When “Shall” Means “Shall”: Wisconsin Supreme Court Requires Mortgage Lenders to Sell Abandoned Properties in Foreclosure

house for sale

Last week the Wisconsin Supreme Court issued its decision in Bank of New York v. Carson, 2015 WI 15, a case we previewed here. The case is significant for its potential lasting effects on mortgage foreclosures in Wisconsin.

The Carson case involves interpretation of Wis. Stat. § 846.102, which applies to foreclosure of “abandoned” properties. In 2007, Shirley Carson granted a mortgage on her home in Milwaukee to secure a loan from Countrywide Home Loans. After Carson defaulted on the loan, Bank of New York (the trustee of the securitized mortgage trust to which Countrywide had transferred the mortgage loan) filed a foreclosure action, and the Milwaukee County Circuit Court entered a default foreclosure judgment in June 2011. Because the property appeared vacant at the time, and the bank did not seek a deficiency judgment against Carson, the judgment provided for a 3-month statutory redemption period under § 846.103(2), but the bank did not sell the property after the redemption period expired.

Continue reading this entry

Judge Posner on Bankruptcy’s "Clean-Up" Jurisdiction

gavel_scales2

Most bankruptcy lawyers might think that the dismissal of a bankruptcy proceeding and the revesting of the bankruptcy estate’s assets in the debtor bring an end to the bankruptcy court’s jurisdiction.

Not (necessarily) so, according to the Seventh Circuit in In re Sweports, Ltd., No. 14-2423 (7th Cir. Jan. 9, 2015), a decision written by Judge Posner in which Judges Williams and Tinder joined. There exists a form of “clean-up” jurisdiction (or “ancillary” jurisdiction, as the court acknowledged “it is commonly called”) that allows a bankruptcy court “to take care of minor loose ends,” even after the case has been dismissed.

Continue reading this entry

Seventh Circuit Requires "Cash on the Barrelhead" from Interpleaders

bank

Judge Easterbrook and his colleagues on the U.S. Court of Appeals for the Seventh Circuit aren’t about to exercise jurisdiction over a civil action of interpleader merely on credit or promises to pay. The plaintiff has to pony up the goods.

This was the holding of the Seventh Circuit’s recent decision in State Farm Life Ins. Co. v. Jonas, No. 14-1464 (7th Cir. Dec. 31, 2014), an opinion authored by Judge Easterbrook, in which Judges Flaum and Kanne joined. Specifically, 28 U.S.C. § 1335 provides federal courts with jurisdiction over certain interpleader actions, but it requires (1) minimal diversity and (2) that “the plaintiff has deposited such money or property . . . into the registry of the court.” Without that “cash on the barrelhead,” the Seventh Circuit held that it lacked jurisdiction.

Continue reading this entry

A Reminder from the Seventh Circuit on the Importance of Creating a Record

gavel_scales

When the court makes an evidentiary ruling off the record, it is required to enter on the record an explanation of the reasoning behind its decision. See, e.g., United States v. Nolan, 910 F.2d 1553, 1559 (7th Cir. 1990); 28 U.S.C. § 753(b). But what is a party’s recourse on appeal if the court failed to meet this requirement and the party didn’t object at the time?

None. So explained the Seventh Circuit in United States v. Lawson, No. 14-1233 (7th Cir. Jan. 20, 2015), a case which should serve as an important reminder about preserving off-the-record rulings for appeal in civil and criminal cases alike.

Continue reading this entry

Seventh Circuit Speaks Again on How the Wisconsin Fair Dealership Law Applies in Arbitration

column_law

A few months ago, we commented on an aspect of the interaction between the Wisconsin Fair Dealership Law (WFDL), Wis. Stat. ch. 135, and arbitration, as discussed by the Seventh Circuit in Everett v. Paul Davis Restoration, Inc., No. 12-3407 (7th Cir. Nov. 3, 2014). That case dealt with the doctrine of direct benefits estoppel, under which a nonsignatory to an arbitration clause was nonetheless held bound to arbitrate. The second issue in the case was whether the WFDL barred the use of arbitration clauses in dealership agreements, and the court made clear that it did not.

The Everett dealership was located in Wisconsin, and the dealership agreement provided for application of the WFDL, which would have been the default rule anyway (§ 135.02(1) defines a dealer under the law as “a person who is the grantee of a dealership situated in this state,” and § 135.025(3) invalidates any contractual provision that seeks to vary the effect of the WFDL). Similarly, the dealership in Reynard v. Ameriprise Financial Services, Inc., No. 14-1730 (7th Cir. Jan. 30. 2015), was located in Wisconsin, so that it, too, was presumptively subject to the WFDL’s terms, one of which requires notice and an opportunity to cure before a dealership may be terminated. § 135.04. But the arbitrators upheld a termination that didn’t meet these terms, so the terminated dealer sought to have the arbitration award vacated on the ground that they had acted in “manifest disregard of the law.” This non-statutory ground for vacating arbitral awards is still recognized by the Seventh Circuit, even though it is far from clear that it survived the Supreme Court’s decision in Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).

Continue reading this entry