A Wisconsin appellate court recently reversed a trial court’s order granting summary judgment for the homeowners and held that a lender’s foreclosure claim could proceed, despite the fact that the lender’s predecessor previously had filed a stipulation dismissing a foreclosure “due to payoff of the loan.” See Deutsche Bank National Trust Company, v. Buboltz, et al., 2019 WL 549771 (Wis. Ct. App. Feb. 12, 2019). The plaintiff-lender’s predecessor brought a foreclosure action and obtained a judgment in 2013. Two years later, the parties filed a stipulation reopening the action and dismissing it without prejudice “due to payoff of the loan.” The court entered an order stating the same. However, the borrowers’ payoff check did not clear, the loan was not paid off, and the mortgage was never discharged. In 2016, defendants purchased the property from the original borrowers, and plaintiff was assigned the note and mortgage. In 2017, plaintiff brought this foreclosure action on the mortgage. Defendants filed a motion for summary judgment arguing that the stipulation and order extinguished the mortgage, that Wis. Stat. § 806.07 required the lender to seek to vacate the order within one year, which it failed to do, and that laches applied to bar the claim. The trial court granted defendants’ summary judgment motion and dismissed the action with prejudice.
On appeal, the Court reversed. First, it found that there was no dispute that the original loan was never paid off or discharged and that the stipulation was mistaken. Second, it found that the order dismissing the action was without prejudice, which allowed plaintiff (or its predecessor) to bring another action on the mortgage, and therefore that Wis. Stat. § 806.07 did not apply because there was no need to vacate the order. Finally, the Court found that laches did not apply here because “the fact that the prior foreclosure action was dismissed without prejudice, and the fact that no satisfaction of the mortgage was ever recorded, gave the Purchasers . . . notice that [plaintiff] could reassert its claim of default on the loan and commence a new foreclosure action.” Accordingly, the Court reversed the trial court and reinstated the action.