912 N.W.2d 364
Wis.2018Background
- In 2004 Thompson executed a promissory note secured by a mortgage; note included an acceleration clause.
- BAC Home Loans sued in 2010 alleging default (as of April 2009), sought acceleration and foreclosure; the 2010 suit was tried and dismissed with prejudice for insufficient evidence (including failure to prove notice of acceleration and possession of the original note).
- After dismissal, Bank of America (servicer) sent a new notice of intent to accelerate in March 2014 alleging a cure amount and deadline; Thompson did not cure.
- Bank of America/Federal National filed a new foreclosure suit in December 2014 alleging a default as of September 2012 and accelerated balance.
- The circuit court held the portions alleging defaults before the 2010 trial date were claim-precluded but allowed claims based on defaults after that date; the court ultimately entered judgment for Federal National.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claim preclusion bars a second foreclosure after a prior foreclosure was dismissed with prejudice | Lender: second suit alleges the same note/mortgage and seeks the same remedy; prior litigation of default should preclude relitigation of the debt | Thompson: prior dismissal with prejudice should bar retrial of same claim; entire debt was at issue in first suit | Court: No. Because the lender never validly accelerated the debt in the first suit (borrower’s default was not proved), the later defaults are new operative facts; claim preclusion does not bar suit for defaults arising after the earlier suit’s trial date |
| Whether the court erred in admitting a copy of the note and whether plaintiff proved possession of the original note | Lender: note endorsed in blank is self-authenticating; original was presented at trial and compared to the copy | Thompson: challenged authenticity and possession of original | Court: No error. Following governing precedent, a blank-endorsed promissory note is self-authenticating commercial paper; the original was shown to be in plaintiff’s counsel’s possession and the copy properly admitted |
Key Cases Cited
- N. States Power Co. v. Bugher, 189 Wis. 2d 541, 525 N.W.2d 723 (Wis. 1995) (elements and transactional approach for claim preclusion)
- DePratt v. West Bend Mut. Ins. Co., 113 Wis. 2d 306, 334 N.W.2d 883 (Wis. 1983) (transactional test and claim-preclusion principles)
- Kruckenberg v. Harvey, 279 Wis. 2d 520, 694 N.W.2d 879 (Wis. 2005) (pragmatic transactional approach; ‘‘common nucleus of operative facts’’)
- Johnson v. Samson Constr. Corp., 704 A.2d 866 (Me. 1997) (example of rule barring relitigation where debt was validly accelerated)
- U.S. Bank Nat’l Ass’n v. Gullotta, 899 N.E.2d 987 (Ohio 2008) (distinguishes suits for installment defaults from suits on an accelerated whole note)