LITIGATIONRESULTS - Whyte Hirschboeck Dudek SC

WHD Obtains Reversal
from Court of Appeals in
Priority Dispute
In Multicircuits, Inc. v. Michael P. Grunsted, et al., WHD was retained by
Fidelity National Title Group, Inc. to represent its insured, CitiMortgage, Inc.
(Citi), in a dispute regarding the priority of its mortgage over a mortgage held
by Multicircuits, Inc. Multicircuits commenced a foreclosure action in which
it sought to foreclose the interest held by Citi in the same property. After the
owners of the property consented to the entry of a judgment of foreclosure in
favor of Multicircuits, Citi and Multicircuits each moved for summary judgment
alleging that its respective mortgage was superior to the other.
During discovery, WHD determined that when Multicircuits obtained an
assignment of its mortgage from Associated Bank, it was not assigned
the promissory note, which the mortgage secured. While the Multicircuits’
mortgage was recorded before the Citi mortgage, Citi argued that its mortgage
was entitled to priority based upon equitable subrogation and on the grounds
that Multicircuits could not enforce its mortgage because it did not hold the
promissory note, and therefore, did not have standing to enforce its mortgage.
The trial court held that Multicircuits’ mortgage was entitled to priority over Citi’s
mortgage pursuant to Wis. Stat. § 706.11 because it had been recorded first.
The trial court rejected Citi’s argument that it was entitled to priority based upon
equitable subrogation and held that whether Multicircuits was assigned the
promissory note was a “red herring.” The trial court also denied Citi’s request
to stay the sheriff’s sale of the property pending Citi’s appeal, forcing Citi to
purchase the property at the sheriff’s sale to preserve its rights.
On appeal, the Court of Appeals reversed the trial court and found entirely in
Citi’s favor, finding that because Multicircuits was not assigned the promissory
note or underlying debt secured by its mortgage, it could not enforce its
mortgage, and therefore, could not possibly have priority over the Citi
mortgage. The Court of Appeals remanded the case to the trial court, ordering
that Multicircuits refund all proceeds it received from the sheriff’s sale to Citi, but
not disturbing the trial court’s order confirming the sheriff’s sale in Citi’s favor.
ANDERSON
posnanski
Litigation Type: Real estate, creditors’ rights
Courts: Winnebago County Circuit Court, District II Court of Appeals
Lead WHD Counsel: Ross Anderson and Timothy Posnanski
Principal WHD Team Members: Ross Anderson, Timothy Posnanski
Practice Areas Involved: Litigation; Real Estate; Consumer Financial
Services; Business Restructuring, Creditors’ Rights & Bankruptcy
10 LITIGATION RESULTS