The Wisconsin Court of Appeals’ decision Tuesday in Gustavo Montalvo v. U.S. Title and Closing Services LLC et al., 2012 AP 103, could, according to the Wisconsin Land Title Association, have “far reaching and disturbing implications” on the trustworthiness and process of title searches in the state.
A three-judge panel denied a review of summary judgment in the case, confirming a jury award in favor of Gustavo Montalvo for regular and punitive damages of almost $86,000 for slander of title and conspiring to deprive the plaintiff of his interest, title and right to property.
In finding for Montalvo, the court confirmed that a 2003 Milwaukee County divorce judgment between Montalvo and Carmen Rodriguez did not transfer Montalvo’s interest to Rodriguez because the court both lacked in personal jurisdiction over Gustavo, and the final divorce judgment did not accurately reflect the intended final judgment of the court.
Montalvo and Rodriguez purchased a home together in 1995. Though unmarried at the time, they moved in with their two kids and later married, calling the house home for almost 7 years.
In 2002, the parties separated. Gustavo went to New York with one daughter and Rodriguez stayed in Milwaukee with the second daughter, Elisa, where they continued to live in the family home. After a while, the parties lost touch.
Rodriguez filed a pro se divorce petition in Milwaukee County in 2003. At the hearing, Rodriguez provided proof of service by publication, but she had not obtained personal service on Montalvo.
Before entering final judgment, Commissioner Michael Bruch cautioned Rodriguez about needing to do more work to get good title after closing.
“I can’t change title,” Bruch said. “Each of them alone will own half the house. They both own half because that’s what they own now.”
Notwithstanding Bruch’s statements, the final divorce judgment noted that the petitioner (Rodriguez) “ is awarded the real estate, two-family home at 728 S. 29th Street, Milwaukee, WI, 53204.” The final judgment was signed and entered by the court clerk, but never recorded with the recorder’s office. No transcript of the hearing was attached to or referenced in the divorce judgment.
When Rodrigez tried to refinance two years later in 2005, a title search by U.S. Title still showed Montalvo’s interest in the property.
Court testimony indicated that a U.S. Title representative provided a forged quitclaim deed allegedly signed by Montalvo, and the property was quitclaimed to a third party. Over the next four years, Rodriguez refinanced several more times, removing a good portion of equity from the home and finally selling the property outright in 2006.
Montalvo returned to the Milwaukee area two years later, to find his wife divorced and his house sold, without seeing a penny of any sales benefits or proceeds.
Counsel for Montalvo reopened the divorce judgment, obtained a revised order and sued the title company and others involved in the property sale.
After a failed initial summary judgment motion by the defendant, a jury found that U.S. Title and other defendants had slandered title and conspired against Montalvo. U.S. Title later appealed the court’s earlier rejection of its summary judgment motion.
The crux of U.S. Title’s appeal focused on whether or not the 2003 divorce judgment was effective in transferring Montalvo’s interest to Rodriguez.
First, U.S. Title could not have divested Montalvo of his property interest in 2005, it stated, because “the divorce court did that already in 2003” through its final order.
“The conveyance, and Montalvo’s loss of interest in the property,” U.S. Title explained, “both occurred upon entry of judgment on July 21, 2003.”
Counsel for U.S. Title pointed to generally accepted rules of construction in Wisconsin, wherein “a reasonable person reviewing judgment could only come to one conclusion about the judgment – that respondent was awarded sole ownership” of the property. Because the language was precise and straightforward, U.S. Title felt there was “no basis to look beyond the four corners of the judgment.”
Additionally, counsel for U.S. Title took issue which the trial court’s reliance on comments made by Bruch during oral argument, which “may never be used to impeach a final order.”
U.S. Title cited a North Dakota decision, Erway v. Deck, 588 N.W.2d 862 (N.D.1999), where a spouse who was awarded real property through a divorce decree in 1984 did not lose her interest even if the decree was not recorded until 1997.
“Public policy dictates that real estate practitioners should be able to rely on finality and the binding effect of judgment,” counsel for U.S. Title asserted.
In support of the trial court decision, Montalvo’s counsel argued that, by the terms of Wis. Stat. 767.2555, “entry of judgment did not divest Montalvo of his interests.”
It is well-established law in Wisconsin, counsel continued, that “the intent of the divorce court at the time of the divorce judgment … controls, and will be given effect,” said Montaldo, citing Lutzke v. Lutzke, 122 Wis.2d 24 (1985).
The Wisconsin Land Party Association was concerned that, even with effective title searches and careful review of title documents, the mandate is foreseeable for a whole new level of title company review of all cases files in every divorce. The WLPA’s brief stated: “There is nothing in the divorce judgment which suggests that it is anything but a ‘final judgment’ in the divorce proceedings, in that it appeared to resolve all substantive matters … and at least for a four-year period, was the last document entered in the case.”