Motion for Summary Judgment – Proper Plaintiff

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WI Court of Appeals – District IV

Case Name: The Bank of New York Mellon v. Gloria J. Klomsten, et al.

Case No.: 2017AP405

Officials: Lundsten, P.J., Sherman and Kloppenburg, JJ

Focus: Motion for Summary Judgment – Proper Plaintiff

This case arises out of a foreclosure action initiated by Bank of New York Mellon against Gloria and Steven Klomsten. The circuit court granted summary judgment in favor of the Bank. On appeal, the Klomstens challenge two rulings of the circuit court: (1) the court’s denial of the Klomstens’ motion to dismiss, and (2) the court’s granting of the Bank’s motion for summary judgment. The Klomstens argue that the circuit court should have granted their motion to dismiss for either of the following reasons: the action is barred by the six-year statute of limitations in WIS. STAT. § 893.43 (2015-16), which applies to breach of contract actions, or the complaint fails to state a claim for relief because the Bank does not sufficiently allege that it possesses the original note, which the Bank must prove to prevail on its foreclosure claim. The Klomstens argue that the circuit court erred in granting the Bank’s motion for summary judgment because the Bank’s submissions in support of summary judgment do not establish a prima facie case that the Bank is the proper plaintiff in this foreclosure action.

We reject both of the Klomstens’ arguments relating to the motion to dismiss. First, it is well established that the running of the statute of limitations that applies to enforcement of a note does not prevent timely foreclosure of the mortgage that secures the note, and the Klomstens do not cite any legal authority to the contrary or argue that this action is otherwise untimely. Second, assuming without deciding that the Bank must allege that it has possession or the ability to possess the note, we conclude that the complaint does not fail to state a claim because it can reasonably be inferred from the allegations it contains, along with the copies of the mortgage and note endorsed in blank attached to the complaint, that the Bank is asserting that it possesses, or has the ability to possess when needed, the original note. Therefore, the complaint does not fail to state a claim for the reason alleged by the Klomstens.

However, we agree with the Klomstens’ argument as to the motion for summary judgment. We conclude that the Bank’s submissions in support of summary judgment do not establish each element of its prima facie case for this foreclosure action because the Bank’s submissions do not aver facts showing that the Bank possesses the original note and, therefore, that the Bank is a proper plaintiff in this foreclosure action. Accordingly, we reverse and remand the case for further proceedings.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.