Bank of America, N.A. v. Martinson, No. 13-3892 (7th Cir. 2016)Annotate this Case
The bank filed a residential mortgage foreclosure suit in Wisconsin state court. The owners, citizens of Minnesota, removed the case to federal court based on diversity of citizenship. The district court entered a judgment of foreclosure, ordered the property sold at a sheriff’s auction after the time for redemption expired, and held that the bank would not be entitled to obtain a deficiency judgment. The owners appealed. In the meantime, the Seventh Circuit held (Townsend decision) that a judgment of foreclosure applying Illinois law was not a final, appealable judgment under 28 U.S.C. 1291, then dismissed the Wisconsin foreclosure appeal. The court noted that both judgments: determined the amount owed as of the judgment date; allowed the bank to seek additional costs before the sale; ordered a sale, but only after passage of the redemption period under state law; ordered the sheriff to report the sale for court confirmation; and ordered that, upon confirmation, the auction purchaser would be entitled to possession of the property. Unlike in Townsend, the Wisconsin judgment precludes any deficiency judgment, so that the bank’s recovery is limited to the sale proceeds. Given a post‐judgment state law right of redemption and a sale that requires further court approval before taking effect, the fact that Wisconsin courts treat a foreclosure judgment ordering a sale as final and appealable does not override the federal standard of finality.