Bank of America , N.a. v. Dawn R. Martinson

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐3892
BANK OF A MERICA , N.A.,
Plaintiff‐Appellee,
v.
D AWN R. MARTINSON, et al.,
Defendants‐Appellants.
____________________
Appeal from the United States District Court for the
Western District of Wisconsin.
No. 10‐CV‐10‐wmc — William M. Conley, Chief Judge.
____________________
A RGUED D ECEMBER 1, 2014 — D ECIDED J ULY 5, 2016
____________________
Before BAUER , KANNE , and HAMILTON, Circuit Judges.
HAMILTON , Circuit Judge. This appeal turns on an issue of
appellate jurisdiction. Based on our court’s decision in HSBC
Bank USA, N.A. v. Townsend, 793 F.3d 771 (7th Cir. 2015), we
conclude that the mortgage foreclosure judgment on appeal
is not a final judgment so that the appeal must be dismissed.
Plaintiff Bank of America filed this suit in a Wisconsin
state court in 2009 to foreclose a residential mortgage with an

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2 No. 13‐3892
original principal balance of $489,000. The owners of the
property, defendants Dawn Martinson Green and her hus‐
band Carl Green, are citizens of Minnesota and removed the
case to the federal district court based on diversity of citizen‐
ship. After a bench trial, the district court found in favor of
Bank of America and held that Bank of America was owed
$708,027.92 as of November 12, 2013. The court entered a
judgment of foreclosure and ordered sale of the property at a
sheriff’s auction after the time for redemption by the owners
had expired. The foreclosure judgment also provided that the
bank would not be entitled to obtain a deficiency judgment
against any defendant.
The defendant‐owners filed a notice of appeal, and the
parties proceeded with briefing on the merits. The defendant‐
owners argued that the bank’s evidence offered to prove the
debt was not properly admissible and that the district court
erred by not allowing them to amend their answer to add
counterclaims. The bank responded on the merits. Because
the Townsend appeal was pending in this court at the time of
argument in this case, we directed the parties shortly before
argument to be prepared to address the issue of appellate ju‐
risdiction in more depth. They did so in written submissions
and at oral argument.
Townsend held that a judgment of foreclosure applying Il‐
linois law was not a final, appealable judgment under 28
U.S.C. § 1291 and that there was no other basis for appellate
jurisdiction in the case. 793 F.3d 771. The panel majority in
that case reasoned that three factors meant the foreclosure
judgment ordering sale of the property was not final. First, the
owner of the property retained statutory rights to redeem or

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No. 13‐3892 3
reinstate the mortgage before a judicial sale. Second, if a judi‐
cial sale occurred, it would need to be confirmed in a further
judicial proceeding. Third, the amount of any deficiency judg‐
ment could not be determined until the sale was held and the
parties had an opportunity to contest its fairness. Id. at 775–
77.
The foreclosure judgment in this case shares the principal
characteristics of the non‐appealable foreclosure judgment in
Townsend. The judgment determined the total amount owed
to the plaintiff bank as of the date of the judgment. It also al‐
lowed the plaintiff‐bank to seek additional costs prior to the
sale. The judgment ordered the sale of the property at a sher‐
iff’s auction, but only after three months had passed to allow
the defendant‐owners to redeem the property under Wiscon‐
sin law. See Wis. Stat. § 846.13 (right of redemption); Wis. Stat.
§ 846.103 (requiring at least three‐month delay after judgment
before sheriff’s sale for this category of property). The judg‐
ment also ordered the sheriff to report on the sale to the court
for confirmation of the sale and ordered that, upon confirma‐
tion, the auction purchaser would be entitled to possession of
the property. See Wis. Stat. §§ 846.16, 846.165, & 846.17.
One difference between this judgment and the judgment
in Townsend is that this judgment provided that no deficiency
judgment may be obtained against any defendant, so that the
plaintiff‐bank’s recovery would be limited to the proceeds
from the sheriff’s foreclosure sale.
The Townsend majority opinion was not specific about how
its holding might have been affected by a change in any of the
factors it relied upon. Here we have two of the three Townsend
factors: a post‐judgment right of the defendant‐owners to re‐
deem the property under state law, and a court‐ordered sale

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4 No. 13‐3892
that would require further court approval before taking effect.
Unlike Townsend, however, there is no prospect of further pro‐
ceedings to determine the amount of any deficiency judgment
after the sale.
In our view, Townsend controls the issue of appellate juris‐
diction here despite the difference concerning deficiency
judgments. What seems to have concerned the Townsend court
most was the remaining potential for substantial proceedings
concerning the court‐ordered sale, as well as the prospect that
the defendant‐owner could exercise the right to redeem the
property after the foreclosure judgment was issued. We do
not read Townsend as making the path to appellate review de‐
pend on whether the foreclosure judgment does or does not
allow for the possibility of a deficiency judgment. That ap‐
proach would invite too much confusion in an area of proce‐
dure and practice where there should be a premium on clarity.
See Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202 (1988)
(stressing importance of adopting bright‐line rules of appel‐
late jurisdiction to ensure uniformity and predictability).
One other difference between this case and Townsend con‐
cerns the way the state courts handle the issue of appealabil‐
ity. Townsend arose in Illinois, and in the Illinois courts, a fore‐
closure judgment ordering a sale is not final and appealable,
as Townsend held for a federal foreclosure judgment ordering
a sale. An appeal in the Illinois courts must await an order
confirming the foreclosure sale, see Townsend, 793 F.3d at 777,
citing EMC Mortgage Corp. v. Kemp, 982 N.E.2d 152, 154 (Ill.
2012), though the confirmation order may need to be stayed
to protect the appellant’s rights pending appeal. See Townsend,
793 F.3d at 780.

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No. 13‐3892 5
In Wisconsin courts, however, a foreclosure judgment or‐
dering a sale like this one is treated as final and appealable.
See Anchor Savings & Loan Ass’n v. Coyle, 435 N.W.2d 727, 729–
30 (Wis. 1989); Shuput v. Lauer, 325 N.W.2d 321, 325–26 (Wis.
1982). As a result, by applying Townsend to this Wisconsin
case, we create a significant, and potentially treacherous, dif‐
ference between federal and state practice and procedure in
mortgage foreclosure cases. Appellants in the state courts
would lose their right to appeal by following our holding ap‐
plicable to federal cases.
The answer to this concern must be that Townsend applied
a federal standard of finality, a procedural issue governed by
federal law. See Budinich, 486 U.S. at 198–99. If we did not ap‐
ply Townsend here, we would open up a conflict within our
circuit on a question of federal procedural law. We believe the
law requires us to be consistent in applying federal procedure
and to accept the inevitable potential for confusion based on
the difference between federal and state procedure in such
cases.
Justice Abrahamson’s opinion for the Wisconsin Supreme
Court in Shuput considered in detail this question of appeala‐
bility in mortgage foreclosure cases. The opinion explained
why treating a foreclosure judgment as appealable, before a
court‐ordered sale takes place and is confirmed, is consistent
with more general principles about the difference between a
merits judgment and its execution, and is consistent with the
views of many other courts and respected commentators. See
325 N.W.2d at 326–27. Essentially the same points, including
applicable precedents from the Supreme Court and this court,
were before the panel in Townsend, however. See 793 F.3d at
781–96 (Hamilton, J., dissenting). The panel rejected them.

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6 No. 13‐3892
Since Townsend is binding precedent in this circuit, this ap‐
peal is DISMISSED for lack of appellate jurisdiction. Each side
shall bear its own costs.

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