U. S. Bank Nat. Assn. v. Patricia Ann Murphy

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
May 13, 2021
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2020AP537 Cir. Ct. No. 2015CV2352

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

U. S. BANK NATIONAL ASSOCIATION,

PLAINTIFF-RESPONDENT,

V.

PATRICIA ANN MURPHY AND PATRICIA GAFFNEY,

DEFENDANTS-APPELLANTS,

JOHN DOE GAFFNEY, JOHN DOE MURPHY, DISCOVER BANK, ASSET
ACCEPTANCE, LLC, UW MEDICAL FOUNDATION AND ASSOCIATED
BANK, N.A.,

DEFENDANTS.

APPEAL from a judgment of the circuit court for Dane County:
FRANK D. REMINGTON, Judge. Affirmed.

Before Fitzpatrick, P.J., Blanchard, and Kloppenburg, JJ.
No. 2020AP537

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

¶1 PER CURIAM. Patricia Ann Murphy and Patricia Gaffney, by
counsel, appeal a judgment of foreclosure. Murphy and Gaffney argue that the
circuit court erred when, following an evidentiary hearing, the court found that
they had failed to establish the causation element to satisfy the doctrine of unclean
hands, which they asserted as an affirmative defense to foreclosure. For the
reasons discussed below, we affirm the judgment of the circuit court.

¶2 Murphy and Gaffney are the borrowers under a note and mortgage
executed in 2007. Foreclosure proceedings led to the entry of a summary
judgment of foreclosure against them in September 2017. Murphy and Gaffney
filed a notice of appeal in this court. We reversed and remanded for further
proceedings, concluding that a genuine issue of material fact precluded summary
judgment as to their affirmative defense based on the equitable doctrine of unclean
hands. See Nationstar Mortgage, LLC v. Murphy, No. 2017AP2091, unpublished
slip op. (WI App Dec. 20, 2018). Pertinent to our decision was an affidavit by
Murphy stating that she stopped making payments because a representative of the
lender, Nationstar, told her during a phone call in the fall of 2014 to stop payments
while a loan modification application was pending. Nationstar argued that its own
affidavits submitted in support of summary judgment contradicted Murphy’s.1

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On October 23, 2017, Nationstar assigned all of its rights related to the note and
mortgage, as well as Nationstar’s rights with respect to this lawsuit and all judgments entered in
it, to U.S. Bank National Association, the respondent in this appeal.

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¶3 On remand, the circuit court held an evidentiary hearing on
January 28, 2020. The court heard testimony from both Murphy and Gaffney, as
well as from a representative who testified on behalf of the loan servicer. The
court found that there was not enough evidence to establish that Murphy and
Gaffney were told not to make their mortgage payments. Accordingly, the court
found that they had failed to meet their burden of establishing unclean hands as an
affirmative defense. See Security Pac. Nat. Bank v. Ginkowski, 140 Wis. 2d 332,
339, 410 N.W.2d 589 (Ct. App. 1987) (to defeat plaintiff in equity under the
“unclean hands” doctrine, defendant must show that “the things from which the
plaintiff seeks relief are the fruit of its own wrongful or unlawful course of
conduct.” (quoted source omitted)). The court entered a judgment of foreclosure
against the appellants, and this appeal follows.

¶4 Whether to grant equitable relief under the doctrine of unclean hands
is a matter within the circuit court’s discretion. Timm v. Portage Cnty. Drainage
Dist., 145 Wis. 2d 743, 752, 429 N.W.2d 512 (Ct. App. 1988). We will affirm the
circuit court’s exercise of discretion “if it examined the relevant facts, applied the
correct standard of law and, using a demonstrated rational process, reached a
conclusion that a reasonable judge could reach.” Randall v. Randall, 2000 WI
App 98, ¶7, 235 Wis. 2d 1, 612 N.W.2d 737. The record reflects that the circuit
court did so here.

¶5 The circuit court identified the applicable legal standard, citing
Ginkowski, 140 Wis. 2d at 339, which provides, “For relief to be denied a plaintiff
in equity under the ‘clean hands’ doctrine, it must be shown that the alleged
conduct constituting ‘unclean hands’ caused the harm from which the plaintiff
seeks relief.” (Emphasis added.) The circuit court considered the relevant facts in

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evidence and determined that Murphy and Gaffney had failed to establish the
required causation element of the unclean hands doctrine.

¶6 Evidence that the circuit court considered included testimony by
Murphy about the phone call with a representative of the lender or loan servicer in
the fall of 2014 during which, Murphy testified, she was told to stop making
mortgage payments. The court made a finding that Murphy was credible in
testifying “that words were said that gave her a reason to believe [that in order] to
become eligible for a loan modification, the loan must be in default.” Murphy and
Gaffney seize on the court’s credibility finding on this point, arguing that it
contradicts other findings made by the court and warrants reversal. We disagree.

¶7 Immediately after making the statement about Murphy’s credibility
referenced above, the circuit court further stated, “I do not have sufficient
evidence to make the finding that statements were made to clearly instruct her that
she should not make any payments during the loan modification because that will
screw up your loan modification.” The court went on to explain that to make such
a finding would be directly inconsistent with other facts in evidence, notably that
Murphy went on to make payments anyway. The court stated, “That she made the
payment tells me that whatever was said about partial payments was ambiguous
enough or not so clear that she went ahead and made those payments anyway.”

¶8 The phone call that took place in the fall of 2014 was only one of
several facts that the circuit court considered and weighed in making its
determination that the equitable doctrine of unclean hands did not prevent the
court from entering a judgment of foreclosure against Murphy and Gaffney. The
court stated that it was an “unfortunate situation” and “shouldn’t have happened,”
but ultimately concluded that the statements made in the phone call did not make

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the difference that Murphy and Gaffney suggested it did. The court considered
several other relevant facts on the record, including but not limited to “the overall
financial position of the parties, the passage of time, and the position of the
parties” at the time of the hearing. It was within the circuit court’s discretion to
consider the credibility of the witnesses and to weigh the facts in evidence. See
WIS. STAT. § 805.17(2) (2019-20)2 (when the circuit court acts as the finder of
fact, the court’s factual findings will be upheld unless clearly erroneous, and due
regard shall be given to the opportunity of the court to judge the credibility of the
witnesses). Generally, this court does not reweigh evidence or assess credibility,
see Dickman v. Vollmer, 2007 WI App 141, ¶14, 303 Wis. 2d 241, 736 N.W.2d
202, and there is nothing in the appellate briefing or the record that persuades us
that we should do so here.

By the Court.—Judgment affirmed.

This opinion will not be published. See WIS. STAT. RULE
809.23(1)(b)5.

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All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise
noted.

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