Peoples State Bank v. Debra K. McCarty

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 4, 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. 2020AP1757 Cir. Ct. No. 2017CV789

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT III

PEOPLES STATE BANK,

PLAINTIFF-RESPONDENT,

V.

DEBRA K. MCCARTY,

DEFENDANT,

JULIE A. PILECKY,

DEFENDANT-APPELLANT.

APPEAL from a judgment of the circuit court for Marathon County:
GREGORY E. GRAU, Judge. Affirmed.

Before Stark, P.J., Hruz and Seidl, JJ.

¶1 STARK, P.J. Peoples State Bank (“the Bank”) was granted a
foreclosure judgment on a piece of commercial property owned by Debra McCarty.
No. 2020AP1757

That property benefitted from a parking easement on adjacent residential property
owned by Julie Pilecky. The sole issue on appeal is whether the foreclosure
judgment—which did not reference either the parking easement specifically or
easements in general—foreclosed McCarty’s interest in the parking easement, such
that the parking easement continued to benefit the subject property after the Bank
purchased that property at a sheriff’s sale.

¶2 Pilecky argues that under the plain language of WIS. STAT.
§ 846.10(1) (2019-20),1 the lack of any reference to the parking easement in the
foreclosure judgment means that the foreclosed property did not include the parking
easement. In response, the Bank asserts that although § 846.10(1) requires a
foreclosure judgment to include a legal description of the foreclosed property, it
does not require a foreclosure judgment to describe or otherwise reference any
easements appurtenant to that property. The Bank further argues that other
Wisconsin statutes and case law provide that appurtenant easements run with the
dominant estate and need not be specifically described in a conveyance in order to
be included with the property conveyed or transferred.

¶3 We agree with the Bank that the foreclosed property in this case
included the parking easement, which was appurtenant to McCarty’s property, even
though the foreclosure judgment did not mention either the parking easement
specifically or easements in general. We therefore affirm the circuit court’s decision
granting summary judgment in favor of the Bank on its claims for declaratory
judgment and slander of title, and on Pilecky’s counterclaim for abuse of process.

1
All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise
noted.

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BACKGROUND

¶4 In 1999, McCarty purchased a piece of commercial property located
on Sixth Street in Wausau. McCarty’s deed included a parking easement over a
neighboring residential property owned by Pilecky. The deed provided that the
parking easement “shall be perpetual and run with the land.”

¶5 McCarty’s purchase of the Sixth Street property was financed by a
note and mortgage from the Bank. The mortgage contained a legal description of
the Sixth Street property and also stated that the mortgaged premises included
“all … easements and appurtenances.” The 1999 mortgage was refinanced in 2001,
and the 2001 mortgage likewise stated that the mortgaged premises included
“all … easements and appurtenances.”

¶6 In 2007, McCarty defaulted on the 2001 mortgage, and the Bank
initiated foreclosure proceedings. Both the foreclosure complaint and a lis pendens
filed by the Bank included a legal description of the Sixth Street property, but they
did not include a legal description of the parking easement or any other specific
reference to that easement. In addition, unlike the mortgages, neither the foreclosure
complaint nor the lis pendens included a general reference to “all … easements and
appurtenances” for the Sixth Street property.

¶7 A foreclosure judgment was entered in July 2007. Again, the
foreclosure judgment included a legal description of the Sixth Street property, but
it did not include a legal description of the parking easement, any other specific
reference to the parking easement, or any reference to easements in general.
McCarty subsequently filed for bankruptcy, and the parties also entered into various
forbearance agreements. A sheriff’s sale ultimately took place on June 20, 2017,
and the Bank was the winning bidder.

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¶8 Following the sheriff’s sale, but before the confirmation hearing,
McCarty and Pilecky executed a document entitled “Termination Agreement and
Termination of Easement,” which stated that the parking easement was terminated
and that McCarty released any rights she may have had under the easement. The
termination agreement was recorded with the Marathon County Register of Deeds
on June 29, 2017. The Bank asserts, and McCarty does not dispute, that McCarty
and Pilecky did not inform the Bank of the termination agreement or seek the Bank’s
consent to terminate the parking easement.

¶9 A confirmation hearing took place on August 15, 2017, after which
the circuit court entered an order confirming the sale of the Sixth Street property to
the Bank. Both the order confirming sale and the sheriff’s deed included a legal
description of the Sixth Street property, but neither of those documents included a
legal description of the parking easement or otherwise referred either to the parking
easement specifically or to easements in general.

¶10 McCarty and Pilecky later re-executed and rerecorded the termination
agreement. At some point, the Bank learned of the termination agreement and
demanded that Pilecky cancel it, but she refused to do so. The Bank then filed the
instant lawsuit against McCarty and Pilecky, asserting two claims. First, the Bank
sought a declaratory judgment that the parking easement “remain[ed] a valid legal
appurtenance” to the Sixth Street property and was “included in the foreclosed
property.” Second, the Bank asserted a claim for slander of title. Pilecky answered
the Bank’s complaint and asserted a counterclaim for abuse of process.

¶11 Pilecky and the Bank ultimately filed cross-motions for summary
judgment. None of the material facts were disputed. The sole issue was whether
the foreclosure judgment encompassed the parking easement such that the sheriff’s

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deed transferred the parking easement to the Bank, thereby rendering McCarty and
Pilecky’s attempts to terminate the parking easement invalid.

¶12 On April 5, 2019, the circuit court issued a written decision granting
the Bank’s summary judgment motion and denying Pilecky’s motion.2 The court
reasoned that the parking easement was an appurtenant easement and was therefore
“annexed (or attached) to the benefitted parcel, which is also called the dominant
estate”—i.e., the Sixth Street property. Citing several Wisconsin cases, the court
then stated that because an appurtenant easement is part of the dominant estate, it is
“transferred along with that estate” and “follows the rest of the dominant estate
regardless of whether it is specifically mentioned” in a conveyance. Accordingly,
the court held that the parking easement

was part of the property that was encumbered by the
mortgages that the Bank eventually foreclosed upon, and it
followed the rest of the dominant estate into the sheriff’s sale
and was conveyed by the subsequent sheriff’s deed. At no
point did the easement get left behind. The fact that the
easement was specifically referenced in the mortgages but
not the sheriff’s deed does not matter. The easement
followed the dominant estate “without express mention in
the conveyance.”

(Footnote and citation omitted.)

¶13 The circuit court therefore “declare[d] that the easement remains a
part of the dominant estate, despite the fact that the sheriff’s deed did not specifically
mention it.” As a result, the court also declared that the termination agreements
were void. The court further concluded that the Bank had prevailed on its slander

2
The Honorable Jill N. Falstad issued the written decision on the parties’ summary
judgment motions. Judge Falstad also denied Pilecky’s subsequent motion for reconsideration of
the court’s summary judgment decision.

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of title claim because McCarty and Pilecky “should have known that their attempts
to terminate the easement were contrary to Wisconsin law and were therefore
frivolous.” Finally, the court concluded that Pilecky’s abuse of process
counterclaim lacked merit, as the Bank’s claim that it owned the easement was
meritorious and thus was not brought for an improper purpose.

¶14 Pilecky moved for reconsideration of the circuit court’s summary
judgment decision. She argued the court made a manifest error of law when it failed
to consider the fact that the parking easement was not mentioned in the foreclosure
judgment, as opposed to the sheriff’s deed. Because the foreclosure judgment did
not mention the easement, Pilecky asserted the easement “was never foreclosed”
and therefore “could not have remained part of the dominant estate.”

¶15 The circuit court denied Pilecky’s reconsideration motion, stating that
under the applicable case law, “neither the foreclosure judgment nor the sheriff’s
deed needed to mention the easement, any more than they needed to mention any
buildings standing upon the property. As a matter of law, the easement is part of
the premises described in the foreclosure judgment.” The court subsequently
entered a judgment awarding the Bank $20,749.73 in damages on its slander of title
claim,3 and Pilecky now appeals.

DISCUSSION

¶16 We independently review a grant of summary judgment, using the
same methodology as the circuit court. Hardy v. Hoefferle, 2007 WI App 264, ¶6,
306 Wis. 2d 513, 743 N.W.2d 843. Summary judgment is appropriate if there is no

3
The Honorable Gregory E. Grau entered the final judgment awarding damages to the
Bank.

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genuine issue of material fact and the moving party is entitled to judgment as a
matter of law. WIS. STAT. § 802.08(2). In this case, the parties do not dispute any
of the material facts, and the sole issue on appeal concerns the proper interpretation
and application of Wisconsin statutes and case law. The interpretation and
application of statutes and case law to undisputed facts are questions of law that we
review independently. Welin v. American Fam. Mut. Ins. Co., 2006 WI 81, ¶16,
292 Wis. 2d 73, 717 N.W.2d 690.

¶17 On appeal, Pilecky renews her argument that the circuit court erred by
granting the Bank summary judgment because the foreclosure judgment did not
include a legal description of the parking easement, any other specific reference to
the parking easement, or any reference to easements in general.4 Pilecky therefore
claims that the foreclosure judgment did not encompass the parking easement and
instead foreclosed only McCarty’s interest in the Sixth Street property itself. As a
result, Pilecky asserts that McCarty retained ownership of the parking easement,
and the parking easement did not pass to the Bank via the sheriff’s deed.5
Consequently, Pilecky claims that McCarty retained the authority to terminate the
parking easement, and the termination agreements were therefore valid and
enforceable.

4
Pilecky clarifies that she is not arguing the parking easement had to be “specifically
mentioned” in the foreclosure judgment. Instead, she asserts it would have been sufficient for the
foreclosure judgment to include general language such as “together with all easements” following
the legal description of the Sixth Street property.
5
Pilecky observes that the sheriff’s deed also lacked any reference to the parking easement
or to easements in general. She asserts, however, that the lack of such references in the foreclosure
judgment is the dispositive factor, as the sheriff’s deed could convey only the property interests
that were actually included in the foreclosure judgment.

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¶18 Pilecky’s argument in this regard rests in large part on WIS. STAT.
§ 846.10(1), which states in relevant part: “If the plaintiff [in a foreclosure action]
recovers[,] the judgment shall describe the mortgaged premises and fix the amount
of the mortgage debt then due.” (Emphasis added.) Based on that language, Pilecky
argues that the property foreclosed in a particular case is limited to the premises
described in the foreclosure judgment. Because the foreclosure judgment in this
case did not make any reference to the parking easement, Pilecky contends the
parking easement was not part of the foreclosed property.

¶19 Pilecky argues that two other statutes further support this conclusion.
First, she cites WIS. STAT. § 806.01(1)(b), a civil procedure statute stating in part
that each judgment “shall specify the relief granted.” Pilecky contends that in this
case, the foreclosure judgment did not specify that it was granting any relief related
to the parking easement.

¶20 Second, Pilecky cites the lis pendens statute, WIS. STAT. § 840.10,
which provides:

In an action where relief is demanded affecting described
real property which relief might confirm or change interests
in the real property, after the filing of the complaint the
plaintiff shall present for filing or recording in the office of
the register of deeds of each county where any part thereof
is situated, a lis pendens containing the names of the parties,
the object of the action and a description of the land in that
county affected thereby.

Sec. 840.10(1)(a) (emphasis added). Pilecky asserts it is undisputed that
§ 840.10(1)(a) “requires a lis pendens to be filed in a foreclosure case,” and it is
further undisputed that the lis pendens filed by the Bank did not include any
reference to the parking easement. She therefore contends that “[p]roperly applying

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[§] 840.10 to the undisputed facts” compels a conclusion that the parking easement
“was never foreclosed.”

¶21 In response, the Bank argues that while the statutes Pilecky cites
require a foreclosure judgment and a lis pendens to include a description of the
mortgaged premises, nothing in those statutes requires either a foreclosure
judgment, a lis pendens, or a sheriff’s deed to include a description of—or any other
reference to—any easements appurtenant to the mortgaged premises. The Bank
further argues that other Wisconsin statutes and cases expressly provide that
appurtenant easements are automatically transferred along with the dominant estate
and need not be specifically mentioned in the instrument of transfer. The Bank
contends that under those statutes and cases, the parking easement was transferred
to the Bank along with the Sixth Street property via the sheriff’s deed, even though
neither the foreclosure judgment nor the sheriff’s deed made any reference to the
parking easement.

¶22 We agree with the Bank. To begin, we observe that an easement may
be either appurtenant or in gross. Borek Cranberry Marsh, Inc. v. Jackson Cnty.,
2010 WI 95, ¶14, 328 Wis. 2d 613, 785 N.W.2d 615. An appurtenant easement
“ties the rights or obligations of a servitude to ownership or occupancy of the land,
and thus it is transferred with the land.” Id. In contrast, an easement in gross “does
not tie the benefits or burdens of a servitude to the land, and may be personal or
transferable.” Id. Here, it is undisputed that the parking easement is an appurtenant
easement. Thus, the rights conferred by the parking easement are tied to the
ownership or occupancy of the Sixth Street property and are not personal to
McCarty.

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¶23 In a foreclosure action, WIS. STAT. §§ 846.10(1) and 840.10(1)(a)
clearly require a foreclosure judgment and a lis pendens to include a description of
the mortgaged premises. Neither of those statutes, however, expressly requires that
a foreclosure judgment or lis pendens include a legal description of, or any other
reference to, any easements appurtenant to the mortgaged premises. Nor is such a
requirement imposed by the plain language of WIS. STAT. § 806.01(1)(b)—which
merely states that a judgment shall specify the relief granted.

¶24 Moreover, as the Bank correctly asserts, reading the statutes Pilecky
cites as requiring a foreclosure judgment to reference easements appurtenant to the
mortgaged premises would be inconsistent with other Wisconsin statutes and case
law. WISCONSIN STAT. ch. 706 pertains to conveyances of real estate. WISCONSIN
STAT. § 706.10(3) states: “In conveyances of lands words of inheritance shall not
be necessary to create or convey a fee, and every conveyance shall pass all the estate
or interest of the grantor unless a different intent shall appear expressly or by
necessary implication in the terms of such conveyance.” (Emphasis added.) In
Borek, our supreme court held that § 706.10(3) applies to easements. Borek, 328
Wis. 2d 613, ¶¶17-23. Here, neither the foreclosure judgment nor the sheriff’s
deed—either expressly or by necessary implication—evidences an intent that the
parking easement would not pass to the Bank and would instead be retained by
McCarty. We therefore agree with the Bank that under § 706.10(3), the foreclosure
judgment and sheriff’s deed passed McCarty’s entire interest in the Sixth Street
property to the Bank, including the appurtenant rights under the parking easement.

¶25 WISCONSIN STAT. § 706.10(4), in turn, provides that a quitclaim deed
“shall pass all of the interest in or appurtenant to the land described which the
grantor could lawfully convey, but shall not warrant or imply the existence, quantity
or quality of any such interest.” (Emphasis added.) Pilecky concedes that a sheriff’s

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deed is a type of quitclaim deed. Thus, under § 706.10(4), the sheriff’s deed
transferred to the Bank all of the interest in the Sixth Street property that McCarty
could lawfully convey, which included the parking easement.

¶26 Wisconsin case law confirms that a conveyance need not expressly
mention an appurtenant easement in order to convey that easement to the grantee.
In Krepel v. Darnell, 165 Wis. 2d 235, 245, 477 N.W.2d 333 (Ct. App. 1991), this
court recognized that “[a]n easement passes by a subsequent conveyance of the
dominant estate without express mention in the conveyance.” Thereafter, in
Gojmerac v. Mahn, 2002 WI App 22, ¶25, 250 Wis. 2d 1, 640 N.W.2d 178 (2001),
we similarly stated that an appurtenant easement “follows every part of the estate
into the hands of those who purchase or inherit the estate” and “passes by a
subsequent conveyance of the dominant estate without express mention in the
conveyance.” Under these cases, the fact that the foreclosure judgment and sheriff’s
deed did not mention the parking easement, or easements in general, is immaterial.
The sheriff’s deed passed McCarty’s entire interest in the Sixth Street property to
the Bank. That interest included the parking easement, which was not personal to
McCarty but was instead appurtenant to the Sixth Street property.

¶27 Pilecky argues that the cases cited above, along with WIS. STAT.
§ 706.10(3) and (4), apply only to property that is sold or inherited and do not apply
to property that is transferred via foreclosure proceedings. Pilecky argues that in
foreclosure proceedings, WIS. STAT. §§ 846.10 and 806.01 instead define the
property that is foreclosed. We have already concluded, however, that neither
§ 846.10 nor § 806.01 requires a foreclosure judgment to include a description of
an easement appurtenant to the mortgaged premises or any other reference to such
an easement. Those statutes merely require a foreclosure judgment to contain a
description of the mortgaged premises—here, the Sixth Street property. Pursuant

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to the cases cited above, along with § 706.10(3) and (4), the sheriff’s deed in this
case conveyed both the Sixth Street property and the appurtenant parking easement
to the Bank, even though the parking easement was not specifically referenced in
the sheriff’s deed or foreclosure judgment. Pilecky fails to advance a cogent
argument as to why an appurtenant easement should be treated differently when the
property to which it is attached is transferred in the context of a foreclosure
proceeding, as opposed to when that property is transferred by sale or inheritance.

¶28 Pilecky emphasizes that both of McCarty’s mortgages expressly
stated that the mortgaged premises included “all … easements and appurtenances.”
She asserts the absence of similar language in the foreclosure judgment shows that
the parking easement was not part of the property foreclosed and that McCarty
therefore retained her right to terminate the easement.

¶29 Pilecky’s argument in this regard turns the law of appurtenant
easements on its head. As noted above, an appurtenant easement is tied to the
ownership or occupancy of a piece of property and is therefore transferred along
with that property. Borek, 328 Wis. 2d 613, ¶14. Unlike an easement in gross, an
appurtenant easement is not personal to the property’s owner. Id. Thus, in this case,
McCarty’s interest in the parking easement was not personal to her; it merely
resulted from her ownership of the Sixth Street property. Consequently, when
McCarty’s interest in the Sixth Street property was transferred to the Bank in the
foreclosure proceedings, the Bank also received her interest in the parking easement.
Contrary to Pilecky’s argument, the fact that the mortgages stated all “easements
and appurtenances” were included in the mortgaged premises did not convert the
parking easement to an easement in gross that was personal to McCarty or otherwise
grant McCarty a personal interest in the parking easement.

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¶30 Pilecky nevertheless claims that if the foreclosure judgment in this
case did foreclose her interest in the parking easement, then it amounted to a “secret
foreclosure,” which is not permitted under Wisconsin law. We reject Pilecky’s
assertion that the foreclosure of McCarty’s interest in the parking easement was in
any way “secret.” McCarty’s deed to the Sixth Street property expressly stated that
the parking easement “shall be perpetual and run with the land.” The foreclosure
judgment and sheriff’s deed both identified the Sixth Street property as the
foreclosed premises. Wisconsin case law has long held that: (1) the ownership of
an appurtenant easement follows the ownership of the dominant estate; and (2) an
easement “passes by a subsequent conveyance of the dominant estate without
express mention in the conveyance.” Krepel, 165 Wis. 2d at 245. Under these
circumstances, the fact that the sheriff’s deed transferred ownership of the parking
easement to the Bank was no secret, even though the easement was not mentioned
in either the sheriff’s deed or the foreclosure judgment.

¶31 Finally, Pilecky cites WIS. STAT. § 846.09, which states in relevant
part:

In any action for the foreclosure of a mortgage, at any time
after judgment and before a sale pursuant thereto, the
plaintiff may be granted leave to amend the summons,
complaint and all the proceedings in the action by making as
defendant any person who is a proper or necessary party
thereto. … After such person has been thus made a party
and served, and the person’s rights adjudicated upon, the
original judgment may be so amended as to bar and foreclose
the person thereby, or to make any provisions in regard to
the person’s rights and interests in like manner as it could
have done had the person been made originally a party.

Pilecky asserts the Bank had the right under this statute to amend its pleadings in
the foreclosure case to name her as a defendant, but it failed to do so.

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¶32 Pilecky’s argument regarding WIS. STAT. § 846.09 is undeveloped,
and we therefore decline to consider it. See State v. Pettit, 171 Wis. 2d 627, 646-47,
492 N.W.2d 633 (Ct. App. 1992). Pilecky does not explain why she was a “proper
or necessary party” to the foreclosure proceedings. See § 846.09. She also fails to
identify any legal interest of hers that the Bank was seeking to foreclose in those
proceedings, or any provisions as to her rights and interests that she believes the
foreclosure judgment should have been amended to include. See id. Simply put,
Pilecky has provided no basis for us to conclude that the Bank’s failure to amend
the foreclosure judgment to add her as a party prevents the Bank from now arguing
that the foreclosure judgment and sheriff’s deed included the parking easement.

¶33 For all of the foregoing reasons, we conclude the circuit court properly
determined, as a matter of law, that the foreclosure judgment foreclosed McCarty’s
interest in the parking easement. The easement therefore continued to benefit the
Sixth Street property after that property was transferred to the Bank via the sheriff’s
deed. As such, the court properly granted the Bank summary judgment on its claims
for declaratory judgment and slander of title, and on Pilecky’s counterclaim for
abuse of process.6 The court also properly denied Pilecky’s motion for
reconsideration, as Pilecky failed either to present newly discovered evidence or to
show that the court made a manifest error of law or fact in its summary judgment
ruling. See Koepsell’s Olde Popcorn Wagons, Inc. v. Koepsell’s Festival Popcorn
Wagons, Ltd., 2004 WI App 129, ¶44, 275 Wis. 2d 397, 685 N.W.2d 853.
Accordingly, we affirm.

6
Pilecky does not dispute that, if the circuit court properly determined that the parking
easement passed to the Bank via the sheriff’s deed, then it properly granted the Bank summary
judgment on both of its claims and on Pilecky’s counterclaim. Pilecky also does not challenge the
amount of damages that the court awarded to the Bank on its slander of title claim.

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By the Court.—Judgment affirmed.

Not recommended for publication in the official reports.

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