Wilmington Savings Fund Society FSB v. Alisha B. Ayres

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.
June 27, 2019
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. 2018AP508 Cir. Ct. No. 2016CV2806

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

WILMINGTON SAVINGS FUND SOCIETY FSB,

PLAINTIFF-RESPONDENT,

V.

ALISHA B. AYRES AND WILLIAM R. AYRES, JR.,

DEFENDANTS-APPELLANTS.

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

Before Lundsten, P.J., Kloppenburg and Fitzpatrick, JJ.

¶1 KLOPPENBURG, J. This case arises from a foreclosure action
filed by Wilmington Savings Fund Society FSB against Alisha and William Ayres.
At issue on appeal are counterclaims asserted by the Ayreses against Wilmington,
which are premised on Wilmington’s handling of the Ayreses’ application for a
No. 2018AP508

loan modification prior to the commencement of the foreclosure action. The
Ayreses assert that Wilmington’s handling of their loan modification application
breached Wilmington’s contractual duty of good faith and fair dealing. In
addition, the Ayreses assert that Wilmington also violated the Real Estate
Settlement Procedures Act (RESPA), 12 U.S.C. § 2601-17 (2012),1 in handling the
loan modification application. Both the duty of good faith and fair dealing claim
and the RESPA claim were tried to a jury.

¶2 The questions presented on appeal are: (1) whether the circuit court
erred by overturning the jury’s verdict awarding the Ayreses damages for
Wilmington’s breach of the duty of good faith and fair dealing; (2) whether the
court erred by declining to change the jury’s negative answer to a special verdict
question asking whether Wilmington violated RESPA in its handling of the
Ayreses’ loan modification appeal; and (3) whether the court erred by allowing
Wilmington’s corporate representative to testify based on notes he had prepared
for trial summarizing Wilmington’s business records without also producing those
records.

¶3 As to the first issue, we conclude that the circuit court properly
overturned the jury’s verdict on the duty of good faith and fair dealing claim. In
doing so, we explain that the Ayreses have not shown that a contract existed
between them and Wilmington under which Wilmington had a duty of good faith
and fair dealing with respect to the Ayreses’ loan modification application. As to
the second issue, we conclude that the court correctly declined to change the jury’s
special verdict answer concerning the loan modification appeal because credible

1
All references to the United States Code are to the 2012 version unless otherwise noted.

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evidence supports the jury’s verdict. Finally, as to the third issue, we assume
without deciding that the court erred by permitting Wilmington’s representative to
testify based on his notes of Wilmington’s business records without producing
those records, but we conclude that the error was harmless. Accordingly, we
affirm.

BACKGROUND2

¶4 The Ayreses purchased a house in Sun Prairie, Wisconsin in 1999.
In 2006, the Ayreses refinanced and executed a Note and Mortgage secured by the
house, which were subsequently transferred to Wells Fargo Bank. In 2010, the
Ayreses executed a loan modification agreement with Wells Fargo. The Note,
Mortgage, and 2010 modification together have governed the Ayreses’ loan at all
times pertinent to this appeal, and we will refer to these items collectively as “the
loan.” Wells Fargo sold the loan to Wilmington on February 19, 2016, and two
different servicers serviced the loan for Wilmington thereafter.3

2
In their brief-in-chief, the Ayreses with few exceptions cite to their appendix and do
not provide citations to the record. This is a violation of an important statutory requirement. On
appeal, a party must include appropriate factual references to the record in its briefing. WIS.
STAT. RULE 809.19(1)(d)–(e). The appendix is not the record. United Rentals, Inc. v. City of
Madison, 2007 WI App 131, ¶1 n.2, 302 Wis. 2d 245, 733 N.W.2d 322. This is no minor matter.
An appendix is a helpful tool when panel judges conduct an initial review of the briefs and,
therefore, parties typically provide appendix cites, as the Ayreses do here. But, when the case is
assigned for drafting, we look directly to the record to verify factual assertions in a brief. The
absence of record cites forces us to look to the appendix to determine where to look in the record.
We warn counsel that future violations of the Rules of Appellate Procedure may result in
sanctions. See WIS. STAT. RULE 809.83(2).
3
According to the testimony at trial, a loan “servicer” is responsible for managing
disbursements and payments, escrow, tax, and insurance for the loan, as well as for assisting
clients through “loss mitigation attempts.” The parties do not dispute that Wilmington is legally
responsible for the actions of the servicers at issue in this case. The parties generally refer to
Wilmington when discussing the actions taken by the servicers with respect to the loan after
February 19, 2016, and we do the same.

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¶5 The Ayreses stopped making the monthly payments required under
the terms of the loan in June 2015. The Ayreses applied for a loan modification in
2016. In response to the Ayreses’ loan modification application, Wilmington
offered a “Trial Modification Plan,” which provided that if the Ayreses made four
specified monthly payments and complied with certain other conditions,
Wilmington would consider a permanent loan modification. Shortly after
receiving the Trial Modification Plan, the Ayreses sent Wilmington an appeal
form stating that they could not afford the monthly payments proposed in the Trial
Modification Plan. Wilmington ultimately rejected the Ayreses’ loan modification
application and appeal in August 2016. We review pertinent details relating to the
Ayreses’ loan modification application and appeal in the discussion section that
follows.

¶6 Wilmington filed the present foreclosure action in October 2016.
The Ayreses asserted multiple defenses to the foreclosure and multiple
counterclaims. Relevant to this appeal, the Ayreses’ counterclaims alleged that
Wilmington’s handling of the Ayreses’ loan modification application and appeal
violated both RESPA and Wilmington’s contractual duty of good faith and fair
dealing.

¶7 The circuit court entered a judgment of foreclosure in favor of
Wilmington. The court held a jury trial on the counterclaims, and the jury
returned the following special verdict:4

QUESTION NO. 1: Did Wilmington fail to exercise
reasonable diligence in obtaining documents and
information from the Ayres[es] to complete their

4
Question Nos. 1 through 4 relate to violations under RESPA.

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application for loan modification in and after February
2016?

Answer: Yes

QUESTION NO. 2: Did Wilmington fail to provide
prompt notice to the Ayres[es] that their application was
incomplete?

Answer: No

QUESTION NO. 3: Did Wilmington, within 30 days of the
application being complete, fail to review the Ayres[es’]
application and notify them of any loss mitigation option
they would be offered?

Answer: No

QUESTION NO. 4: Did Wilmington fail to process the
Ayres[es’] appeal according to the applicable provisions of
RESPA?

Answer: No

….

QUESTION NO. 7: Did Wilmington breach its duty of
good faith and fair dealing with respect to the Ayres[es]?

Answer: Yes

The jury awarded $15,000 in damages for Wilmington’s failure to diligently
obtain documents and information (Question No. 1) and awarded $75,000 in
damages on the claim of breach of the duty of good faith and fair dealing
(Question No. 7).

¶8 In ruling on the parties’ various post-verdict motions, the circuit
court overturned the jury’s verdict determining that Wilmington breached its duty
of good faith and fair dealing, and left unchanged the jury’s answers to the
remaining special verdict questions. The Ayreses appeal.

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DISCUSSION

¶9 The Ayreses raise three issues on appeal. We address and reject
each of the Ayreses’ arguments in turn.

I. Breach of the Duty of Good Faith and Fair Dealing

¶10 The Ayreses argue that Wilmington breached its contractual duty of
good faith and fair dealing (which we will refer to as the duty of good faith) in its
handling of the Ayreses’ loan modification application by: (1) making conflicting
and repetitive requests regarding documentation to support their loan modification
application; (2) offering unaffordable Trial Modification Plan terms in response to
their application; and (3) giving the Ayreses only three days to accept the Trial
Modification Plan terms.5 As we explain, the Ayreses’ argument fails because
they do not establish a prerequisite for their breach of the duty of good faith claim,
namely, a contract from which that duty arises.

¶11 We first summarize the applicable legal principles and standard of
review. We then explain that the Ayreses have failed to show that Wilmington
had a contractual duty to exercise good faith in handling the Ayreses’ loan
modification application, and we conclude that the circuit court properly

5
The Ayreses also appear to assert that Wilmington breached its duty of good faith by
refusing to accept payments from the Ayreses while the loan modification application was
ongoing. However, the Ayreses do not develop a supporting argument as to why this action
breached Wilmington’s duty of good faith, nor do they in their reply brief respond to
Wilmington’s counterargument that the terms of the loan explicitly permitted Wilmington to
“accelerate” the loan and refuse to accept monthly payments if the Ayreses fell behind on their
monthly payments. Accordingly, we do not consider this assertion further. See Fischer v.
Wisconsin Patients Comp. Fund, 2002 WI App 192, ¶1 n.1, 256 Wis. 2d 848, 650 N.W.2d 75
(“An argument asserted by a respondent on appeal and not disputed by the appellant in the reply
brief is taken as admitted.”).

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overturned the jury’s verdict on the Ayreses’ breach of the duty of good faith
claim.

A. Applicable Law and Standard of Review

¶12 The duty of good faith is not amenable to precise definition, but
previous Wisconsin courts have summarized it thus:

Parties to a contract have a duty of good faith to each
other.… [I]t may be said that contracts impose on the
parties thereto a duty to do everything necessary to carry
them out.... Moreover, there is an implied undertaking in
every contract on the part of each party that he [or she] will
not intentionally and purposely do anything to prevent the
other party from carrying out his [or her] part of the
agreement, or do anything which will have the effect of
destroying or injuring the right of the other party to receive
the fruits of the contract.

Metropolitan Ventures, LLC v. GEA Assocs., 2006 WI 71, ¶35, 291 Wis. 2d 393,
717 N.W.2d 58, opinion clarified on denial of reconsideration, 2007 WI 23, 299
Wis. 2d 174, 727 N.W.2d 502 (citations and quoted source omitted).

¶13 In order to assert that Wilmington breached its contractual duty of
good faith, the Ayreses must establish the existence of a contract between them
and Wilmington from which Wilmington’s obligation to process the Ayreses’ loan
modification application in good faith arose; in other words, the contractual duty
of good faith cannot be breached in the absence of a valid contract between the
parties. See id., ¶¶35-36 (“[C]ontracts impose on the parties” a duty of good faith,
and “[t]he duty of good faith arises because parties to a contract, once executed,
have entered into a cooperative relationship.”); see also Beidel v. Sideline
Software, Inc., 2013 WI 56, ¶27, 348 Wis. 2d 360, 842 N.W.2d 240 (“Every
contract implies good faith and fair dealing between the parties to it.” (quoting
Chayka v. Santini, 47 Wis. 2d 102, 107 n.7, 176 N.W.2d 561 (1970))); Hauer v.

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Union State Bank of Wautoma, 192 Wis. 2d 576, 596-97, 532 N.W.2d 456 (Ct.
App. 1995) (statute requiring good faith “applies only to the performance or
enforcement of a contract, it does not impose a duty of good faith in the
negotiation and formation of contracts”). The party claiming breach of a
contractual duty “must establish the existence of the contract” from which the duty
arises. VanHierden v. Swelstad, 2010 WI App 16, ¶11, 323 Wis. 2d 267, 779
N.W.2d 441.

¶14 As elaborated below, the Ayreses argue that a contract existed
between them and Wilmington from which Wilmington had a duty to process their
loan modification application in good faith. In evaluating this argument, our
standard of review is twofold. We will not overturn a jury’s answer to a special
verdict question based on an error of fact if any credible evidence supports the
verdict. State v. Abbott Labs., 2012 WI 62, ¶27, 341 Wis. 2d 510, 816 N.W.2d
145. Thus, in the first part of our analysis, we review whether the facts that the
Ayreses assert gave rise to the purported contract are supported by any credible
evidence, and we explain why they do not.

¶15 We then proceed to the second part of our analysis, to fully respond
to the parties’ arguments, and we examine whether the facts asserted by the
Ayreses, even if supported by credible evidence, are sufficient to show the
existence of a contract. This presents a question of law that we review de novo.
See Piaskoski & Assocs. v. Ricciardi, 2004 WI App 152, ¶7, 275 Wis. 2d 650, 686
N.W.2d 675 (“Where the material facts are undisputed, … the existence … of a
contract [is] a question of law which we decide de novo.”). We explain why we
reject the Ayreses’ argument that we should answer this question in the
affirmative.

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B. Whether Wilmington Had a Duty of Good Faith

¶16 Here, the Ayreses concede that Wilmington had no obligation under
the terms of the contract comprising the loan to process the loan modification
application in any particular way. Instead, they argue that the trial evidence
supported a jury finding that Wilmington had a contractual duty to process their
loan modification application in good faith because “Wilmington suggested [that]
they submit [a loan modification application]” and “the Ayreses took
[Wilmington] up on the proposition.” That is, according to the Ayreses, these two
events—the solicitation to apply, and the attempt to apply—created the contract
from which the duty of good faith arose.

¶17 There are two problems with the Ayreses’ argument. The first
problem is evidentiary. Nowhere do the Ayreses cite to trial evidence supporting a
finding that Wilmington “suggested” that the Ayreses apply for a modification, or
that Wilmington in any way initiated a loan modification process. This lack of
supporting citations to trial evidence alone defeats the Ayreses’ argument. See
Jensen v. McPherson, 2004 WI App 145, ¶6 n.4, 275 Wis. 2d 604, 685 N.W.2d
603 (“It is not this court’s responsibility to sift and glean the record in extenso to
find facts supporting [the party’s] argument.”); State v. McMorris, 2007 WI App
231, ¶30, 306 Wis. 2d 79, 742 N.W.2d 322 (court of appeals may “choose not to
consider … arguments that lack proper citations to the record”).

¶18 Moreover, apart from the Ayreses’ failure to point to trial evidence,
our review of the trial record reveals no evidence indicating that Wilmington
“suggested” or otherwise solicited the Ayreses to apply for a loan modification.
Alisha Ayres testified only that she believed Wilmington acquired the loan in
February 2016, and that after Wilmington had acquired the loan, the Ayreses

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“appl[ied] for a new loan modification with Wilmington.” Neither Alisha Ayres’s
testimony, nor any of the other trial testimony or exhibits, indicate that
Wilmington solicited the Ayreses to apply for a loan modification. Indeed, to the
extent the trial evidence provides any insight, it suggests that it was the Ayreses,
not Wilmington, who initiated discussion of the loan modification. For instance,
the earliest correspondence from Wilmington to the Ayreses that was admitted
into evidence was a letter that Alisha Ayres testified she received in late March,
2016, which stated that Wilmington was “follow[ing] up … on [the Ayreses’]
recent request for loan assistance.” Alisha Ayres testified that she received the
letter “after submitting the documents for loan modification.” A reasonable
inference from this evidence is that the Ayreses applied for a loan modification,
and Wilmington responded. Thus, the Ayreses fail to establish the factual basis
for the premise of their contractual duty of good faith argument.

¶19 While our analysis could stop here, in light of the parties’ extensive
briefing on the issue and for the sake of thoroughness, we briefly address the
second problem with the Ayreses’ argument, which is that they do not cite any
Wisconsin authorities that support their argument that the two alleged events—
Wilmington’s solicitation to apply for a loan modification, and the Ayreses’
subsequent attempt to apply—create a contract.

¶20 As an initial point, we note that the Ayreses have not developed any
argument that the two events they rely on satisfy the elements of contract
formation. See, e.g., Piaskoski & Assocs., 275 Wis. 2d 650, ¶7 (“A valid contract
requires an offer, acceptance and consideration.”). As explained above, in the
absence of a valid contract between the Ayreses and Wilmington, Wilmington
could have no duty of good faith to process the Ayreses’ loan modification
application in any particular way. See, e.g., Metropolitan Ventures, 291 Wis. 2d

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393, ¶¶35-36 (“contracts impose on the parties” a duty of good faith (emphasis
added)). Thus, because the Ayreses have not explained how the two events they
rely on establish a contract under the relevant standard, they have failed off the bat
to show that Wilmington had any duty of good faith with respect to their loan
modification application.

¶21 The Ayreses attempt to circumvent this defect in their argument by
citing numerous cases which, they assert, support their argument that the duty of
good faith “applies to [loan] modification efforts.” However, with one exception,
the cases cited by the Ayreses are all lower federal court decisions, most of which
are unpublished. Thus, they do not alter the analysis of the Wisconsin law
discussed above, which, as we have explained, requires the Ayreses to show the
existence of a contract with Wilmington in order to claim that Wilmington
breached its duty of good faith. See City of Weyauwega v. Wisconsin Cent. Ltd.,
2018 WI App 65, ¶12 n.4, 384 Wis. 2d 382, 919 N.W.2d 609 (federal district and
circuit court decisions do not bind us). In any event, none of the cases support the
specific proposition, essential to the Ayreses’ argument, that the twin events of a
solicitation to apply for a loan modification and a subsequent attempt to apply
create a contract.

¶22 The sole Wisconsin authority cited by the Ayreses is Wisconsin Nat.
Gas Co. v. Gabe’s Constr. Co., 220 Wis. 2d 14, 582 N.W.2d 118 (Ct. App. 1998).
In that case, Wisconsin Natural Gas was deemed to have breached its contractual
duty of good faith when it failed to timely alert Gabe’s Construction that it
intended to make a claim under the indemnification clause of the contract between
the two companies. Id. at 16-19. We held that, although the contract terms did
not explicitly require Wisconsin Natural Gas to give notice of the claim, because
Wisconsin Natural Gas had on previous occasions done so, and because it had in

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fact assured Gabe’s Construction that it did not intend to make a claim in the case
at hand, it had breached its duty of good faith by failing to give timely notice. Id.
at 21-24.

¶23 Wisconsin Natural Gas does not help the Ayreses for at least two
reasons. First, in that case, the duty of good faith arose from the original contract
between the parties, and was not the product of a new contract formed during the
modification process. See id. at 24 (analyzing whether duty of good faith was
breached under the “indemnification clause of the contract”). In contrast, the
Ayreses have conceded that the original contract here does not impose a duty of
good faith on Wilmington with respect to the loan modification application.
Second, Wisconsin Natural Gas says nothing about whether a contract may be
formed by a solicitation to apply for a contract modification coupled with an
attempt to modify the contract. It thus does not support the Ayreses’ premise that
a new contract was formed during the modification application process here.

¶24 Because the Ayreses have not provided any legal authority
supporting the proposition that a solicitation to apply for a loan modification
coupled with an attempt to apply create a contract, we do not consider their
argument to that effect any further.

¶25 In sum, the Ayreses’ argument that a new contract was formed when
Wilmington “suggested” that the Ayreses apply for a loan modification and they
subsequently attempted to apply for a loan modification fails. It follows that the
circuit court properly overturned the jury’s answer to the good faith and fair
dealing question.

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II. Special Verdict Question Number Four

¶26 The Ayreses next argue that the circuit court erred by declining to
change the jury’s answer to special verdict question number four. The standard to
be applied is whether any credible evidence supports the jury’s verdict. See
Foseid v. State Bank of Cross Plains, 197 Wis. 2d 772, 787, 541 N.W.2d 203 (Ct.
App. 1995) (any-credible-evidence standard applies to motions to change the
jury’s answer to a special verdict question). Moreover, where, as here, the circuit
court has approved the jury’s verdict on motions after the verdict, we give even
greater deference to the verdict and will not overturn it unless “there is such a
complete failure of proof that the verdict must be based on speculation.”
Kuklinski v. Rodriguez, 203 Wis. 2d 324, 331, 552 N.W.2d 869 (Ct. App. 1996).

¶27 Special Verdict Question No. 4 asked the jury to answer whether
Wilmington failed “to process the Ayres[es]’ appeal according to the applicable
provisions of RESPA.” RESPA generally provides that borrowers have a right to
appeal a “determination to deny a … loss mitigation application.” 12 C.F.R.
§ 1024.41(h) (2019);6 see also 12 C.F.R. § 1024.1 (implementing RESPA).
RESPA also imposes certain obligations on lenders in handling such an appeal.
See 12 C.F.R. § 1024.41(h)(3)–(4). We need not decide whether these RESPA
requirements were met in this circumstance because we conclude that the RESPA
requirements do not apply to the Ayreses’ appeal.

¶28 The parties agree that the RESPA requirements would not apply if
the Ayreses appealed the terms of the Trial Modification Plan, because the Trial

6
All references to the Code of Federal Regulations are to the 2019 version unless
otherwise noted.

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No. 2018AP508

Modification Plan was not a “determination to deny” the Ayreses’ application, but
was instead an approval of the Ayreses’ application, albeit on terms the Ayreses
considered too stringent. See 12 C.F.R. § 1024.41(h). On the other hand, the
parties also agree that these RESPA requirements would apply if the Ayreses
appealed a different determination from Wilmington, which we will refer to as
“the HAMP denial” and which informed the Ayreses that Wilmington had denied
them a “HAMP modification,” because that was a “determination to deny” the
Ayreses’ application.

¶29 The narrow question presented, therefore, is whether the Ayreses
appealed the terms of the Trial Modification Plan or the HAMP denial.
Accordingly, we review the trial evidence to determine if any credible evidence
supports a finding that the Ayreses appealed the terms of the Trial Modification
Plan.

¶30 The trial evidence provides the following relevant background.
Wilmington sent the Ayreses two separate correspondences dated August 1, 2016.
The first correspondence stated that Wilmington had approved the Ayreses for a
“Standard Modification” of the loan, but had denied the Ayreses a “HAMP
Modification.” This HAMP denial informed the Ayreses that they had a right to
appeal the decision and attached a form entitled “Loan Modification Appeal
Form.” The second correspondence was the Trial Modification Plan, mentioned
above, which, to repeat, provided that Wilmington would consider the Ayreses for
a permanent loan modification if they made four monthly payments and met other
requirements.

¶31 The Ayreses sent Wilmington a completed Loan Modification
Appeal Form dated August 11, 2016. On the appeal form, the Ayreses wrote that

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they were “writing to appeal the loan modification plan that is attached to this
letter” and that they believed they would not be able to afford the monthly
payments proposed in the Trial Modification Plan. The Ayreses attached only the
Trial Modification Plan to the Appeal Form. In a letter dated August 30, 2016,
Wilmington informed the Ayreses that it did not approve their “request for loan
assistance” because they had “refused [the] Modification Terms Offered.”

¶32 We conclude that there is ample evidence in the trial record to
support a finding that the Ayreses appealed only the terms of the Trial
Modification Plan. For instance, as stated above, the appeal form submitted by the
Ayreses stated that they were “writing to appeal the loan modification plan that is
attached to this letter” and that they believed they would not be able to afford the
monthly payments proposed in the Trial Modification Plan. The Ayreses attached
the Trial Modification Plan, not the HAMP denial, to that appeal form. This alone
suffices to establish the any-credible-evidence required to sustain the jury’s
verdict.

¶33 The Ayreses appear to make two arguments to the contrary, both of
which we reject. First, the Ayreses point to other evidence in the record, such as
Alisha Ayres’s trial testimony, which the Ayreses assert establishes that they
believed they were appealing the HAMP denial. However, whatever the merits or
relative weight of this evidence, it does not alter our conclusion that there was
credible evidence to sustain the jury’s verdict. Thus, the Ayreses’ reliance on
other trial evidence fails. See McGowan v. Story, 70 Wis. 2d 189, 203, 234
N.W.2d 325 (1975) (“If there is any credible evidence to support a jury’s verdict,
irrespective of the weight of evidence to the contrary, it is the obligation of this
court to sustain the jury’s finding.”).

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¶34 Second, the Ayreses cite to a string of authorities, including Catalan
v. GMAC Mortg. Corp., 629 F.3d 676 (7th Cir. 2011), and Medrano v. Flagstar
Bank, FSB, 704 F.3d 661 (9th Cir. 2012), suggesting that RESPA should be
construed broadly in favor of borrowers. The Ayreses assert that the evidence
shows they intended to appeal the HAMP denial, and that requiring them to
specifically state that they were appealing the HAMP denial therefore “runs
counter to the purposes” of RESPA. This argument again fails to come to grips
with our standard of review. Credible evidence supports a finding that the Ayreses
intended to appeal only the monthly payment amount of the Trial Modification
Plan. For example, there is the language of the written application form itself,
which suggests the Ayreses intended only to appeal the monthly payment amount
of the Trial Modification Plan. There is also Alisha Ayres’s own testimony, in
which she stated, “I appealed the … loan trial modification plan.” Although
Alisha Ayres later testified that she was appealing “everything,” her testimony as a
whole permits an inference that the Ayreses did not intend to appeal the HAMP
denial at all. Thus, regardless of the asserted RESPA policy favoring borrowers,
there is credible evidence here suggesting that the Ayreses did not intend to appeal
the HAMP denial.

¶35 In sum, there is credible evidence to sustain the jury’s answer to
special verdict question number four.

III. Testimony by Wilmington’s Corporate Representative

¶36 Finally, the Ayreses argue that the circuit court erred by permitting
Peter Joslyn, Wilmington’s corporate representative, to testify based on notes he
had prepared for trial summarizing Wilmington’s business records without

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producing those records.7 The pertinent background to this argument is as
follows.

¶37 Joslyn testified that he reviewed all of Wilmington’s records of the
Ayreses’ loan prior to trial, including the records of all written and telephone
correspondence. In preparation for trial, he prepared a “scratch sheet” of notes
from those records, which he created to help him remember the dates, times, and
contents of different communications. Wilmington provided the Ayreses with a
copy of Joslyn’s notes. During the trial, Joslyn used the notes to refresh his
memory and answer questions.

¶38 The Ayreses objected on the grounds that Joslyn was not testifying
from personal knowledge and that his testimony was hearsay. Additionally, the
Ayreses argued that they were entitled to view the documents Joslyn had used to
prepare the notes under WIS. STAT. § 906.12 (2017-18),8 which provides, “If a
witness uses a writing to refresh the witness’s memory for the purpose of
testifying, … an adverse party is entitled to have it produced at the hearing, to
inspect it, to cross-examine the witness thereon, and to introduce in evidence those
portions which relate to the testimony of the witness.” The circuit court declined
to order Wilmington to produce the records Joslyn had used to prepare his notes.

¶39 On appeal, the Ayreses renew their argument that Wilmington was
required to produce the records under WIS. STAT. § 906.12, and argue that the

7
While Joslyn was an employee of Wilmington’s loan servicer, the parties treat his
testimony and the records on which he relied as relating to Wilmington, and we follow their lead.
8
All references to the Wisconsin statutes are to the 2017-18 version unless otherwise
noted.

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circuit court’s failure to order production means we should remand for a new trial
on the counterclaims.

¶40 We assume, without deciding, that the circuit court erred by not
ordering Wilmington to produce the records Joslyn used to prepare the notes.
However, we agree with Wilmington that the error was harmless.

¶41 “[A]n erroneous exercise of discretion in admitting or excluding
evidence does not necessarily lead to a new trial. The appellate court must
conduct a harmless error analysis to determine whether the error ‘affected the
substantial rights of the party.’ If the error did not affect the substantial rights of
the party, the error is considered harmless.” Martindale v. Ripp, 2001 WI 113,
¶30, 246 Wis. 2d 67, 629 N.W.2d 698 (quoted source omitted); see also WIS.
STAT. § 805.18(2) (“No … new trial [shall be] granted in any action or proceeding
on the ground of … the improper admission of evidence … unless … the error
complained of has affected the substantial rights of the party seeking to … secure
a new trial.”); see also WIS. STAT. § 901.03(1) (error may not be predicated upon a
ruling which admits or excludes evidence unless a substantial right of the party is
affected). An error does not “affect the substantial rights” of a party unless there
is a “reasonable possibility” that the error contributed to the outcome of the
proceeding at issue. Martindale, 246 Wis. 2d 67, ¶32.

¶42 Here, the Ayreses do not clearly identify the individual records they
believe should have been produced pursuant to WIS. STAT. § 906.12. However,
the Ayreses identify portions of Joslyn’s testimony that they believe were based on
his review of Wilmington’s records and were detrimental to their trial arguments,
and we interpret their argument to be that Wilmington should have produced the
records underlying those portions of testimony. Accordingly, we direct our

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No. 2018AP508

harmless error analysis at the circuit court’s failure to order production of the
records underlying the portions of Joslyn’s testimony identified by the Ayreses.

¶43 As far as we can glean from the briefing, the records the Ayreses
assert should have been produced fall into three categories. We address each.

¶44 The first category of records the Ayreses assert should have been
produced relates to the process by which Wilmington arrived at the terms of the
Trial Modification Plan. For instance, the Ayreses point to Joslyn’s testimony
related to how the proposal’s first payment date was decided. As stated, we
interpret their argument to be that the records underlying this testimony should
have been produced.

¶45 However, the terms of the Trial Modification Plan are not relevant to
any of the claims on which the Ayreses did not prevail. That is, the terms of the
proposal—including the date of the first payment due under it—are not relevant to
the determination of any of the special verdict questions which the jury answered
“no.” Therefore, failure to produce records related to the creation of those terms
had no bearing on the outcome of the Ayreses’ claims.

¶46 The second category of records the Ayreses assert should have been
produced relates to the documentation Wilmington received from the Ayreses.
The Ayreses point to a portion of Joslyn’s testimony in which he stated that the
Ayreses had sent proof of homeowners’ insurance in June 2016. Additionally, the
Ayreses point to testimony concerning Wilmington’s internal communications
related to the documents Wilmington had received from them. The Ayreses argue
that the records on which this testimony was based “would have helped establish
exactly what documents were received, and when.”

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No. 2018AP508

¶47 However, the only claim to which this testimony was relevant is the
claim that Wilmington failed to diligently obtain documents from the Ayreses—a
claim on which the Ayreses won. Thus, the failure to produce the documents on
which Joslyn based this testimony did not affect the outcome of the Ayreses’
claims.

¶48 The final category of records the Ayreses assert should have been
produced relates to certain phone calls between the Ayreses and Wilmington in
August 2016. Specifically, the Ayreses point to Joslyn’s testimony that a
Wilmington employee had called the Ayreses on August 4, August 15, and August
29 to discuss the Trial Modification Plan. Joslyn testified that, during these phone
calls, the Ayreses expressed concern about the affordability of the plan. Further,
he testified that in the phone call of August 29, a Wilmington employee advised
the Ayreses that they could not appeal the plan.

¶49 The Ayreses imply that Wilmington’s advice in the August 29 phone
call is relevant to the determination of special verdict question number four—
which asks whether Wilmington handled the Ayreses’ appeal in accordance with
RESPA. However, Joslyn testified that nowhere in the records of the phone calls
did the Ayreses state that they intended to appeal the HAMP denial, and the
Ayreses point to no evidence suggesting otherwise. There is therefore no basis to
suppose that the records of the August 29 phone call would have revealed an intent
from the Ayreses to appeal the HAMP denial, as opposed to the Trial Modification
Plan. As a result, the records would have shed no additional light on the question
of whether Wilmington properly processed the Ayreses’ appeal, and the failure to
produce those records is harmless.

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No. 2018AP508

¶50 In sum, any error by the circuit court in failing to order production of
the documents on which Joslyn based his testimony was harmless.

CONCLUSION

¶51 We conclude that the circuit court properly overturned the jury’s
verdict on the Ayreses’ duty of good faith and fair dealing claim because the
Ayreses have not shown the existence of a contract under which Wilmington had a
duty to process their loan modification application in good faith. We also
conclude that because credible evidence supports the jury’s verdict concerning the
loan modification appeal, the court properly declined to change the jury’s verdict.
Finally, we conclude that any error by the court in failing to order the production
of Wilmington’s business records was harmless.

¶52 Therefore, we affirm.

By the Court.—Judgment affirmed.

Not recommended for publication in the official reports.

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