Foreclosure Junior Lienholder.

• Author: Hawkins, Derek
• Position: Heartland Credit Union v. Chocolaterian LLC

Byline: Derek Hawkins

WI Court of Appeals District IV

Case Name: Heartland Credit Union v. Chocolaterian LLC, et al.,

Case No.: 2020AP2154

Officials: Blanchard, P.J., Kloppenburg, and Fitzpatrick, JJ.

Focus: Foreclosure Junior Lienholder

Heartland Credit Union brought a mortgage foreclosure action against Chocolaterian LLC in the Dane County Circuit Court. Heartland appeals an order of the circuit court which granted the motion of Duane Beckett, a junior lienholder, to confirm a sheriff's sale of real property belonging to Chocolaterian ("the property"). Chocolaterian borrowed money from Beckett, and a mortgage to secure that loan was recorded. Later, Chocolaterian executed a promissory note with Heartland ("Note 1"), and a mortgage to secure that debt was recorded. Beckett agreed to subordinate his mortgage to Heartland's mortgage for Note 1. A few months later, Chocolaterian executed a second promissory note with Heartland ("Note 2").

Chocolaterian failed to pay its debts to Heartland. Heartland filed a complaint against Chocolaterian requesting a foreclosure judgment. The complaint also requested a money judgment against Chocolaterian for the amounts due under Note 1 and Note 2. Beckett was named as a defendant in that action because of his status as a lienholder. The circuit court entered a judgment of foreclosure on Heartland's mortgage. The circuit court also entered judgment against Chocolaterian for the amounts due under Note 1 and Note 2. At a sheriff's sale of the property, Heartland made a "credit bid" of $499,000,1 an amount greater than the amount due to Heartland under Note 1, but less than the amount due under Note 1 and Note 2 combined. Heartland moved to confirm the sale, but the circuit court concluded that Heartland was not entitled to credit bid more than the amount due under Note 1. The court allowed Heartland to withdraw its confirmation motion so that a...