Seelen v. Couillard (In re Couillard)

486 B.R. 481, 2012 WL 6924392, 2012 Bankr. LEXIS 6025
Procedural entryThis page is a short order in Seelen v. Couillard (In re Couillard). Read the opinion of the Court — 486 B.R. 466
United States Bankruptcy Court, W.D. Wisconsin·Decided December 6, 2012·No. Bankruptcy No. 12-11610-7; Adversary No. 12-132·Published

Opinion

DECISION

THOMAS S. UTSCHIG, Bankruptcy Judge.

On November 9, 2012, the Court entered an order denying the motion for summary judgment filed by Bank of America, N.A. The bank has filed a motion for reconsideration.1 Fed. R. Bankr.P. 9024 incorporates Fed.R.Civ.P. 60(b) and permits a party to request relief from a final judgment, order, or proceeding due to “mistake” or “any other reason that justifies relief.” Fed. R. Bankr.P. 7054(a) directs that Fed.R.Civ.P. 54(b) is applicable in adversary proceedings. That rule indicates that a decision which “adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties ... may be revised at any time before the entry of a judgment adjudicating all the claims.”

While the bank submitted its motion in the alternative, the November 9 order is properly regarded as interlocutory in nature and thus subject to reconsideration under Rule 54(b).- As the bank notes, the standard for review of the motion is what “justice requires.” A motion to reconsider is not a place to revisit or recast prior argument, but to identify something new. Reconsideration is appropriate where “the Court has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension.” See Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir.1990).

The bank submits that reconsideration is appropriate because the Court’s decision “radically misinterprets” Wisconsin law concerning land rights. This would appear to be an inappropriate basis for reconsideration, insofar as it suggests that the Court’s reasoning was in error. Indeed, other than a scholarly recitation of the history of Wisconsin’s grantor-grantee index, much of the bank’s brief is simply a restatement of its prior arguments regarding the recording of interests in land and a reflection of its disagreement with the Court’s legal conclusions.2

[484]*484Put simply, the Court did not misunderstand the parties, their arguments, or the issues before it. The chapter 7 trustee filed this adversary proceeding to avoid the bank’s mortgage. The trustee’s complaint alleged that the original mortgage did not contain the legal descriptions of two parcels of land and the subsequent affidavit of correction which purported to add those parcels to the mortgage was not signed by the debtors (as grantors) in conformity with Wisconsin law. The trustee’s contention was that the documents did not provide constructive notice of the bank’s interest in the parcels and that by exercising the rights of a subsequent purchaser for value under state law, he could avoid the mortgage for the benefit of the bankruptcy estate under 11 U.S.C. § 544(a)(3).

The bank’s motion for summary judgment had three components. First, the bank argued that the original mortgage was valid against subsequent purchasers because it satisfied the Wisconsin statute of frauds and identified the property with “reasonable certainty.” Next, the bank argued that the affidavit of correction provided subsequent purchasers with constructive notice of its mortgage. And finally, the bank argued that it was entitled to an equitable lien (or equitable subrogation). The Court ruled against the bank on these points. The bank’s brief in support of its motion for reconsideration makes sweeping statements about the possible negative implications of the Court’s ruling, but ultimately returns to the same essential contentions.

The bank has styled its brief as supporting its reconsideration request and as a response to the trustee’s oral motion.3 In this context, the Court adopts the findings and conclusions from the prior decision and will address certain points raised by the bank. The Court will not revisit each issue in toto, but will restrict this ruling to a few additional observations. Taken together, these decisions shall constitute the Court’s findings of fact and conclusions of law pursuant to Fed. R. Bankr.P. 7052.

First, the Court did not intend to modify (radically or otherwise) the settled law of Wisconsin. The Court sought to apply that law to the facts of this particular case. Admittedly, the prior decision indicates that the mortgage’s appearance in the grantor-grantee index was ultimately “irrelevant,” a characterization that the bank [485]*485interprets as a broad repudiation of any notice which might be imparted by the grantor-grantee index. The relevance at issue, however, involved the specifics of this case and nothing more.

The grantor-grantee index is not legally irrelevant, and it imparts notice of what it contains. See Wis. Stat. § 706.09(4) (the chain of title includes all instruments discoverable by a search of “the public records affecting real estate in the offices of the register of deeds”). But when a document does not appear in the tract index because it fails to contain enough information to identify the tract in question as required by the recording statutes, the document’s appearance in the grantor-grantee index cannot alter the outcome (i.e., the conclusion that a subsequent purchaser lacked constructive notice of the interest) because a search of that index would only reveal the defective document. Kordecki v. Rizzo, 106 Wis.2d 713, 317 N.W.2d 479, 482 (Wis.1982) (in determining rights under the recording statute, the question is “what the record shows”).

In this case, the mortgage did not reference the two parcels by either legal description or parcel identification number, and as such would only provide constructive notice of an interest in the single parcel which was correctly referenced. Wis. Stat. § 706.08(l)(a) (a conveyance which is “not recorded as provided by law shall be void as against any subsequent purchaser”); § 706.09(l)(b) (a subsequent purchaser’s interest is superior to one created by a conveyance which does not provide a “definite reference” to the “real estate affected”). As the Court’s prior decision notes, what the bank originally recorded was not sufficient to meet the recording requirements. See Wis. Stat. § 706.05(2). The mortgage’s appearance in the grantor-grantee index was—and is—factually

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Seelen v. Couillard (In re Couillard), 486 B.R. 481, 2012 WL 6924392, 2012 Bankr. LEXIS 6025 (Wis. 2012).

486 B.R. 481 (Seelen v. Couillard (In re Couillard)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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