Wisconsin Circuit Court Grants Summary Judgment In Favor Of Lender Rejecting Borrowers Standing And Laches Defenses


Earlier this month a circuit court in Milwaukee County granted Wilmington Savings Fund Society’s (“Wilmington”) summary judgment motion which sought to enforce a note[i] executed by Nickolas and Wendi Zagorski (“the Zagorskis”). Wilmington Savings Fund Society v. Zagorski, Case No. 23-CV-4685 (Wis. Cir. Ct. Branch 44, May 15, 2024). The Zagorskis took a loan out in 1999 and signed a $15,000 note (“the Note”) which was secured by a mortgage on Zagorskis’ real property located in Milwaukee County.[ii]

In 2009 the Zagorskis stopped making payments on the Note. As a result, the lender filed suit to enforce the Note in 2011 and 2021. The court dismissed both of those cases without prejudice and then Wilmington filed a third action to enforce the note in June 2023. In response, the Zagorskis raised several defenses including lack of standing, laches and statute of limitations. The matter proceeded to summary judgment where the court pointed out that the Zagorskis failed to file an opposing affidavit or response to Wilmington’s motion. Notwithstanding, the court allowed the Zagorskis, who were proceeding pro se, to rely on arguments made in a previously filed motion to dismiss.

The court concluded that Wilmington sufficiently pled and proved its claim to enforce the Note by presenting the Note and an affidavit attesting to Wilmington’s physical possession of the original Note.[iii] The Note proved the terms of the indebtedness and the affidavit proved that Wilmington was a holder and entitled to enforce the Note under Wis. Stat. § 403.301[iv]. The Zagorskis countered that they were not obliged to pay the Note under Wis. Stat. § 403.305(3) because Wilmington lost the allonge and the assignment of mortgage.[v] The court rejected the Zagorskis’ argument and clarified that § 403.305(3) pertained to lost instruments, i.e., the note, not lost allonges or assignments. Without any discussion of whether the Note was bearer paper, the court refused to apply § 403.305(3) and found Wilmington had standing as the Note holder.

Likewise, the court rejected the Zagorskis’ laches and statute of limitations defenses. As to laches, the court explained that the Zagorskis carried the burden of proving the three elements[vi] of laches and that application of the equitable defense was in the “sound discretion of the court.”[vii] The court concluded that the Zagorskis could not satisfy the second element of laches because they could not prove a lack of knowledge that Wilmington would bring a claim against them. The court explained that the Zagorskis’ mistaken belief that Wilmington wrote off the debt did “not equate to” a lack of knowledge that the note holder would bring a foreclosure action.

As to the statute of limitations, the court rejected Zagorskis’ argument that the 6-year statute of limitations, pertaining to actions on a “contract, obligation, or liability,” applied to a foreclosure action. The court explained that argument “has been soundly and repeatedly rejected by Wisconsin courts since at least 1866.”[viii] The court granted summary judgment concluding that Wilmington brought its claim timely under the 30-year statute of limitations “outlined in § 893.33(2) and (5)…” Since this decision was rendered by a circuit court it is of no precedential value; however, it suggests a good path forward for lenders enforcing claims in the circuit courts of Wisconsin.

[i] Although the opinion does not specifically indicate that the bank sought to foreclose its mortgage, the court’s discussion and application of Wis. Stat. § 893.33 (30-year statute of limitations on mortgage foreclosures) suggests Wilmington sought to enforce the note and foreclose the mortgage. Zagorski, at 8.

[ii] Zagorski, at 2. All future references to this case are to this page until indicated otherwise.

[iii] Zagorski, at 5-6.

[iv] Wis. Stat. § 403.301 states in pertinent part that a “ ‘[p]erson entitled to enforce’ an instrument means the holder of the instrument…”

[v] Zagorski, at 7. All future references to this case are to this page until indicated otherwise.

[vi] For the doctrine of laches to apply, the following three elements must be proved: “(1) a party unreasonably delays in bringing a claim; (2) a second party lacks knowledge that the first party would raise that claim; and (3) the second party is prejudiced by the delay.” Zagorski, at 7 (quoting Wisconsin Small Businesses United, Inc. v. Brennan, 2020 WI 69, §11, 393 Wis. 2d 308, 317, 946 N.W. 2d 101, 106.

[vii] Zagorski, at 7-8. All future references to this case are to this page until indicated otherwise.

[viii] Zagorski, at 8 quoting Bank of New York Mellon v. Klomsten, 2018 WI App 25, ¶15, 381 Wis. 2d 218, 911 N.W. 2d 364.