1) What I mean, if we win, does the bank have to start the foreclosure all over again, since his case was built out on the basis of default on a business loan rather that a personal loan, at least as far as the house secured loan was concerned?
A: The answer depends on the pleadings of your attorney. The complaint contains a prayer for relief ("Wherefore, plaintiff prays for...."). If that prayer includes a request that the court set aside/void the transfer of title in the foreclosure sale, and the court agrees, then the bank would have to begin again. Otherwise, your remedy would only be money damages -- not title to the property.
2) If we win would not that mean that the bank can not foreclose based on his petition as it stands now, as a business loan default at least as far as the house secured loan is concerned?
A: Again, it depends on what your attorney has pleaded in the complaint as relief for your claim. You'll have to review the complaint, and see if your attorney has requested that the foreclosure sale be set aside/voided.
Also, I really did not understand what you meant by the following answer?
You only get one "bite at the apple" in court. You must plead all related causes of action in the same case, or you forever waive any that are not pleaded, under the doctrine of collateral estoppel. Thus, the answer here is that you will have no further recourse once the current case ends.
A: I'll try to explain by creating an example. Suppose that you are in a traffic accident. Your car is damaged in the amount of $10,000; you have $5,000 in medical costs; $1,000 in rental car costs; and $100,000 in pain and suffering.You sue the other driver and you plead everything except for the rental car cost.
You win your case, and then you realize that you forgot the rental car costs. You file a new lawsuit for the $1,000. The court will dismiss your lawsuit, because under the doctrine of collateral estoppel, a plaintiff must plead every cause of action related to a certain transaction or occurrence in court -- only once. After the court rules on the case, the plaintiff cannot relitigate the same issue again. The rental car costs are barred -- you will never recover them.
Your attorney knows how this works. He/she has pleaded everything that he/she thinks can be won. Even if something else exists, once your case is over, you cannot return to court and try to recover for something else related to this loan or the property foreclosure. It is forever barred under the doctrine of collateral estoppel.
Edits: You asked: Our house has not been foreclosed on as of yet. No ruling as of yet.
A: Then, the bank would have to start over, because the amount that you owe is not what was originally claimed in the default and foreclosure sale notice. also if we win, and since the house has not been foreclosed upon as of yet, can my wife simply buy my share and pay off the home secured loan?
A: I don't know any reason why she could not do this. She would be buying it from you, though, since you state that the bank hasn't foreclosed, the property is still yours.
Hope this helps.