Associated Bank N.A. v. Jack W. Collier, Deborah L. Collier, Greenbrier Developers, LLC

• Decision Date: 15 July 2014
• Docket Number: No. 2011AP2597.,2011AP2597.
• Citation: 852 N.W.2d 443,355 Wis.2d 343,2014 WI 62
• Parties: ASSOCIATED BANK N.A., Plaintiff, SB1 Waukesha County, LLC, Co–Plaintiff–Respondent, v. Jack W. COLLIER, Deborah L. Collier, Greenbrier Developers, LLC, Executive Realty Partnership LP, Gerald Franklin, Kenneth Whaley, ISB Community Bank and United States of America, Defendants, Decade Properties, Inc., Intervening Defendant–Appellant–Petitioner.
• Court: Wisconsin Supreme Court

355 Wis.2d 343

852 N.W.2d 443

2014 WI 62

ASSOCIATED BANK N.A., Plaintiff,

SB1 Waukesha County, LLC, Co–Plaintiff–Respondent,

v.Jack W. COLLIER, Deborah L. Collier, Greenbrier Developers, LLC, Executive Realty Partnership LP, Gerald Franklin, Kenneth Whaley, ISB Community Bank and United States of America, Defendants,Decade Properties, Inc., Intervening Defendant–Appellant–Petitioner.

No. 2011AP2597.

Supreme Court of Wisconsin.

Argued Sept. 11, 2013.

Decided July 15, 2014.

For the intervening defendant-appellant-petitioner, there were briefs by Roy L. Prange, Valerie L. Bailey–Rihn, and Quarles & Brady LLP, Madison, and oral argument by Valerie L. Baily Rihn.

For the co-plaintiff-respondent, there was a brief by John M. Van Lieshout, Joseph W. Voiland, and Reinhart Boerner Van Deuren S.C., Milwaukee; and Neal H. Levin and Freeborn & Peters LLP, Chicago, and oral argument by Neal H. Levin.

PATIENCE DRAKE ROGGENSACK, J.

¶ 1 This is a review of an unpublished decision of the court of appeals ¹ affirming the circuit court's ² denial of summary judgment, grant of a motion to turn over property to the receiver, and denial of a motion for reconsideration. The review concerns the collection efforts of two judgment creditors of defendant Jack Collier, SB1 Waukesha County, LLC and Decade Properties, Inc., the latter being owned by Collier's business associate, Jeffrey Keierleber.

¶ 2 Decade argues that when it served Collier with an order to appear at supplemental proceedings, it perfected a “common law creditor's lien” on all of Collier's personal property. According to Decade, its lien preserves the property for Decade's benefit, thereby precluding SB1 from pursuing collection from it. SB1 argues that even though Decade served Collier with an order to appear at supplemental proceedings before SB1 did so, Decade has no lien on Collier's personal property because Decade's judgment was not docketed before its service of the order to appear. SB1 reasons that a judgment must be capable of execution before there is the potential for a common law lien on personal property and un-docketed judgments cannot obtain an execution.

¶ 3 We conclude that supplemental proceedings under ch. 816 are a discovery tool in aid of judgment collection. Decade's serving Collier with an order to appear for supplemental proceedings did not give rise to a blanket lien on all of Collier's personal property that prevented SB1 from pursuing collection. A judgment creditor obtains an interest in a judgment debtor's identified, non-exempt personal property superior to other unsecured creditors when it dockets its money judgment, identifies specific personal property and levies that property. Levying may be accomplished by at least three different means: (1) by executing against specific personal property with the assistance of a sheriff; (2) by serving the garnishee defendant in a garnishment action to seize specific property in the hands of the garnishee defendant; or (3) by obtaining an order to apply specific personal property to the satisfaction of the judgment, which a creditor may do with the assistance of a supplemental receiver. Wis. Stat. § 815.05(6) (2011–12); ³Wis. Stat. § 812.01; Wis. Stat. § 816.08.

¶ 4 Here, SB1 was the first judgment creditor with a docketed money judgment to levy specific, non-exempt personal property of Collier. It did so by obtaining a court order to turn over specifically identified property to its receiver. Accordingly, we affirm the decision of the court of appeals that concluded that SB1 has priority over Decade in regard to the specific personal property SB1 identified and levied. However, insofar as the decision of the court of appeals can be read to recognize a blanket lien in favor of SB1 that prevents other creditors from pursuing collection from Collier's personal property, we modify that decision because no blanket lien exists.

I. BACKGROUND

¶ 5 This case concerns SB1's attempt to satisfy the portion of a default judgment against Collier that it purchased from Associated Bank, N.A. The relevant portion of the judgment ⁴ relates to Collier's default on a $7.2 million promissory note in favor of Associated, which Collier secured with a personal guarantee and a mortgage on a Brookfield property.

¶ 6 After purchasing a portion of Associated's docketed money judgment against Collier, SB1 obtained an order for Collier to appear at supplemental proceedings. Despite repeated attempts to serve Collier in Wisconsin and Florida, where Collier had a second home, SB1 was unsuccessful and the order expired.

¶ 7 Shortly after SB1 obtained an order for Collier to appear, Keierleber, the owner of Decade, sued Collier. The court of appeals succinctly summarized the litigation as follows:

In short order, Keierleber commenced six lawsuits on behalf of Keierleber, Keierleber-owned, and Keierleber- and Collier-owned Wisconsin and Florida entities, Decade among them. Each complaint sought enforcement of a claimed loan right and money judgment against Collier or against two business entities of which Keierleber and Collier each owned a fifty-percent interest. While still unserved with SB1's order to appear, Collier accepted service of these six complaints. The parties involved in the six new actions executed stipulations agreeing to judgment amounts in each of them.

Associated Bank N.A. v. Collier, No. 2011AP2597, unpublished slip op., at ¶ 4, 2012 WL 5935954 (Wis.Ct.App. Nov. 28, 2012).

¶ 8 Of these six lawsuits, the present case concerns only the $654,646.83 judgment Decade obtained against Collier personally. Decade tried to docket this judgment with the Waukesha County Clerk of Court by sending the judgment, a $5.00 docketing fee and a receipt for docketing to the circuit court, where the judgment was to be signed and forwarded to the clerk with the docketing fee and receipt. However, even though Decade's attorneys received the receipt dated October 26, 2010, the clerk did not enter the judgment in the judgment and lien docket. Instead, on June 29, 2011, after the error was discovered, the clerk docketed Decade's judgment.

¶ 9 On November 16, 2010, Decade served Collier with an order to appear for supplemental proceedings, which Decade's attorney conducted on November 22, 2010. In its brief, Decade explained that it took these actions after learning about SB1's collection efforts in order to “protect its interest by first obtaining a judgment and then a superior Creditor's/Receivers Lien against Collier's personal property.” It does not appear from the record that Decade took any additional steps to seize any of Collier's personal property to satisfy its judgment.

¶ 10 Having been unsuccessful in serving Collier before the initial order expired, SB1 subsequently obtained a second order for Collier to appear for supplemental proceedings. SB1 also moved the circuit court to appoint a supplemental receiver.

¶ 11 On April 2, 2011, at Collier's Florida residence, SB1 finally obtained service of the order to appear for supplemental proceedings and its motion to appoint a receiver. On April 18, 2011, Collier failed to appear at the scheduled supplemental proceedings and the supplemental commissioner issued an order to show cause why Collier should not be held in contempt of court. The commissioner also appointed Douglas Mann as supplemental receiver.

¶ 12 On June 9, 2011, the day before the return date of the order to show cause, Collier initiated a state insolvency proceeding in Florida. SB1 moved to enjoin the insolvency proceeding on the grounds that SB1 had a receiver's lien on Collier's personal property, which was perfected. Decade intervened and objected to imposition of an injunction. The Florida insolvency proceeding was enjoined and Collier was found in contempt of court for failing to appear at SB1's supplemental proceedings.

¶ 13 On July 29, 2011, SB1 moved for court approval of the sale of Collier's personal property located in Brookfield, Wisconsin, which had a fair market value of $63,925. SB1 also moved to order Collier to turn over certain shares of stock, rights to unasserted counterclaims and affirmative defenses in Waukesha County cases, and all partnership interests in and profits from an entity called AWI Limited Partnership.

¶ 14 Decade intervened and opposed SB1's motions. Decade moved for summary judgment on the grounds that it had a superior lien on all of Collier's personal property. It argued that according to our decision in Mann v. Bankruptcy Estate of Badger Lines, Inc., 224 Wis.2d 646, 590 N.W.2d 270 (1999), all that is necessary to perfect a common law lien that prevents SB1 from pursuing collection is service on Collier of an order to appear at a supplemental proceeding.

¶ 15 SB1 responded that Decade could not have had a lien on Collier's personal property when it served Collier with a notice to appear at supplemental proceedings because Decade's judgment had not been entered in the judgment and lien docket.

¶ 16 Decade contended that the failure to enter the judgment in the judgment and lien docket did not affect the validity of its lien.⁵ At a hearing before the circuit court, Decade's attorney argued that “the key issue is that execution and the ability to execute [are] separate from the ability to institute supplementary proceedings because you don't need to have [an un]satisfied execution in order to proceed with a compelling order to appear before a court commissioner.” In other words, Decade's position was that a judgment creditor can obtain a common law lien even if its judgment is not docketed or executable because the ability to execute and a judgment creditor's lien are not tethered.

¶ 17 The circuit court rejected Decade's argument, reasoning that “if the underpinning for the proceeding fails[,] the proceeding itself necessarily fails.” In denying Decade's motion for reconsideration, the court reiterated that its position was that “you can't pursue collection unless you...