S.E. Wis., Inc. v. Paul Davis Restoration Wisconsin

Decision Date04 June 2013
Docket NumberNo. 2011AP1121.,2011AP1121.
PartiesPAUL DAVIS RESTORATION OF S.E. WISCONSIN, INC., Plaintiff–Respondent–Petitioner, v. PAUL DAVIS RESTORATION OF NORTHEAST WISCONSIN, Defendant–Appellant and Denmark State Bank, Garnishee.
CourtWisconsin Supreme Court

OPINION TEXT STARTS HERE

For the plaintiff-respondent-petitioner, there were briefs by Adam A. Bardosy and Sean D. Lanphier, and Mallery & Zimmerman, S.C., Milwaukee, with oral argument by Adam A. Bardosy.

For the defendant-appellant, the cause was argued by Natalie M. Sturicz, with whom on the brief was Robert E. Bellin, Jr.

N. PATRICK CROOKS, J.

[347 Wis.2d 615]¶ 1 This case centers on a garnishment action in which the alleged judgment debtor challenged the ability of the judgment creditor to enforce a judgment by garnishment. The case arises from territory-related disputes between two franchisees, Paul Davis Restoration of S.E. Wisconsin, Inc. (Southeast) and Paul Davis Restoration of Northeast Wisconsin (Northeast). Pursuant to the franchise agreement, binding arbitration is prescribed to resolve such disputes, and the results of an arbitration process included an award for Southeast in the amount of $101,693 against Northeast, which is the name under which EA Green Bay, LLC, does business. The problem we now addressarose when Southeast sought to enforce a judgment, via a garnishment action under Wis. Stat. § 812.01 (2009–10) 1, for the money damages it had been awarded by the arbitration panel.

¶ 2 Following the arbitration, there was no objection to confirming the award by entry of judgment against Northeast in circuit court.2 Nor has there been any dispute that Northeast was the name under which EA Green Bay, LLC, did business. Nevertheless, EA Green Bay, LLC, opposed the subsequent garnishment action in circuit court on the grounds that the judgment, entered against only Northeast, the name under which it did business, was unenforceable.

[347 Wis.2d 617]¶ 3 The circuit court for Brown County, the Honorable Donald R. Zuidmulder presiding, relied on two Wisconsin cases 3 for the proposition that Northeast, the name under which EA Green Bay, LLC, did business, had “no independent legal significance apart from the underlying business” and applied that principle in this context to mean that the names “refer to the same legal entity.” It therefore held that any valid judgment against Northeast is also enforceable against EA Green Bay, LLC. The court of appeals reversed. It cited to the same cases as the circuit court, stating that where a company does business under a name different from the legal entity's name, that name is “merely descriptive of” and “not ... distinct from” the person or corporation operating the business and is “a legal nonentity”; it therefore reasoned that a judgment against such a name is unenforceable and cannot serve as a basis for a garnishment action.4

¶ 4 Wisconsin courts have not directly addressed the precise question presented: whether an otherwise valid judgment can be enforced against a legal entity when the judgment is entered against the name underwhich the legal entity does business.5 The cases relied on by the circuit court and court of appeals state that when a person or corporation does business under a name, that name “is merely descriptive of the person or corporation” and “it does not create or constitute an entity distinct from the person operating the business.” Jacob v. West Bend Mut. Ins. Co., 203 Wis.2d 524, 537 n. 7, 553 N.W.2d 800 (Ct.App.1996). In Capsavage v. Esser, 224 Wis.2d 404, 415, 591 N.W.2d 888 (Ct.App.1999), which involved a dispute concerning the type of legal entity involved, the court clarified that the name under which the company, Sundance Marine, was doing business was not “a distinct entity” but rather was “simply another way to refer to Sundance Marine.” 6

¶ 5 It follows from this principle that if the name under which a person or corporation does business is “simply another way to refer to” a single legal entity and constitutes no entity distinct from the person or corporation who does business, then a judgment against the “doing business as” or “d/b/a” name is enforceable against the legal entity from which it is indistinct. This result is consistent with the approach taken on this question by the majority of other jurisdictions that have addressed it. Based on this principle in Wisconsin case law concerning a d/b/a designation or trade name, and consistent with the approaches of the majority of other jurisdictions, we hold that the judgment against EA Green Bay LLC's d/b/a designation, Paul Davis Restoration of Northeast Wisconsin, is enforceable against EA Green Bay, LLC, and the account at Denmark State Bank; Northeast and EA Green Bay, LLC, are not two distinct legal entities; and EA Green Bay, LLC, was undisputedly doing business under the name Northeast. We reverse the decision of the court of appeals and remand to the circuit court for further proceedings consistent with this opinion.

I. BACKGROUND

¶ 6 After the arbitration proceedings described above were complete and the judgment was entered in Milwaukee County Circuit Court, Northeast refused to pay the arbitration award. Southeast commenced the action that is now before us, a separate and independent garnishment action in Brown County Circuit Court, to collect the judgment from a Denmark State Bank account titled in the name of “EA Green Bay LLC d/b/a Paul Davis Restoration & Remodeling of NE WI d/b/a Building Werks.” The record 7 reflects that the checks on the account bear only the name Paul Davis Restoration & Remodeling of NE WI.” In its answer to the garnishment complaint, garnishee defendant Denmark State Bank stated that “EA Green Bay LLC d/b/a Paul Davis Restoration & Remodeling of NE WI d/b/a Building Werks is a Denmark State Bank customer.” It also stated that

[a]s of the date and time Denmark State Bank was served with the Garnishment Summons and Complaint, Denmark State Bank was indebted to EA Green Bay LLC d/b/a Paul Davis Restoration & Remodeling of NE WI d/b/a Building Werks in the full amount of the ... garnishment, by virtue of a deposit account.

In its ruling, the circuit court stated, “It cannot be disputed that EA [Green Bay, LLC] was the principal name on the account on [the date of the service of the garnishee summons] and that it was EA [Green Bay, LLC]'s Employer Identification Number.” It also noted that “checks continued to be deposited for Paul Davis Restoration of Northeast Wisconsin....”

¶ 7 The Brown County Circuit Court denied Northeast's motion to dismiss and directed the bank to release the funds in the account to Southeast. As noted above, the court based the ruling on the Jacob and Binon cases and on its determination that [r]ather than separating the [Northeast] non-entity from the ‘EA Green Bay, LLC legal entity, the d/b/a designation simply means that the two names refer to the same legal entity.” It considered EA Green Bay, LLC's argumentsan “attempt[ ] to create a legal distinction where none exists.”

¶ 8 The court of appeals reversed in an unpublished, per curiam opinion. It read the Jacob and Binon cases as supporting the proposition that because a d/b/a designation “does not create or constitute an entity distinct from the person [or corporation] operating the business,” a judgment against a d/b/a designee alone is unenforceable. Paul Davis Restoration of S.E. Wis., Inc. v. Paul Davis Restoration of Northeast Wis., No. 2011AP1121, 2012 WL 2094353, unpublished slip op., ¶¶ 7–9 (Wis. Ct.App. June 12, 2012). It drew parallels to the facts discussed in Jacob, in which the court found that a plaintiff had improperly named a deceased person, rather than the estate's personal representative, as a party to the suit. Id. Southeast petitioned this court for review, which we granted.

II. STANDARD OF REVIEW AND APPLICABLE LAW

¶ 9 The question presented here arises in the context of a garnishment action, which is governed by Wis. Stat. § 812.01. The statute states:

Any creditor may proceed against any person who is indebted to or has any property in his or her possession or under his or her control belonging to such creditor's debtor or which is subject to satisfaction of an obligation described under s. 766.55(2), as prescribed in this subchapter. Plaintiff as used in this subchapter includes a judgment creditor and defendant, a judgment debtor or the spouse or former spouse of a judgment debtor if the judgment is rendered in connection with an obligation described under s. 766.55(2).

Wis. Stat. § 812.01(1). Application of a statute to an undisputed set of facts is a question of law. Nichols v. Nichols, 162 Wis.2d 96, 103, 469 N.W.2d 619 (1991).

¶ 10 We also note that it is well established that a garnishment action is an action independent of the judgment for which it seeks to recover payment and is instituted separately according to statute. SeeWis. Stat. § 812.01. See Butler v. Polk, 592 F.2d 1293, 1295–1296 (5th Cir.1979) (observing that “garnishment actions against third-parties are generally construed as independent suits, at least in relation to the primary action”); Randolph v. Emp'rs Mut. Liab. Ins. Co. of Wis., 260 F.2d 461, 464 (8th Cir.1958) (“The only issue is the liability of the garnishee on its insurance contract.... [T]he amount of such liability has been established by the judgment against [the insured] in the state court action.”); Adriaenssens v. Allstate Ins. Co., 258 F.2d 888, 890 (10th Cir.1958) (garnishments are “original and independent actions [by] the holders of the judgments”).

¶ 11 Noting, in the context of a garnishment case, that [t]he judgment carries the presumption of validity,” this court cited the settled law on judgments:

The general rule is stated in 49 C.J.S. Judgments ... as follows: “A judgment rendered by a court having jurisdiction of the parties and the subject matter, unless reversed or annulled...

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