Badgerland Overhead Door, LLC v. Today's Overhead Door, LLC

Citations: 922 N.W.2d 310; 2018 WI App 71; 384 Wis. 2d 632Docket: Appeal No. 2017AP714

Court: Court of Appeals of Wisconsin; October 2, 2018; Wisconsin; State Appellate Court

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1 Day Enterprises, LLC (Day) appeals a court order denying its motion to reconsider the denial of a motion to surrender funds and seeking relief from judgment under WIS. STAT. 806.07 (2015-16). Day also contests a judgment that holds it liable as a garnishee for $20,000 owed to Badgerland Overhead Door, LLC (Badgerland). Day argues that the circuit court erred by misinterpreting an asset purchase agreement with Today's Overhead Door, LLC (TOD), improperly assessing successor liability, denying due process, and failing to recognize evidence of fraud by TOD. Additionally, Day contends that the court mistakenly concluded that a $20,000 credit owed to TOD constituted property subject to garnishment.

Day, a subsidiary of American Overhead Door, Inc., purchased TOD's assets on May 1, 2014, in exchange for a $20,000 credit against TOD's debts to American, assuming only specific liabilities to Cellcom and Bauer Printing. Following the acquisition, Badgerland obtained a judgment against TOD for over $76,000 related to debts incurred prior to the sale and initiated garnishment actions against various garnishees, including Schley Buildings, LLC and Integrity Home Builders, Inc. Day intervened, claiming the funds collected belonged to it rather than TOD.

The circuit court ruled that American had absorbed the debts of Schley and Integrity to TOD, allowing Badgerland to garnish the funds. Day's appeal of this decision was dismissed as untimely. Subsequently, Badgerland filed a garnishment complaint against Day for the $20,000 credit, asserting Day was indebted to TOD. Day denied this claim and argued that the nature of the asset purchase agreement meant it held no property of TOD, and that TOD had breached their contract, exempting Day from liability for the debts owed. The court ultimately affirmed the rulings against Day.

Day filed a motion to reconsider, claiming new evidence of fraudulent conduct by TOD and breaches of their agreement. Day also contended that the circuit court should have compelled Badgerland to surrender collections based on garnishment law, due process violations, and issues of successive liability. During a March 3, 2017 hearing, the court heard from witnesses, including Jeff Day, who had previously testified about an unfulfilled agreement regarding a $20,000 payment for TOD's assets. Testimonies from Travis and Angela Techlin indicated that TOD did not provide the promised credit towards its debts. The court concluded this unpaid credit was subject to garnishment and ruled against Day, holding it liable for $20,000.

In addressing Day's motion to reconsider, the court deemed the new evidence of fraud irrelevant to the claims involving Day and Badgerland. It concluded that Day had not been imposed with successor liability and had received due process during earlier hearings. Consequently, the court denied Day's motion to reconsider. Day appealed, arguing that the court erred in its denial for several reasons, including misinterpretation of the agreement, improper assessment of successor liability, denial of due process, and misjudgment regarding the fraud evidence. However, the appellate court noted that the first three arguments were not properly before it, as they sought to revisit the original order from September 2015, which Day had failed to appeal in a timely manner. The only issue before the appellate court was Day's claim that new evidence of fraud by TOD invalidated the original order under WIS. STAT. 806.07.

The circuit court correctly determined that Day was not entitled to relief under WIS. STAT. 806.07(1) as no evidence of misconduct by Badgerland was presented. The statute requires fraud, misrepresentation, or misconduct by an adverse party for relief, and in this case, Badgerland was the adverse party regarding Day's motion for funds, making TOD's actions irrelevant.

Regarding the garnishment of a $20,000 credit, Day argued that the circuit court misinterpreted the term 'property' in WIS. STAT. 812.01(1). The court conducted a de novo review, confirming that the plain meaning of 'property' encompasses intangible rights, supported by definitions from BLACK'S LAW DICTIONARY. Thus, the credit was deemed a 'valued resource' and subject to garnishment.

Day's assertion that the $20,000 credit was not property subject to garnishment was dismissed, as no supporting statutory interpretation was presented. Additionally, Day raised three further arguments: first, that the credit was granted to TOD's account at the agreement's signing, making it unavailable for garnishment; second, that the credit's contingent nature on TOD's performance was not properly addressed; and third, that the credit's 'derivative' status from a separate contract excluded it from garnishment, but these arguments lacked sufficient development or legal backing.

Day's arguments regarding forfeiture were not raised in the circuit court and are thus forfeited, as established in Gemini Capital Grp. LLC v. Jones. Day claims there was no forfeiture because it made every effort to present these issues, but this is contradicted by the record, which shows ample opportunity for Day to argue and present witnesses at the March 3, 2017 hearing. Despite this, Day did not address these issues. Even if the forfeiture were ignored, Day's arguments would still fail. Testimonies from Jeff Day, Travis, and Angie Techlin indicated that the $20,000 credit had not been paid or applied, contradicting Day's assertion that it was applied at the agreement's execution. Any breach by TOD would not impact Badgerland's rights under the garnishment statute but would provide a separate cause of action for Day against TOD. Moreover, Day did not provide supporting authority or analysis for its claim that the $20,000 credit was 'derivative' of another contract and thus not garnishable. The court will not consider this undeveloped argument. Consequently, the circuit court's order denying the motion for reconsideration and its judgment holding Day liable for $20,000 to Badgerland are affirmed. The opinion will not be published, and all statutory references pertain to the 2015-16 version. Day's motion to reconsider, filed on August 30, 2016, came after an appeal rejection in 2016, which is also noted.