2020 WI 3

SUPREME COURT OF WISCONSIN

CASE NO.: 2017AP822

COMPLETE TITLE: Veritas Steel, LLC,

 Plaintiff-Respondent,

 v.

Lunda Construction Company,

 Defendant-Third-Party 

 Plaintiff-Appellant-Petitioner,

 v.

Bridge Resources, LLC n/k/a Bridge Fabrication 

Holdings, 

LLC, Alan Sobel, Matthew Cahill and Atlas 

Holdings, LLC,

 Third-Party Defendants-Respondents.

REVIEW OF DECISION OF THE COURT OF APPEALS

Reported at 385 Wis. 2d 210,923 N.W.2d 181

(2018 – unpublished)

OPINION FILED: January 15, 2020 

SUBMITTED ON BRIEFS: 

ORAL ARGUMENT: September 19, 2019 

SOURCE OF APPEAL:

COURT: Circuit 

COUNTY: Dane 

JUDGE: Frank D. Remington 

JUSTICES:

DALLET, J., delivered the majority opinion of the Court, in 

which ANN WALSH BRADLEY, ZIEGLER, REBECCA GRASSL BRADLEY, KELLY 

and HAGEDORN, JJ., joined. ROGGENSACK, C.J., filed a concurring 

opinion.

NOT PARTICIPATING:

 

ATTORNEYS:

For the defendant-third-party-plaintiff-appellantpetitioner, there were briefs filed by Saul C. Glazer, Michael D. 

Hahn, and Axley Brynelson, Madison. With whom on the brief was 

Dean Thomson, Paul Ratelle, and Fabyanske Westra Hart & Thomson 
2

PA, Minneapolis, Minnesota. There was an oral argument by Paul 

Ratelle.

For the third-party-defendants-respondents, there was a brief 

filed by Michael D. Leffel, Kevin M. LeRoy, Thomas L. Shriner, Jr.

and Foley & Lardener LLP, Madison and Milwaukee. With whom on the 

brief was Richard Mancino, Jill K. Grant, Stuart R. Lombardi, 

William O’Brien, Patricia O. Haynes, Joseph G. Davis, and Willkie 

Farr & Gallagher LLP, New York, New York and Washington, DC. There 

was an oral argument by Richard Macino.
2020 WI 3

NOTICE

This opinion is subject to further 

editing and modification. The final 

version will appear in the bound 

volume of the official reports. 

No. 2017AP822

(L.C. No. 2015CV509)

STATE OF WISCONSIN : IN SUPREME COURT

Veritas Steel, LLC,

 Plaintiff-Respondent,

 v.

Lunda Construction Company,

 Defendant-Third-Party 

 Plaintiff-Appellant-Petitioner,

 v.

Bridge Resources, LLC n/k/a Bridge Fabrication 

Holdings, LLC, Alan Sobel, Matthew Cahill and 

Atlas Holdings, LLC,

 Third-Party Defendants-Respondents.

FILED

JAN 15, 2020

Sheila T. Reiff

Clerk of Supreme Court

DALLET, J., delivered the majority opinion of the Court, in which 

ANN WALSH BRADLEY, ZIEGLER, REBECCA GRASSL BRADLEY, KELLY and 

HAGEDORN, JJ., joined. ROGGENSACK, C.J., filed a concurring 

opinion. 

REVIEW of a decision of the Court of Appeals. Affirmed. 

¶1 REBECCA FRANK DALLET, J. Lunda Construction Company 

(Lunda) alleges that Veritas Steel, LLC (Veritas), and third-party 

defendants Atlas Holdings, LLC (Atlas), and Bridge Fabrication 
No. 2017AP822 

2

Holdings, LLC, took unfair advantage of PDM Bridge, LLC's (PDM) 

loan defaults, "with the intent to gain ownership of PDM's 

lucrative steel fabrication business for grossly inadequate 

consideration through a secretive, unlawful and fraudulent process 

designed to render PDM an empty shell with no assets remaining to 

satisfy PDM's eight-figure liability to Lunda." 

¶2 The circuit court granted summary judgment to Veritas on 

Lunda's successor liability claim because there was no genuine 

issue of material fact as to the de facto merger, mere 

continuation, and fraudulent transaction exceptions to the general 

rule against successor liability.1 The court of appeals affirmed 

as to the de facto merger and mere continuation exceptions, the 

only exceptions Lunda raised on appeal.2

¶3 The question before us is whether the de facto merger, 

mere continuation, and fraudulent transaction exceptions to the 

rule against successor liability apply in this case to impose 

successor liability on Veritas. Lunda asks this court to read 

Fish v. Amsted Indus., Inc., 126 Wis. 2d 293, 376 N.W.2d 820 

(1985), as having expanded the de facto merger and mere 

continuation exceptions. Lunda further asserts that the court of 

appeals erroneously dismissed its successor liability claim in 

light of the fraudulent transaction exception. 

 

1 Judge Frank D. Remington of Dane County Circuit Court 

presided. 

2 Veritas Steel, LLC v. Lunda Construction Co., No. 2017AP822, 

unpublished slip op. (Wis. Ct. App. Nov. 21, 2018).
No. 2017AP822 

3

¶4 We reject Lunda's expanded reading of Fish, 126 

Wis. 2d 293, and conclude that Lunda has not raised a genuine issue 

of material fact as to an "identity of ownership" between Veritas 

and PDM, the key component necessary to satisfy the de facto merger 

and mere continuation exceptions. We further conclude that by not 

raising the fraudulent transaction exception before the court of 

appeals, Lunda forfeited that argument. We therefore affirm the 

court of appeals. 

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

¶5 The facts of this case are lengthy and fairly complex. 

PDM operated a steel fabrication business.3 In 2006, PDM entered 

into a credit agreement with a syndicate of lenders for a $115 

million term and $25 million revolving loan. As security for 

repayment, the lenders obtained a first priority lien on 

"substantially all of PDM's assets."

¶6 PDM's financial condition had begun to significantly 

decline by 2011. PDM eventually defaulted on its obligations to 

the lenders under the 2006 credit agreement. By 2013, PDM was 

indebted to the lenders on secured debt with a face value of 

approximately $76 million. In June 2013, the lenders and PDM 

executed a forbearance agreement in which PDM agreed to either 

sell itself to an interested acquirer or restructure with the 

assistance of an investment banker.

 

3 American Securities, a private equity firm, purchased PDM 

in 2006 and held it through a company called ASP PDM LLC. Like 

the court of appeals, for ease of reference, we will use "PDM" to 

refer both to the limited liability corporation and its only 

member. See Veritas, No. 2017AP822, ¶6 n.2. 
No. 2017AP822 

4

¶7 Pursuant to the forbearance agreement, PDM retained an 

investment banker to market a sale of the company for the highest 

possible price. Of 136 potential acquirers contacted by the 

investment banker, none of them offered a price that came close to 

satisfying PDM's outstanding secured debt. The highest bid came 

from Atlas, a private equity firm. 

¶8 Rather than purchase PDM's assets directly, Atlas and 

the lenders agreed that Atlas would acquire the lenders' secured 

claims against PDM and then foreclose on PDM's assets. Atlas

caused the creation of a new entity, Bridge Resources, LLC, to aid 

in the acquisition of PDM's assets. Bridge Resources subsequently 

filed amended Uniform Commercial Code (UCC) financing statements, 

in which it confirmed itself as the new administrative agent under 

the credit agreement and verified its protected security interest 

in PDM's assets. Through a series of transactions, affiliates of 

Atlas and a co-investor purchased all of PDM's outstanding debt 

directly from the lenders for approximately $22 million, which was 

indicative of the value of PDM's assets.

¶9 PDM, having no prospect of paying back the outstanding 

debt under the credit agreement, entered into a "transaction

support agreement" with Bridge Resources in October 2013. The 

agreement anticipated that the parties would work towards a strict 

foreclosure on the collateral securing PDM's loans in exchange for 

partial satisfaction of PDM's obligations under the 2006 credit 

agreement. To carry out the strict foreclosure, Atlas created a 

subsidiary called Veritas, which was assigned a first priority 
No. 2017AP822 

5

lien on PDM's assets and eventually became the sole secured lender 

under the credit agreement.4 

¶10 In November 2013, PDM, Bridge Resources, and Veritas

executed a strict foreclosure agreement. PDM conveyed to Veritas 

the collateral securing the loan in exchange for the discharge of 

approximately $71 million out of $76 million of unpaid, secured 

debt that PDM owed under the credit agreement.5 The strict 

foreclosure agreement did not change the ownership or board 

structure of PDM. It is undisputed that there was no stock or 

other indicia of equitable ownership transferred from Veritas to 

PDM. Further, no director or owner of PDM became a director or 

owner of Veritas. 

¶11 Meanwhile, in 2010, Lunda, a civil construction 

contractor, entered into a subcontract with PDM, which required

PDM to provide steel for a bridge construction project. In 2012,

after PDM failed to perform, Lunda sued for breach of contract. 

At the time that Veritas foreclosed on PDM's assets, Lunda had a 

 

4 Veritas was formed in October 2013 by Bridge Fabrication 

Holdings, Veritas's sole member. Bridge Fabrications Holdings and 

Bridge Resources merged in 2014 and became BFH Holdings, LLC, which 

is majority-owned by Atlas affiliates.

5 Pursuant to Uniform Commercial Code § 9-620, a debtor may 

turn over to a lender the collateral for a loan in exchange for 

full or partial satisfaction of a debt. Wisconsin's Uniform 

Commercial Code has a similar provision, see Wis. Stat. § 409.620

(2017-18). There is no dispute that the transaction support 

agreement and the subsequent strict foreclosure were in full 

compliance with the procedures set forth in the UCC.

All subsequent references to the Wisconsin Statutes are to 

the 2017-18 version unless otherwise indicated.
No. 2017AP822 

6

contingent, unsecured breach of contract claim. It was not until 

2014, after the strict foreclosure agreement was finalized, that 

Lunda obtained a $16 million judgment against PDM. Lunda, as an 

unsecured creditor, subsequently took steps under Wis. Stat. 

§ 779.155 to assert a lien on funds owed to Veritas by the 

Wisconsin Department of Transportation (DOT) for projects on which 

PDM had worked.

¶12 In February 2015, Veritas commenced this action against 

Lunda and sought a declaration that Lunda had no claim to payments 

by the DOT for the projects at issue. Lunda asserted eight 

counterclaims against Veritas and commenced a third-party action 

against Atlas, Bridge Fabrication Holdings, and two former 

officers of PDM.6 The circuit court granted Veritas's motion to 

dismiss on six of Lunda's counterclaims. Only two claims remained: 

a successor liability claim against Veritas7 and a claim against 

Veritas, Atlas, and Bridge Fabrication Holdings under the 

Wisconsin Uniform Fraudulent Transfer Act (WUFTA claim).8 Summary 

 

6 The two former officers, Alan Sobel and Matthew Cahill, are 

not involved in this appeal. Cahill, who was the CEO of PDM, and 

Sobel, who was the CFO of PDM, continued for at least some period 

of time in those roles at Veritas. However, neither had an owner's 

interest in PDM or Veritas. 

7 The circuit court had previously dismissed Lunda's successor 

liability claim against Atlas and Bridge Fabrication Holdings, 

which is not at issue in this case.

8 The circuit court had previously granted a separate motion 

for summary judgment filed by Sobel and Cahill as to Lunda's WUFTA 

claim.
No. 2017AP822 

7

judgment motions on the remaining two claims were granted by the 

circuit court.

¶13 On appeal, Lunda challenged the dismissal of its

successor liability claim against Veritas under the de facto merger 

and mere continuation exceptions. Lunda also appealed the 

dismissal of its WUFTA claim against Veritas and the third-party 

defendants. The court of appeals affirmed the circuit court as to 

both issues.9 

¶14 Lunda petitioned this court for review and challenges 

the dismissal of its successor liability claim against Veritas as 

it relates to the de facto and mere continuation exceptions. Lunda 

also alleges that the court of appeals erroneously dismissed its 

successor liability claim in light of the fraudulent transaction 

exception to the rule against successor liability.

II. STANDARD OF REVIEW

¶15 We review a decision on summary judgment using the same 

methodology as the circuit court. Green Spring Farms v. 

Kersten, 136 Wis. 2d 304, 314-15, 401 N.W.2d 816 (1987). Summary 

judgment shall be granted where the record demonstrates "that there 

is no genuine issue as to any material fact and that the moving 

party is entitled to a judgment as a matter of law." Wis. Stat. 

§ 802.08(2). 

III. ANALYSIS

 

9 The portion of the court of appeals' decision regarding 

Lunda's WUFTA claim is not at issue here. See Veritas, No. 

2017AP822, ¶¶36-42.
No. 2017AP822 

8

¶16 We first discuss the purpose of the general rule against 

successor liability and the exceptions to that rule as developed 

in Wisconsin jurisprudence. We next clarify the de facto merger 

and mere continuation exceptions and determine whether Lunda 

raised a genuine issue of material fact as to these exceptions. 

Finally, we decide whether Lunda forfeited its successor liability 

claim as to the fraudulent transaction exception by failing to 

raise it before the court of appeals. 

A. The general rule against successor liability:

its purpose and relevant exceptions

¶17 It is well established that when a company sells or 

transfers all of its assets to another company, the purchasing 

company does not become liable for the transferring company's debts 

and liabilities. See Fish, 126 Wis. 2d at 298 (quoting Leannais 

v. Cincinnati, Inc., 565 F.2d 437, 439 (7th Cir. 1977))("'[a]

corporation which purchases the assets of another corporation does 

not succeed to the liabilities of the selling corporation.'"). 

This general rule against successor liability was designed to 

protect a bona fide purchaser from assuming the liabilities of a 

predecessor corporation.10 See Springer v. Nohl Elec. Prods. 

 

10 Although first applied in the corporate context, we have 

recognized that the rule against successor liability also belongs 

in the product liability context because: 

[T]he successor corporation did not create the risk nor 

did it directly profit from the predecessor's sale of 

the defective product; it did not solicit the use of the 

defective product nor make any representations as to its 

safety; nor is it able to enhance the safety of a product 

that is already on the market.
No. 2017AP822 

9

Corp., 2018 WI 48, ¶15, 381 Wis. 2d 438, 912 N.W.2d 1. "'The 

traditional rule of nonliability was developed . . . to protect 

the rights of commercial creditors and dissenting shareholders 

following corporate acquisitions, as well as to determine 

successor corporation liability for tax assessments and 

contractual obligations of the predecessor.'" Fish, 126 

Wis. 2d at 303 (quoting Ramirez v. Amsted Indus., Inc., 431 A.2d 

811, 815-16 (N.J. 1981)).

¶18 We have recognized four exceptions to the rule against 

successor liability under the following circumstances: 

(1) when the purchasing corporation expressly or 

impliedly agreed to assume the selling corporation's 

liability; (2) when the transaction amounts to a 

consolidation or merger of the purchaser and seller 

corporations; (3) when the purchaser corporation is 

merely a continuation of the seller corporation; or (4) 

when the transaction is entered into fraudulently to 

escape liability for such obligations.

Tift v. Forage King Indus., Inc., 108 Wis. 2d 72, 75-76, 322 

N.W.2d 14 (1982) (quoting Leannais, 565 F.2d at 439). These 

exceptions illustrate the balance in successor liability law 

between "two competing, and often conflicting, policy goals: to 

provide a necessary remedy to injured parties, often tort 

claimants, and to provide transactional clarity and certainty for 

business parties engaged in fundamental corporate transactions." 

Matheson, John H., Successor Liability, 96 Minn. L. Rev. 371, 372-

73 (2011).

 

Springer v. Nohl Elec. Prods. Corp., 2018 WI 48, ¶15, 381 

Wis. 2d 438, 912 N.W.2d 1 (quoting Fish v. Amsted Indus., Inc., 

126 Wis. 2d 293, 307, 376 N.W.2d 820 (1985)). 
No. 2017AP822 

10

¶19 We focus our discussion on exceptions two and three, 

also known as the de facto merger and mere continuation exceptions. 

Both exceptions "are declaratory of tests to be applied to 

encourage 'piercing the corporate veil'" and thus examine "the 

substance and effect of business transformations or 

reorganizations to determine whether the original organization 

continues to have life or identity in a subsequent and existing 

business organization." Tift, 108 Wis. 2d at 79. We resolve the 

parties' dispute over the type of "identity" evidence necessary 

for purposes of establishing these exceptions.

B. The de facto merger and mere 

continuation exceptions defined 

¶20 The de facto merger and mere continuation exceptions 

were defined and then developed in three main cases: Tift, Cody

and Fish. This court first explicitly recognized the exceptions 

in Tift, 108 Wis. 2d 72, a products liability action alleging 

injuries caused by a "chopper box" tractor attachment. The chopper 

box was first manufactured by a sole proprietorship, which turned 

into a partnership and eventually "metamorphosed into" a 

corporation, Forage King Industries. Id. at 74. Forage King 

Industries consisted of two shareholders who had formed the 

partnership, one of whom was the original sole proprietor. Id. 

Throughout its different business forms, the company retained the 

same employees, manufactured the same products, and sold to the 

same dealers. Id. at 74-75. 

¶21 In 1975, just before the plaintiff was injured, all of 

the Forage King Industries stock was purchased by another 
No. 2017AP822 

11

corporation that continued to operate as Forage King Industries 

and manufacture the same products. Id. at 75. The plaintiff

commenced an action against Forage King Industries and its insurer, 

alleging that the company was a successor to the manufacturer of 

the chopper box and was therefore responsible for the plaintiff's 

injuries. Id.

¶22 We applied the "rules of corporate law" and reasoned 

that the de facto merger and mere continuation exceptions 

"demonstrate that, when it is the same business organization that 

one is dealing with, whether it be by consolidation, merger, or 

continuation, liability may be enforced" because "[t]hese are 

tests of identity." Id. at 79. We thus concluded that, despite 

organizational transformation, the present Forage King Industries 

was "substantially identical to the organization that manufactured 

the allegedly defective chopper box and [was] therefore liable."11 

Id. at 80. 

¶23 The mere continuation exception to successor liability 

was further developed in Cody v. Sheboygan Mach. Co., 108 

Wis. 2d 105, 321 N.W.2d 142 (1982). The plaintiff sued Sheboygan 

Machine Company for injuries caused by a defective sander. Id. at 

109. The defective sander had been manufactured by the original 

Sheboygan Machine Company, but that company sold its assets and 

its name to a different company, who again resold the company 

 

11 The court in Tift did not distinguish between the 

application of the de facto merger and mere continuation 

exceptions. See Tift v. Forage King Indus., Inc., 108 Wis. 2d 72, 

79-80, 322 N.W.2d 14 (1982). 
No. 2017AP822 

12

assets and name. Id. at 107-08. The plaintiff brought suit 

against Sheboygan Machine Company, a corporation that shared the 

same name as the manufacturer of the sander but functioned 

exclusively as a repair shop. Id. at 108-09. Sheboygan Machine 

Company shared none of the officers, directors, or stockholders as 

the predecessor companies. Id. at 108.

¶24 Citing to the facts of Tift and the principles enunciated 

in that case, the Cody court concluded that the mere continuation 

exception did not apply because the facts did "not demonstrate any 

continuity or identity of business organizations" between the two 

entities in question. Id. at 106. The Cody court concluded that 

the second corporation "was an entirely different corporation" and 

that the "subsequent businesses were markedly different in 

character and purpose from the original manufacturer" and "were 

not continuations of the original business." Id. at 111. 

¶25 This court refined the de facto merger and mere 

continuation exceptions several years later in Fish, 126 

Wis. 2d 293. The Fish plaintiffs alleged injuries resulting from 

the use of a power press manufactured by Bontrager Construction 

Company. Id. at 295-96. The plaintiffs filed suit against Amsted 

Industries, Inc., the company that acquired Bontrager's assets and 

continued to make the power press, and South Bend II, the company 

who subsequently bought the power press line from Amsted. Id. at 

295-97. They alleged that, as successor corporations, Amsted and 

South Bend II were liable for the acts of Bontrager in 

manufacturing the allegedly defective power press. Id. at 297.

All parties agreed that the traditional exceptions to the rule 
No. 2017AP822 

13

against successor liability did not apply to the case, but the 

plaintiffs argued that Tift expanded both the de facto merger and 

mere continuation exceptions. Id. at 298. The plaintiffs argued 

that "identity" meant "identity of assets, operations and identity 

of the product, rather than identity of ownership." Id. at 300-

01 (emphasis added).

¶26 The Fish court plainly rejected the argument that Tift

expanded the de facto and mere continuation exceptions: "the 

[p]laintiffs are in error in alleging that the Tift decision has 

expanded the exceptions to the rule of nonliability." Id. at 301. 

The court specified that "[i]dentity refers to identity of 

ownership, not identity of product line." Id. The court affirmed 

dismissal of the successor liability claim as related to both 

exceptions because "there [was] not sufficient identity between 

Bontrager and either Amsted or South Bend II to justify holding 

them liable for the acts of their predecessor." Id. at 295.

¶27 The Fish court also delineated the "key elements" 

required to meet the de facto and mere continuation exceptions. 

In determining whether a de facto merger has occurred, the "key 

element" "is that the transfer of ownership was for stock in the 

successor corporation rather than cash." Id. at 301. The "key 

element" to resolve whether the successor is a mere continuation 

of the seller corporation "'is a common identity of the officers, 

directors and stockholders in the selling and purchasing 

corporations.'" Id. at 302 (quoting Leannais, 565 F.2d at 440).

C. The requirement of identity of ownership 
No. 2017AP822 

14

¶28 As Fish made clear, the de facto and mere continuation 

exceptions to the rule against successor liability require 

evidence of identity of ownership.12 For the de facto merger 

exception, identity of ownership hinges on whether "the transfer 

of ownership was for stock in the successor corporation rather 

than cash." Fish, 126 Wis. 2d at 301. It is important to recognize 

that transfer of ownership may still exist even where the successor 

entity does not have stock to offer the acquired entity. In such 

cases, proof of identity of ownership may be established through 

equity ownership.13 For example, equity ownership could take the 

form of membership interests in a limited liability corporation.14

 

12 As one federal district court correctly noted, "it would 

appear that the Wisconsin Supreme Court [in Fish] has effectively 

determined that, absent a transfer of stock ownership, other merger 

factors are insufficient to sustain application of the de facto 

merger exception." Smith v. Meadows Mills, Inc., 60 F. Supp. 2d 

911, 917 (E.D. Wis. 1999). The Smith court also reflected that, 

"it appears that the Wisconsin Supreme Court [in Fish] has made 

one factor——identity of ownership——a necessary requirement for the 

mere continuation exception to apply." Id. at 918. 

13 Lunda contends that there is "inconsistency" between 

Wisconsin's statutory merger law, Wis. Stat. § 180.1101, which 

allows for exchange of shares of one entity for "cash or property" 

of another, and the stock transfer requirement under the de facto 

merger exception. As support, Lunda cites to a footnote in the 

court of appeals' decision. See Veritas, No. 2017AP822, ¶32 n.11. 

A statutory merger pursuant to § 180.1101 is distinct from a de 

facto merger in that it involves two companies formally stating 

their intentions to merge and following statutory procedures to 

effectuate the merger. 

14 Not all entities will fit within the de facto merger 

exception. Where there is no ownership interest to be transferred, 

as in a case involving nonprofit corporations, the de facto merger 

exception does not apply. As one federal court commented, "[t]he 

policies underlying the no successor liability principle are 

geared toward encouraging economic actors to function effectively 
No. 2017AP822 

15

¶29 As to the mere continuation exception, identity of 

ownership is established where there "'is a common identity of the 

officers, directors and stockholders in the selling and purchasing 

corporations.'" Fish, 126 Wis. 2d at 302 (quoting Leannais, 565 

F.2d at 440).15 Some evidence, like the common identity of 

stockholders, will support application of both the de facto merger 

and mere continuation exceptions. However, unlike the de facto 

merger exception, the mere continuation exception may be 

established with evidence of the continuation of the same officers, 

directors, and stockholders under circumstances where there is no 

transfer of equity or stock ownership. 

¶30 Despite Fish's clear mandate that identity of ownership 

is the key inquiry, Lunda asserts that Fish significantly expanded 

the de facto merger and mere continuation exceptions to allow the 

substitution of "identity of management and control" for identity 

of ownership. In support of its argument, Lunda highlights the 

Fish court's use of the phrase "identity of management and control" 

twice in the decision: once, in addressing Tift, where the court 

said there was an "identity of management and control throughout 

the transformation from sole proprietorship to partnership;" and

again, in discussing Cody, where the court said there was "no 

 

in a market economy and have no application in the context of nonprofit and non-stock organizations." Gallenberg Equip., Inc. v. 

Agromac Int'l, Inc., 10 F. Supp. 2d 1050, 1056 (E.D. Wis. 1998).

15 Tift and Fish relied upon Leannais v. Cincinnati, Inc., 565 

F.2d 437 (7th Cir. 1977), for the basic principles regarding 

successor liability. See Veritas, No. 2017AP822, ¶24 n.8

(describing the Leannais case).
No. 2017AP822 

16

identity of management and control throughout the transfers of 

ownership." Fish, 126 Wis. 2d at 302. Lunda further cites to IGL

and Gallenberg for the proposition that courts post-Fish have not 

required identity of ownership. IGL-Wis. Awning, Tent & Trailer 

Co., Inc. v. Greater Milwaukee Air & Water Show, Inc., 185 Wis. 2d 

864, 520 N.W.2d 279 (Ct. App. 1994); Gallenberg Equip., Inc. v. 

Agromac Int'l, Inc., 10 F. Supp. 2d 1050 (E.D. Wis. 1998). 

¶31 Identity of ownership remains the sine qua non of 

successor liability. Although the phrase "identity of management 

and control" was used to describe the transfers of ownership in 

Tift and Cody, the Fish court maintained that identity of ownership 

is required to meet the de facto merger and mere continuation 

exceptions. The Fish court explained that in Tift there was 

identity of ownership because "the identical organization 

continued to manufacture the same product" and in Cody there was 

not identity of ownership because "the successor corporation was 

an entirely different corporation" with "'no common identity of 

officers, directors and stockholders between the two companies.'" 

Fish, 126 Wis. 2d at 300, 302 (quoted source omitted). 

¶32 Contrary to Lunda's assertion, courts post-Fish have 

required proof of identity of ownership to establish the de facto 

merger and mere continuation exceptions. Lunda contends that the 

IGL court "impos[ed] successor liability based on a finding that 

there was 'identity of management and control' of two 

corporations." However, in concluding that the mere continuation 

exception applied, the court of appeals in IGL relied upon the 

circuit court's finding of fact that "'[f]or all intents and 
No. 2017AP822 

17

purposes, only the name of the business changed.'" IGL, 185 

Wis. 2d at 870.16 The IGL court additionally relied upon the 

circuit court's finding of fact that "[t]he identical organization 

in substance continued to operate with the same persons . . ." 

including the same director who formed the predecessor nonprofit 

corporation. Id. at 868, 870. 

¶33 Similarly, in Gallenberg, the federal court rejected the 

plaintiff's successor liability claim because the "plaintiff 

cannot show continuity of ownership," which it described as "the 

common thread" of the de facto merger and mere continuation 

exceptions. Gallenberg, 10 F. Supp. 2d at 1054. The court refused 

to consider the argument that by actively managing the predecessor 

corporation for a time period before the asset purchase, the 

successor corporation's owners were "de facto shareholders" and 

exercised pre-transfer control. Id. at 1056. The Gallenberg court 

concluded that the plaintiff wrongly "equate[d] control with 

ownership. They are not the same." Id. Both IGL and Gallenberg

thus required evidence of identity of ownership in order to meet 

the relevant exceptions to successor liability at issue in each 

case.

 

16 The mere continuation exception was the only exception to 

the general rule against successor liability that was addressed by 

the court in IGL-Wis. Awning, Tent & Trailer Co., Inc. v. Greater 

Milwaukee Air & Water Show, Inc., 185 Wis. 2d 864, 520 N.W.2d 279 

(Ct. App. 1994). 
No. 2017AP822 

18

¶34 We reject Lunda's reading of Tift and Fish17 and decline 

to broaden the exceptions to the rule against successor liability, 

as we have declined to do in the past. See Fish, 126 Wis. 2d at 

303-12 (rejecting the plaintiff's arguments in favor of adopting 

a "product line" exception and "expanded continuation" exception 

to the rule).18 Identity of ownership, not identity of management 

and control, remains the essential element that a plaintiff must 

establish under both the de facto merger and mere continuation 

exceptions.

D. No genuine issue of material fact regarding 

identity of ownership

¶35 The facts in this case do not establish identity of 

ownership between Veritas, the asset purchaser, and PDM, the 

seller, under either the de facto merger or mere continuation 

exceptions. In regards to the de facto merger exception, it is 

undisputed that there was no stock or other indicia of equity 

ownership transferred from Veritas to PDM. Therefore, there was 

no de facto merger as a matter of law and Lunda's claim under this 

exception must fail. 

¶36 As to the mere continuation exception, Atlas and its 

subsidiaries, including Veritas, were strangers to Lunda prior to 

 

17 Lunda does not dispute that we must affirm the court of 

appeals if we reject its interpretation of Fish, 126 Wis. 2d 293.

18 Expanding the exceptions to the rule against successor 

liability would also be inconsistent with its important objective: 

to provide "transactional clarity and certainty for business 

parties engaged in fundamental corporate transactions." Matheson, 

John H., Successor Liability, 96 Minn. L. Rev. 371, 373 (2011).
No. 2017AP822 

19

receiving a call from an investment banker regarding the prospect 

of purchasing PDM. Veritas and PDM had separate and distinct

ownership before and after Veritas foreclosed on PDM's assets. No 

director or owner of PDM became a director or owner of Veritas. 

Based on this lack of common identity of officers, directors, and 

stockholders in the selling and purchasing corporations, the mere

continuation exception does not apply.

¶37 Lunda has not raised a genuine issue of material fact as 

to identity of ownership under either the de facto merger or mere 

continuation exceptions and therefore its successor liability 

claim must fail. 

E. Forfeiture of Lunda's successor liability claim based

upon the fraudulent transaction exception

¶38 Finally, Lunda asserts that the court of appeals 

erroneously dismissed its successor liability claim in light of 

the fraudulent transaction exception to the rule against successor 

liability.19 Veritas contends that Lunda forfeited this argument 

when it failed to raise the exception before the court of appeals.20 

We agree. 

 

19 In its third-party complaint, Lunda referred to the 

exception as the "fraudulent purpose exception." It has also been 

referred to as the "fraudulent transfer exception" and the 

"fraudulent transaction exception." Like we did in Springer, 381 

Wis. 2d 438, we will refer to it as the fraudulent transaction 

exception so as to not mistake it for the WUFTA claim. 

20 Veritas also contends that Lunda never pursued this 

exception before the circuit court on summary judgment; however, 

as detailed herein, that is inaccurate.
No. 2017AP822 

20

¶39 A chronological summary of the circuit court proceedings 

and subsequent appellate briefing illustrates how Lunda forfeited 

this argument. When Lunda filed its counterclaims and third-party 

complaint in response to Veritas's declaratory judgment action, it 

asserted a successor liability claim based on three exceptions to 

the rule against successor liability: de facto merger, mere 

continuation, and fraudulent transaction. At the same time, Lunda 

also pleaded a statutory WUFTA claim. Lunda's brief in opposition 

to Veritas's motion for summary judgment included argument on only 

the de facto merger and mere continuation exceptions, and its WUFTA 

claim. But, at oral argument before the circuit court, the 

fraudulent transaction exception was raised and both parties 

confirmed its existence within the dispute. The circuit court's 

final order explained that it found no genuine issue of material 

fact as to successor liability "under any of the theories that 

Lunda advanced, whether de facto merger, mere continuation, or 

fraudulent [transaction]," and that it also found no dispute as to 

Lunda's WUFTA claim. (Emphasis added.) 

¶40 In its brief to the court of appeals, Lunda chose not to 

raise an argument as to the circuit court's adverse ruling on the 

fraudulent transaction exception. Instead, Lunda argued that 

there were "genuine issues of material fact as to the elements of 

the de facto merger and mere continuation" exceptions, and as to 

its WUFTA claim. 

¶41 Lunda suggests that this court's recent decision in 

Springer, 381 Wis. 2d 438, revives its claim for successor 

liability on the basis of the fraudulent transaction exception. 
No. 2017AP822 

21

In Springer, we concluded that a fraudulent transfer under WUFTA 

did not supplant the common-law fraudulent transaction exception 

to the rule against successor liability. Id., ¶29. 

¶42 The court of appeals reached its decision in this case 

in November 2018, several months after publication of Springer, 

and addressed the only issue related to fraudulence that was 

presented by Lunda: its WUFTA claim. See Veritas, No. 2017AP822, 

¶¶36-42. Because Lunda failed to pursue the fraudulent transaction 

exception on appeal, the holding in Springer is of no import. 

Lunda failed to preserve on appeal its successor liability claim 

as to the fraudulent transaction exception and this court's 

decision in Springer cannot revive it. We decline to address this 

forfeited claim.

IV. CONCLUSION

¶43 We conclude that because Lunda did not establish a 

genuine issue of material fact as to identity of ownership between 

Veritas and PDM, it cannot satisfy the de facto merger or mere 

continuation exceptions to the rule against successor liability. 

We further conclude that by not raising the fraudulent transaction 

exception before the court of appeals, Lunda forfeited its claim 

for successor liability based on that exception. We therefore 

affirm the court of appeals. 

By the Court.—The decision of the court of appeals is 

affirmed.
No. 2017APAP822.pdr

1

¶44 PATIENCE DRAKE ROGGENSACK, C.J. (concurring). There 

is no question of fact that Atlas's related entities purchased PDM 

Bridge, LLC's (PDM)1 secured debt from PDM's lenders with the 

intent to obtain control of PDM. They did so through strict 

foreclosure of that secured debt, which resulted in ownership of 

PDM's assets without encumbrance by any debt with lower priority 

than the secured debt that drove the foreclosure. 

¶45 Lunda Construction Company (Lunda) asserts that the 

strict foreclosure does not save Veritas's assets from its $16 

million judgment against PDM. Before us, Lunda contends that 

Veritas is the same corporation as PDM, but with a different name, 

due to de facto merger and mere continuation doctrines. Lunda 

also asserts that Veritas's intent to remove PDM's assets from its 

reach gives rise to common law and statutory fraud claims that 

open Veritas's assets to collection for Lunda's judgment against 

PDM.

¶46 Therefore, the question before us is whether, given the 

undisputed facts, Atlas lawfully removed PDM's assets from Lunda's 

reach by the actions it and its affiliates took, which actions 

culminated in strict foreclosure that prevented Lunda's claims 

from reaching Veritas's assets. As I explain below, my answer to 

that question is yes. Accordingly, although I do not join the 

majority opinion, I respectfully concur in the majority opinion's 

dismissal of Lunda's claims against Veritas.

 

1 PDM was a non-stock Delaware corporation with a single 

member, ASP PDM, LLC (ASP), which also was a non-stock Delaware 

corporation.
No. 2017APAP822.pdr

2

I. BACKGROUND

¶47 PDM was a steel bridge fabrication company with offices 

in Illinois and fabrication facilities in Wisconsin and Florida. 

In 2006, to continue in business, PDM obtained financing from a 

syndicate of lenders (the Syndicate), which provided PDM loans 

evidenced by a $115 million note and a $25 million line of credit. 

The Syndicate collateralized its loans with PDM's real estate and 

personal property, both tangible and intangible, by filing 

appropriate mortgages and financing statements to protect its 

interests. ASP also pledged its member interest in PDM to the 

Syndicate thereby giving corporate control of PDM to the Syndicate.

¶48 PDM's financial difficulties continued. In December of 

2011, PDM suffered losses in excess of $63 million and was in 

default of its financial commitments to the Syndicate. The 

Syndicate and PDM entered into a Forbearance Agreement, wherein 

PDM agreed to "restructure" its operations. 

¶49 In 2012, PDM's financial troubles continued, producing 

another loss in excess of $63 million. Its financial difficulties 

also were affecting Lunda. In July of 2012, Lunda sued PDM for 

breach of contract with damages alleged to be in excess of $16 

million.2

¶50 Notwithstanding the 2011 "restructuring," PDM continued 

to have general financial difficulties. PDM also was unable to 

meet the terms of the 2011 Forbearance Agreement between it and 

the Syndicate. 

 

2 Due to a series of intervening events, Lunda did not obtain 

a judgment on this debt until 2014.
No. 2017APAP822.pdr

3

¶51 In June of 2013, the principal amount of PDM's debt to 

the Syndicate was approximately $70 million and PDM was insolvent. 

PDM was in default of its credit agreement with the Syndicate. 

Due to PDM's financial condition, the Syndicate and PDM entered 

into a second Forbearance Agreement3 wherein PDM became obligated 

to retain assistance of an investment banker to sell its business 

as a going concern or to sell all of its assets on or before 

September 20, 2013. 

¶52 To accomplish those tasks, PDM retained Houlihan Lokey 

Capital, Inc., a well known investment banker with experience 

selling distressed companies. Although the investment banker 

contacted 136 potential purchasers, only six letters of interest 

were obtained. No responding entity was willing to pay enough to 

cover the Syndicate's outstanding $70 million debt. Atlas, a 

private equity firm and industrial holding company, was the highest 

bidder, offering $33 million as a net purchase price for PDM. 

¶53 Upon learning that Lokey's efforts to sell PDM had not 

been successful, Atlas, and two other unsuccessful bidders in the 

potential sale of PDM, offered to purchase the Syndicate's secured 

debt for varying amounts. Atlas did so because it determined that 

if properly restructured, PDM could be a valuable asset for Atlas's 

investors. 

¶54 In August 2013, Atlas created Bridge Resources, LLC 

(Bridge Resources), with Atlas as its majority member. Bridge 

Resources and another Atlas entity, paid the Syndicate 

 

3 There is no evidence that Veritas, Atlas and Bridge 

Fabrications Holdings, LLC (BFH) were parties to the Forbearance 

Agreement or had an interest in PDM's debt or equity at the time 

the Forbearance Agreement was executed. 
No. 2017APAP822.pdr

4

approximately $22 million for all of the Syndicate's secured debt 

and the ASP pledge. Bridge Resources became the administrative 

agent of the secured debt. Appropriate financing statements and 

mortgages were filed on all of PDM's personal and real property, 

giving Bridge Resources a perfected security interest in all PDM's 

assets. 

¶55 In September 2013, Bridge Resources created Bridge 

Fabrications Holdings, LLC (BFH).4 In October of 2013, to 

accomplish strict foreclosure of PDM's assets, BFH created Veritas 

Steel, LLC (Veritas) to which rights in PDM's secured debt were 

transferred.5 

¶56 On November 5, 2013, Veritas conducted a Wis. Stat. 

§ 409.620 strict foreclosure procedure on all the secured debt via 

a Strict Foreclosure Agreement. In that Agreement, Veritas agreed 

to assume only those PDM liabilities that were expressly set forth 

in the agreement. 

¶57 Strict foreclosures on the secured debt permitted 

Veritas to own all PDM assets in satisfaction of the debt that PDM 

had originally incurred during the Syndicate financing.6 At the 

 

4 BFH's members were Lapetus Capital LLC, Atlas Resources, LP 

and SHP; Capital Solutions Fund, LP and Atlas Capital Resources, 

LP. 

5 BFH was Veritas's sole member. In October of 2013, BFH 

created BFH Secured Lending and was its sole member; then in 

December of 2013, Bridge Resources merged into BFH. 

6 Pursuant to Wis. Stat. § 409.620 (U.C.C. § 9-620) a creditor 

can foreclose on debt collateralized by personal property of a 

type that is subject to Wis. Stat. ch. 409 (U.C.C. ch. 9) and 

accept the collateral in full or partial satisfaction of the debt.

Foreclosures of PDM's real property proceeded under differing 

statutory provisions depending on the location of the real 
No. 2017APAP822.pdr

5

conclusion of strict foreclosure, Veritas owned all of PDM's 

assets, cleansed of all secured and unsecured debts that were 

subordinate to the secured debt that Veritas owned. 

¶58 In March of 2014, Lunda obtained a judgment of 

approximately $16 million against PDM, which it filed in Wisconsin 

in July of 2014 and in Illinois in September of 2014. In July of 

2014, Lunda commenced an action in Wisconsin to obtain funds from 

the Wisconsin Department of Transportation (DOT) pursuant to Wis. 

Stat. § 779.155 based on its judgment against PDM.7 

¶59 In February 2015, Veritas commenced this lawsuit as a 

declaratory judgment action due to Lunda's Wis. Stat. § 779.155 

action seeking payments from DOT, which Veritas claimed belonged 

to it. Lunda counterclaimed, alleging that Veritas was PDM by 

another name; and therefore, Veritas's assets were subject to 

Lunda's claims for payment of its $16 million judgment against 

PDM. 

¶60 Lunda contended that Veritas is the same entity as PDM 

due to a de facto merger of PDM, or as a mere continuation of PDM. 

Lunda also asserted that the strict foreclosure procedures 

employed were grounded in common law or statutory fraud and 

therefore, permit Lunda to collect its debt from Veritas's assets. 

The circuit court dismissed Lunda's complaint against Veritas, and 

the court of appeals affirmed that dismissal. 

II. DISCUSSION

A. Standard of Review

 

property. See Wis. Stat. § 846.15 et seq. 

7 PDM was dissolved in August of 2014. 
No. 2017APAP822.pdr

6

¶61 Here, we review summary judgment granted to Veritas. In 

so doing, we independently employ the same methodology as the court 

of appeals and the circuit court. Wisconsin Pharmacal Co., LLC v. 

Nebraska Cultures of Cal., Inc., 2016 WI 14, ¶12, 367 Wis. 2d 221, 

876 N.W.2d 72. Summary judgment is to be granted "if the 

pleadings, depositions, answers to interrogatories, and admissions 

on file, together with the affidavits, if any, show that there is 

no genuine issue as to any material fact and that the moving party 

is entitled to a judgment as a matter of law." Id. (quoting Wis. 

Stat. § 802.08(2) (2013-14)).

B. Corporate Assets

1. General Rule

¶62 When one corporation buys the assets of another 

corporation in a commercial context, the transferee corporation 

generally does not succeed to the transferor's debts. Marie T. 

Reilly, Making Sense of Successor Liability, 31 Hofstra L. Rev. 

745 (2003). However, a court may decide that the transferee 

corporation should be treated as a successor corporation and be 

liable for the transferor's debts. Id. at 746. In the matter 

before us, strict foreclosure, a Wis. Stat. § 409.620, et seq.

remedy available to secured creditors, is the context in which to 

evaluate Lunda's claims.8 

 

8 There are occasions when federal law causes the purchasing 

corporation to be liable for the acts of the transferor 

corporation. See Kathryn A. Barnard, EPA's Policy of Corporate 

Successor Liability Under CERCLA, 6 Stan. Envtl. L. J. 78 (1986-

1987). CERCLA and its policy concerns are not present here. I 

mention CERCLA only because the context in which successor 

corporate liability is evaluated is important. 
No. 2017APAP822.pdr

7

¶63 Wisconsin follows the general rule, wherein a 

corporation that purchases the assets of another corporation in a 

commercial context is not liable for the obligations of the selling 

corporation. See Fish v. Amsted Indus., Inc., 126 Wis. 2d 293, 

298, 376 N.W.2d 820 (1985). The general rule stated above promotes 

alienability of corporate assets and is in accord with policies 

that promote productive use of business assets. Gallenberg Equip., 

Inc. v. Agromac Int'l, Inc., 10 F. Supp. 2d 1050, 1053 (1998). 

2. Exceptions

¶64 In Wisconsin, there are four exceptions to the rule of 

non-liability for the transferee corporation:

(1) when the purchasing corporation expressly or 

impliedly agreed to assume the selling corporation's 

liability; (2) when the transaction amounts to a 

consolidation or merger of the purchaser and seller 

corporations; (3) when the purchaser corporation is 

merely a continuation of the seller corporation; or 

(4) when the transaction is entered into fraudulently to 

escape liability for such obligations. 

Fish, 126 Wis. 2d at 298 (quoting Leannais v. Cincinnati, Inc., 

565 F.2d 437, 439 (7th Cir. 1977)). 

¶65 Lunda contends that the strict foreclosure employed here 

caused a de facto merger between PDM and Veritas. In evaluating 

a claim of de facto merger, appellate precedent considers whether:

(1) the assets of the seller corporation are acquired 

with shares of the stock in the buyer corporation, 

resulting in a continuity of shareholders; (2) the 

seller ceases operations and dissolves soon after the 

sale; (3) the buyer continues the enterprise of the 

seller corporation so that there is a continuity of 

management, employees, business location, assets and 

general business operations; and (4) the buyer assumes 

those liabilities of the seller necessary for the 

uninterrupted continuation of normal business 

operations. 
No. 2017APAP822.pdr

8

Sedbrook v. Zimmerman Design Grp., Ltd., 190 Wis. 2d 14, 20-21, 

526 N.W.2d 758 (Ct. App. 1994) (quoting Parson v. Roper Whitney, 

Inc., 586 F. Supp. 1447, 1449 (W.D. Wis. 1984)). However, as we 

explained in Fish, "[t]he key element in determining whether a 

merger or de facto merger has occurred is that the transfer of 

ownership was for stock in the successor corporation rather than 

cash." Fish, 126 Wis. 2d at 301 (quoting Leannais, 565 F.2d at 

439). 

¶66 In the matter before us, Lunda has provided nothing from 

which we could conclude that PDM's member, ASP, received membership 

status in Veritas, upon foreclosure, at the time of asset transfer 

or at any other time. The assets of PDM were obtained in exchange 

for satisfaction of approximately $65 million of PDM's $70 million 

of secured debt, which Veritas then held.9 Veritas's position 

relative to the assets that belonged to PDM did not arise due to 

a merger or a de facto merger of PDM with Veritas. 

¶67 Lunda also contends that Veritas is a mere continuation 

of PDM; that it is the same corporation, but with a different name. 

In evaluating a claim that one corporation is a mere continuation 

of an earlier corporation, we consider whether there is "a common 

identity of the officers, directors and stockholders in the selling 

and purchasing corporations." Leannais, 565 F.2d at 440. In Tift, 

we cited Leannais and also focused on "identity." As we explained:

When viewed in the context of a tort caused by a 

defective product, these two "exceptions" merely recite 

that, where either one is applicable, there is 

"identity," because in substance the successor business 

 

9 Five million dollars of secured debt remained and was 

retained by Veritas together with the assets that secured it. 
No. 2017APAP822.pdr

9

organization which the plaintiff sues is, despite 

organizational metamorphosis, the same business 

organization which manufactured the product which caused 

his injury. 

Tift v. Forage King Indus., Inc., 108 Wis. 2d 72, 78, 322 N.W.2d 

14 (1982). Our major concern in Tift was whether a company that 

began as a sole proprietorship, proceeded to a partnership and 

ended as a corporation could be liable for a product manufactured 

by an earlier business form that was not corporate. Id. at 76-

77. However, lest there be confusion on the meaning of "identity," 

in Fish, we explained that "[i]dentity refers to identity of 

ownership, not identity of product line." Fish, 126 Wis. 2d at 

301. 

¶68 In the matter before us, there is no identity of 

ownership between PDM and Veritas. Both PDM and Veritas have LLC 

non-stock structures, but there was no overlap in their members or 

in their creators. PDM, a Delaware LLC, had a single member, ASP. 

Veritas, also a Delaware limited liability company, has a single 

member, BFH. BFH's members do not include ASP or PDM. While nonstock corporations generally are controlled by their articles and 

owned by their members, the articles of neither PDM nor Veritas 

are in the record before us. There is no proof in the record that 

supports the conclusion that Veritas and PDM have the same 

ownership. While it appears that Matt Cahill,10 who was the CEO 

of PDM, and Alan Sobel, who was the CFO of PDM, continued for at 

least some period of time in those roles at Veritas, neither had 

an owner's interest PDM or in Veritas. Accordingly, Veritas does 

 

10 Cahill was replaced as CEO in April of 2014. 
No. 2017APAP822.pdr

10

not meet the criteria necessary for us to conclude that it is a 

mere continuation of PDM.

¶69 Lunda also contends that because Veritas foreclosed by 

using strict foreclosure procedures that were designed to 

eliminate all debt that had a lesser priority than the debt Atlas 

affiliates purchased from the Syndicate, the transactions at issue 

here were fraudulent as to Lunda.11 Therefore, Lunda reasons the 

general rule that the purchasing corporation is not responsible 

for the debts of the seller does not apply; and accordingly, it 

has the right to execute its $16 million judgment against Veritas's 

assets.

¶70 The elements of common law fraud are: (1) a 

representation of fact that the speaker intends the hearer to rely 

on; (2) which the speaker either knows is untrue, or makes with 

reckless disregard for its truthfulness; (3) another believes such 

representation and relies on it; (4) with resulting damage. 

Ollerman v. O'Rourke Co., Inc., 94 Wis. 2d 17, 25, 288 N.W.2d 95 

(1980) (quoting Whipp v. Iverson, 43 Wis. 2d 166, 169-170, 168 

N.W.2d 201 (1969)). 

 

11 Lunda pled common law fraud and the circuit court addressed 

it. Lunda also raised it in its arguments before us. The majority 

opinion applies forfeiture and does not address this contention 

because Lunda did not continue this allegation before the court of 

appeals. Majority op., ¶¶38-42. 

Forfeiture is a doctrine of judicial administration. See

State v. Soto, 2012 WI 93, ¶¶35, 36, 343 Wis. 2d 43, 817 N.W.2d 

848. Because Lunda's contention arises in a commercial context 

where statutory procedures under ch. 409 were employed and 

guidance may be helpful to future commercial litigants, I choose 

to address Lunda's contention. 
No. 2017APAP822.pdr

11

¶71 We recently addressed common law fraud in Springer v. 

Nohl Elec. Prods. Corp., 2018 WI 48, 381 Wis. 2d 438, 912 N.W.2d 

1, in the context of a products liability claim that alleged 

successor corporation liability. There, Mrs. Springer claimed 

that her husband died from exposure to asbestos-containing 

products, which occurred during his employment for a company that 

preceded Nohl. Id., ¶2. She sued Nohl to recover for his injuries 

and death. Id. We explained that the fraudulent transfer of 

assets exception to non-liability "has rarely been used to impose 

successor liability for products liability claims." Id., ¶17 

(citing Restatement (Third) of Torts: Products Liability § 12 

cmt. e (Am. Law Inst. 1998); Timothy J. Murphy, A Policy Analysis 

of a Successor Corporation's Liability for Its Predecessor's 

Defective Products When the Successor Has Acquired the 

Predecessor's Assets for Cash, 71 Marq. L. Rev. 815, 819 (1988). 

¶72 In Springer, we painted the fraud exception with broad 

strokes that left the particulars of that exception for another 

day. We said, "The fraudulent transaction theory turns on the 

intention underlying the transfer of assets to [the successor], 

i.e., whether it was made with an actual intention to hinder, 

delay, or defraud creditors." Springer, 381 Wis. 2d 438, ¶19 

(quoting United States ex rel. Bunk v. Gov't Logistics N.V., 842 

F.3d 261, 276 (4th Cir. 2016)). We also said that "the fraudulent 

transfer exception, [in] the law [of] every 

jurisdiction . . . requires a finding that the corporate transfer 

of assets 'is for the fraudulent purpose of escaping liability.'" 

Id. (quoting Raytech Corp. v. White, 54 F.3d 187, 192 (3d Cir. 

1995) (alterations in original)). The wrongful intent of the 
No. 2017APAP822.pdr

12

person seeking to avoid liability was critical to our decision in 

Springer. Id., ¶19.

¶73 It is important to note that Springer arose in the 

context of a products liability claim. It did not involve strict 

foreclosure of secured debt pursuant to Wis. Stat. § 409.620. 

Lunda gave little attention to the commercial context in which its 

claim arose, yet an understanding of the context in which Lunda 

makes its claim and Veritas raises its defense is critical. 

Therefore, a brief overview of strict foreclosure will be helpful 

to the reader's understanding of my discussion that follows.

¶74 "Article 9 of the Uniform Commercial Code (U.C.C.) 

permits a secured creditor to elect among several alternative 

remedies in the event of a default by the debtor."12 LaRoche v. 

Amoskeag Bank, 969 F.2d 1299, 1302 (1st Cir. 1992). Subsequent to 

debtor default, the secured creditor may dispose of the collateral, 

"as long as it does it in a 'commercially reasonable manner.'" 

Id. at 1303. However, a secured creditor also may choose to 

proceed by strict foreclosure, which is a different statutory 

opportunity. Id. 

¶75 Strict foreclosure permits a secured creditor "to retain 

the collateral in complete satisfaction of the indebtedness." Id.

"Disputes about valuation or even a clear excess of collateral 

value over the amount of obligations satisfied do not necessarily 

demonstrate the absence of good faith." Michael L. Monson, Strict 

Foreclosure Under Article 9: Benefits, Risks, and Strategies, 43 

No. 1 UCC L.J. (Oct. 2010), 3. 

 

12 Wisconsin Stat. ch. 409 is the Wisconsin equivalent of 

Uniform Commercial Code chapter 9.
No. 2017APAP822.pdr

13

¶76 When a secured party employs strict foreclosure pursuant 

to statute and accepts the collateral in full or partial 

satisfaction of the debt owed:

(1) the debt is discharged to the extent consented to by 

the debtor, (2) all of the debtor's rights in the 

collateral are transferred to the secured party, (3) the 

security interest that was the subject of the debtor's 

consent and any subordinate security interest or other 

subordinate liens are discharged, and (4) any other 

subordinate interests are terminated. . . . After the 

secured party has accepted the collateral it may resell 

the collateral to a subsequent purchaser, keep it, or 

otherwise deal with it as its own property.

Id. at 6.

¶77 Wisconsin Stat. § 409.620's authorization of strict 

foreclosure has a number of mandatory procedures and the 

availability of objections that could stop the process. For 

example, subordinate secured creditors have a right to notice of 

the proposed strict foreclosure, Wis. Stat. § 409.621(1), and a 

right to object to using strict foreclosure, Wis. Stat. 

§ 409.620(1)(b). However, on November 5, 2013, when Veritas 

strictly foreclosed on the debt that was secured by PDM's assets,

Lunda was not a subordinate secured creditor. Therefore, Lunda

did not have the opportunity to object to Veritas' use of strict 

foreclosure. 

¶78 In addition, Lunda has not claimed that the strict 

foreclosure that occurred here did not satisfy the statutory 

obligations of Wis. Stat. ch. 409. Lunda simply contends that 

because the strict foreclosure process was used to cleanse assets 

of debt the process was fraudulent. 

¶79 Lunda's argument misses its mark because 

Wis. Stat. ch. 409 was created in part to do exactly what happened 
No. 2017APAP822.pdr

14

here. Veritas's conduct was not fraudulent because it was not 

wrongful in this commercial context.13 Stated otherwise, I 

conclude that a creditor that strictly forecloses in a commercial 

context in accord with the statutory procedures set out in ch. 409 

to avoid the claims of debtors with lesser priority does not 

exhibit wrongful intent that supports a claim of common law fraud. 

Accordingly, the broad statements about "fraudulent intent" set 

out in Springer have no application here. 

¶80 My conclusion that strict foreclosure under Wis. Stat. 

§ 409.620 does not support Lunda's fraud claim is reinforced by 

Wis. Stat. § 242.08(5)(b). Statutory fraud, Wisconsin Uniform 

Fraudulent Transfer Act (WUFTA), is set out in Wis. Stat. ch. 242. 

Lunda sought to use WUFTA to void the transfer of PDM's assets to 

Veritas. However, § 242.08(5)(b) provides that a transfer is not 

voidable if it results from "Enforcement of a security interest in 

compliance with ch. 409." Here, there is no question that the 

transfer of personal property, tangible and intangible, occurred 

through enforcement of a security interest under § 409.620 et seq. 

WUFTA also has no application here. 

 

13 Chapter 409's legislation for secured transactions is 

complicated. An understanding of the claim and defense and the 

context in which they arise is critical. Here, we have strict 

foreclosure between commercial parties engaged in commercial 

transactions.
No. 2017APAP822.pdr

15

III. CONCLUSION

¶81 The question before us is whether, given the undisputed 

facts, Atlas lawfully removed PDM's assets from Lunda's reach by 

the actions it and its affiliates took, which actions culminated 

in strict foreclosure that prevented Lunda's claims from reaching 

Veritas's assets. As I explained above, my answer to that question 

is yes. Accordingly, although I do not join the majority opinion, 

I respectfully concur in the majority opinion's dismissal of 

Lunda's claims against Veritas. 
No. 2017APAP822.pdr

1