COURT OF APPEALS

DECISION

DATED AND FILED

August 15, 2024

Samuel A. Christensen

Clerk of Court of Appeals

NOTICE

This opinion is subject to further editing. If 

published, the official version will appear in 

the bound volume of the Official Reports. 

A party may file with the Supreme Court a 

petition to review an adverse decision by the 

Court of Appeals. See WIS. STAT. § 808.10 

and RULE 809.62. 

Appeal No. 2023AP751 Cir. Ct. No. 2022CV539

STATE OF WISCONSIN IN COURT OF APPEALS

DISTRICT IV

DESJURDIN LACEY AND MILDRED LACEY,

 PLAINTIFFS-APPELLANTS,

 V.

CREDIT ACCEPTANCE COMPANY,

 DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Dodge County: 

JOSEPH G. SCIASCIA, Judge. Reversed. 

Before Blanchard, Nashold, and Taylor, JJ.

Per curiam opinions may not be cited in any court of this state as precedent 

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3). 

¶1 PER CURIAM. In 2016, Desjurdin Lacey entered into a retail 

installment agreement (“the contract”) that required him to make payments on a 
No. 2023AP751

2

used car. He defaulted on the contract. In 2019, Credit Acceptance Corporation 

filed an action seeking a deficiency judgment on the contract and obtained a

money judgment (“the judgment”) against Lacey. In 2022, Desjurdin Lacey and 

his spouse, Mildred Lacey, obtained an order from the Dodge County Circuit 

Court prohibiting creditors that included Credit Acceptance from garnishing 

Desjurdin Lacey’s wages.

¶2 Later in 2022, Desjurdin Lacey and Mildred Lacey initiated this

action. The Laceys allege that Credit Acceptance violated provisions of the 

Wisconsin Consumer Act and engaged in civil theft by allegedly continuing

garnishment efforts against Desjurdin Lacey’s wages, despite the fact that Credit 

Acceptance had been placed on notice of the court order prohibiting such 

garnishment. The circuit court order granted a motion by Credit Acceptance to 

compel arbitration of the Laceys’ current claims, based on an arbitration clause 

contained in the contract. The Laceys appeal. 

¶3 Applying the merger doctrine, we conclude that Credit Acceptance 

cannot rely on the arbitration clause contained in the contract to compel arbitration 

in this action. This is because Credit Acceptance’s contractual right to arbitrate 

the Laceys’ claims, which relate to Credit Acceptance’s alleged enforcement of 

the judgment it obtained in 2019, merged into the judgment. Accordingly, we 

reverse the order dismissing the action in order to allow arbitration. 

BACKGROUND

¶4 Desjurdin Lacey defaulted on the 2016 contract to purchase a used 

minivan. In January 2019, Credit Acceptance sued to collect on the outstanding 

balance, and in February it obtained a money judgment of $10,588.98. Based on 
No. 2023AP751

3

this deficiency judgment, Credit Acceptance began garnishing Desjurdin Lacey’s 

wages from his job at a retail store. 

¶5 In August 2022, more than three years after Credit Acceptance 

obtained the money judgment, the Laceys commenced a voluntary amortization of 

debts proceeding under WIS. STAT. ch. 128 (2021-22) in Dodge County Circuit 

Court.1 An affidavit of debts that the Laceys attached to the petition included a 

debt of $5,384.09 to Credit Acceptance, representing what the Laceys averred to 

be the remaining balance due on the judgment. On September 14, 2022, the court 

issued an order appointing a trustee and enjoining creditors from conduct that 

included enforcing a garnishment to collect debts that were scheduled in the 

ch. 128 proceeding. 

 

1

 Under WIS. STAT. § 128.21, a person whose main income is from wages or salary may 

commence a circuit court proceeding based on a representation that

... the person is unable to meet current debts as they mature, but 

is able to make regular future payments on account sufficient to 

amortize the debts over a period of not more than 3 years, and 

that he or she desires the aid of the court to effectuate the 

amortization. The petition shall also set forth the names and 

addresses of any creditors who have levied any executions, 

attachments or garnishments, and of any garnishees, and the 

court shall forthwith, by order, require that proceedings for the 

enforcement of the executions, attachments or garnishments be 

stayed during the pendency of proceedings under this section.

WIS. STAT. § 128.21(1). After such a petition is filed, the court appoints a “disinterested trustee” 

to come up with a plan for the repayment of debts, “and until the dismissal of the proceedings, no 

execution, attachment or garnishment may be levied or enforced by any creditor seeking the 

collection of any claim which arose prior to the proceedings, unless such claim is not included by 

the debtor in the claims to be amortized.” Sec. 128.21(2), (3).

All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise 

noted.
No. 2023AP751

4

¶6 In December 2022, the Laceys filed the action in this case. The 

complaint claims that Credit Acceptance violated WIS. STAT. § 427.104(h) and (j) 

of the Wisconsin Consumer Act, and committed civil theft, by making 

garnishment efforts against Desjurdin Lacey’s wages, despite the fact that Credit 

Acceptance had been placed on notice of the order prohibiting such garnishment. 

¶7 Credit Acceptance filed a motion requesting an order compelling

arbitration of the claims in this action, based on an arbitration clause included in 

the contract. The Laceys opposed the motion. 

¶8 In a written order, the circuit court granted the motion to compel 

arbitration. 

DISCUSSION

¶9 One argument advanced by the Laceys in the circuit court against 

Credit Acceptance’s motion to compel arbitration was the following. The 

arbitration clause in the contract—and all of the other rights and obligations 

created for the parties by the contract—“dissolve[d]” when those rights and 

obligations were “converted” into the money judgment that Credit Acceptance 

sought and obtained to resolve its action based on the contract. On appeal, the 

Laceys renew this argument. They argue that the circuit court erred in compelling 

arbitration “based solely on” the contract, because the contract was “merged into a 

money judgment in a separate circuit court action” from this one. On the record of 

this case, as argued by the parties, we agree that the motion to compel arbitration 

should be denied.

¶10 A motion to compel arbitration involves contract interpretation and 

the determination of substantive arbitrability, which are issues that we review de 
No. 2023AP751

5

novo. Midwest Neurosciences Assocs., LLC v. Great Lakes Neurosurgical 

Assocs., LLC, 2018 WI 112, ¶38, 384 Wis. 2d 669, 920 N.W.2d 767. In 

considering the issue that we determine to be dispositive under the merger 

doctrine, we are not called on to interpret the meaning of any specific provision in 

the contract here, including the arbitration clause. Instead, we address only the 

legal issue of whether the merger doctrine applies based on the undisputed facts. 

See Bank of Sun Prairie v. Marshall Dev. Co., 2001 WI App 64, ¶5, 242 Wis. 2d 

355, 626 N.W.2d 319 (applying standard de novo review on summary judgment to 

a merger issue).

¶11 Turning to the substance of the merger doctrine, this court in 1985 

adopted the doctrine as formulated in the RESTATEMENT (SECOND) OF JUDGMENTS

(1982).

2

 Waukesha Concrete Prods. v. Capitol Indem. Corp., 127 Wis. 2d 332, 

343-44, 379 N.W.2d 333 (Ct. App. 1985). The doctrine “is a common-law 

principle applied throughout all state and federal forums, in a basically consistent 

manner.” Production Credit Ass’n v. Laufenberg, 143 Wis. 2d 200, 205, 420 

N.W.2d 778 (Ct. App. 1988).

¶12 The merger doctrine as adopted in Wisconsin provides:

When a valid and final personal judgment is 

rendered in favor of the plaintiff:

(1) The plaintiff cannot thereafter maintain an 

action on the original claim or any part thereof, although 

[the plaintiff] may be able to maintain an action upon the 

judgment; and

 

2

 The American Law Institute published the first version of this restatement in 1942 and 

the RESTATEMENT (SECOND) OF JUDGMENTS in 1982. See https://www.ali.org/

publications/show/judgments/. We cite to the 1982 version, and for its commentary we refer to 

the version updated in June 2024. We refer to all citations to this version and its commentary as 

the “RESTATEMENT.”
No. 2023AP751

6

(2) In an action upon the judgment, the defendant 

cannot avail [the defendant itself] of defenses [that the 

defendant] might have interposed, or did interpose, in the 

first action. 

Waukesha Concrete, 127 Wis. 2d at 343-44 (quoting RESTATEMENT § 18). One

comment to the current version of the RESTATEMENT elaborates in the following 

terms:

When the plaintiff recovers a valid and final 

personal judgment, [the plaintiff’s] original claim is 

extinguished and rights upon the judgment are substituted 

for it. The plaintiff’s original claim is said to be “merged” 

in the judgment. It is immaterial whether the defendant had 

a defense to the original action if [the defendant] did not 

rely on it, or if [the defendant] did rely on it and judgment 

was nevertheless given against [the defendant]. It is 

immaterial whether the judgment was rendered upon a 

verdict or upon a motion to dismiss or other objection to 

the pleadings or upon consent, confession, or default.

RESTATEMENT § 18 cmt. a. As this court has stated, “[b]y operation of merger, 

upon entry of judgment, the contract sued upon loses all of its vitality and ceases 

to bind the parties to its execution.” Production Credit, 143 Wis. 2d at 205. 

¶13 The merger doctrine was applied in Waukesha Concrete in the 

context of a claim by a supply company against the surety of a contractor. 

Waukesha Concrete, 127 Wis. 2d at 344. The supply company as creditor sought 

to enforce the interest rate based on terms in its contract with the contractor, which 

called for a higher rate post-judgment. Id. at 343. However, the contractual 

interest rate was extinguished upon the entry of a final judgment, and in its place a 

“new cause of action based upon the judgment” called for a new rate of interest at 

the lower statutory rate. Id. at 344. Turning to Production Credit, this court 

concluded there that, once rights and obligations in a contract have been merged 

into the judgment, post-merger attempts to collect costs and attorney’s fees that 
No. 2023AP751

7

were authorized only by the merged contract could not be sustained. See 

Production Credit, 143 Wis. 2d at 204-07 (“In the absence of an express 

agreement otherwise, the obligation of a debtor to pay the creditor’s costs and fees 

of collection or foreclosure is merged in a judgment in favor of the creditor.”).

¶14 With this precedent in mind, and based on the briefing of the parties, 

we conclude that the merger doctrine applies here to preclude enforcement of the 

arbitration clause contained in the contract. In the words of the RESTATEMENT

formulation, “a valid and final personal judgment” was “rendered in favor of” 

Credit Acceptance. Therefore, Credit Acceptance “cannot thereafter maintain an 

action on” “any part” of “the original claim,” which was based on the contract, 

except that Credit Acceptance can “maintain an action upon” the money judgment 

it obtained. See RESTATEMENT § 18.

¶15 It is true that Credit Acceptance is not now pursuing a new action 

against the Laceys. The Laceys are suing Credit Acceptance. But the nature of 

the new action is exclusively directed at Credit Acceptance’s alleged conduct in 

enforcing the judgment. There can be no dispute that the arbitration clause in the 

contract here formed, in the words of the test under the merger doctrine, “any part” 

of the contractual benefits for which that the parties are presumed to have

bargained. As Credit Acceptance itself points out, the claims in the current action 

that it seeks to arbitrate did not even accrue until long after the contract action was 

resolved in the judgment that Credit Acceptance sought and obtained. Here, 

through “operation of merger, upon entry of judgment, the contract sued upon 

[lost] all of its vitality and cease[d] to bind the parties to its execution.” See 

Production Credit, 143 Wis. 2d at 205.
No. 2023AP751

8

¶16 We now address Credit Acceptance’s arguments to the contrary, 

which are not robustly developed.

¶17 Credit Acceptance argues that the Laceys failed to preserve this 

merger doctrine argument by failing to raise it in the circuit court. To be sure, the 

argument that the Laceys made in the circuit court on this issue was not as well 

developed as the argument that they present on appeal. But we now explain why 

we conclude that the argument was sufficiently preserved in the circuit court.

¶18 Appellate courts strive to avoid reversals that would “blindside trial 

courts ... based on theories which did not originate in their forum,” and therefore it 

is not enough to raise general, related issues in order to preserve particular 

arguments for appellate review. See State v. Rogers, 196 Wis. 2d 817, 827, 539 

N.W.2d 897 (Ct. App. 1995) (explaining that the forfeiture rule requires that, to 

preserve its arguments, a party must “make all of [its] arguments to the trial 

court”). This court need not, but typically will, reject arguments raised for the first 

time on appeal. See State v. Kaczmarski, 2009 WI App 117, ¶7, 320 Wis. 2d 811, 

772 N.W.2d 702 (forfeiture is a rule of judicial administration and we may 

exercise discretion to address issues raised for the first time on appeal). 

¶19 As we have noted, the Laceys argued in the circuit court that the 

arbitration clause in the contract was “dissolve[d]” when the rights and obligations 

of the parties under the contract were “converted” into the money judgment that 

Credit Acceptance sought and obtained to resolve the action on the contract. The 

Laceys did not use the word “merge” or “merger,” but this recognizably stated the 

merger concept. 

¶20 Further, in support of their argument in the circuit court, the Laceys 

cited a footnote in Menard, Inc. v. Liteway Lighting Prods., 2004 WI App. 95, 
No. 2023AP751

9

273 Wis. 2d 439, 685 N.W.2d 365, abrogated on other grounds by Kruckenberg 

v. Harvey, 2005 WI 43, 279 Wis. 2d 520, 694 N.W.2d 879, and also highlighted 

one opinion cited in the Menard footnote, Post v. Schwall 157 Wis. 2d 652, 460 

N.W.2d 794 (Ct. App. 1990). The Laceys cited this authority for the proposition 

that a “money judgment was sufficient to dissolve the contract between the 

parties.” See Menard, 273 Wis. 2d 439, ¶24 & n.4; Post, 157 Wis. 2d at 659-60.3 

At and around the cited passages in Post, this court addressed “res judicata” 

principles that evoke the merger doctrine.4 See Post, 157 Wis. 2d at 658-60. 

 

3

 More specifically, footnote 4 of Menard states:

To the extent Menard’s argument relates to a timeline 

wherein the judgment was satisfied and then items were 

returned, Liteway was given a money judgment, not a replevin 

judgment. The money judgment was sufficient to dissolve the 

contract between the parties, giving Liteway a right to payment 

and Menard ownership of the goods, defective or not. See Post 

v. Schwall, 157 Wis. 2d 652, 659-60, 460 N.W.2d 794 (Ct. App. 

1990). Permitting Menard to return the goods after judgment as 

a means of satisfying the judgment is to allow Menard to elect 

Liteway’s remedy.

Menard, Inc. v. Liteway Lighting Prods., 2004 WI App. 95, ¶24 n.4, 273 Wis. 2d 439, 685 

N.W.2d 365 (emphasis added), abrogated on other grounds by Kruckenberg v. Harvey, 2005 WI 

43, 279 Wis. 2d 520, 694 N.W.2d 879.

4

 As this court has explained, under the approach used in the RESTATEMENT, the merger 

doctrine “is an aspect of res judicata”: 

the term “res judicata” is used in a broad sense to include three 

concepts: “merger—the extinguishment of a claim in a judgment 

for plaintiff; bar—the extinguishment of a claim in a judgment 

for defendant; and issue preclusion—the effect of the 

determination of an issue in another action between the parties 

on the same claim ... or a different claim....” 

Bank of Sun Prairie v. Marshall Dev. Co., 2001 WI App 64, ¶9 & n. 5, 242 Wis. 2d 355, 626 

N.W.2d 319 (quoting RESTATEMENT ch. 3, intro. note (1982)). 
No. 2023AP751

10

¶21 On this record, we conclude that reversal on this issue would not 

blindside the circuit court. Moreover, our addressing the issue is not unfair to 

Credit Acceptance, which had an opportunity in the circuit court, and now again 

on appeal, to provide persuasive arguments that the merger doctrine does not 

apply here.

¶22 Moving to the merits of the merger argument, Credit Acceptance

does not rely on any particular language in the arbitration agreement to support its 

position that the merger doctrine does not apply, and therefore we do not 

reproduce that language in detail. It is sufficient to acknowledge that the contract 

contains broad language entitling either side to arbitrate any “dispute” “arising out 

of or in any way related to” the contract. Further, given our conclusion that the 

merger doctrine applies, we need not reach separate disagreements between the 

parties about how the contract defined “a dispute” that could be arbitrated at the 

election of either side of the contract, about whether Credit Acceptance waived 

arbitration through its litigation conduct, or about whether the waiver issue must 

be decided by a court or an arbitrator.

¶23 Credit Acceptance correctly notes that in both Production Credit

and Waukesha Concrete, as reflected in our summaries above, the topics that were 

deemed merged did not include a right to arbitration. But Credit Acceptance fails 

to develop and support an argument that any aspect of the merger doctrine as 

adopted in Wisconsin excludes arbitration as a topic that may be subject to the 

merger doctrine. 

¶24 Nor does Credit Acceptance distinguish Wisconsin case law by 

directing us to material differences between the contract claims here and the 

contract claims that have been deemed merged into judgments in prior cases. For 
No. 2023AP751

11

example, Credit Acceptance does not identify how the Laceys’ claims relate to 

obligations of either party under the contract that were not resolved by the 

judgment. Credit Acceptance accurately observes that the parties bound 

themselves in the contract to the obligations of the arbitration clause. But the only 

topics that Credit Acceptance now seeks to arbitrate (its alleged wrongdoing in 

collection efforts) are based on the judgment that resulted from the alreadylitigated breach of contract claim. For similar reasons, in Production Credit, we 

rejected the creditor’s argument that the contractual right to attorney’s fees and 

costs was not merged into the judgment because this right was “separable” from 

the debtor’s obligation to make loan payments. See Production Credit, 143 

Wis. 2d at 206. This was because the obligation to pay fees and costs “arose out 

of the loan agreement,” which “contemplated [only] one indebtedness.” See id.

¶25 In order for Credit Acceptance to prevail here, it would need to 

identify an exception to the merger doctrine, or a way to distinguish the merger 

doctrine case law, because the merger doctrine as described in Wisconsin cases is

generally sweeping and unqualified: “[b]y operation of merger, upon entry of 

judgment, the contract sued upon [lost] all of its vitality and cease[d] to bind the 

parties to its execution.” See id. at 205 (emphasis added). 

¶26 Bank of Sun Prairie is an example of a case in which an argument 

based on the merger doctrine was denied, but Credit Acceptance fails to develop 

an argument that any statement in that case supports its argument here. To the 

contrary, the discussion in Bank of Sun Prairie implicitly treats the merger 

doctrine as generally sweeping in its reach. Starting from that implicit premise, 

the opinion carefully explains why the doctrine does not apply in one particular 

context involving enforcement actions for property held as collateral for a debt. In 

doing so, we addressed at length, and rejected, an argument that an action for 
No. 2023AP751

12

foreclosure of a mortgage should be dismissed based on the merger doctrine

because the mortgage holder had previously obtained a deficiency judgment in a 

foreclosure action on a different mortgage, involving different property, that 

secured the same debt. Bank of Sun Prairie, 242 Wis. 2d 355, ¶¶6-21; see id.,

¶¶8-9 (citing RESTATEMENT cmt. g, which provides in part that “[t]he creditor 

retains the right to enforce a lien or gain possession of property held as collateral 

for the debt”). The analysis turned on legal rules specifically permitting an action 

to foreclose on a mortgage securing a debt that has been reduced to a judgment, 

and the court’s conclusion was that the judgment did not preclude the mortgage 

holder “from seeking foreclosure on a different mortgage on different property 

that secures the same debt.” Id., ¶¶8-21. As noted, Credit Acceptance does not 

explain why the arbitration clause here is not subject to the merger doctrine, either 

in a manner analogous to the enforcement of a lien on another property as in Bank 

of Sun Prairie, or through some other category of exclusions to the doctrine. 

¶27 Separately, Credit Acceptance briefly cites as persuasive authority 

two federal district court opinions. We conclude that neither opinion is persuasive 

here. 

¶28 Morrison v. Midland Funding, LLC, No. 20-CV-6468-FPG, 2021 

WL 2529618 (W.D.N.Y. June 21, 2021), is readily distinguishable, and it is also 

not persuasive. In Morrison, a credit card agreement that was the subject of a 

default judgment and subsequent collection efforts contained a provision which

stated that the eventual creditor “will not require [the eventual debtor] to 

arbitrate[ in] a case we file to collect money you owe to us. However, if you 

respond to the collection lawsuit by claiming any wrongdoing, we may require 

you to arbitrate.” Id. at *4. This aspect of the facts in Morrison significantly 

distinguishes it from this case. Here, we do not have an underlying contract that 
No. 2023AP751

13

explicitly contemplated arbitration in the context of a later lawsuit alleging 

wrongdoing in collection efforts on the judgment resulting from an action on the 

contract. As acknowledged above, the contract here contains broad language 

entitling either side to arbitrate any “dispute” “arising out of or in any way related 

to” the contract. But unlike the contract in Morrison, the contract here does not 

specifically contemplate the Laceys eventually claiming wrongdoing in response 

to collection efforts made on a judgment.

¶29 Further, the court in Morrison does not satisfactorily address the fact 

that the collection actions sought to be arbitrated there (involving claims filed 

under the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq.) were not 

taken pursuant to the credit card agreement that had been reduced to a default 

judgment, but instead the collection actions were taken pursuant to the default 

judgment. See Morrison, No. 20-CV-6468-FPG, at **3-5. For example, the court 

in Morrison states that the merger doctrine could not apply to avoid enforcement 

of the arbitration clause, because this would render contracts “meaningless 

whenever a party breached any portion of an agreement and the other party 

obtained a judgment on such breach.” Id. at *4. This concern by the court in 

Morrison may be implicitly premised on the scenario in which a lawsuit based on 

a contract is resolved in a manner that produces a judgment as to some claims, but 

reserves the parties’ rights regarding one or more additional claims. Credit 

Acceptance does not suggest that any such claim-splitting event occurred here at 

the time it sought and obtained the judgment on the contract. And we see no basis 
No. 2023AP751

14

to think that there was.

5

 In short, Credit Acceptance gives us no reason to 

conclude that all terms of the contract here, including the arbitration clause, were 

not merged into the judgment. Therefore, at least so far as Credit Acceptance 

argues its position, the reasoning in Morrison does not apply here in the face of 

clear Wisconsin law defining the merger doctrine.

¶30 Similarly, we do not consider persuasive the briefly stated reasoning 

in the other opinion cited by Credit Acceptance, and the opinion may rest on 

California law that is not operative in Wisconsin. See Muschetto v. Kenosian & 

Miele, LLP, No. SACV-17-1020 JVS (DFMx), *3, 2017 WL 10562628 (C.D. Cal. 

Oct. 23, 2017). At bottom, the court in Muschetto, like the court in Morrison,

fails to provide a satisfactory explanation for treating an arbitration clause as a 

term of a contract that is necessarily, or even arguably, what the court deems to be

“separate from those [terms] that resulted in a prior judgment.” See Muschetto,

No. SACV-17-1020 JVS (DFMx), *3. In the instant case, the parties accepted all 

of the rights and obligations stated in the terms contained in a single contract, and 

Credit Acceptance’s action on that contract resulted in a single judgment. Under 

Wisconsin law, all claims that either side could make under that contract merged 

 

5

 We need not, and do not, express any view about whether or how Credit Acceptance 

might have been able to preserve its arbitration rights through a different approach to the contract 

or to the litigation that produced the judgment that it sought and obtained. See Milton R. 

Friedman, FRIEDMAN ON CONTRACTS AND CONVEYANCES OF REAL PROPERTY § 8.18 (7th ed.

2005) (stating that “[t]he effect of merger may be qualified by agreement”). We need not reach 

that issue because we are presented with no evidence that the parties here agreed or took any 

steps to limit the effect of the merger doctrine before or at the time the judgment was entered. 

That is, Credit Acceptance does not suggest any manner in which the parties purported to 

distinguish among the various rights that they had established in the single contract—including 

singling out the arbitration clause for special consideration—by the time that Credit Acceptance 

sought and obtained a single judgment to resolve its lawsuit against Desjurdin Lacey.
No. 2023AP751

15

into the judgment that Credit Acceptance sought and obtained, including any 

claims that either party might later want to make to enforce the arbitration clause.

CONCLUSION

¶31 For all of these reasons, we reverse the circuit court’s order granting 

the motion to compel arbitration.

By the Court.—Order reversed.

This opinion will not be published. See WIS.

STAT. RULE 809.23(1)(b)5.