Title: Casanova v. Polsky
Citation: N/A
Docket Number: 2019AP002063, 2019AP001728
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: March 16, 2023

2023 WI 19 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2019AP1728 & 2019AP2063 
 
 
 
COMPLETE TITLE: 
In re:   
The Atrium of Racine, Inc., d/b/a The Atrium and 
Bay Pointe: 
 
Marilyn Casanova , member of Creditor Committee, 
Audrey J. Fox, member of Creditor Committee, Dr. 
Melvin Miritz, member of Creditor Committee, 
Linda Miritz, member of Creditor Committee, 
Edward and Louise Langleib Trust, member of 
Creditor Committee, Carleton Musson, member of  
Creditor Committee, Wilma Milovancevic, member 
of Creditor Committee, Helen Taylor, member of 
Creditor Committee, Louis P. Teicheret Trust, 
member of Creditor Committee, Reverend Frederick 
Marks, member of Creditor Committee, Jewel 
Marks, member of Creditor Committee, Patricia 
Meier, member of Creditor Committee, Patricia  
Teernstra, member of Creditor Committee, Andrew 
Mikaelian, member of Creditor Committee, 
Marcella Mikaelian, member of Creditor 
Committee, Josephine Brooks, member of Creditor 
Committee, Evelyn Odell, member of Creditor  
Committee, Laurence Freer, member of Creditor 
Committee, Dorothy Kohl, member of Creditor 
Committee, Karen Boerger, member of Creditor 
Committee, Jacqueline Williamson, member of 
Creditor Committee, Judy Glowinski, member of  
Creditor Committee, Anne Tredwell, member of 
Creditor Committee, Marilyn Baham, member of 
Creditor Committee, Elsie Gotzman, member of 
Creditor Committee, Lucille Ciaramita, member of 
Creditor Committee, Joanne Ramaker, member of 
Creditor Committee, Johanna Sander, member of  
Creditor Committee, Thomas Eser, member of 
Creditor Committee, Henryetta Eser, member of 
Creditor Committee, Grace Nelson, member of 
Creditor Committee, Jane Odders, member of 
Creditor Committee, David Nelson, member of  
Creditor Committee, Ray Katt (deceased), member 
of Creditor Committee, Louise Katt, member of 
Creditor Committee, Ethel Hader, member of 
Creditor Committee, Warren Larsen, member of 
Creditor Committee, Ellen Larsen, member of 
Creditor Committee, Frances Scott, member of  
 
 
2 
Creditor Committee, Susan Prouty, member of 
Creditor Committee, Robert Rainey, member of 
Creditor Committee, Patricia Rainey, member of 
Creditor Committee, Helen Eckheart, member of 
Creditor Committee, Wilma Wise, member of 
Creditor Committee, Earl Christianson, member  
of Creditor Committee and Marian Bloch, member 
of Creditor Committee, 
          Appellants, 
Var Krikorian, Ruth Minton, Richard Minton, 
Walter Steidl, Irene Miller, Marian Kornwolf, 
Marjorie Speckhard, Delores Torphy, Geraldine 
Baumblatt, Joan Peterson, John Rowland,  
Julianne Rowland, Lorraine Pavelcik, Marilyn 
Iselin, Metta Reiker, Prudence White, Elaine 
Oetlinger, Esther Wulff, Helen Veenstra, Rev. 
Dr. Ross Henry Larson, Fred and Nancy Flofer, 
Winifried Wiser, Nazaly Bagdasian, Robert  
Callaway, Estate of Elaine Zlevor, Marshall 
Cushman, Bernard Braun, Patricia Braun, Bob 
Ottum, Holly Ottum, Joyce Ottum, Jeanne Haas, 
Gloria Murphy, Ralph Anderson, Doris Beuttler, 
Genevieve Hostak, Marlene Weichmann, Mary 
Mueller, Wood Family Trust and Mary Holtz, 
          Claimants-Appellants, 
     v. 
Michael S. Polsky, Esq. , Receiver and The Bank 
of New York Mellon Trust Company, N.A., 
          Respondents-Petitioners. 
 
 
 
In re:   
The Atrium of Racine, Inc., d/b/a The Atrium and 
Bay Pointe: 
 
Marilyn Casanova, member of Creditor Committee,  
Audrey J. Fox, member of Creditor Committee,  
Dr. Melvin Miritz, member of Creditor Committee,  
Linda Miritz, member of Creditor Committee,  
Edward and Louise Langleib Trust, member of 
Creditor Committee, Carleton Musson, member of 
Creditor Committee, Wilma Milovancevic, member 
of Creditor Committee, Helen Taylor, member of 
Creditor Committee, Louis P. Teichert Trust, 
member of Creditor Committee, Reverend Frederick 
Marks, member of Creditor Committee, Jewel 
Marks, member of Creditor Committee, Patricia 
Meier, member of Creditor Committee, Patricia 
Teernstra, member of Creditor Committee, Andrew 
Mikaelian, member of Creditor Committee, 
 
 
3 
Marcella Mikaelian, member of Creditor 
Committee, Josephine Brooks, member of Creditor 
Committee, Evelyn Odell, member of Creditor 
Committee, Laurence Freer, member of Creditor 
Committee, Dorothy Kohl, member of Creditor 
Committee, Karen Boerger, member of Creditor 
Committee, Jacqueline Williamson, member of 
Creditor Committee, Judy Glowinski, member of 
Creditor Committee, Anne Tredwell, member of 
Creditor Committee, Marilyn Baham, member of 
Creditor Committee, Elsie Gotzman, member of 
Creditor Committee, Lucille Ciaramita, member of 
Creditor Committee, Joanne Ramaker, member of 
Creditor Committee, Johanna Sander, member of 
Creditor Committee,  
Thomas Eser, member of Creditor Committee,  
Henryetta Eser, member of Creditor Committee,  
Grace Nelson, member of Creditor Committee,  
Jane Odders, member of Creditor Committee,  
David Nelson, member of Creditor Committee,  
Ray Katt (deceased), member of Creditor 
Committee, Louise Katt, member of Creditor 
Committee, Ethel Hader, member of Creditor 
Committee, Warren Larsen, member of Creditor 
Committee,Ellen Larsen, member of Creditor 
Committee, Frances Scott, member of Creditor 
Committee, Susan Prouty, member of Creditor 
Committee, Robert Rainey, member of Creditor 
Committee, Patricia Rainey, member of Creditor 
Committee, Helen Eckheart, member of Creditor 
Committee, Wilma Wiser, member of Creditor 
Committee, Earl Christianson, member of Creditor 
Committee, Marian Bloch, member of Creditor 
Committee, Jan Teichert, member of Creditor 
Committee, Dorothy Nelson, member of Creditor 
Committee, Metta Reiker, member of Creditor 
Committee, Prudence White, member of Creditor 
Committee, Elaine Oetlinger, member of Creditor 
Committee, Esther Wulff, member of Creditor 
Committee, Helen Veenstra, member of Creditor 
Committee, Mark H. Larson, Successor Trustee of 
the Ross H. Larson and Willetta J. Larson 
Revocable Trust of 2015, member of Creditor 
Committee, Fred Hofer, member of Creditor 
Committee, Nancy Hofer, member of Creditor 
Committee, Winifred Wiser, member of Creditor 
Committee, Nazaly Bagdasian, member of Creditor 
Committee, Robert Callaway, member of Creditor 
Committee, Estate of Elaine Zlevor, member of 
Creditor Committee, Marshall Cushman, member of 
 
 
4 
Creditor Committee, Var Krikorian, member of 
Creditor Committee, Ruth Minton, member of 
Creditor Committee, Richard Minton, member of 
Creditor Committee, Walter Steidl, member of 
Creditor Committee, Irene Miller, member of 
Creditor Committee, Marian Kornwolf, member of 
Creditor Committee, Marjorie Speckhard, member 
of Creditor Committee, Delores Torphy, member of 
Creditor Committee, Geraldine Baumblatt, member 
of Creditor Committee, Joan Peterson, member of 
Creditor Committee, John Rowland, member of 
Creditor Committee, Julianne Rowland, member of 
Creditor Committee, Lorraine Pavelcik, member of 
Creditor Committee, Marilyn Iselin, member of 
Creditor Committee, Bernard Braun, member of 
Creditor Committee, Patricia Braun, member of 
Creditor Committee, Bob Ottum, member of 
Creditor Committee, Holly Ottum, member of 
Creditor Committee, Joyce Ottum, member of 
Creditor Committee, Jeanne Haas, member of 
Creditor Committee, Gloria Murphy, member of 
Creditor Committee, Ralph Anderson, member of 
Creditor Committee, Doris Beuttler, member of 
Creditor Committee, Genevieve Hostak, member of 
Creditor Committee, Marlene Weichmann, member of 
Creditor Committee, Mary Mueller, member of 
Creditor Committee, Wood Family Trust, member of 
Creditor Committee and Mary Holtz, member of 
Creditor Committee, 
          Appellants, 
     v. 
Michael S. Polsky, Esq., Receiver and The Bank 
of New York Mellon Trust Company, N.A., 
          Respondents-Petitioners. 
 
 
 
 
REVIEW OF DECISION OF THE COURT OF APPEALS  
Reported at 399 Wis. 2d 322, 964 N.W.2d 544 
(2021 – unpublished) 
 
 
OPINION FILED: 
March 16, 2023   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
September 9, 2022   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Racine   
 
JUDGE: 
Michael J. Piontek and David W. Paulson   
 
 
 
 
 
 
 
 
5 
JUSTICES: 
ZIEGLER, J., delivered the majority opinion of the court, in 
which ROGGENSACK, C.J., KELLY, and HAGEDORN, JJ., joined.  
BRADLEY, R.G., J., concurs. KELLY, J., concurs.  BRADLEY, A.W., 
J., dissents, joined by DALLET, J. 
NOT PARTICIPATING: 
        
 
 
 
ATTORNEYS: 
 
 
For the respondents-petitioners, there were briefs filed by 
Katherine Stadler, Carla O. Andres, Michael S. Polsky, and 
Godfrey & Kahn, S.C., Madison, and Beck, Chaet, Bamberger & 
Polsky, S.C., Milwaukee. There was an oral argument by Katherine 
Stadler and Joseph M. Peltz.  
 
For the plaintiffs-appellants, there was a brief filed by 
John A. Becker and Becker & French, Racine. There was an oral 
argument by John A. Becker and Thomas M. Devine.  
 
An amicus curiae brief was filed by James E. Bartzen and 
Boardman & Clark LLP, Madison, for the Wisconsin Bankers 
Association.  
 
 
 
 
2023 WI 19 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
Nos.   2019AP1728 & 2019AP2063 
(L.C. No. 
2007CV1133) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In re:   
 
The Atrium of Racine, Inc., d/b/a The Atrium 
and Bay Pointe: 
 
Marilyn Casanova, member of Creditor Committee, 
Audrey J. Fox, member of Creditor Committee, 
Dr. Melvin Miritz, member of Creditor 
Committee, Linda Miritz, member of Creditor 
Committee, Edward and Louise Langleib Trust, 
member of Creditor Committee, Carleton Musson, 
member of Creditor Committee, Wilma 
Milovancevic, member of Creditor Committee, 
Helen Taylor, member of Creditor Committee, 
Louis P. Teicheret Trust, member of Creditor 
Committee, Reverend Frederick Marks, member of 
Creditor Committee, Jewel Marks, member of 
Creditor Committee, Patricia Meier, member of 
Creditor Committee, Patricia Teernstra, member 
of Creditor Committee, Andrew Mikaelian, member 
of Creditor Committee, Marcella Mikaelian, 
member of Creditor Committee, Josephine Brooks, 
member of Creditor Committee, Evelyn Odell, 
member of Creditor Committee, Laurence Freer, 
member of Creditor Committee, Dorothy Kohl, 
member of Creditor Committee, Karen Boerger, 
member of Creditor Committee, Jacqueline 
Williamson, member of Creditor Committee, Judy 
Glowinski, member of Creditor Committee, Anne 
Tredwell, member of Creditor Committee, Marilyn 
Baham, member of Creditor Committee, Elsie 
Gotzman, member of Creditor Committee, Lucille 
Ciaramita, member of Creditor Committee, Joanne 
Ramaker, member of Creditor Committee, Johanna 
Sander, member of Creditor Committee, Thomas 
Eser, member of Creditor Committee, Henryetta 
Eser, member of Creditor Committee, Grace 
Nelson, member of Creditor Committee, Jane 
Odders, member of Creditor Committee, David 
Nelson, member of Creditor Committee, Ray Katt 
(deceased), member of Creditor Committee, 
Louise Katt, member of Creditor Committee, 
FILED 
 
MAR 16, 2023 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
1 
Ethel Hader, member of Creditor Committee, 
Warren Larsen, member of Creditor Committee, 
Ellen Larsen, member of Creditor Committee, 
Frances Scott, member of Creditor Committee, 
Susan Prouty, member of Creditor Committee, 
Robert Rainey, member of Creditor Committee, 
Patricia Rainey, member of Creditor Committee, 
Helen Eckheart, member of Creditor Committee, 
Wilma Wiser, member of Creditor Committee, Earl 
Christianson, member of Creditor Committee and 
Marian Bloch, member of Creditor Committee, 
 
          Appellants, 
 
Var Krikorian, Ruth Minton, Richard Minton, 
Walter Steidl, Irene Miller, Marian Kornwolf, 
Marjorie Speckhard, Delores Torphy, Geraldine 
Baumblatt, Joan Peterson, John Rowland, 
Julianne Rowland, Lorraine Pavelcik, Marilyn 
Iselin, Metta Reiker, Prudence White, Elaine 
Oetlinger, Esther Wulff, Helen Veenstra, Rev. 
Dr. Ross Henry Larson, Fred and Nancy Flofer, 
Winifried Wiser, Nazaly Bagdasian, Robert 
Callaway, Estate of Elaine Zlevor, Marshall 
Cushman, Bernard Braun, Patricia Braun, Bob 
Ottum, Holly Ottum, Joyce Ottum, Jeanne Haas, 
Gloria Murphy, Ralph Anderson, Doris Beuttler, 
Genevieve Hostak, Marlene Weichmann, Mary 
Mueller, Wood Family Trust and Mary Holtz, 
 
          Claimants-Appellants, 
 
     v. 
 
Michael S. Polsky, Esq. , Receiver and The Bank 
of New York Mellon Trust Company, N.A., 
 
          Respondents-Petitioners. 
 
 
 
REBECCA GRASSL BRADLEY, J., delivered the majority opinion for a 
unanimous Court. 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed.   
 
¶1 
REBECCA GRASSL BRADLEY, J.   After the Atrium, a 
senior-living facility, defaulted on debt service payments to a 
Nos. 2019AP1728 & 2019AP2063   
 
2 
 
group of bondholders, the facility filed a petition for 
receivership.1  The court-appointed receiver sold the Atrium's 
assets, generating more than $4 million in proceeds.  According 
to the receiver, the Atrium owed the bondholders more than $6 
million, secured by a valid mortgage lien on the Atrium's 
estate.  Many of the Atrium's residents claimed they were 
entitled to the proceeds of the sale because, under their 
residency agreements, they were owed reimbursement of the 
entrance fees they paid to the Atrium.  The circuit court 
concluded the bondholders' mortgage lien was superior to the 
residents' entrance fee claims.2  The court of appeals reversed, 
applying M&I First National Bank v. Episcopal Homes Management, 
Inc., 195 Wis. 2d 485, 536 N.W.2d 175 (Ct. App. 1995) to deem 
the residents' claims superior to the bondholders' lien.3 
¶2 
Before 
this 
court, 
the 
residents 
concede 
the 
bondholders possess a valid, perfected mortgage lien on the 
Atrium's estate, but the residents argue (1) the bondholders 
contracted away the superiority of their mortgage lien, and (2) 
                                                 
1 A receivership is a sequestration of an insolvent estate's 
assets, and a receiver is an impartial manager of those assets.   
Admanco, Inc. v. 700 Stanton Drive, LLC, 2010 WI 76, ¶32, 326 
Wis. 2d 586, 786 N.W.2d 759; see also, BNP Paribas v. Olsen's 
Mill, Inc., 2011 WI 61, ¶101, 335 Wis. 2d 427, 799 N.W.2d 792 
(Roggensack, J., concurring). 
2 Judge David W. Paulson, Racine County, presided.  As 
proceedings continued, Judge Michael J. Piontek and later Judge 
Jon E. Frederickson rotated onto the case. 
3 Casanova 
v. 
Polsky, 
Nos. 
2019AP1728 
& 
2019AP2063, 
unpublished slip op. (Wis. Ct. App. July 30, 2021).  
 
Nos. 2019AP1728 & 2019AP2063   
 
3 
 
Episcopal Homes grants entrance fee claims superiority.  We 
disagree and hold:  (1) Under Wis. Stat. § 128.17 (2021–22), the 
bondholders' mortgage lien is superior to the residents' 
contract claims;4 (2) the bondholders did not contract away the 
superiority of their lien; and (3) Episcopal Homes does not 
apply to the proceeds from the sale of real property with a 
properly perfected mortgage lien.  We therefore reverse the 
decision of the court of appeals. 
I.  BACKGROUND 
A.  Bay Pointe Project and Financing Documents 
¶3 
The Atrium of Racine, Inc. was a nonprofit corporation 
that owned and operated a 76-unit senior-living facility.  In 
2002, the Atrium sought to build an assisted-living home called 
Bay Pointe.  To finance the project, the Atrium contracted with 
the Elderly Housing Authority of the City of Racine (the 
Authority) to issue bonds.  The Authority sold the bonds to Bank 
One Trust Company, National Association,5 trustee for a group of 
approximately 800 investors (the Bondholders' Trustee).  To 
effectuate this transaction, various parties entered into a 
series of contracts:  a Project Contract between the Atrium and 
the Authority; a Mortgage and Security Agreement (the Mortgage) 
between the Atrium and the Authority (which assigned its 
                                                 
4 All subsequent references to the Wisconsin Statutes are to 
the 2021–22 version unless otherwise indicated. 
5 Bank One is the predecessor in interest to New York Mellon 
Trust Company, N.A., which now serves as the Bondholders' 
Trustee. 
Nos. 2019AP1728 & 2019AP2063   
 
4 
 
interest 
to 
the 
Bondholders' 
Trustee); 
and, 
between 
the 
Authority and the Bondholders' Trustee, a Trust Indenture 
(collectively, the Financing Documents).  As required by 
securities 
regulations, 
the 
bond 
underwriter6 
prepared 
an 
Official Statement summarizing the material terms and conditions 
of the bond issuance as well as the risks of investing.  Because 
the Official Statement is not a contract, it was not signed by 
any party, nor was it incorporated by reference into any 
contract. 
¶4 
The Project Contract established the process by which 
the bonds would issue as well as the terms and conditions 
governing the Atrium's construction expenditures.  Under its 
terms, the Authority would issue and sell revenue bonds, 
depositing the proceeds into a Project Fund from which the 
Atrium would draw to cover construction expenses.7  Under the 
Mortgage, the Atrium pledged its real estate, tangible personal 
property, revenue, and proceeds of the foregoing to the 
Authority as collateral for repayment of the bond proceeds. 
                                                 
6 A bond underwriter purchases bonds from an issuer and 
distributes those bonds to the public.  Sec. Indus. Ass'n v. Bd. 
of Governors of Fed. Rsrv. Sys., 468 U.S. 207, 217 n.17 (1984).  
By purchasing and selling bonds on its own account, an 
underwriter assumes all risk of loss from the issuer.  Id. at 
218 n.18. 
7 The proceeds from the sale of the bonds were a loan from 
the Authority to the Atrium, for which the Atrium signed 
promissory notes documenting its duty to repay the Authority. 
Nos. 2019AP1728 & 2019AP2063   
 
5 
 
¶5 
Bank One purchased $8,050,000 in Atrium bonds from the 
Authority under the Trust Indenture,8 which assigned to Bank One 
(as Bondholders' Trustee) the Authority's Mortgage lien on the 
Atrium's estate.  After purchasing the bonds, Bank One perfected 
its security interest in the real estate by filing the Mortgage 
with the Racine County Register of Deeds.  It also filed a UCC 
financing statement with the Wisconsin Department of Financial 
Institutions, which documented Bank One's security interest in 
the Atrium's assets and perfected its security interest in 
collateral other than real estate.9  No party disputes the 
bondholders possess a properly perfected mortgage lien on the 
Atrium's estate. 
B.  Residency Agreements 
¶6 
Before moving into the Atrium, each resident signed a 
residency agreement10 requiring the resident to pay an entrance 
                                                 
8 A trust indenture is a "document containing the terms and 
conditions 
governing 
a 
trustee's 
conduct 
and 
the 
trust 
beneficiaries' rights."  Trust indenture, Black's Law Dictionary 
919 (11th ed. 2019). 
9 The parties do not dispute that when New York Melon 
succeeded Bank One in interest, all necessary continuation, 
assignment, and name-change documents were filed with the State. 
10 Over time, the Atrium altered the form, substance, and 
language of these agreements for new residents.  The record 
contains six different versions of the agreement, but the 
differences among them do not affect our analysis. 
Nos. 2019AP1728 & 2019AP2063   
 
6 
 
fee ranging from $40,000 to $238,000.11  Collectively, Atrium 
residents had paid over $7.5 million in entrance fees at the 
time this suit started.  Upon moving out of the Atrium, each 
resident's entrance fee would be partly refundable when a new 
resident moved into the Atrium and paid an entrance fee.  To 
calculate a refund, the Atrium used one of two formulas 
depending on which version of the residency agreement the 
resident signed.  The first formula provided for a flat 90% 
refund.  The second formula used an "option ratio," under which 
the refund varied based on the value of the new resident's 
entrance fee.  Once a new fee was paid, the Atrium used that 
money to refund the entrance fee paid by the former resident.  
Entrance fees were deposited in the Atrium's general operating 
account——commingled with the funds for day-to-day expenses——
rather than a segregated account. 
C.  Receivership 
¶7 
This suit arose when the Atrium defaulted on its debt 
service payments to the bondholders.  Under Wis. Stat. ch. 128, 
the Atrium commenced a voluntary assignment for the benefit of 
                                                 
11 Certain agreements required Atrium residents to pay a 
security deposit in addition to an entrance fee.  In the 
conclusion section of their brief, the residents request we hold 
"the residents are entitled to reimbursement of their entrance 
fees and security deposits out of the proceeds of the sale of 
the Atrium before payment to the Bondholders."  The residents do 
not, however, develop any argument regarding security deposits 
specifically; rather, the residents ask us to treat their 
entrance fees as security deposits under Episcopal Homes.  As 
explained in this opinion, the bondholders' properly perfected 
mortgage lien has priority over the residents' claims with 
respect to the proceeds from the sale of real property. 
Nos. 2019AP1728 & 2019AP2063   
 
7 
 
creditors in the circuit court.  The court appointed a receiver, 
vesting him with "all of the usual powers . . . pursuant to 
Chapter 
128 
of 
the 
Wisconsin 
Statutes[.]" 
 
The 
court 
specifically authorized the receiver "to sell any and all 
property of the [Atrium] free and clear of all liens, with all 
liens attaching to the proceeds of sale in the order of their 
priority, 
through 
public 
or 
private 
proceedings, 
in 
any 
commercially reasonable manner, subject to the prior approval of 
[the] Court." 
¶8 
The receiver notified the Atrium's creditors and other 
interested parties of his appointment and requested they file 
their verified claims with the circuit court.  Residents 
individually filed proofs of claim for refund of entrance fees 
collectively totaling more than $7 million.  One resident, Dr. 
Ross Henry Larson, moved for the creation of a resident 
committee under Wis. Stat. § 128.10.  The circuit court granted 
Dr. Larson's motion but emphasized the narrow scope and limited 
duties of the committee: 
The Court's already indicated that I have reservations 
about any committee that has power to [a]ffect a power 
of the receiver. . . .  If it's necessary that I 
authorize a resident creditors committee, I will do 
so.  But I'm being very, very specific here that the 
duties of that committee will not interrupt or overlap 
with 
the 
receiver's 
duty, 
but 
those 
resident 
committees can be obviously to advise.  It'll be a way 
for [the receiver] to interact with all of the 
creditors without having to go through 70 different 
notices and approvals. 
¶9 
The bondholders filed their own proof of claim for 
$6,264,620.65.  The receiver noted the bonds were "secured by 
Nos. 2019AP1728 & 2019AP2063   
 
8 
 
first 
position 
properly 
perfected 
security 
interests 
and 
mortgages" and determined the Atrium owed the bondholders' trust 
more than $6,097,000.  As for cash in the Atrium's estate, the 
receiver 
found 
only 
two 
accounts, 
neither 
holding 
funds 
sufficient to continue operating the Atrium——or to pay the debt 
owed to the bondholders.  The first account was a "general 
operating account" containing $80,795.11; the second was a 
"Resident Trust Account" containing less than $3,000.  According 
to counsel for the receiver, the Resident Trust Account "did not 
have entrance fees deposited" into it.  Instead, it held "some 
minimal amount of funds that [were] paid by the residents for 
various services at the debtor's facilities[.]" 
¶10 Given the extent of the claims against the Atrium's 
estate and its meager amount of cash, the receiver moved for 
authorization to enter into a listing agreement and sell the 
Atrium's assets.  The receiver concluded a sale would maximize 
the estate's value for the benefit of the creditors.  After the 
circuit court granted the receiver's motion, the receiver 
entered into a listing agreement with Senior Living Investment 
Brokerage, Inc. 
¶11 Along with the motion for authorization to sell the 
assets, the receiver moved for permission to use the Atrium's 
revenue to continue operating the facility.  The residents 
objected to this motion.  Allowing the receiver to spend the 
Atrium's revenue, they argued, would "dissipate[]" the Atrium's 
assets and leave "nothing . . . available for the return of 
millions of dollars in entrance fee funds."  In response to this 
Nos. 2019AP1728 & 2019AP2063   
 
9 
 
objection, the receiver again noted the bondholders' secured 
interest in the Atrium’s assets.  Without authorization to use 
the Atrium's assets, he determined the Atrium would be forced to 
close.  The circuit court granted the receiver's motion. 
¶12 Months later, the receiver moved for declaratory 
relief, requesting the circuit court declare the bondholders' 
Mortgage lien superior to the residents' entrance fee claims.  
The residents again objected, and filed a motion for summary 
judgment "in the amount of $7,983,739" asking the court to 
impose a constructive trust in that amount.  The residents also 
filed a motion for declaration of interest, maintaining the 
Financing 
Documents, 
along 
with 
the 
Official 
Statement, 
established the superiority of their entrance fee claims.  After 
briefing, the court held a joint hearing on the parties' 
motions. 
¶13 In an April 2018 order, the circuit court granted the 
receiver's 
motion 
for 
declaratory 
relief 
and 
denied 
the 
residents' motion for summary judgment.  In its written 
decision, the court found (1) the residents were not entitled to 
a constructive trust on any proceeds from the sale of the 
Atrium's assets and (2) none of the Financing Documents or the 
Official Statement subordinated the bondholders' Mortgage lien 
to the residents' entrance fee claims.  Despite having both of 
their motions denied, the residents did not appeal this order. 
D.  Sale of the Atrium 
¶14 More than a year later, with the priority dispute 
resolved, the receiver found a suitable buyer for the Atrium, a 
Nos. 2019AP1728 & 2019AP2063   
 
10 
 
senior-housing and healthcare company called PC39.  The parties 
negotiated an Asset Purchase Agreement (APA), and set the sale 
price of the Atrium at $5,500,000.  The sale included all of the 
Atrium's real and personal property but excluded any liability 
relating to the residents' entrance fees.  Under the APA, the 
proceeds from the sale were to be paid to the bondholders. 
¶15 The receiver moved for authorization to proceed with 
the sale pursuant to the APA, but the residents objected, citing 
the APA's payment of proceeds to the bondholders.  The parties 
filed a stipulation requesting an order for the proceeds to be 
held in escrow pending resolution of the residents' objection.  
In the stipulation, the residents noted their intention to 
appeal the April 2018 order on payment priority.  The receiver 
and the trustee jointly responded to the residents' objection, 
arguing the deadline for appealing the April 2018 decision had 
long passed; therefore, the residents had waived their right to 
appeal the order. 
¶16 In resolving the residents' objection, the circuit 
court issued two orders.  The first, entered on July 31, 2019, 
authorized the receiver to sell the Atrium's assets, while the 
second required the receiver to hold the sale proceeds in escrow 
Nos. 2019AP1728 & 2019AP2063   
 
11 
 
pending appeal.  About a week later, the sale closed, and the 
receiver placed the net proceeds of $4,711,518.7812 in escrow. 
E.  Appeals 
¶17 Soon after the sale closed, the residents filed a 
proposed order with the circuit court on September 6, 201913 
reiterating the substance of the April 2018 order but adding:  
"This order is final for the purposes of appeal."  Later that 
day, the receiver sent the court a letter in response, again 
emphasizing the residents' window for appeal had passed.  He 
also asserted "[t]here [was] no basis to modify or vacate the 
2018 Order[.]"  The court did not respond to either letter. 
¶18 Around this time, the residents appealed the July 31, 
2019 sale order.14  Thereafter, the circuit court entered the 
residents' proposed order on October 17, 2019, reaffirming the 
substance of the April 2018 priority order and stating the new 
order was final for purposes of appeal.15  The residents appealed 
this order, not the April 2018 order.16 
                                                 
12 According to a status report filed by the receiver, the 
total amount placed in escrow reflects the Atrium's list price 
minus "Court-approved professional fees, the commission owed to 
Senior Living Investment Brokerage, Inc., a deferred maintenance 
credit to the Buyer in the amount of $250,000, taxes, and other 
customary prorations pursuant to the Asset Purchase Agreement, 
as amended, the Sale Order and the Stipulation." 
13 Only the cover letter, but not this proposed order, 
appears in the appellate record. 
14 This appeal was docketed as appeal No. 2019AP1728. 
15 Like the proposed order, the order entered by the circuit 
court is not in the appellate record.   
16 This appeal was docketed as Appeal No. 2019AP2063.  
Nos. 2019AP1728 & 2019AP2063   
 
12 
 
¶19 On appeal, the two cases were consolidated, and the 
court of appeals reversed the circuit court's priority judgment.  
Relying on Episcopal Homes, the court of appeals concluded "the 
rights of the Residents to their entrance fees and security 
deposits are superior to the Bondholders' rights to the Atrium's 
assets[.]"17  In addition to their priority argument, the 
residents also contended "[t]he receiver violated his fiduciary 
duty to the residents when he took the side of one creditor over 
another."  The court of appeals rejected this argument.18 
¶20 On August 27, 2021, the bondholders and the receiver 
filed a petition for review, presenting the following two 
issues:  (1) "May an undocumented, unrecorded lien——created by 
judicial 
fiat——have 
priority 
over 
the 
Trustee's 
properly 
perfected first mortgage and security interest?" and (2) "Did 
the Court of Appeals (and, by extension, this Court) lack 
jurisdiction over these appeals by virtue of the failure to 
appeal from a final order dated April 23, 2018?"  We granted 
review on both issues.  Without filing a petition for review or 
cross-review, the residents in their briefing again claimed the 
receiver violated his fiduciary duties.  The receiver filed a 
motion to deem the issue forfeited, to which the residents filed 
a response.  We "decline[d] to foreclose our right to consider 
[the question]" and ordered supplemental letter briefing, which 
the parties submitted. 
                                                 
17 Casanova, Nos. 2019AP1728 & 2019AP2063, ¶18. 
18 Id., n.12. 
Nos. 2019AP1728 & 2019AP2063   
 
13 
 
II.  STANDARD OF REVIEW 
¶21 "Whether to grant 'a declaratory judgment is addressed 
to the circuit court's discretion.'  When the exercise of 
discretion turns on a question of law, however, our review is" 
independent.  Talley v. Mustafa Mustafa, 2018 WI 47, ¶13, 381 
Wis. 2d 393, 911 N.W.2d 55 (quoting Olson v. Farrar, 2012 WI 3, 
¶24, 338 Wis. 2d 215, 809 N.W.2d 1). 
¶22 This case requires us to determine the priority of a 
properly perfected mortgage lien interest, which is a question 
of statutory interpretation.  See BNP Paribas v. Olsen's Mill, 
Inc., 2011 WI 61, ¶37, 335 Wis. 2d 427, 799 N.W.2d 792.  
"Statutory interpretation presents a question of law" this court 
reviews independently.  Teigen v. Wis. Elections Comm'n, 2022 WI 
64, ¶12, 403 Wis. 2d 607, 976 N.W.2d 519 (citing T.L.E.-C. v. 
S.E., 2021 WI 56, ¶13, 397 Wis. 2d 462, 960 N.W.2d 391).  
Additionally, this case requires us to interpret contracts, also 
a question of law this court reviews independently.  Tufail v. 
Midwest Hosp., LLC, 2013 WI 62, ¶22, 348 Wis. 2d 631, 833 
N.W.2d 586 (citing Ehlinger v. Hauser, 2010 WI 54, ¶47, 325 
Wis. 2d 287, 785 N.W.2d 328). 
III.  DISCUSSION 
A.  Finality of the April 2018 Order 
¶23 As a threshold matter, the bondholders and the 
receiver ask us to conclude the residents forfeited their right 
to appeal the circuit court's decision on priority.  They argue 
the April 2018 order was final for purposes of appeal.  Because 
the residents did not appeal that order until July 2019, they 
Nos. 2019AP1728 & 2019AP2063   
 
14 
 
argue the residents lost the right to appeal it.  For the 
purpose of deciding the important substantive issue of law 
presented by the dispute over priority, we assume without 
deciding the April 2018 order was not final and the residents 
properly appealed the circuit court's July 31, 2019 order 
establishing the superiority of the bondholders' Mortgage lien 
over the residents' entrance fee claims. 
B.  Financing Documents 
¶24 Relying on provisions of the Financing Documents and 
the Official Statement, the residents assert the bondholders 
contracted away the superiority of their Mortgage lien.  Certain 
provisions, they argue, subordinated the bondholders' Mortgage 
lien to the contractually required repayment of the residents' 
entrance fees.  We disagree. 
¶25 The receivership statutes control the resolution of 
this issue.  When an entity is placed under receivership, the 
receiver may, with court permission, "sell assets and distribute 
the proceeds of the sale."  BNP Paribas, 335 Wis. 2d 427, ¶42.  
Upon closing, the receiver must distribute the proceeds among 
the estate's creditors pursuant to Wis. Stat. § 128.17, which 
establishes the order of payment: 
(1) 
The order of distribution out of the debtor's 
estate shall be as follows: 
 
 
(a) 
The actual and necessary costs of preserving 
the estate subsequent to the commencement of 
the proceedings. 
 
 
(b) 
Costs 
of 
administration 
including 
a 
reasonable 
attorney's 
fee 
for 
the 
Nos. 2019AP1728 & 2019AP2063   
 
15 
 
representation of the debtor.  
 
(d) 
Wages, 
including 
pension, 
welfare 
and 
vacation benefits, due to workmen, clerks, 
traveling or city salespersons or servants, 
which have been earned within 3 months 
before the date of the commencement of the 
proceedings, not to exceed $600 to each 
claimant.  
 
(e) 
Taxes, assessments and debts due the United 
States, this state or any county, district 
or municipality. 
 
 
(f) 
Other debts entitled to priority.  
 
(g) 
Debts 
due 
to 
creditors 
generally, 
in 
proportion to the amount of their claims, as 
allowed.  
 
(h) 
After payment of the foregoing, the surplus, 
if any, shall be returned to the debtor. 
Section (f) describes certain secured claims and encompasses 
mortgages under Wis. Stat. § 706.11, which grants priority to 
mortgages "executed to a state or national bank."  This 
provision includes the Mortgage because the Bondholders' Trustee 
is a national bank association.  Section 706.11(1) provides that 
when "[a]ny mortgage executed to a state or national bank" "has 
been duly recorded, it shall have priority over all liens upon 
the mortgaged premises and the buildings and improvements 
thereon . . . filed after the recording of such mortgage" with 
exceptions only for certain categories of liens under which the 
residents' entrance fee claims undisputedly do not fall. 
¶26 Secured creditors like the Bondholders' Trustee have 
"the right, on the debtor's default, to proceed against 
collateral and apply it to the payment of the debt."  Secured 
Nos. 2019AP1728 & 2019AP2063   
 
16 
 
creditor, Black's Law Dictionary 465 (11th ed. 2019).  A secured 
creditor "cannot have his security taken away from him without 
his consent."  BNP Paribas, 335 Wis. 2d 427, ¶44 (quoting Wis. 
Brick & Block Corp. v. Vogel, 54 Wis. 2d 321, 326, 195 
N.W.2d 664 (1972)). 
¶27 Section (g) describes unsecured claims.  BNP Paribas, 
335 Wis. 2d 427, ¶115 (Roggensack, J., concurring) ("Paragraph 
(1)(g) addresses the distribution to unsecured creditors.").  
Unlike secured creditors, unsecured creditors have "no property 
interest in the debtor's assets[.]"  BNP Paribas, 335 Wis. 2d 
427, ¶43.  Accordingly, when distributing proceeds from the sale 
of an estate, a receiver must satisfy debts held by secured 
creditors before satisfying those held by unsecured creditors.  
See id., ("[U]nsecured creditors are entitled to distribution of 
any proceeds of a sale only after priority claims have been 
satisfied."  (citations omitted)). 
¶28 The 
parties 
agree 
the 
bondholders 
are 
secured 
creditors and the residents are unsecured creditors.  Both seek 
first payment from the proceeds of the sale of the Atrium's 
assets, which are insufficient to pay either claim, much less 
both.  Typically, those facts alone would settle this dispute:  
Because Wis. Stat. § 128.17 prioritizes the claims of secured 
creditors over those of unsecured creditors, the bondholders 
would receive first payment.  In this case, however, the 
residents argue the bondholders subordinated their secured 
interest to the residents' interest in their entrance fees. 
Nos. 2019AP1728 & 2019AP2063   
 
17 
 
¶29 To subordinate a secured interest, a secured creditor 
usually signs a subordination agreement, a contract modifying 
"the priorities that would otherwise exist."  Scotiabank de 
Puerto Rico v. Brito (Plaza Resort at Palmas, Inc), 469 
B.R. 398, 408 (B.A.P. 1st Cir. 2012); see also, Restatement 
(Third) 
of 
Property 
§ 7.7 
cmt. 
a 
(1997) 
(explaining 
a 
subordination agreement is a document "reducing [a] mortgage's 
priority below that of some other interest or group of interests 
in the real estate to which the mortgage would otherwise be 
superior").  The residents do not contend the bondholders signed 
a subordination agreement.  Instead, they argue the bondholders 
consented in the Financing Documents and the Official Statement 
to the subordination of their Mortgage.  Although "[i]t is true 
that a subordination can be incorporated" into any contract, see 
Restatement (Third) of Property § 7.7 cmt. a, the Official 
Statement is not a contract and the Financing Documents do not 
contain any provision subordinating the bondholders' Mortgage. 
¶30 The residents first point to the definitions of 
"permitted liens" and "permitted encumbrances" in the Official 
Statement, Project Contract, and the Mortgage.  The parties 
construe these phrases to include entrance fees.  We agree with 
this construction.  The Mortgage states "permitted encumbrances" 
include "[l]iens permitted under Section 5.12(b) of the [Project 
Contract]."  According to the Project Contract, "Permitted Liens 
shall 
consist 
of . . . [e]ntrance 
fees 
or 
similar 
funds 
deposited by or on behalf of such residents[.]"  The residents 
therefore 
argue 
if 
the 
Financing 
Documents 
grant 
either 
Nos. 2019AP1728 & 2019AP2063   
 
18 
 
permitted liens or permitted encumbrances priority over the 
bondholders' Mortgage lien, entrance fees must be refunded 
before the Mortgage is paid. 
¶31 The residents direct our attention to the phrase 
"subject to" as it appears in both the Official Statement and 
the Mortgage.  The Official Statement provides, in relevant 
part: 
Pursuant to the Mortgage, the Corporation has granted 
to the Trustee a first mortgage lien on the campus 
currently owned by the corporation . . . subject in 
each case to Permitted Liens as defined in the Project 
Contract. 
(Emphasis added.)  The Mortgage contains similar language: 
This Mortgage constitutes a direct and valid lien on 
and security interest in the Mortgaged Property 
subject only to Permitted Encumbrances. 
(Emphasis 
added.) 
 
Neither 
provision 
subordinates 
the 
bondholders' Mortgage. 
¶32 Because the Official Statement is not a contract, it 
is incapable of containing a subordination agreement.  It is not 
an agreement at all, in whole or in part.  The residents contend 
the Official Statement must be "controlling" because there is no 
other explanation for why it exists.  To the contrary, it exists 
Nos. 2019AP1728 & 2019AP2063   
 
19 
 
because the government says it must.19  The residents accurately 
argue the Official Statement serves as a notice to investors of 
investment risks and "what claims might be superior to theirs," 
but nothing in the Official Statement actually subordinates the 
bondholders' Mortgage. 
¶33 Undefined in the only contract in which the pertinent 
language appears, the phrase "subject to" must take its ordinary 
meaning.  See Town Bank v. City Real Est. Dev., LLC, 2010 WI 
134, ¶33, 330 Wis. 2d 340, 793 N.W.2d 476 ("We construe [] 
contract language according to its plain or ordinary meaning")  
(citing Huml v. Vlazny, 2006 WI 87, ¶52, 293 Wis. 2d 169, 716 
N.W.2d 807).  As used in the Mortgage, it means "to be affected 
by or possibly affected by (something)."  Subject to, Merriam-
Webster's 
Collegiate 
Dictionary, 
https://unabridged.merriam-
webster.com/collegiate/subject%20to (last visited Jan. 9, 2023).  
                                                 
19 See, e.g., 15 U.S.C. § 77j(a)(1) ("[A] prospectus 
relating to a security other than security issued by a foreign 
government or political subdivision thereof, shall contain the 
information contained in the registration statement"); Wis. 
Stat. § 551.303(2)(a) (requiring "[a] copy of the latest form of 
prospectus filed under the Securities Act of 1933"); 17 C.F.R. 
§ 240.15c2-12 ("Prior to the time the Participating Underwriter 
bids for, purchases, offers, or sells municipal securities in an 
Offering, the Participating Underwriter shall obtain and review 
an official statement that an issuer of such securities deems 
final as of its date, except for the omission of no more than 
the following information:  The offering price(s), interest 
rate(s), 
selling 
compensation, 
aggregate 
principal 
amount, 
principal amount per maturity, delivery dates, any other terms 
or provisions required by an issuer of such securities to be 
specified in a competitive bid, ratings, other terms of the 
securities depending on such matters, and the identity of the 
underwriter(s)."). 
Nos. 2019AP1728 & 2019AP2063   
 
20 
 
In construing a statute, the court of appeals embraced this 
definition "as suitable for the facially broad phrase 'subject 
to.'"  State v. Quisling, 2018 WI App 35, ¶25, 382 Wis. 2d 272, 
915 N.W.2d 730.  To be affected by or possibly affected by 
something is not necessarily to be trumped, dominated, or primed 
by it.  These provisions merely contemplate the possibility 
entrance 
fees 
could 
take 
priority 
over 
the 
bondholders' 
Mortgage; they do not create a lien, much less accord it 
priority over a properly recorded mortgage. 
¶34 The residents' entrance fees are nothing more than 
unsecured, contingent liabilities of the Atrium.  As the 
residents themselves concede, their entrance fees are not liens 
and the residents never attempted to create liens.  Although the 
Mortgage is subject to Permitted Encumbrances, which include 
liens permitted under Section 5.12(b) of the Project Contract, 
the entrance fees never became liens on the real property of the 
Atrium. Having never become liens, the residents' unsecured 
claims for recovery of their entrance fees could not possibly 
trump the bondholders' Mortgage. 
¶35 Other provisions on which the residents rely likewise 
merely acknowledge superior claims might exist.  Section 5.12(a) 
of the Official Statement provides: 
[R]esidents of the facilities that require entrance 
fees may have certain rights with respect to their 
entrance fees and therefore the entrance fees held by 
the Corporation may not be available to pay the Series 
2002 Bonds in the event of a foreclosure. 
(Emphasis added.)  The Project Contract similarly states: 
Nos. 2019AP1728 & 2019AP2063   
 
21 
 
The Obligor agrees that it will not create or suffer 
to 
be 
created 
or 
exist 
any 
Lien 
upon 
its 
Property . . . other than Permitted Liens whenever 
created, all of which Permitted Liens may be superior 
to the Lien of the Mortgage[.] 
(Emphasis added.).  The key word in these provisions is "may."  
Like 
"subject 
to," 
this 
word 
does 
not 
subordinate 
the 
Mortgage.  It most naturally conveys only "a possibility."  May, 
Black's Law Dictionary 1000 (8th ed. 2004); see also, May, 
Webster's Second New International Dictionary 1517 (citation 
omitted).  In effect, these provisions merely convey there is a 
possibility Permitted Liens could be superior to the Mortgage 
lien.  Possibilities are not realities; the residents never 
attempted to create liens on the Atrium's real property, and 
these provisions do not subordinate the bondholders' secured 
lien to the residents' unsecured claims for entrance fees. 
¶36 The residents cite one more provision, Section 3.8 of 
the Mortgage, which reads: 
Section 3.8.  Permitted Encumbrances.  Except for the 
Permitted Encumbrances, Obligor will not enter, create 
or suffer to be created any further Lien upon the 
Mortgaged Property, or any part thereof, whether or 
not prior to or subordinate to or on a parity with the 
Lien of this Mortgage, without the prior written 
consent of the Trustee[.] 
(Emphasis added.)  Notwithstanding the fact the residents have 
disclaimed having any liens on the Atrium's real property, 
nothing in this provision subordinates the Mortgage to any 
Permitted Encumbrance or "any further Lien."  Regardless of 
whether the residents possess liens or not, this provision says 
nothing about the priority accorded to them.  Notably, Section 
Nos. 2019AP1728 & 2019AP2063   
 
22 
 
3.8 contemplates the Permitted Encumbrances or other Lien may be 
merely "subordinate to or on a parity with" the Mortgage lien; 
nevertheless, the Atrium agreed it would not "enter, create or 
suffer to be created any further Lien"——even one subordinate to 
the 
Mortgage——without 
the 
prior 
written 
consent 
of 
the 
Bondholders' Trustee.  The residents present no evidence the 
Bondholders' 
Trustee 
consented 
to 
subordination 
of 
the 
bondholders' Mortgage. 
¶37 Nothing in the Financing Documents or the Official 
Statement 
subordinates 
the 
bondholders' 
Mortgage.  
The 
provisions cited by the residents merely contemplate the 
possibility that the Mortgage could be subordinated to other 
liens.  Nothing in the Financing Documents or the Official 
Statement creates any liens or other encumbrances, much less 
subordinates the mortgage to them.  We therefore apply Wis. 
Stat. 
§ 128.17, 
which 
accords 
the 
bondholders' 
Mortgage 
priority. 
C.  Episcopal Homes 
¶38 The residents next rely on Episcopal Homes——a court of 
appeals decision not binding on this court.  Friends of Frame 
Park, U.A. v. City of Waukesha, 2022 WI 57, ¶63, 403 Wis. 2d 1, 
976 
N.W.2d 263 
(Rebecca 
Grassl 
Bradley, 
J., 
concurring) 
(explaining this court is not bound by the decisions of the 
court of appeals); see also State v. Yakich, 2022 WI 8, ¶31, 400 
Wis. 2d 549, 970 N.W.2d 12.  We need not consider whether that 
case was correctly decided because, contrary to the residents' 
Nos. 2019AP1728 & 2019AP2063   
 
23 
 
analysis, Episcopal Homes differs materially from the present 
case as a matter of both fact and law. 
¶39 Episcopal Homes involved a senior-living facility that 
defaulted on bond repayments.  Episcopal Homes, 195 Wis. 2d at 
492.  In that case, a group of roughly 1,700 bondholders bought 
more than $11 million in bonds to fund the construction of a 
facility called DeKoven.  Id. at 490.  Under a series of 
financing documents, the bondholders held a security interest in 
an account containing approximately $1,000,000 in entrance fees.  
Id. at 492–93.  DeKoven's residency agreements subordinated 
entrance fee repayments to the bondholders' lien.  Id. at 492.  
After DeKoven defaulted on its bond repayments, the bondholders 
claimed a secured interest in the segregated entrance fee 
account funds. Id. 
¶40 The circuit court granted summary judgment in favor of 
the DeKoven residents and imposed a constructive trust against 
the entrance fee account.  Id. at 496.  The court of appeals 
affirmed, concluding DeKoven had contracted with each resident 
as landlord and tenant; accordingly, the court deemed the rental 
agreements leases.  Id. at 489, 506.  Based on the language of 
the rental agreements, the court concluded the entrance fees 
were effectively security deposits under Wis. Admin. Code § ATCP 
134.02(11), governed by the public policy espoused in the 
administrative code.  Id. at 507, 509.  Because Wisconsin Admin. 
Code § 134.06(3) prohibits using standard forms to place 
additional conditions on the return of security deposits, the 
Nos. 2019AP1728 & 2019AP2063   
 
24 
 
court determined any subordinating provisions in the rental 
agreements were unenforceable.  Id. at 511–12. 
¶41 The court of appeals also upheld the circuit court's 
imposition of a constructive trust against the segregated 
entrance fee account.  Id. at 514.  It held the subordination 
provisions unconscionable because they violated public policy.  
Id. at 513.  Additionally, the court concluded the bondholders 
would have been unjustly enriched if those provisions were 
enforced.  Id.  Because the court decided the elements of a 
constructive trust were satisfied, it affirmed the circuit 
court.  Id. at 514. 
¶42 The residents in this case claim their entrance fees, 
like those paid by the DeKoven residents, constitute security 
deposits.  In their view, the sale proceeds represent "what is 
left of their entrance fees" entitling them to the proceeds 
under Episcopal Homes.  Misconstruing Episcopal Homes, the court 
of 
appeals 
adopted 
the 
residents' 
arguments 
and 
ignored 
Wisconsin law governing the priority of properly perfected 
mortgage liens over unsecured claims with respect to proceeds 
from the sale of mortgaged real estate. 
¶43 Episcopal Homes is inapplicable to the facts of this 
case.  In Episcopal Homes, the court of appeals exercised 
equitable powers against a segregated account containing funds 
traceable to the residents' payment of entrance fees.  In 
contrast, the residents of the Atrium seek to usurp a first 
priority lien on the proceeds from the sale of real property.  
Whatever equitable powers courts may possess, nothing in law or 
Nos. 2019AP1728 & 2019AP2063   
 
25 
 
equity authorizes courts to disrupt the statutorily prescribed 
priority of secured lenders.  See Law v. Siegel, 571 U.S. 415, 
421 (2014) (citing Norwest Bank Worthington v. Ahlers, 485 U.S. 
197, 206 (1988) ("We have long held that 'whatever equitable 
powers remain in the bankruptcy courts must and can only be 
exercised within the confines of' the Bankruptcy Code.")).  In 
this 
case, 
Wis. 
Stat. 
§§ 706.11 
and 
128.17 
grant 
the 
bondholders' 
Mortgage 
lien 
unequivocal 
superiority. 
 
The 
residents' argument for extending Episcopal Homes beyond a 
segregated account of entrance fees not in receivership to reach 
the materially distinct proceeds from the sale of real property 
subject to a perfected mortgage lien asks this court to 
disregard the plain language of chapter 128.  We have no legal 
authority to do so. 
D.  Fiduciary Duties 
¶44 As a final matter, the residents challenge the court 
of appeals' decision holding the receiver did not violate his 
fiduciary duties to the residents when he moved the circuit 
court to issue an order on priority.  Casanova v. Polsky, Nos. 
2019AP1728 & 2019AP2063, unpublished slip op., ¶18 n.12 (Wis. 
Ct. App. July 30, 2021).  This argument is underdeveloped.  The 
residents do not engage in any detailed analysis to support this 
argument and do not request any relief to remedy the receiver's 
alleged breach of fiduciary duty.  Because we need not address 
underdeveloped arguments, we decline to address this claim.  
Papa v. Wis. Dep't of Health Servs., 2020 WI 66, ¶42 n.15, 393 
Wis. 2d 1, 
946 
N.W.2d 17; 
see 
also, 
Teigen 
v. 
Wisconsin 
Nos. 2019AP1728 & 2019AP2063   
 
26 
 
Elections Comm'n, 2022 WI 64, ¶45, 403 Wis. 2d 607, 976 
N.W.2d 519 (lead op.). 
IV. CONCLUSION 
¶45 Under Wis. Stat. § 128.17, the bondholders' Mortgage 
lien has priority over the residents' entrance fee claims.  No 
provision 
of 
the 
Financing 
Documents 
subordinates 
the 
bondholders' lien, and Episcopal Homes does not extend to the 
proceeds from the sale of real property with a properly 
perfected mortgage lien.  The bondholders are therefore entitled 
to first payment from the proceeds of the sale of the Atrium's 
assets. 
By the Court.—The decision of the court of appeals is 
reversed. 
 
 
Nos. 2019AP1728 & 2019AP2063   
 
 
 
1