Court Opinion

ID: 9379814
Source: CourtListenerOpinion
Date Created: 2023-03-16 15:11:22.502851+00
Date Added: 2024-06-11T17:16:54.600959
License: Public Domain

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
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,

               2
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

               3
                       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

                                        4
JUSTICES:
REBECCA GRASSL BRADLEY, J., delivered the majority opinion for a
unanimous Court.
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.

                                           5
                                                                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                FILED
Creditor Committee, Patricia Teernstra, member
of Creditor Committee, Andrew Mikaelian, member
of Creditor Committee, Marcella Mikaelian,              MAR 16, 2023
member of Creditor Committee, Josephine Brooks,
member of Creditor Committee, Evelyn Odell,                Sheila T. Reiff
member of Creditor Committee, Laurence Freer,           Clerk of Supreme Court
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 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

                                 1
                                                                     Nos.   2019AP1728 & 2019AP2063

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).

                                                       2
                                                             Nos.   2019AP1728 & 2019AP2063

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

      4All subsequent references to the Wisconsin Statutes are to
the 2021–22 version unless otherwise indicated.
      5Bank One is the predecessor in interest to New York Mellon
Trust Company, N.A., which now serves as the Bondholders'
Trustee.

                                            3
                                                               Nos.   2019AP1728 & 2019AP2063

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.

      6A 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.
      7The 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.

                                                 4
                                                 Nos.     2019AP1728 & 2019AP2063

      ¶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

      8A 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).
      9The 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.

       Over time, the Atrium altered the form, substance, and
      10

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.

                                      5
                                                            Nos.    2019AP1728 & 2019AP2063

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

       Certain agreements required Atrium residents to pay a
      11

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.

                                             6
                                                             Nos.   2019AP1728 & 2019AP2063

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

                                               7
                                                           Nos.   2019AP1728 & 2019AP2063

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
                                               8
                                                             Nos.       2019AP1728 & 2019AP2063

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
                                                 9
                                                 Nos.   2019AP1728 & 2019AP2063

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

                                      10
                                                    Nos.     2019AP1728 & 2019AP2063

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

     12According 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."
     13Only the cover letter, but                not    this    proposed    order,
appears in the appellate record.
     14   This appeal was docketed as appeal No. 2019AP1728.
     15Like 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.
                                         11
                                                         Nos.    2019AP1728 & 2019AP2063

      ¶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.

                                            12
                                                               Nos.    2019AP1728 & 2019AP2063

                               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
                                              13
                                                       Nos.       2019AP1728 & 2019AP2063

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

                                            14
                                                         Nos.    2019AP1728 & 2019AP2063

                     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

                                             15
                                                            Nos.   2019AP1728 & 2019AP2063

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.

                                            16
                                                                Nos.    2019AP1728 & 2019AP2063

       ¶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
                                                 17
                                                    Nos.   2019AP1728 & 2019AP2063

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

                                       18
                                                Nos.      2019AP1728 & 2019AP2063

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).

       See, e.g., 15 U.S.C. § 77j(a)(1) ("[A] prospectus
       19

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).").

                                      19
                                                              Nos.   2019AP1728 & 2019AP2063

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:

                                                 20
                                                               Nos.    2019AP1728 & 2019AP2063

       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

                                                 21
                                                         Nos.   2019AP1728 & 2019AP2063

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'

                                           22
                                                        Nos.   2019AP1728 & 2019AP2063

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

                                           23
                                                            Nos.       2019AP1728 & 2019AP2063

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
                                              24
                                                            Nos.    2019AP1728 & 2019AP2063

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
                                               25
                                                        Nos.      2019AP1728 & 2019AP2063

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.

                                          26
    Nos.   2019AP1728 & 2019AP2063

1