Marilyn Casanova v. Michael S. Polsky, Esq.

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.

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 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

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 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
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 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
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 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

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 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.
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 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.

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 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

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 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