United States of America v. Meisegeier et al
Filing
52
ORDER denying David Krumrei and Bonita Perry's 42 Petition for Equitable Distribution of Surplus. Wymore Seed and Farm Supply's request for surplus funds (dkt. ## 43 , 48 ) is DENIED IN SUBSTANTIAL PART as set forth within this order. Defendants Emily and Larry Meisegeiers' request for surplus funds (dkt. # 49 ) is GRANTED IN PART in the amount of $38,388.264 and STAYED IN PART in the amount of $3,197.06. Within thirty days, Wymore should inform the court if he has filed a collateral challenge to the order of satisfaction in state court, and if so, the case number of that challenge and a copy of his filing. If satisfactory, the court will transfer the remaining surplus to that court pending resolution of his challenge. If not, the court will release the surplus to the Meisegeiers. Signed by District Judge William M. Conley on 7/29/2015. (jef),(ps)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA,
Plaintiff,
OPINION & ORDER
v.
14-cv-065-wmc
LARRY A. MEISEGEIER,
EMILY B. MEISEGEIER,
WYMORE SEED AND FARM SUPPLY,
MARSHFIELD CLINIC,
DAVID KRUMREI,
BONITA PERRY,
SHELDON CO-OP SERVICES and
HERDSMAN FEEDS, INC.,
Defendants.
In this foreclosure action, Larry and Emily Meisegeier, the individual defendants and
owners of the mortgaged premises, defaulted on several promissory notes delivered to the
United States of America, acting through the Farm Service Agency, United States
Department of Agriculture.
This final opinion and order addresses and disposes of the
surplus that ultimately resulted from the sale of the underlying property.
The Meisegeiers failed to appear to defend the suit brought by the government, and
the clerk entered default against them. Plaintiff then moved for default judgment. After
granting that motion, the court ordered the sale of the property in question. (Sept. 10,
2014 Opinion & Order (dkt. #23).)
On February 25, 2015, the property sold at public auction for $172,000.00.
(Marshal’s Report of Sale (dkt. #35) 2.) The mortgage judgment against the Meisegeiers,
however, was only $126,668.53, plus $57.95 in interest. After covering the costs of sale
incurred by the U.S. Marshal’s Service and the United States Attorney’s Office, there still
remained a surplus of $44,061.24.
(See Order Confirming Sale (dkt. #37) ¶ 7.)
Accordingly, the court gave any additional claimants to the surplus fourteen days to file
their claims. (Id. at ¶ 9.)
A few, unsecured creditors have come forward asserting timely claims: (1) a claim by
the United States for $2,475.92 in interest and additional costs associated with the
foreclosure sale (dkt. #38); (2) a “petition for equitable distribution of surplus” by David
Krumrei and Bonita Perry, requesting a pro rata distribution of all the funds among the
Meisegeiers’ creditors (dkt. #42); and (3) a request from P. Thomas Wymore of Wymore
Seed and Farm Supply for $2,103.50, plus $1,093.56 in interest (dkt. #43). In light of
these claims, this court entered an order on April 9, 2015, which gave the Meisegeiers an
additional fourteen days to file a response, if any, to the claims, something they also
declined to do. The court also scheduled a hearing on the claims for April 29th.
Before that hearing, the court took judicial notice of records obtained from the
Wisconsin Circuit Court Access website, which showed Krumrei, Perry and Wymore had
obtained judgment liens against the Meisegeiers that would have survived their Chapter 7
bankruptcy proceedings. Those records also showed, however, that the judgments in those
cases were satisfied as of November 2014, as a result of applications for the satisfaction of
judgment under Wis. Stat. § 806.19(4) filed by the Meisegeiers’ legal counsel on October
24. Subsection (d) of that statute states that: “Upon receipt of a completed application,
the clerk shall submit the proposed order for signature by a judge after which the clerk shall
satisfy of record each judgment described in the application. Upon satisfaction, a judgment
shall cease to be a lien on any real property that the person discharged in bankruptcy owns
or later acquires.”
2
At the April 29th hearing, the Meisegeiers did not appear, nor did unsecured
creditors Krumrei or Perry. Mr. Wymore did appear on behalf of his sole proprietorship,
Wymore Seed and Farm Supply.1 The United States also appeared by Assistant United
States Attorney Barbara Oswald. The court granted the unopposed request of the United
States for its costs and interest, but noted the problems with the other two claims to the
surplus funds -- mainly that if the Meisegeiers had obtained a satisfaction of judgment
under § 806.19, it appeared that the remaining creditors no longer had a legal right to the
surplus funds from the sale of the property.
The court noted, however, that “the
Meisegeiers have not advanced any of these arguments; indeed, they have not appeared in
the case at all.” (May 8, 2015 Opinion & Order (dkt. #47) 3.) Accordingly, the court
provided the interested parties a last chance to supplement the record, asking that: (1)
claimants Wymore, Krumrei and Perry file proof of their judgments against the Meisegeiers
and proof of any lien against the subject property, as well as address whether they had any
knowledge of the Meisegeiers’ applications for satisfaction of judgment; and (2) the
Meisegeiers file a written response addressing the asserted claims and explaining why they
should not be held in default with respect to those claims.
The court again received nothing from Krumrei or Perry in response to its order of
May 8. Mr. Wymore, however, filed his response timely on May 14, 2015, providing the
court with the following:
A copy of his judgment in the amount of $2,098.50 (dkt. #48-1).
1
Wymore confirmed at the hearing that Wymore Seed and Farm Supply is a sole proprietorship,
allowing him to proceed pro se. United States v. Hagerman, 545 F.3d 579, 581 (7th Cir. 2008).
3
His written explanation that, according to officials at the Rusk County Clerk of
Court’s office and the Register of Deeds Office, he held a general lien on all of the
Meisegeiers’ real estate, rather than a lien linked to a particular parcel of land.
An acknowledgment that he previously received a copy of the October 24, 2014,
application for an order of satisfaction of judgment from the Kenyon Law Office, as
well as a copy of the November 5, 2014, order granting that application (dkt. #482).
The court also received a fax from Allen F. Kenyon, who represented the Meisegeiers in
their Chapter 7 proceedings.
(Dkt. #49.)
Attorney Kenyon enclosed a copy of the
application and order on satisfaction of judgment with respect to Krumrei’s judgment
against the Meisegeiers. (Dkt. #49-1.)
Finally, on May 26, the court received a“brief in opposition” in letter form from the
Meisegeiers themselves (dkt. #50), which included copies of the satisfaction of judgment
due to bankruptcy (as well as copies of the discharge on which it is based) with respect to all
the creditors named as defendants in this case, including Wymore Seed and Farm Supply
(dkt. #50-1), and David Krumrei and Bonita Perry (dkt. #50-4). The Meisegeiers did not
attempt to explain why the court should not hold them accountable for their silence the first
time the court directed them to respond, relying instead on the fact that their former
creditors have no legal claim to the funds.
OPINION
On this record, Wymore, Krumrei and Perry no longer held a valid lien on the
Meisegeiers’ property as of November 5, 2014, when the Rusk County Circuit Court
4
entered an order of satisfaction with respect to the judgments in question. “The plain
language of [§ 806.19(4)] unambiguously provides that when a proper application is
received by the clerk and submitted to the judge for signature, the only thing required for
satisfaction of a judgment debt and cessation of an associated judgment lien is that the
underlying judgment has been discharged in bankruptcy.” Megal Dev’t Corp. v. Shadof, 2005
WI 151, ¶ 2, 286 Wis. 2d 105, 705 N.W.2d 645.
The former creditors could perhaps attempt a collateral attack on the validity of the
order of satisfaction using § 806.07, “Relief from judgment or order.” See 5 Jay E. Grenig,
Wisconsin Pleading & Practice Forms § 37:134 (5th ed. 2015), available at Westlaw, 5 Wis. Pl.
& Pr. Forms § 37:134. But this foreclosure action, which is only tangentially related to the
judgments in question, would be an inappropriate venue for that challenge, even assuming
the court had the power to entertain it. See, e.g., Arnold v. KJD Real Estate, LLC, 752 F.3d
700, 704-05 (7th Cir. 2014) (under Rooker-Feldman doctrine, lower federal courts lack
subject matter jurisdiction in cases “complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district court review
and rejection of those judgments”) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 284 (2005)).
Additionally, the validity of the orders of satisfaction is better litigated in the court
that entered those orders as a matter of comity and policy. At a minimum, the state court
that entered the satisfaction order is in the best position to assess whether it should stand in
light of the considerations enumerated in Wis. Stat. § 806.07. Finally, and importantly, no
one -- not even Wymore -- has formally attacked the validity of the orders of satisfaction in
5
this court. Accordingly, the Rusk County Circuit Court should be the one to assess whether
its order ought to be vacated under § 806.07(1).
This still leaves the question of what to do with the remaining surplus funds.
Despite the Meisegeiers’ failure to explain their long silence and absence from the hearing
on surplus, the court concludes that they are legally entitled to most of those funds based
on their having obtained, however belatedly, state court orders of satisfaction.
The
Meisegeiers surely could have been more prompt in advising the court that they had
obtained orders of satisfaction of judgment under § 806.19(4), but missing the briefing
deadline does not justify this court ignoring a duly-entered order from the Rusk County
Circuit Court.
Turning to the surplus petitions then, the court concludes that Krumrei and Perry
failed to preserve their claim to the surplus by filing proof of judgment as ordered or by
appearing at the hearing. Accordingly, their petition will be denied.
In contrast, Wymore did preserve his claim, and it is possible that he may wish to
challenge the underlying order of satisfaction in state court.2 If so, Wymore will be given an
opportunity to bring a collateral attack in the Rusk County Circuit Court before this court
pays out the funds to which he asserts a claim, provided that this court is given a copy of
any such filing within thirty days of this opinion and order. This court will then transfer
the claimed funds to that state court to be held pending the resolution of his challenge.3 If
2
This court hastens to add that it expresses no opinion on the merits of such a challenge, having
little to no information about what occurred in those underlying proceedings.
3
Of course, there may be an easier solution available. The Meisegeiers will be receiving a significant
surplus from the sale of their property, one that far exceeds the approximately $3,000 (representing
both judgment and interest) that Wymore requests. Accordingly, it lies within their discretion to
settle the matter voluntarily.
6
he does not wish to bring such a challenge, however, or if thirty days pass without word
from Wymore, then the court will disburse the remaining surplus to the Meisegeiers as well.
ORDER
IT IS ORDERED that:
1) David Krumrei and Bonita Perry’s petition for equitable distribution of surplus
(dkt. #42) is DENIED.
2) Wymore Seed and Farm Supply’s request for surplus funds (dkt. ##43, 48) is
DENIED IN SUBSTANTIAL PART as set forth above.
3) Defendants Emily and Larry Meisegeiers’ request for surplus funds (dkt. #49) is
GRANTED IN PART in the amount of $38,388.264 and STAYED IN PART in
the amount of $3,197.06.
4) Within thirty days, Wymore should inform the court if he has filed a collateral
challenge to the order of satisfaction in state court, and if so, the case number of
that challenge and a copy of his filing. If satisfactory, the court will transfer the
remaining surplus to that court pending resolution of his challenge. If not, the
court will release the surplus to the Meisegeiers.
Entered this 29th day of July, 2015.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge
4
This calculation represents the reported surplus from the sale of $44,061.24, less the $3,197.06
Wymore requested and the $2,475.92 paid to the United States.
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?