                                                                 2020 WI 3

                  SUPREME COURT               OF   WISCONSIN
CASE NO.:                  2017AP822


COMPLETE TITLE:            Veritas Steel, LLC,
                                     Plaintiff-Respondent,
                                v.
                           Lunda Construction Company,
                                     Defendant-Third-Party
                                     Plaintiff-Appellant-Petitioner,
                                v.
                           Bridge Resources, LLC n/k/a Bridge Fabrication
                           Holdings,
                           LLC, Alan Sobel, Matthew Cahill and Atlas
                           Holdings, LLC,
                                     Third-Party Defendants-Respondents.

                              REVIEW OF DECISION OF THE COURT OF APPEALS
                              Reported at 385 Wis. 2d 210,923 N.W.2d 181
                                         (2018 – unpublished)

OPINION FILED:             January 15, 2020
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:             September 19, 2019

SOURCE OF APPEAL:
   COURT:                  Circuit
   COUNTY:                 Dane
   JUDGE:                  Frank D. Remington

JUSTICES:
DALLET, J., delivered the majority opinion of the Court, in
which ANN WALSH BRADLEY, ZIEGLER, REBECCA GRASSL BRADLEY, KELLY
and HAGEDORN, JJ., joined. ROGGENSACK, C.J., filed a concurring
opinion.
NOT PARTICIPATING:



ATTORNEYS:



      For            the        defendant-third-party-plaintiff-appellant-
petitioner, there were briefs filed by Saul C. Glazer, Michael D.
Hahn, and Axley Brynelson, Madison. With whom on the brief was
Dean Thomson, Paul Ratelle, and Fabyanske Westra Hart & Thomson
PA, Minneapolis, Minnesota. There was an oral argument by Paul
Ratelle.

     For the third-party-defendants-respondents, there was a brief
filed by Michael D. Leffel, Kevin M. LeRoy, Thomas L. Shriner, Jr.
and Foley & Lardener LLP, Madison and Milwaukee. With whom on the
brief was Richard Mancino, Jill K. Grant, Stuart R. Lombardi,
William O’Brien, Patricia O. Haynes, Joseph G. Davis, and Willkie
Farr & Gallagher LLP, New York, New York and Washington, DC. There
was an oral argument by Richard Macino.




                                2
                                                                    2020 WI 3
                                                          NOTICE
                                            This opinion is subject to further
                                            editing and modification.   The final
                                            version will appear in the bound
                                            volume of the official reports.
No.    2017AP822
(L.C. No.   2015CV509)

STATE OF WISCONSIN                      :              IN SUPREME COURT

Veritas Steel, LLC,

            Plaintiff-Respondent,

      v.

Lunda Construction Company,                                     FILED
            Defendant-Third-Party                          JAN 15, 2020
            Plaintiff-Appellant-Petitioner,
                                                               Sheila T. Reiff
      v.                                                   Clerk of Supreme Court


Bridge Resources, LLC n/k/a Bridge Fabrication
Holdings, LLC, Alan Sobel, Matthew Cahill and
Atlas Holdings, LLC,

            Third-Party Defendants-Respondents.


DALLET, J., delivered the majority opinion of the Court, in which
ANN WALSH BRADLEY, ZIEGLER, REBECCA GRASSL BRADLEY, KELLY and
HAGEDORN, JJ., joined.    ROGGENSACK, C.J., filed a concurring
opinion.


      REVIEW of a decision of the Court of Appeals.          Affirmed.



      ¶1    REBECCA FRANK DALLET, J.   Lunda Construction Company

(Lunda) alleges that Veritas Steel, LLC (Veritas), and third-party

defendants Atlas Holdings, LLC (Atlas), and Bridge Fabrication
                                                                          No.    2017AP822



Holdings, LLC, took unfair advantage of PDM Bridge, LLC's (PDM)

loan       defaults,       "with   the    intent     to    gain   ownership     of    PDM's

lucrative         steel     fabrication       business      for     grossly   inadequate

consideration through a secretive, unlawful and fraudulent process

designed to render PDM an empty shell with no assets remaining to

satisfy PDM's eight-figure liability to Lunda."

       ¶2        The circuit court granted summary judgment to Veritas on

Lunda's successor liability claim because there was no genuine

issue       of        material   fact    as   to     the    de    facto   merger,      mere

continuation, and fraudulent transaction exceptions to the general

rule against successor liability.1                   The court of appeals affirmed

as to the de facto merger and mere continuation exceptions, the

only exceptions Lunda raised on appeal.2

       ¶3        The question before us is whether the de facto merger,

mere continuation, and fraudulent transaction exceptions to the

rule against successor liability apply in this case to impose

successor liability on Veritas.                     Lunda asks this court to read

Fish v. Amsted Indus., Inc., 126 Wis. 2d 293, 376 N.W.2d 820
(1985),          as     having   expanded     the    de     facto    merger     and    mere

continuation exceptions.                Lunda further asserts that the court of

appeals erroneously dismissed its successor liability claim in

light of the fraudulent transaction exception.



       Judge Frank D. Remington of Dane County Circuit Court
       1

presided.

       Veritas Steel, LLC v. Lunda Construction Co., No. 2017AP822,
       2

unpublished slip op. (Wis. Ct. App. Nov. 21, 2018).

                                               2
                                                               No.    2017AP822



     ¶4   We     reject   Lunda's    expanded    reading     of     Fish,   126

Wis. 2d 293, and conclude that Lunda has not raised a genuine issue

of material fact as to an "identity of ownership" between Veritas

and PDM, the key component necessary to satisfy the de facto merger

and mere continuation exceptions.         We further conclude that by not

raising the fraudulent transaction exception before the court of

appeals, Lunda forfeited that argument.           We therefore affirm the

court of appeals.

          I.    FACTUAL BACKGROUND AND PROCEDURAL POSTURE

     ¶5   The facts of this case are lengthy and fairly complex.

PDM operated a steel fabrication business.3             In 2006, PDM entered

into a credit agreement with a syndicate of lenders for a $115

million term and $25 million revolving loan.                As security for

repayment,     the   lenders   obtained     a   first    priority    lien   on

"substantially all of PDM's assets."

     ¶6   PDM's financial condition had begun to significantly

decline by 2011.      PDM eventually defaulted on its obligations to

the lenders under the 2006 credit agreement.               By 2013, PDM was
indebted to the lenders on secured debt with a face value of

approximately $76 million.          In June 2013, the lenders and PDM

executed a forbearance agreement in which PDM agreed to either

sell itself to an interested acquirer or restructure with the

assistance of an investment banker.

     3 American Securities, a private equity firm, purchased PDM
in 2006 and held it through a company called ASP PDM LLC. Like
the court of appeals, for ease of reference, we will use "PDM" to
refer both to the limited liability corporation and its only
member. See Veritas, No. 2017AP822, ¶6 n.2.

                                      3
                                                      No.   2017AP822



     ¶7   Pursuant to the forbearance agreement, PDM retained an

investment banker to market a sale of the company for the highest

possible price.    Of 136 potential acquirers contacted by the

investment banker, none of them offered a price that came close to

satisfying PDM's outstanding secured debt.    The highest bid came

from Atlas, a private equity firm.

     ¶8   Rather than purchase PDM's assets directly, Atlas and

the lenders agreed that Atlas would acquire the lenders' secured

claims against PDM and then foreclose on PDM's assets.         Atlas

caused the creation of a new entity, Bridge Resources, LLC, to aid

in the acquisition of PDM's assets.   Bridge Resources subsequently

filed amended Uniform Commercial Code (UCC) financing statements,

in which it confirmed itself as the new administrative agent under

the credit agreement and verified its protected security interest

in PDM's assets.   Through a series of transactions, affiliates of

Atlas and a co-investor purchased all of PDM's outstanding debt

directly from the lenders for approximately $22 million, which was

indicative of the value of PDM's assets.
     ¶9   PDM, having no prospect of paying back the outstanding

debt under the credit agreement, entered into a "transaction

support agreement" with Bridge Resources in October 2013.        The

agreement anticipated that the parties would work towards a strict

foreclosure on the collateral securing PDM's loans in exchange for

partial satisfaction of PDM's obligations under the 2006 credit

agreement.   To carry out the strict foreclosure, Atlas created a

subsidiary called Veritas, which was assigned a first priority


                                4
                                                                       No.    2017AP822



lien on PDM's assets and eventually became the sole secured lender

under the credit agreement.4

       ¶10    In November 2013, PDM, Bridge Resources, and Veritas

executed a strict foreclosure agreement.                  PDM conveyed to Veritas

the collateral securing the loan in exchange for the discharge of

approximately $71 million out of $76 million of unpaid, secured

debt that PDM owed under the credit agreement.5                          The strict

foreclosure      agreement    did    not    change       the   ownership     or   board

structure of PDM.       It is undisputed that there was no stock or

other indicia of equitable ownership transferred from Veritas to

PDM.       Further, no director or owner of PDM became a director or

owner of Veritas.

       ¶11    Meanwhile,     in     2010,       Lunda,    a    civil   construction

contractor, entered into a subcontract with PDM, which required

PDM to provide steel for a bridge construction project.                      In 2012,

after PDM failed to perform, Lunda sued for breach of contract.

At the time that Veritas foreclosed on PDM's assets, Lunda had a


       Veritas was formed in October 2013 by Bridge Fabrication
       4

Holdings, Veritas's sole member. Bridge Fabrications Holdings and
Bridge Resources merged in 2014 and became BFH Holdings, LLC, which
is majority-owned by Atlas affiliates.

       Pursuant to Uniform Commercial Code § 9-620, a debtor may
       5

turn over to a lender the collateral for a loan in exchange for
full or partial satisfaction of a debt.      Wisconsin's Uniform
Commercial Code has a similar provision, see Wis. Stat. § 409.620
(2017-18).   There is no dispute that the transaction support
agreement and the subsequent strict foreclosure were in full
compliance with the procedures set forth in the UCC.

     All subsequent references to the Wisconsin Statutes are to
the 2017-18 version unless otherwise indicated.

                                            5
                                                                 No.     2017AP822



contingent, unsecured breach of contract claim.            It was not until

2014, after the strict foreclosure agreement was finalized, that

Lunda obtained a $16 million judgment against PDM.                Lunda, as an

unsecured   creditor,       subsequently   took   steps   under    Wis.     Stat.

§ 779.155 to assert a lien on funds owed to Veritas by the

Wisconsin Department of Transportation (DOT) for projects on which

PDM had worked.

     ¶12    In February 2015, Veritas commenced this action against

Lunda and sought a declaration that Lunda had no claim to payments

by the DOT for the projects at issue.                Lunda asserted eight

counterclaims against Veritas and commenced a third-party action

against    Atlas,    Bridge    Fabrication   Holdings,     and     two    former

officers of PDM.6      The circuit court granted Veritas's motion to

dismiss on six of Lunda's counterclaims. Only two claims remained:

a successor liability claim against Veritas7 and a claim against

Veritas,    Atlas,    and     Bridge   Fabrication   Holdings       under     the

Wisconsin Uniform Fraudulent Transfer Act (WUFTA claim).8                Summary




     6 The two former officers, Alan Sobel and Matthew Cahill, are
not involved in this appeal. Cahill, who was the CEO of PDM, and
Sobel, who was the CFO of PDM, continued for at least some period
of time in those roles at Veritas. However, neither had an owner's
interest in PDM or Veritas.
     7 The circuit court had previously dismissed Lunda's successor
liability claim against Atlas and Bridge Fabrication Holdings,
which is not at issue in this case.
     8 The circuit court had previously granted a separate motion
for summary judgment filed by Sobel and Cahill as to Lunda's WUFTA
claim.

                                       6
                                                                      No.    2017AP822



judgment motions on the remaining two claims were granted by the

circuit court.

      ¶13    On    appeal,    Lunda       challenged   the     dismissal     of     its

successor liability claim against Veritas under the de facto merger

and   mere   continuation          exceptions.     Lunda       also   appealed      the

dismissal of its WUFTA claim against Veritas and the third-party

defendants.       The court of appeals affirmed the circuit court as to

both issues.9

      ¶14    Lunda petitioned this court for review and challenges

the dismissal of its successor liability claim against Veritas as

it relates to the de facto and mere continuation exceptions. Lunda

also alleges that the court of appeals erroneously dismissed its

successor liability claim in light of the fraudulent transaction

exception to the rule against successor liability.

                             II.    STANDARD OF REVIEW

      ¶15    We review a decision on summary judgment using the same

methodology       as   the   circuit      court.       Green    Spring      Farms    v.

Kersten, 136 Wis. 2d 304, 314-15, 401 N.W.2d 816 (1987).                      Summary
judgment shall be granted where the record demonstrates "that there

is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law."                     Wis. Stat.

§ 802.08(2).

                                   III.    ANALYSIS



      9The portion of the court of appeals' decision regarding
Lunda's WUFTA claim is not at issue here.    See Veritas, No.
2017AP822, ¶¶36-42.

                                            7
                                                               No.   2017AP822



      ¶16    We first discuss the purpose of the general rule against

successor liability and the exceptions to that rule as developed

in Wisconsin jurisprudence.         We next clarify the de facto merger

and   mere      continuation   exceptions   and   determine   whether   Lunda

raised a genuine issue of material fact as to these exceptions.

Finally, we decide whether Lunda forfeited its successor liability

claim as to the fraudulent transaction exception by failing to

raise it before the court of appeals.

           A.    The general rule against successor liability:
                    its purpose and relevant exceptions
      ¶17    It is well established that when a company sells or

transfers all of its assets to another company, the purchasing

company does not become liable for the transferring company's debts

and liabilities.       See Fish, 126 Wis. 2d at 298 (quoting Leannais

v. Cincinnati, Inc., 565 F.2d 437, 439 (7th Cir. 1977))("'[a]

corporation which purchases the assets of another corporation does

not succeed to the liabilities of the selling corporation.'").

This general rule against successor liability was designed to
protect a bona fide purchaser from assuming the liabilities of a

predecessor corporation.10         See Springer v. Nohl Elec. Prods.


       Although first applied in the corporate context, we have
      10

recognized that the rule against successor liability also belongs
in the product liability context because:

      [T]he successor corporation did not create the risk nor
      did it directly profit from the predecessor's sale of
      the defective product; it did not solicit the use of the
      defective product nor make any representations as to its
      safety; nor is it able to enhance the safety of a product
      that is already on the market.

                                      8
                                                                     No.    2017AP822



Corp., 2018 WI 48, ¶15, 381 Wis. 2d 438, 912 N.W.2d 1.                           "'The

traditional rule of nonliability was developed . . . to protect

the rights of commercial creditors and dissenting shareholders

following       corporate    acquisitions,       as    well    as   to     determine

successor       corporation     liability        for     tax   assessments         and

contractual       obligations       of   the    predecessor.'"           Fish,    126

Wis. 2d at 303 (quoting Ramirez v. Amsted Indus., Inc., 431 A.2d

811, 815-16 (N.J. 1981)).

     ¶18       We have recognized four exceptions to the rule against

successor liability under the following circumstances:

     (1) when the purchasing corporation expressly or
     impliedly agreed to assume the selling corporation's
     liability; (2) when the transaction amounts to a
     consolidation or merger of the purchaser and seller
     corporations; (3) when the purchaser corporation is
     merely a continuation of the seller corporation; or (4)
     when the transaction is entered into fraudulently to
     escape liability for such obligations.
Tift v. Forage King Indus., Inc., 108 Wis. 2d 72, 75-76, 322

N.W.2d 14 (1982) (quoting Leannais, 565 F.2d at 439).                            These

exceptions      illustrate    the    balance    in     successor    liability     law

between "two competing, and often conflicting, policy goals:                        to

provide    a    necessary     remedy     to    injured    parties,       often   tort

claimants, and to provide transactional clarity and certainty for

business parties engaged in fundamental corporate transactions."

Matheson, John H., Successor Liability, 96 Minn. L. Rev. 371, 372-

73 (2011).

Springer v. Nohl Elec. Prods. Corp., 2018 WI 48, ¶15, 381
Wis. 2d 438, 912 N.W.2d 1 (quoting Fish v. Amsted Indus., Inc.,
126 Wis. 2d 293, 307, 376 N.W.2d 820 (1985)).

                                          9
                                                                           No.   2017AP822



       ¶19   We focus our discussion on exceptions two and three,

also known as the de facto merger and mere continuation exceptions.

Both   exceptions       "are   declaratory         of   tests   to   be      applied      to

encourage 'piercing the corporate veil'" and thus examine "the

substance       and      effect       of     business       transformations              or

reorganizations to determine whether the original organization

continues to have life or identity in a subsequent and existing

business organization."             Tift, 108 Wis. 2d at 79.          We resolve the

parties' dispute over the type of "identity" evidence necessary

for purposes of establishing these exceptions.

                      B. The de facto merger and mere
                       continuation exceptions defined
       ¶20   The de facto merger and mere continuation exceptions

were defined and then developed in three main cases:                         Tift, Cody

and Fish.       This court first explicitly recognized the exceptions

in Tift, 108 Wis. 2d 72, a products liability action alleging

injuries caused by a "chopper box" tractor attachment. The chopper

box was first manufactured by a sole proprietorship, which turned
into    a    partnership       and     eventually       "metamorphosed           into"    a

corporation, Forage King Industries.                    Id. at 74.          Forage King

Industries      consisted      of    two   shareholders     who      had     formed      the

partnership, one of whom was the original sole proprietor.                               Id.

Throughout its different business forms, the company retained the

same employees, manufactured the same products, and sold to the

same dealers.      Id. at 74-75.

       ¶21   In 1975, just before the plaintiff was injured, all of
the    Forage    King    Industries        stock    was    purchased        by    another

                                           10
                                                                    No.    2017AP822



corporation that continued to operate as Forage King Industries

and manufacture the same products.                  Id. at 75.     The plaintiff

commenced an action against Forage King Industries and its insurer,

alleging that the company was a successor to the manufacturer of

the chopper box and was therefore responsible for the plaintiff's

injuries.     Id.

       ¶22    We applied the "rules of corporate law" and reasoned

that    the   de    facto   merger    and      mere   continuation       exceptions

"demonstrate that, when it is the same business organization that

one is dealing with, whether it be by consolidation, merger, or

continuation, liability may be enforced" because "[t]hese are

tests of identity."         Id. at 79.        We thus concluded that, despite

organizational transformation, the present Forage King Industries

was "substantially identical to the organization that manufactured

the allegedly defective chopper box and [was] therefore liable."11

Id. at 80.

       ¶23    The mere continuation exception to successor liability

was    further     developed   in    Cody     v.    Sheboygan    Mach.    Co.,   108
Wis. 2d 105, 321 N.W.2d 142 (1982).                The plaintiff sued Sheboygan

Machine Company for injuries caused by a defective sander.                   Id. at

109.    The defective sander had been manufactured by the original

Sheboygan Machine Company, but that company sold its assets and

its name to a different company, who again resold the company


       The court in Tift did not distinguish between the
       11

application of the de facto merger and mere continuation
exceptions. See Tift v. Forage King Indus., Inc., 108 Wis. 2d 72,
79-80, 322 N.W.2d 14 (1982).

                                         11
                                                                              No.    2017AP822



assets and name.             Id. at 107-08.          The plaintiff brought suit

against Sheboygan Machine Company, a corporation that shared the

same    name     as    the   manufacturer      of    the    sander       but    functioned

exclusively as a repair shop.             Id. at 108-09.            Sheboygan Machine

Company shared none of the officers, directors, or stockholders as

the predecessor companies.           Id. at 108.

       ¶24     Citing to the facts of Tift and the principles enunciated

in that case, the Cody court concluded that the mere continuation

exception did not apply because the facts did "not demonstrate any

continuity or identity of business organizations" between the two

entities in question.           Id. at 106.         The Cody court concluded that

the second corporation "was an entirely different corporation" and

that    the     "subsequent      businesses         were   markedly       different          in

character and purpose from the original manufacturer" and "were

not continuations of the original business."                       Id. at 111.

       ¶25     This    court    refined   the        de    facto    merger          and    mere

continuation          exceptions    several     years        later       in     Fish,       126

Wis. 2d 293.          The Fish plaintiffs alleged injuries resulting from
the use of a power press manufactured by Bontrager Construction

Company.       Id. at 295-96.      The plaintiffs filed suit against Amsted

Industries, Inc., the company that acquired Bontrager's assets and

continued to make the power press, and South Bend II, the company

who subsequently bought the power press line from Amsted.                                 Id. at

295-97.       They alleged that, as successor corporations, Amsted and

South     Bend    II     were   liable    for       the    acts     of    Bontrager          in

manufacturing the allegedly defective power press.                             Id. at 297.
All parties agreed that the traditional exceptions to the rule
                                          12
                                                                     No.    2017AP822



against successor liability did not apply to the case, but the

plaintiffs argued that Tift expanded both the de facto merger and

mere continuation exceptions.          Id. at 298.       The plaintiffs argued

that "identity" meant "identity of assets, operations and identity

of the product, rather than identity of ownership."                   Id. at 300-

01 (emphasis added).

      ¶26     The Fish court plainly rejected the argument that Tift

expanded the de facto and mere continuation exceptions:                         "the

[p]laintiffs are in error in alleging that the Tift decision has

expanded the exceptions to the rule of nonliability."                   Id. at 301.

The   court    specified     that   "[i]dentity    refers       to    identity    of

ownership, not identity of product line."            Id.    The court affirmed

dismissal of the successor liability claim as related to both

exceptions because "there [was] not sufficient identity between

Bontrager and either Amsted or South Bend II to justify holding

them liable for the acts of their predecessor."                 Id. at 295.

      ¶27     The    Fish   court   also    delineated    the    "key      elements"

required to meet the de facto and mere continuation exceptions.
In determining whether a de facto merger has occurred, the "key

element" "is that the transfer of ownership was for stock in the

successor corporation rather than cash."             Id. at 301.           The "key

element" to resolve whether the successor is a mere continuation

of the seller corporation "'is a common identity of the officers,

directors      and     stockholders    in    the   selling      and     purchasing

corporations.'"        Id. at 302 (quoting Leannais, 565 F.2d at 440).

              C.     The requirement of identity of ownership


                                       13
                                                          No.    2017AP822



     ¶28   As Fish made clear, the de facto and mere continuation

exceptions   to   the   rule   against   successor   liability   require

evidence of identity of ownership.12         For the de facto merger

exception, identity of ownership hinges on whether "the transfer

of ownership was for stock in the successor corporation rather

than cash." Fish, 126 Wis. 2d at 301. It is important to recognize

that transfer of ownership may still exist even where the successor

entity does not have stock to offer the acquired entity.         In such

cases, proof of identity of ownership may be established through

equity ownership.13     For example, equity ownership could take the

form of membership interests in a limited liability corporation.14

     12As one federal district court correctly noted, "it would
appear that the Wisconsin Supreme Court [in Fish] has effectively
determined that, absent a transfer of stock ownership, other merger
factors are insufficient to sustain application of the de facto
merger exception." Smith v. Meadows Mills, Inc., 60 F. Supp. 2d
911, 917 (E.D. Wis. 1999). The Smith court also reflected that,
"it appears that the Wisconsin Supreme Court [in Fish] has made
one factor——identity of ownership——a necessary requirement for the
mere continuation exception to apply." Id. at 918.
     13Lunda contends that there is "inconsistency" between
Wisconsin's statutory merger law, Wis. Stat. § 180.1101, which
allows for exchange of shares of one entity for "cash or property"
of another, and the stock transfer requirement under the de facto
merger exception. As support, Lunda cites to a footnote in the
court of appeals' decision. See Veritas, No. 2017AP822, ¶32 n.11.
A statutory merger pursuant to § 180.1101 is distinct from a de
facto merger in that it involves two companies formally stating
their intentions to merge and following statutory procedures to
effectuate the merger.
     14 Not all entities will fit within the de facto merger
exception. Where there is no ownership interest to be transferred,
as in a case involving nonprofit corporations, the de facto merger
exception does not apply. As one federal court commented, "[t]he
policies underlying the no successor liability principle are
geared toward encouraging economic actors to function effectively
                                   14
                                                                 No.   2017AP822



     ¶29    As   to   the    mere    continuation   exception,   identity    of

ownership is established where there "'is a common identity of the

officers, directors and stockholders in the selling and purchasing

corporations.'"       Fish, 126 Wis. 2d at 302 (quoting Leannais, 565

F.2d at 440).15         Some evidence, like the common identity of

stockholders, will support application of both the de facto merger

and mere continuation exceptions.              However, unlike the de facto

merger     exception,       the    mere   continuation   exception     may   be

established with evidence of the continuation of the same officers,

directors, and stockholders under circumstances where there is no

transfer of equity or stock ownership.

     ¶30    Despite Fish's clear mandate that identity of ownership

is the key inquiry, Lunda asserts that Fish significantly expanded

the de facto merger and mere continuation exceptions to allow the

substitution of "identity of management and control" for identity

of ownership.     In support of its argument, Lunda highlights the

Fish court's use of the phrase "identity of management and control"

twice in the decision:            once, in addressing Tift, where the court
said there was an "identity of management and control throughout

the transformation from sole proprietorship to partnership;" and

again, in discussing Cody, where the court said there was "no


in a market economy and have no application in the context of non-
profit and non-stock organizations." Gallenberg Equip., Inc. v.
Agromac Int'l, Inc., 10 F. Supp. 2d 1050, 1056 (E.D. Wis. 1998).
     15Tift and Fish relied upon Leannais v. Cincinnati, Inc., 565
F.2d 437 (7th Cir. 1977), for the basic principles regarding
successor liability.     See Veritas, No. 2017AP822, ¶24 n.8
(describing the Leannais case).

                                          15
                                                                  No.    2017AP822



identity of management and control throughout the transfers of

ownership."     Fish, 126 Wis. 2d at 302.       Lunda further cites to IGL

and Gallenberg for the proposition that courts post-Fish have not

required identity of ownership.           IGL-Wis. Awning, Tent & Trailer

Co., Inc. v. Greater Milwaukee Air & Water Show, Inc., 185 Wis. 2d

864, 520 N.W.2d 279 (Ct. App. 1994); Gallenberg Equip., Inc. v.

Agromac Int'l, Inc., 10 F. Supp. 2d 1050 (E.D. Wis. 1998).

     ¶31   Identity    of    ownership    remains    the   sine    qua   non    of

successor liability.        Although the phrase "identity of management

and control" was used to describe the transfers of ownership in

Tift and Cody, the Fish court maintained that identity of ownership

is required to meet the de facto merger and mere continuation

exceptions.      The Fish court explained that in Tift there was

identity   of    ownership     because     "the     identical     organization

continued to manufacture the same product" and in Cody there was

not identity of ownership because "the successor corporation was

an entirely different corporation" with "'no common identity of

officers, directors and stockholders between the two companies.'"
Fish, 126 Wis. 2d at 300, 302 (quoted source omitted).

     ¶32   Contrary to Lunda's assertion, courts post-Fish have

required proof of identity of ownership to establish the de facto

merger and mere continuation exceptions.            Lunda contends that the

IGL court "impos[ed] successor liability based on a finding that

there   was     'identity     of   management       and    control'      of    two

corporations."     However, in concluding that the mere continuation

exception applied, the court of appeals in IGL relied upon the
circuit court's finding of fact that "'[f]or all intents and
                                     16
                                                                  No.   2017AP822



purposes, only the name of the business changed.'"                      IGL, 185

Wis. 2d at 870.16         The IGL court additionally relied upon the

circuit court's finding of fact that "[t]he identical organization

in substance continued to operate with the same persons . . ."

including the same director who formed the predecessor nonprofit

corporation.    Id. at 868, 870.

     ¶33    Similarly, in Gallenberg, the federal court rejected the

plaintiff's    successor     liability      claim   because    the   "plaintiff

cannot show continuity of ownership," which it described as "the

common thread" of the         de facto merger and         mere continuation

exceptions. Gallenberg, 10 F. Supp. 2d at 1054.               The court refused

to consider the argument that by actively managing the predecessor

corporation for a time period before the asset purchase, the

successor corporation's owners were "de facto shareholders" and

exercised pre-transfer control. Id. at 1056. The Gallenberg court

concluded    that   the    plaintiff   wrongly      "equate[d]    control   with

ownership.    They are not the same."         Id.    Both IGL and Gallenberg

thus required evidence of identity of ownership in order to meet
the relevant exceptions to successor liability at issue in each

case.




     16The mere continuation exception was the only exception to
the general rule against successor liability that was addressed by
the court in IGL-Wis. Awning, Tent & Trailer Co., Inc. v. Greater
Milwaukee Air & Water Show, Inc., 185 Wis. 2d 864, 520 N.W.2d 279
(Ct. App. 1994).

                                       17
                                                       No.    2017AP822



     ¶34   We reject Lunda's reading of Tift and Fish17 and decline

to broaden the exceptions to the rule against successor liability,

as we have declined to do in the past.     See Fish, 126 Wis. 2d at

303-12 (rejecting the plaintiff's arguments in favor of adopting

a "product line" exception and "expanded continuation" exception

to the rule).18    Identity of ownership, not identity of management

and control, remains the essential element that a plaintiff must

establish under both the de facto merger and mere continuation

exceptions.

           D.   No genuine issue of material fact regarding
                            identity of ownership
     ¶35   The facts in this case do not establish identity of

ownership between Veritas, the asset purchaser, and PDM, the

seller, under either the de facto merger or mere continuation

exceptions.     In regards to the de facto merger exception, it is

undisputed that there was no stock or other indicia of equity

ownership transferred from Veritas to PDM.     Therefore, there was

no de facto merger as a matter of law and Lunda's claim under this
exception must fail.

     ¶36   As to the mere continuation exception, Atlas and its

subsidiaries, including Veritas, were strangers to Lunda prior to


     17Lunda does not dispute that we must affirm the court of
appeals if we reject its interpretation of Fish, 126 Wis. 2d 293.
     18Expanding the exceptions to the rule against successor
liability would also be inconsistent with its important objective:
to provide "transactional clarity and certainty for business
parties engaged in fundamental corporate transactions." Matheson,
John H., Successor Liability, 96 Minn. L. Rev. 371, 373 (2011).

                                  18
                                                              No.   2017AP822



receiving a call from an investment banker regarding the prospect

of purchasing PDM.      Veritas and PDM had separate and distinct

ownership before and after Veritas foreclosed on PDM's assets.            No

director or owner of PDM became a director or owner of Veritas.

Based on this lack of common identity of officers, directors, and

stockholders in the selling and purchasing corporations, the mere

continuation exception does not apply.

     ¶37    Lunda has not raised a genuine issue of material fact as

to identity of ownership under either the de facto merger or            mere

continuation exceptions and therefore its successor liability

claim must fail.

    E.    Forfeiture of Lunda's successor liability claim based
              upon the fraudulent transaction exception
     ¶38    Finally,   Lunda   asserts   that   the   court    of   appeals

erroneously dismissed its successor liability claim in light of

the fraudulent transaction exception to the rule against successor

liability.19   Veritas contends that Lunda forfeited this argument

when it failed to raise the exception before the court of appeals.20
We agree.




     19In its third-party complaint, Lunda referred to the
exception as the "fraudulent purpose exception." It has also been
referred to as the "fraudulent transfer exception" and the
"fraudulent transaction exception." Like we did in Springer, 381
Wis. 2d 438, we will refer to it as the fraudulent transaction
exception so as to not mistake it for the WUFTA claim.
     20Veritas also contends that Lunda never pursued this
exception before the circuit court on summary judgment; however,
as detailed herein, that is inaccurate.

                                   19
                                                                No.    2017AP822



     ¶39    A chronological summary of the circuit court proceedings

and subsequent appellate briefing illustrates how Lunda forfeited

this argument.     When Lunda filed its counterclaims and third-party

complaint in response to Veritas's declaratory judgment action, it

asserted a successor liability claim based on three exceptions to

the rule against successor liability:               de facto merger, mere

continuation, and fraudulent transaction.           At the same time, Lunda

also pleaded a statutory WUFTA claim.         Lunda's brief in opposition

to Veritas's motion for summary judgment included argument on only

the de facto merger and mere continuation exceptions, and its WUFTA

claim.      But, at oral argument before the circuit court, the

fraudulent    transaction   exception   was    raised    and    both    parties

confirmed its existence within the dispute.            The circuit court's

final order explained that it found no genuine issue of material

fact as to successor liability "under any of the theories that

Lunda advanced, whether de facto merger, mere continuation, or

fraudulent [transaction]," and that it also found no dispute as to

Lunda's WUFTA claim.     (Emphasis added.)
     ¶40    In its brief to the court of appeals, Lunda chose not to

raise an argument as to the circuit court's adverse ruling on the

fraudulent transaction exception.           Instead, Lunda argued that

there were "genuine issues of material fact as to the elements of

the de facto merger and mere continuation" exceptions, and as to

its WUFTA claim.

     ¶41    Lunda suggests that this court's recent decision in

Springer,    381   Wis. 2d 438,   revives     its    claim     for    successor
liability on the basis of the fraudulent transaction exception.
                                   20
                                                                       No.   2017AP822



In Springer, we concluded that a fraudulent transfer under WUFTA

did not supplant the common-law fraudulent transaction exception

to the rule against successor liability.                 Id., ¶29.

      ¶42    The court of appeals reached its decision in this case

in November 2018, several months after publication of Springer,

and addressed the only issue related to fraudulence that was

presented by Lunda:       its WUFTA claim.         See Veritas, No. 2017AP822,

¶¶36-42. Because Lunda failed to pursue the fraudulent transaction

exception on appeal, the holding in Springer is of no import.

Lunda failed to preserve on appeal its successor liability claim

as   to    the    fraudulent    transaction    exception      and    this    court's

decision in Springer cannot revive it.              We decline to address this

forfeited claim.

                                 IV.   CONCLUSION

      ¶43    We conclude that because Lunda did not establish a

genuine issue of material fact as to identity of ownership between

Veritas and PDM, it cannot satisfy the de facto merger or mere

continuation exceptions to the rule against successor liability.
We further conclude that by not raising the fraudulent transaction

exception before the court of appeals, Lunda forfeited its claim

for successor liability based on that exception.                       We therefore

affirm the court of appeals.

      By    the    Court.—The    decision     of   the    court   of     appeals   is

affirmed.




                                        21
                                                     No.   2017APAP822.pdr



       ¶44   PATIENCE DRAKE ROGGENSACK, C.J.     (concurring).      There

is no question of fact that Atlas's related entities purchased PDM

Bridge, LLC's (PDM)1 secured debt from PDM's lenders with the

intent to obtain control of PDM.          They did so through strict

foreclosure of that secured debt, which resulted in ownership of

PDM's assets without encumbrance by any debt with lower priority

than the secured debt that drove the foreclosure.

       ¶45   Lunda Construction Company (Lunda) asserts that the

strict foreclosure does not save Veritas's assets from its $16

million judgment against PDM.          Before us, Lunda contends that

Veritas is the same corporation as PDM, but with a different name,

due to de facto merger and mere continuation doctrines.            Lunda

also asserts that Veritas's intent to remove PDM's assets from its

reach gives rise to common law and statutory fraud claims that

open Veritas's assets to collection for Lunda's judgment against

PDM.

       ¶46   Therefore, the question before us is whether, given the

undisputed facts, Atlas lawfully removed PDM's assets from Lunda's
reach by the actions it and its affiliates took, which actions

culminated in strict foreclosure that prevented Lunda's claims

from reaching Veritas's assets.     As I explain below, my answer to

that question is yes.      Accordingly, although I do not join the

majority opinion, I respectfully concur in the majority opinion's

dismissal of Lunda's claims against Veritas.


       PDM was a non-stock Delaware corporation with a single
       1

member, ASP PDM, LLC (ASP), which also was a non-stock Delaware
corporation.

                                   1
                                                       No.    2017APAP822.pdr

                               I.   BACKGROUND

     ¶47    PDM was a steel bridge fabrication company with offices

in Illinois and fabrication facilities in Wisconsin and Florida.

In 2006, to continue in business, PDM obtained financing from a

syndicate of lenders (the Syndicate), which provided PDM loans

evidenced by a $115 million note and a $25 million line of credit.

The Syndicate collateralized its loans with PDM's real estate and

personal    property,   both    tangible   and   intangible,     by   filing

appropriate mortgages and financing statements to protect its

interests.    ASP also pledged its member interest in PDM to the

Syndicate thereby giving corporate control of PDM to the Syndicate.

     ¶48    PDM's financial difficulties continued.          In December of

2011, PDM suffered losses in excess of $63 million and was in

default of its financial commitments to the Syndicate.                   The

Syndicate and PDM entered into a Forbearance Agreement, wherein

PDM agreed to "restructure" its operations.

     ¶49    In 2012, PDM's financial troubles continued, producing

another loss in excess of $63 million.        Its financial difficulties

also were affecting Lunda.          In July of 2012, Lunda sued PDM for
breach of contract with damages alleged to be in excess of $16

million.2

     ¶50    Notwithstanding the 2011 "restructuring," PDM continued

to have general financial difficulties.          PDM also was unable to

meet the terms of the 2011 Forbearance Agreement between it and

the Syndicate.



     2 Due to a series of intervening events, Lunda did not obtain
a judgment on this debt until 2014.

                                       2
                                                           No.   2017APAP822.pdr

     ¶51    In June of 2013, the principal amount of PDM's debt to

the Syndicate was approximately $70 million and PDM was insolvent.

PDM was in default of its credit agreement with the Syndicate.

Due to PDM's financial condition, the Syndicate and PDM entered

into a second Forbearance Agreement3 wherein PDM became obligated

to retain assistance of an investment banker to sell its business

as a going concern or to sell all of its assets on or before

September 20, 2013.

     ¶52    To accomplish those tasks, PDM retained Houlihan Lokey

Capital, Inc., a well known investment banker with experience

selling distressed companies.             Although the investment banker

contacted 136 potential purchasers, only six letters of interest

were obtained.     No responding entity was willing to pay enough to

cover the Syndicate's outstanding $70 million debt.                  Atlas, a

private equity firm and industrial holding company, was the highest

bidder, offering $33 million as a net purchase price for PDM.

     ¶53    Upon learning that Lokey's efforts to sell PDM had not

been successful, Atlas, and two other unsuccessful bidders in the

potential sale of PDM, offered to purchase the Syndicate's secured
debt for varying amounts.     Atlas did so because it determined that

if properly restructured, PDM could be a valuable asset for Atlas's

investors.

     ¶54    In August 2013, Atlas created Bridge Resources, LLC

(Bridge Resources), with Atlas as its majority member.                  Bridge

Resources    and    another   Atlas       entity,   paid     the     Syndicate

     3 There is no evidence that Veritas, Atlas and Bridge
Fabrications Holdings, LLC (BFH) were parties to the Forbearance
Agreement or had an interest in PDM's debt or equity at the time
the Forbearance Agreement was executed.

                                      3
                                                            No.   2017APAP822.pdr

approximately $22 million for all of the Syndicate's secured debt

and the ASP pledge.     Bridge Resources became the administrative

agent of the secured debt.        Appropriate financing statements and

mortgages were filed on all of PDM's personal and real property,

giving Bridge Resources a perfected security interest in all PDM's

assets.

     ¶55   In   September   2013,   Bridge      Resources     created    Bridge

Fabrications    Holdings,   LLC   (BFH).4       In   October      of   2013,   to

accomplish strict foreclosure of PDM's assets, BFH created Veritas

Steel, LLC (Veritas) to which rights in PDM's secured debt were

transferred.5

     ¶56   On November 5, 2013, Veritas conducted a Wis. Stat.

§ 409.620 strict foreclosure procedure on all the secured debt via

a Strict Foreclosure Agreement.      In that Agreement, Veritas agreed

to assume only those PDM liabilities that were expressly set forth

in the agreement.

     ¶57   Strict   foreclosures     on   the    secured     debt      permitted

Veritas to own all PDM assets in satisfaction of the debt that PDM

had originally incurred during the Syndicate financing.6                 At the


     4 BFH's members were Lapetus Capital LLC, Atlas Resources, LP
and SHP; Capital Solutions Fund, LP and Atlas Capital Resources,
LP.
     5 BFH was Veritas's sole member.    In October of 2013, BFH
created BFH Secured Lending and was its sole member; then in
December of 2013, Bridge Resources merged into BFH.
     6 Pursuant to Wis. Stat. § 409.620 (U.C.C. § 9-620) a creditor
can foreclose on debt collateralized by personal property of a
type that is subject to Wis. Stat. ch. 409 (U.C.C. ch. 9) and
accept the collateral in full or partial satisfaction of the debt.

     Foreclosures of PDM's real property proceeded under differing
statutory provisions depending on the location of the real
                                 4
                                                                   No.   2017APAP822.pdr

conclusion of strict foreclosure, Veritas owned all of PDM's

assets, cleansed of all secured and unsecured debts that were

subordinate to the secured debt that Veritas owned.

       ¶58    In     March    of   2014,       Lunda    obtained    a    judgment    of

approximately $16 million against PDM, which it filed in Wisconsin

in July of 2014 and in Illinois in September of 2014.                      In July of

2014, Lunda commenced an action in Wisconsin to obtain funds from

the Wisconsin Department of Transportation (DOT) pursuant to Wis.

Stat. § 779.155 based on its judgment against PDM.7

       ¶59    In February 2015, Veritas commenced this lawsuit as a

declaratory judgment action due to Lunda's Wis. Stat. § 779.155

action seeking payments from DOT, which Veritas claimed belonged

to it.       Lunda counterclaimed, alleging that Veritas was PDM by

another name; and therefore, Veritas's assets were subject to

Lunda's claims for payment of its $16 million judgment against

PDM.

       ¶60    Lunda contended that Veritas is the same entity as PDM

due to a de facto merger of PDM, or as a mere continuation of PDM.

Lunda      also    asserted    that      the       strict   foreclosure    procedures
employed were grounded in common law or statutory fraud and

therefore, permit Lunda to collect its debt from Veritas's assets.

The circuit court dismissed Lunda's complaint against Veritas, and

the court of appeals affirmed that dismissal.

                                   II.    DISCUSSION

                              A.   Standard of Review


property.         See Wis. Stat. § 846.15 et seq.
       7   PDM was dissolved in August of 2014.

                                               5
                                                              No.   2017APAP822.pdr

      ¶61   Here, we review summary judgment granted to Veritas.                 In

so doing, we independently employ the same methodology as the court

of appeals and the circuit court.          Wisconsin Pharmacal Co., LLC v.

Nebraska Cultures of Cal., Inc., 2016 WI 14, ¶12, 367 Wis. 2d 221,

876   N.W.2d   72.     Summary     judgment   is   to    be   granted      "if   the

pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is

no genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law."                Id. (quoting Wis.

Stat. § 802.08(2) (2013-14)).

                            B.   Corporate Assets

                              1.   General Rule

      ¶62   When     one   corporation     buys    the   assets       of    another

corporation in a commercial context, the transferee corporation

generally does not succeed to the transferor's debts.                      Marie T.

Reilly, Making Sense of Successor Liability, 31 Hofstra L. Rev.

745 (2003).        However, a court may decide that the transferee

corporation should be treated as a successor corporation and be

liable for the transferor's debts.            Id. at 746.           In the matter
before us, strict foreclosure, a Wis. Stat. § 409.620, et seq.

remedy available to secured creditors, is the context in which to

evaluate Lunda's claims.8



      8There are occasions when federal law causes the purchasing
corporation to be liable for the acts of the transferor
corporation. See Kathryn A. Barnard, EPA's Policy of Corporate
Successor Liability Under CERCLA, 6 Stan. Envtl. L. J. 78 (1986-
1987). CERCLA and its policy concerns are not present here. I
mention CERCLA only because the context in which successor
corporate liability is evaluated is important.

                                       6
                                                   No.    2017APAP822.pdr

     ¶63   Wisconsin   follows    the   general   rule,     wherein    a

corporation that purchases the assets of another corporation in a

commercial context is not liable for the obligations of the selling

corporation.   See Fish v. Amsted Indus., Inc., 126 Wis. 2d 293,

298, 376 N.W.2d 820 (1985). The general rule stated above promotes

alienability of corporate assets and is in accord with policies

that promote productive use of business assets. Gallenberg Equip.,

Inc. v. Agromac Int'l, Inc., 10 F. Supp. 2d 1050, 1053 (1998).

                          2.     Exceptions

     ¶64   In Wisconsin, there are four exceptions to the rule of

non-liability for the transferee corporation:

     (1) when the purchasing corporation expressly or
     impliedly agreed to assume the selling corporation's
     liability; (2) when the transaction amounts to a
     consolidation or merger of the purchaser and seller
     corporations; (3) when the purchaser corporation is
     merely a continuation of the seller corporation; or
     (4) when the transaction is entered into fraudulently to
     escape liability for such obligations.
Fish, 126 Wis. 2d at 298 (quoting Leannais v. Cincinnati, Inc.,

565 F.2d 437, 439 (7th Cir. 1977)).

     ¶65   Lunda contends that the strict foreclosure employed here

caused a de facto merger between PDM and Veritas.         In evaluating

a claim of de facto merger, appellate precedent considers whether:

     (1) the assets of the seller corporation are acquired
     with shares of the stock in the buyer corporation,
     resulting in a continuity of shareholders; (2) the
     seller ceases operations and dissolves soon after the
     sale; (3) the buyer continues the enterprise of the
     seller corporation so that there is a continuity of
     management, employees, business location, assets and
     general business operations; and (4) the buyer assumes
     those liabilities of the seller necessary for the
     uninterrupted   continuation    of   normal   business
     operations.

                                   7
                                                   No.   2017APAP822.pdr

Sedbrook v. Zimmerman Design Grp., Ltd., 190 Wis. 2d 14, 20-21,

526 N.W.2d 758 (Ct. App. 1994) (quoting Parson v. Roper Whitney,

Inc., 586 F. Supp. 1447, 1449 (W.D. Wis. 1984)).     However, as we

explained in Fish, "[t]he key element in determining whether a

merger or de facto merger has occurred is that the transfer of

ownership was for stock in the successor corporation rather than

cash."     Fish, 126 Wis. 2d at 301 (quoting Leannais, 565 F.2d at

439).

     ¶66    In the matter before us, Lunda has provided nothing from

which we could conclude that PDM's member, ASP, received membership

status in Veritas, upon foreclosure, at the time of asset transfer

or at any other time.   The assets of PDM were obtained in exchange

for satisfaction of approximately $65 million of PDM's $70 million

of secured debt, which Veritas then held.9       Veritas's position

relative to the assets that belonged to PDM did not arise due to

a merger or a de facto merger of PDM with Veritas.

     ¶67    Lunda also contends that Veritas is a mere continuation

of PDM; that it is the same corporation, but with a different name.

In evaluating a claim that one corporation is a mere continuation
of an earlier corporation, we consider whether there is "a common

identity of the officers, directors and stockholders in the selling

and purchasing corporations." Leannais, 565 F.2d at 440. In Tift,

we cited Leannais and also focused on "identity." As we explained:

     When viewed in the context of a tort caused by a
     defective product, these two "exceptions" merely recite
     that, where either one is applicable, there is
     "identity," because in substance the successor business

     9 Five million dollars of secured debt remained and was
retained by Veritas together with the assets that secured it.

                                  8
                                                                  No.   2017APAP822.pdr
       organization which the plaintiff sues is, despite
       organizational   metamorphosis,   the    same   business
       organization which manufactured the product which caused
       his injury.
Tift v. Forage King Indus., Inc., 108 Wis. 2d 72, 78, 322 N.W.2d

14 (1982).         Our major concern in Tift was whether a company that

began as a sole proprietorship, proceeded to a partnership and

ended as a corporation could be liable for a product manufactured

by an earlier business form that was not corporate.                        Id. at 76-

77. However, lest there be confusion on the meaning of "identity,"

in Fish, we explained that "[i]dentity refers to identity of

ownership, not identity of product line."                   Fish, 126 Wis. 2d at

301.

       ¶68    In    the   matter   before     us,   there    is    no   identity    of

ownership between PDM and Veritas.             Both PDM and Veritas have LLC

non-stock structures, but there was no overlap in their members or

in their creators.         PDM, a Delaware LLC, had a single member, ASP.

Veritas, also a Delaware limited liability company, has a single

member, BFH.        BFH's members do not include ASP or PDM.               While non-

stock corporations generally are controlled by their articles and

owned by their members, the articles of neither PDM nor Veritas
are in the record before us.          There is no proof in the record that

supports      the    conclusion    that   Veritas    and     PDM    have    the   same

ownership.         While it appears that Matt Cahill,10 who was the CEO

of PDM, and Alan Sobel, who was the CFO of PDM, continued for at

least some period of time in those roles at Veritas, neither had

an owner's interest PDM or in Veritas.               Accordingly, Veritas does




       10   Cahill was replaced as CEO in April of 2014.

                                          9
                                                          No.    2017APAP822.pdr

not meet the criteria necessary for us to conclude that it is a

mere continuation of PDM.

     ¶69    Lunda also contends that because Veritas foreclosed by

using     strict   foreclosure     procedures     that   were    designed    to

eliminate all debt that had a lesser priority than the debt Atlas

affiliates purchased from the Syndicate, the transactions at issue

here were fraudulent as to Lunda.11           Therefore, Lunda reasons the

general rule that the purchasing corporation is not responsible

for the debts of the seller does not apply; and accordingly, it

has the right to execute its $16 million judgment against Veritas's

assets.

     ¶70    The    elements   of    common      law   fraud     are:     (1) a

representation of fact that the speaker intends the hearer to rely

on; (2) which the speaker either knows is untrue, or makes with

reckless disregard for its truthfulness; (3) another believes such

representation     and   relies    on   it;   (4) with   resulting     damage.

Ollerman v. O'Rourke Co., Inc., 94 Wis. 2d 17, 25, 288 N.W.2d 95

(1980) (quoting Whipp v. Iverson, 43 Wis. 2d 166, 169-170, 168

N.W.2d 201 (1969)).




     11Lunda pled common law fraud and the circuit court addressed
it. Lunda also raised it in its arguments before us. The majority
opinion applies forfeiture and does not address this contention
because Lunda did not continue this allegation before the court of
appeals. Majority op., ¶¶38-42.

     Forfeiture is a doctrine of judicial administration.    See
State v. Soto, 2012 WI 93, ¶¶35, 36, 343 Wis. 2d 43, 817 N.W.2d
848. Because Lunda's contention arises in a commercial context
where statutory procedures under ch. 409 were employed and
guidance may be helpful to future commercial litigants, I choose
to address Lunda's contention.

                                        10
                                                                   No.    2017APAP822.pdr

         ¶71   We recently addressed common law fraud in Springer v.

Nohl Elec. Prods. Corp., 2018 WI 48, 381 Wis. 2d 438, 912 N.W.2d

1, in the context of a products liability claim that alleged

successor corporation liability.                 There, Mrs. Springer claimed

that     her   husband     died   from     exposure    to     asbestos-containing

products, which occurred during his employment for a company that

preceded Nohl.        Id., ¶2.    She sued Nohl to recover for his injuries

and death.        Id.    We explained that the fraudulent transfer of

assets exception to non-liability "has rarely been used to impose

successor liability for products liability claims."                             Id., ¶17

(citing Restatement (Third) of Torts:                  Products Liability § 12

cmt. e (Am. Law Inst. 1998); Timothy J. Murphy, A Policy Analysis

of   a    Successor     Corporation's      Liability    for       Its    Predecessor's

Defective       Products     When    the        Successor     Has        Acquired    the

Predecessor's Assets for Cash, 71 Marq. L. Rev. 815, 819 (1988).

         ¶72   In Springer, we painted the fraud exception with broad

strokes that left the particulars of that exception for another

day.      We said, "The fraudulent transaction theory turns on the

intention underlying the transfer of assets to [the successor],
i.e., whether it was made with an actual intention to hinder,

delay, or defraud creditors."               Springer, 381 Wis. 2d 438, ¶19

(quoting United States ex rel. Bunk v. Gov't Logistics N.V., 842

F.3d 261, 276 (4th Cir. 2016)).            We also said that "the fraudulent

transfer         exception,         [in]         the        law          [of]       every

jurisdiction . . . requires a finding that the corporate transfer

of assets 'is for the fraudulent purpose of escaping liability.'"

Id. (quoting Raytech Corp. v. White, 54 F.3d 187, 192 (3d Cir.
1995) (alterations in original)).                 The wrongful intent of the

                                           11
                                                        No.    2017APAP822.pdr

person seeking to avoid liability was critical to our decision in

Springer.    Id., ¶19.

     ¶73    It is important to note that Springer arose in the

context of a products liability claim.          It did not involve strict

foreclosure of secured debt pursuant to Wis. Stat. § 409.620.

Lunda gave little attention to the commercial context in which its

claim arose, yet an understanding of the context in which Lunda

makes its claim and Veritas raises its defense is critical.

Therefore, a brief overview of strict foreclosure will be helpful

to the reader's understanding of my discussion that follows.

     ¶74    "Article   9   of   the   Uniform   Commercial    Code   (U.C.C.)

permits a secured creditor to elect among several alternative

remedies in the event of a default by the debtor."12             LaRoche v.

Amoskeag Bank, 969 F.2d 1299, 1302 (1st Cir. 1992).           Subsequent to

debtor default, the secured creditor may dispose of the collateral,

"as long as it does it in a 'commercially reasonable manner.'"

Id. at 1303.     However, a secured creditor also may choose to

proceed by strict foreclosure, which is a different statutory

opportunity.    Id.
     ¶75    Strict foreclosure permits a secured creditor "to retain

the collateral in complete satisfaction of the indebtedness."             Id.

"Disputes about valuation or even a clear excess of collateral

value over the amount of obligations satisfied do not necessarily

demonstrate the absence of good faith."         Michael L. Monson, Strict

Foreclosure Under Article 9:          Benefits, Risks, and Strategies, 43

No. 1 UCC L.J. (Oct. 2010), 3.

     12Wisconsin Stat. ch. 409 is the Wisconsin equivalent of
Uniform Commercial Code chapter 9.

                                       12
                                                                     No.    2017APAP822.pdr

      ¶76    When a secured party employs strict foreclosure pursuant

to   statute    and     accepts      the      collateral       in    full    or     partial

satisfaction of the debt owed:

      (1) the debt is discharged to the extent consented to by
      the debtor, (2) all of the debtor's rights in the
      collateral are transferred to the secured party, (3) the
      security interest that was the subject of the debtor's
      consent and any subordinate security interest or other
      subordinate liens are discharged, and (4) any other
      subordinate interests are terminated. . . . After the
      secured party has accepted the collateral it may resell
      the collateral to a subsequent purchaser, keep it, or
      otherwise deal with it as its own property.
Id. at 6.

      ¶77    Wisconsin       Stat.    § 409.620's        authorization         of    strict

foreclosure     has     a    number      of        mandatory    procedures        and    the

availability of objections that could stop the process.                                  For

example, subordinate secured creditors have a right to notice of

the proposed strict foreclosure, Wis. Stat. § 409.621(1), and a

right   to     object       to   using     strict       foreclosure,         Wis.       Stat.

§ 409.620(1)(b).         However, on November 5, 2013, when Veritas

strictly foreclosed on the debt that was secured by PDM's assets,

Lunda was not a subordinate secured creditor.                        Therefore, Lunda
did not have the opportunity to object to Veritas' use of strict

foreclosure.

      ¶78    In addition, Lunda has not claimed that the strict

foreclosure that occurred here did not satisfy the statutory

obligations of Wis. Stat. ch. 409.                     Lunda simply contends that

because the strict foreclosure process was used to cleanse assets

of debt the process was fraudulent.
      ¶79    Lunda's         argument          misses          its     mark         because

Wis. Stat. ch. 409 was created in part to do exactly what happened
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here.     Veritas's conduct was not fraudulent because it was not

wrongful    in   this   commercial    context.13   Stated    otherwise,   I

conclude that a creditor that strictly forecloses in a commercial

context in accord with the statutory procedures set out in ch. 409

to avoid the claims of debtors with lesser priority does not

exhibit wrongful intent that supports a claim of common law fraud.

Accordingly, the broad statements about "fraudulent intent" set

out in Springer have no application here.

     ¶80    My conclusion that strict foreclosure under Wis. Stat.

§ 409.620 does not support Lunda's fraud claim is reinforced by

Wis. Stat. § 242.08(5)(b).           Statutory fraud, Wisconsin Uniform

Fraudulent Transfer Act (WUFTA), is set out in Wis. Stat. ch. 242.

Lunda sought to use WUFTA to void the transfer of PDM's assets to

Veritas.    However, § 242.08(5)(b) provides that a transfer is not

voidable if it results from "Enforcement of a security interest in

compliance with ch. 409."       Here, there is no question that the

transfer of personal property, tangible and intangible, occurred

through enforcement of a security interest under § 409.620 et seq.

WUFTA also has no application here.




     13Chapter 409's legislation for secured transactions is
complicated. An understanding of the claim and defense and the
context in which they arise is critical.  Here, we have strict
foreclosure between commercial parties engaged in commercial
transactions.

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                          III.   CONCLUSION

     ¶81    The question before us is whether, given the undisputed

facts, Atlas lawfully removed PDM's assets from Lunda's reach by

the actions it and its affiliates took, which actions culminated

in strict foreclosure that prevented Lunda's claims from reaching

Veritas's assets. As I explained above, my answer to that question

is yes.    Accordingly, although I do not join the majority opinion,

I respectfully concur in the majority opinion's dismissal of

Lunda's claims against Veritas.




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