The Scharine Group, Inc. v. Tamera J. Drehmel

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
February 2, 2023
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2022AP363 Cir. Ct. No. 2020CV193

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

THE SCHARINE GROUP, INC.,

PLAINTIFF-APPELLANT,

V.

TAMERA J. DREHMEL AND KELLY S. BORDE,

DEFENDANTS-RESPONDENTS.

APPEAL from an order of the circuit court for Columbia County:
ANDREW W. VOIGT, Judge. Affirmed.

Before Kloppenburg, Fitzpatrick, and Nashold, JJ.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2022AP363

¶1 PER CURIAM. The Scharine Group, Inc. (“Scharine”) sued
Tamera Drehmel and Kelly Borde seeking execution against the “cash
equalization payments” ordered to be paid to Tamera and Kelly in their respective
2018 divorce judgments. In those judgments, Donald Borde was ordered to make
a $275,000 cash equalization payment to Tamera, and James Borde was ordered to
make a $275,000 cash equalization payment to Kelly.1 Scharine alleged that the
cash equalization payments, which “remain unpaid,” constitute “marital property”
and are, therefore, available to satisfy the debt that is owed to Scharine after it
provided farm goods and services to the Borde brothers’ agricultural business in
2017 while the parties were married.

¶2 Scharine moved for summary judgment, seeking a declaration that
Scharine “may execute against” the cash equalization payments to Tamera and
Kelly “in satisfaction of its claim” for the business debt. The circuit court denied
Scharine’s motion, awarded summary judgment to Tamera and Kelly, and
dismissed Scharine’s complaint.

¶3 On appeal, Scharine makes the same argument that it made in the
circuit court: (1) the Borde brothers’ business debt to Scharine was incurred “in
the interest of their marriages to Tamera and Kelly;” (2) Tamera and Kelly each
received the right to a $275,000 “cash equalization payment” in their respective
divorce judgments in lieu of equity in the Borde brothers’ farming business; and
(3) pursuant to WIS. STAT. § 766.55(2)(b) (2019-20)2, the payments are transfers
1
Because several of the individuals share the same last name, for ease of reading we
follow the lead of the parties and generally refer to the individuals by their first names and to
Donald and James collectively as “the Borde brothers.”
2
All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise
noted.

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No. 2022AP363

to Tamera and Kelly of marital property and, therefore, are available to Scharine
to satisfy the Borde brothers’ business debt.3 We reject Scharine’s argument that
the payments constitute marital property and are, therefore, available to Scharine
to satisfy the business debt. Accordingly, we affirm.

BACKGROUND

¶4 The following facts are undisputed for purposes of summary

judgment.

¶5 Scharine is a corporation that sells agricultural products and
services. In 2017, Scharine sold farm products and provided farm services to the
Borde brothers, who, at the time, were partners in a farm operation. The balance
due to Scharine for those sales and services is $157,437.70, plus late charges from
September 30, 2018.
¶6 When the debt to Scharine was incurred in 2017, Donald was
married to Tamera and James was married to Kelly. In 2018, both couples
divorced.

¶7 As each of the couples agreed in a Marital Settlement Agreement
incorporated as part of each divorce judgment, Tamera and Kelly were each to
receive $275,000 from her ex-husband as a “cash equalization payment” to
“equalize the marital property division.” Donald was to make Tamera’s payment

3
Scharine clarifies that, inasmuch as the cash equalization payments have not yet been
made, it does not seek a money judgment against Tamera and Kelly, but only a judgment against
their “claims” for the cash equalization payments. Scharine does not assert that this distinction
matters to our analysis of the issue on appeal, which, as stated by Scharine, is whether the
payments constitute marital property available to Scharine to satisfy the Borde brothers’ business
debt. Consistent with Scharine’s statement of the issue, we refer in this opinion only to the cash
equalization payments.

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within 90 days of the final divorce hearing and Tamera was to have a lien against
“any property awarded to the husband until the $275,000.00 payment is made to
[Tamera] in full.” James was to make Kelly’s payment “within 5 calendar days”
of having access to the proceeds from his lender after “refinancing or renewing” a
loan.

¶8 Sometime after entry of the divorce judgments, the Borde brothers
each commenced Chapter 12 bankruptcy proceedings in the United States
Bankruptcy Court for the Western District of Wisconsin.4 At the time that the
Borde brothers commenced the bankruptcy proceedings, the Borde brothers had
neither made the cash equalization payments to Tamera and Kelly as ordered in
their respective divorce judgments nor paid Scharine the debt incurred by the
Borde brothers’ business. The two Chapter 12 proceedings were jointly
administered and a joint Chapter 12 plan was confirmed on October 15, 2020.

¶9 In the Chapter 12 bankruptcy plan, Tamera’s and Kelly’s claims for
the equalization payments and Scharine’s claim for the business debt were all
categorized as “general unsecured claims.” The bankruptcy plan provided that the
cash equalization payments owed to Tamera and Kelly “shall not be discharged in
bankruptcy.”5 The bankruptcy plan provided that the debts owed to Scharine and
the remaining unsecured creditors were to be discharged after 36 months.

4
Bankruptcy Code Chapter 12, titled “Adjustment of Debts of a Family Farmer or
Fisherman with Regular Annual Income,” enables financially distressed family farmers and
fishermen to propose and carry out a plan to repay all or part of their debts to creditors over three
to five years. 11 U.S.C.A § 12, § 1222(b)-(c). All references to the United States Code are to the
2018 version.
5
Debts incurred under a judgment of divorce are not dischargeable in bankruptcy
pursuant to 11 U.S.C. § 523(a).

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No. 2022AP363

¶10 In the course of the bankruptcy proceedings, the bankruptcy court
granted Scharine’s motion to pursue its claims against Tamera and Kelly.6
Scharine filed this action against Tamera and Kelly in September 2020. As of the
filing of the complaint, the Borde brothers had not paid the debt owed Scharine or
made either of the $275,000 cash equalization payments to Tamera and Kelly.

¶11 Scharine moved for summary judgment, requesting a declaration that
it may execute against the cash equalization payments to Tamera and Kelly to
satisfy the Borde brothers’ business debt. After briefing and oral argument by the
parties, the circuit court denied Scharine’s motion, granted summary judgment to
Tamera and Kelly, and dismissed Scharine’s complaint.

¶12 Scharine appeals.

DISCUSSION

¶13 We review the circuit court’s grant of summary judgment de novo,
using the same methodology as the circuit court. R.W. Docks & Slips v. State,
2001 WI 73, ¶12, 244 Wis. 2d 497, 628 N.W.2d 781. Summary judgment is
proper if there is no genuine issue of material fact and a party is entitled to
judgment as a matter of law. Id.; WIS. STAT. § 802.08(2) (summary judgment to
the moving party) and (6) (summary judgment to the non-moving party).

¶14 The resolution of this appeal requires that we determine whether,
under WIS. STAT. § 766.55, the cash equalization payments ordered in Tamera’s
and Kelly’s divorce judgments constitute marital property so as to be available to

6
Scharine does not assert that this order from the bankruptcy court was a statement from
that court regarding the validity of Scharine’s claim in this lawsuit.

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No. 2022AP363

satisfy the debt to Scharine incurred by the Borde brothers’ business during
Tamera’s and Kelly’s marriages to the brothers. The application of a statute to
undisputed facts presents a question of law that we review independently of the
circuit court. Curda-Derickson v. Derickson, 2003 WI App. 167, ¶9, 266 Wis. 2d
453, 668 N.W.2d 736; Brey v. State Farm Mut. Auto. Ins. Co., 2022 WI 7, ¶9,
400 Wis. 2d 417, 970 N.W.2d 1.

¶15 We first review the pertinent provisions in WIS. STAT. § 766.55. We
then apply the provisions to the undisputed facts and explain our conclusion that
the cash equalization payments do not constitute “[m]arital property assigned to”
Tamera and Kelly and, therefore, are not available to satisfy the Borde brothers’
business debt incurred during the brothers’ marriages to Tamera and Kelly. See
§ 766.55(2m).

I. WISCONSIN STAT. § 766.55

¶16 WISCONSIN STAT. § 766.55, titled “Obligations of spouses,”
“establishes classifications of obligations, marital and individual, with which
spouses may be involved, and clarifies what property is available to satisfy
obligations of differing classes.” Curda-Derickson, 266 Wis. 2d 453, ¶12.
Section 766.55 provides in relevant part:

(1) An obligation incurred by a spouse during
marriage,[7] including one attributable to an act or omission

7
“During marriage” is defined as “a period in which both spouses are domiciled in this
state that begins at the determination date and ends at dissolution or at the death of a spouse.”
WIS. STAT. § 766.01(8).

The “determination date” is defined as “the last to occur of the following: (a) Marriage.
(b) 12:01 a.m. on the date that both spouses are domiciled in this state. (c) 12:01 a.m. on
January 1, 1986.” WIS. STAT. § 766.01(5)(a-c).

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No. 2022AP363

during marriage, is presumed to be incurred in the interest
of the marriage or the family.

(2) After the determination date all of the following
apply:

….

(b) An obligation incurred by a spouse in
the interest of the marriage or the family may be
satisfied only from all marital property and all other
property of the incurring spouse .…

(2m) Unless the dissolution decree or any
amendment to the decree so provides, no income of
a nonincurring spouse is available for satisfaction of
an obligation under sub. (2) (b) after entry of the
decree. Marital property assigned to each spouse
under that decree is available for satisfaction of
such an obligation to the extent of the value of the
marital property at the date of the decree. If a
dissolution decree provides that the nonincurring
spouse is responsible for satisfaction of the
obligation, the obligation may be satisfied as if both
spouses had incurred the obligation.

Sec. 766.55 (clarifying footnote included where relevant.)

¶17 As stated, WIS. STAT. § 766.55(1) mandates that an obligation that
has been incurred during marriage is presumed to be incurred “in the interest of
the marriage or the family.” St. Mary’s Hosp. Med. Ctr. v. Brody, 186 Wis. 2d
100, 110, 519 N.W.2d 706 (Ct. App. 1994); see § 766.55(1). This presumption
“applies to the categories of obligations described in § 766.55(2)(b) through (d).”
St. Mary’s, 186 Wis. 2d at 111. “[T]he statutory category into which an obligation
falls determines the right of a creditor to reach the property of a spouse.” Id. at
108. Pertinent here, and as quoted above, “an obligation incurred by a spouse in
the interest of the marriage or the family may be satisfied only from all marital
property and all other property of the incurring spouse.” Sec. 766.55(2)(b). Under
§ 766.55(2m), also quoted above, “the extent of the value of the marital property

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No. 2022AP363

at the date of the [divorce judgment]” “is available for satisfaction of [an
obligation under § 766.55(2)(b)].” Id.

¶18 Under WIS. STAT. § 766.31(1), “All property of spouses is marital
property except that which is classified,” by statute or agreement, as the individual
property of one of the spouses. Sec. 766.31(1). Under WIS. STAT. § 766.01(15),
“Property” is “an interest, present or future, legal or equitable, vested or
contingent, in real or personal property, including digital property, as defined in
[WIS. STAT. §] 711.03(10).” Under § 766.31(3), “Each spouse has a present
undivided one-half interest in each item of marital property.” Sec. 766.31(3).

A. Analysis

¶19 It is undisputed that the Scharine debt incurred by the Borde brothers
during their marriages to Tamera and Kelly is an obligation in the interest of those
marriages within the meaning of WIS. STAT. § 766.55(1). It is also undisputed that
the divorce judgments did not make Tamera or Kelly responsible for the Borde
brothers’ obligation to Scharine.8 Thus, the question on appeal is whether the cash
equalization payments ordered to be made by the Borde brothers to Tamera and
Kelly in their divorce judgments constitute “marital property” available to satisfy
that debt under § 766.55(2)(b).

¶20 Under WIS. STAT. § 766.55(2) and (2m), the cash equalization
payments ordered in the divorce judgments are not marital property assigned to
Tamera or Kelly. The divorce judgments required that the cash equalization

8
In addition, the divorce judgments provide that each of the Borde brothers shall hold
their ex-spouses Tamera and Kelly, respectively, harmless on all the debts of the business.

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No. 2022AP363

payments be made at some future point: within 90 days for Tamera with a lien on
property held by Donald until the payment was made, and upon refinancing or
renewing a loan for Kelly. These payments are neither personal nor real property
“assigned” to Tamera and Kelly. See § 776.55(2m) (providing that marital
property “assigned to each spouse” is available to settle a debt incurred during
marriage). Unlike the assets divided between the spouses in the divorce
judgments, the cash equalization payments did not exist during their marriages.
Instead, each divorce judgment created a new obligation for one ex-spouse to
compensate the other ex-spouse. See WIS. STAT. §§ 767.34(1) (stipulations
between parties to a divorce must be approved by the court) and 767.34(3) (a
judgment of divorce is effective when granted by the court).

¶21 Scharine itself acknowledges that “the Borde brothers did not
transfer business assets to their ex-spouses.” The cash equalization payments were
created by the divorce judgments as obligations that are extraneous to the marital
property accumulated during the marriages. By their terms, the divorce judgments
did not transfer marital property from the Borde brothers to Tamera and Kelly;
rather, they required the payment of money from whatever sources the Borde
brothers would choose to make available to satisfy the ordered payment
obligations.

¶22 This conclusion is supported by the fact that each cash equalization
payment is itemized in its own separate section apart from the list of marital

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No. 2022AP363

property being assigned in each divorce judgment.9 That each payment is
separated out of the property division, with its own section describing the
payment, reflects that these payments were not marital property that existed at any
point before the divorce judgments were entered. Accordingly, the payments were
not “marital property assigned” in the divorce judgments.

¶23 Scharine argues that the cash equalization payments are transfers of
marital property available to satisfy the Borde brothers’ debt to Scharine because
the payments “compensate” Tamera and Kelly for their equity in the Borde
brothers’ business assets. Scharine reasons that “[i]f the Borde brothers had
liquidated their businesses instead of agreeing to compensate their spouses for
their share of the equity, the divorce court would presumably have divided the
proceeds between the spouses. Those proceeds would not have passed free and
clear of the claims of business creditors.” Scharine then asserts that “[t]he same is
true of the monetary claims provided in lieu of equity in these divorce
proceedings.” This argument fails for at least the following reasons.

¶24 First, Scharine’s two-paragraph presentation of the argument is not
supported by legal authority, and we could reject it on that basis alone. See
Industrial Risk Insurers v. Am. Eng’g Testing, Inc., 2009 WI App 62, ¶25, 318

9
In the judgment for the divorce between Tamera and Donald, there is a section entitled
“Equalization of Marital Property Division” which is separate from a section entitled “Property
Division.” This equalization section describes the “payment of $275,000 [] required to equalize
the marital property division.” The section entitled “Property Division” also lists the “Cash
Equalization Payment from the husband to the wife in the amount of $275,000.00” as the last
item of property awarded to Tamera. The Cash Equalization Payment referenced in the property
division section differs from the other property itemized in that section in that the other items of
property all existed at the time of the divorce judgment. Given the payment’s listing in the
separate cash equalization section, it is evident that its listing in the property division section does
not indicate that the cash payment itself is marital property being awarded to Tamera.

10
No. 2022AP363

Wis. 2d 148, 769 N.W.2d 82 (“Arguments unsupported by legal authority will not
be considered, and we will not abandon our neutrality to develop arguments.”)
(internal citations omitted).

¶25 Second, this argument also lacks factual support. It is undisputed
that the Borde brothers’ business assets were marital property. However, as
explained above, unlike those assets that existed during the marriages, the cash
equalization payments did not exist during the marriages. Once the marital
property was divided in each divorce judgment, a new obligation was created upon
the ex-spouse, to be satisfied from any source by the ex-spouse. This new
obligation did not “assign” marital property to Tamera and Kelly. See WIS. STAT.
§ 766.55(2m).

¶26 Third, the record does not support the connections that Scharine
attempts to draw between the Borde brothers’ business assets and the cash
equalization payments. The divorce judgments provided that Tamera was to have
a lien on James’s property until he made the cash equalization payment, and that
Kelly was to be paid after Donald refinanced a loan. These conditions ensured
performance and enforcement of the payment obligations. They did not transform
the payments into marital property derived either from a lien on James’s property
or refinancing of Donald’s loan.

¶27 Fourth, while the cash equalization payments to Tamera and Kelly
are payments received “in lieu of” marital property, the ordering of those
payments did not, as argued by Scharine, “convert” Tamera’s and Kelly’s equity
in the marital property before divorce “to a claim for future payment.” The
divorce judgments provided that Tamera and Kelly would receive future cash
payments from their ex-spouses instead of portions of marital property to which

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No. 2022AP363

they may have been entitled. Nothing about these judgments involved the
assignment of marital property or transfer of marital property or rendered those
future payments marital property.

¶28 Fifth, Scharine concedes that Tamera and Kelly “are not personally
obligated to pay the debts incurred by the Borde brothers.” That concession,
which is correct, leads to the following, and necessary, conclusion about
Scharine’s argument if this court allows Scharine to capture a portion of either
$275,000 obligation owed by each Borde brother to his ex-wife. That conclusion
is that one of the following two alternatives must be true, and each shows why
Scharine’s argument fails.

¶29 One alternative is that, at the time Scharine obtains a portion of the
money owed by a Borde brother to either Tamera or Kelly, that money will have
already been transferred by a Borde brother, and that money will then be owned
by either Tamera or Kelly. In such an event, and contrary to the undisputed
assertion of Scharine that Tamera and Kelly are not personally liable to pay the
debts incurred by their ex-husbands, Tamera or Kelly will, in fact, be personally
liable for the debt owed to Scharine. That is true because, in this scenario, a Borde
brother paid the amount to his ex-wife as required by the divorce judgment and
satisfied his obligation to his ex-wife, but Tamera or Kelly will not retain that
money as it will be captured from them by Scharine. As a result, in this scenario,
Scharine will have made Kelly or Tamera personally liable for the debt.

¶30 In the alternative, at the time Scharine obtains a portion of the
money owed by a Borde brother to either Tamera or Kelly, the funds will still be
owned by a Borde brother. In that event, the money must be ordered by a court to
be paid from an account owned by a Borde brother. However, the Borde brothers

12
No. 2022AP363

are not parties to this action. Accordingly, this court does not have the authority to
order amounts to be paid from an account owned by a Borde brother. Further, the
bankruptcy court did not give Scharine permission to bring suit against either
Borde brother.

¶31 Under either alternative, the account containing the cash equalization
payment will have to be owned by either Tamera or Kelly or one of the Borde
brothers. In either situation, as just noted, allowing Scharine to obtain a portion of
the payment is untenable because Tamera and Kelly are not personally liable for
this debt and the Borde brothers are not parties to this action.

¶32 These same reasons apply to Scharine’s restatement of its argument
in its reply brief, that the payments are “traceable” from marital property. As
explained above, the payments neither began as marital property nor transformed
marital property to which they could be traced. There can be no tracing forward
because there is no starting point in marital property.10

¶33 In sum, Scharine fails to show that the cash equalization payments
constitute marital property that is available to satisfy the Borde brothers’ business
debt under WIS. STAT. § 766.55.

10
Scharine in its reply brief cites testimony at the divorce hearing to support its tracing
argument. Not only does the argument come too late, but Scharine does not argue that resort to
extrinsic evidence is necessary to resolve an ambiguity in the divorce judgment. We reject
Scharine’s argument for these additional reasons. See Bilda v. County of Milwaukee, 2006 WI
App 57, ¶20 n.7, 292 Wis. 2d 212, 713 N.W.2d 661 (“It is a well-established rule that we do not
consider arguments raised for the first time in a reply brief.”); see also Pulkkila v. Pulkkila, 2020
WI 34, ¶24, 391 Wis. 2d 107, 941 N.W.2d 239 (“A divorce judgment that is clear on its face is
not open to construction.”) (quoting Washington v. Washington, 2000 WI 47, ¶17, 234 Wis. 2d
689, 611 N.W.2d 261).

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No. 2022AP363

CONCLUSION

¶34 For the reasons stated, we affirm the circuit court’s order denying
Scharine’s summary judgment motion, entering summary judgment in favor of
Tamera and Kelly, and dismissing the complaint.

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

14