Crown Castle USA, Inc. v. Orion Construction Group, LLC: Removing a Tool From the Collection Lawyer's Toolbox

In Crown Castle USA, Inc. v. Orion Construction Group, LLC, No. 09AP3029 (Wis. Sup. Ct., Mar. 22, 2012), the Supreme Court, in a 4-3 decision that will be surprising to collections practitioners, concluded that a Wisconsin judgment creditor, in proceedings supplemental to entry of judgment, may not compel anyone but the judgment debtor itself to testify about the debtor’s assets. 

Crown Castle obtained a judgment against Orion Construction, a limited liability company. Orion Construction’s sole member was Douglas Larson, also the sole member of another LLC called Orion Logistics, an entity that played no part in the transaction between Crown Castle and Orion Construction. At a supplemental proceeding before a court commissioner under Wis. Stat. § 816.03(1)((b), Orion Construction produced financial records that were skimpy and useless for collection purposes. So Crown Castle asked for and obtained an order from the commissioner for the business records of all entities in which Larson had an interest, obviously hoping to uncover evidence of transfers of Orion Construction’s assets or other information to help Crown Castle collect its judgment. Orion Construction resisted on the ground that the statute gives judgment creditors no right to compel anyone but the judgment debtor itself to appear and answer questions in a supplemental proceeding.  

The circuit court and the Court of Appeals sided with the creditor, but the Supreme Court reversed. The applicable statute, § 816.06, says that, at a supplemental hearing, the “judgment debtor may be examined on oath and testimony on the part of either party may be offered.” The court focused particularly on a 1935 amendment that deleted language from this statute stating that “witnesses may be required to appear and testify.”  Op. ¶ 35. Accordingly, the court read the current statute to permit the testimony of witnesses other than the debtor only if they appear voluntarily. The dissent thought that the 1935 amendment may have been intended merely to streamline the statute’s language, in light of the ability under § 885.01(1) (still on the books) to compel the testimony of witnesses and the production of evidence “in any action, matter or proceeding,” including a supplemental hearing. Op. ¶ 75.

Regardless of which of the justices correctly read the statute and its history, judgment creditors now lack the tool that they have used most effectively in the past to find evidence of concealment of assets and other debtor fraud. Until the Legislature amends the statute, creditors’ lawyers may well find their imaginations challenged and their collection efforts stymied.