Winfield Solutions, LLC v. Ganske
1:21-cv-00134
| E.D. Wis. | Mar 31, 2022Background
- Winfield sold agricultural products on credit to WS Ag Center, Inc.; the Ganskes personally guaranteed WSAG’s debts.
- On April 29, 2019 the Western District of Wisconsin entered a $1,524,461.15 judgment for Winfield; Winfield docketed that judgment in Door County on June 4, 2019, creating a lien on the Ganskes’ Baileys Harbor residence (2504 County Highway F).
- The Ganskes also owned a Sun Prairie residence (their prior homestead) and had a $75,000 mortgage to Swanson (executed April 2017) and a $50,000 mortgage to Place (recorded May 16, 2019) against the Baileys Harbor property.
- The Ganskes filed Chapter 11 on February 11, 2020, claimed the Baileys Harbor property as their homestead under Wis. Stat. § 815.20, and asserted continuous (part‑time) occupancy there before and after June 4, 2019.
- Winfield objected to the homestead exemption, sought to avoid the Swanson/Place mortgages as fraudulent transfers, moved for abandonment of those claims, and sought relief from the automatic stay; the bankruptcy court overruled Winfield’s objection, avoided Winfield’s judgment lien under § 522(f), and denied Winfield’s abandonment and stay‑relief motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Baileys Harbor property was the Ganskes’ homestead on June 4, 2019 | The Sun Prairie residence was their homestead on June 4, 2019 (tax returns, mail, depositions, and first meeting statement show Sun Prairie address) | Baileys Harbor was occupied as the homestead (weekends, holidays, business stays; furnished; intent to domicile there) | Bankruptcy court’s factual finding that Baileys Harbor was homestead not clearly erroneous; homestead exemption allowed |
| Whether Winfield’s judgment lien could be avoided under § 522(f) | Lien should stand because judgment docketed when Sun Prairie was homestead | Lien impairs claimed homestead exemption and is avoidable | Court avoided Winfield’s judgment lien; motion to avoid lien granted |
| Whether the estate should be ordered to abandon fraudulent‑transfer claims related to Swanson and Place mortgages | Abandon the claims so mortgages remain ineffective to benefit the estate | Claims could yield $125,000 to the estate and are not burdensome or inconsequential | Denial of abandonment was not an abuse of discretion; claims retained for estate benefit |
| Whether Winfield is entitled to relief from the automatic stay under § 362(d) | No equity for debtors (property ~$300k minus Winfield’s $1.5M lien → negative equity); stay relief warranted | Avoidance of Winfield’s lien under § 522(f) leaves debtor with exempt equity; property necessary to reorganization analysis favors denying relief | Denial of stay relief affirmed — court found avoidable lien and $140,335 exempt equity; no abuse of discretion |
Key Cases Cited
- In re Smith, 582 F.3d 767 (7th Cir. 2009) (standard of review: law de novo, factual findings for clear error)
- United States v. U.S. Gypsum Co., 333 U.S. 364 (U.S. 1948) (definition of "clearly erroneous" standard)
- Moore v. Krueger, 507 N.W.2d 155 (Wis. Ct. App. 1993) (homestead statute construed liberally in favor of debtor)
- Anderson v. Anderson Tooling, Inc., 961 N.W.2d 911 (Wis. Ct. App. 2021) (liberal construction of homestead exemptions against judgment creditors)
- In re Carter, 550 B.R. 433 (Bankr. W.D. Wis. 2016) (part‑time occupancy can support homestead claim)
- In re Broesch, 34 B.R. 554 (Bankr. E.D. Wis. 1983) (occupancy and intent factors for homestead determination)