PUBLISHED
OPINION
Case No.: 95-2619
Petition for Review Filed
Complete Title
of Case:
CH2M Hill, Inc., a Florida Corporation,
Formerly Known As CH2M Hill Central, Inc.,
an Oregon Corporation,
Plaintiff-Respondent,
v.
Black & Veatch, a Missouri General
Partnership, Comprised of Individual Partners
J.E. Abbott, et al.,
Defendant-Appellant.
Submitted on Briefs: September 3, 1996
Oral Argument: ----
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: November 12, 1996
Opinion Filed: November 12, 1996
Source of APPEAL Appeal from an order
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Milwaukee
(If "Special", JUDGE: WILLIAM J. HAESE
so indicate)
JUDGES: WEDEMEYER, P.J., FINE and CURLEY, JJ.
Concurred: FINE, J.
Dissented:
Appellant
ATTORNEYS For the defendant-appellant the cause was submitted
on the briefs of Edward A. Hannan, M. Susan Maloney
and Jane F. Carrig of Godfrey, Braun & Hayes
of
Milwaukee.
Respondent
ATTORNEYS For the plaintiff-respondent the cause was
submitted on the briefs of Robert J. Smith and
Hugh N. Anderson of Wickwire Gavin, P.C. of
Madison.
COURT OF APPEALS
DECISION
DATED AND
RELEASED
November 12, 1996
NOTICE
A party may file with the Supreme Court a
petition to review an adverse decision by the
Court of Appeals. See § 808.10 and Rule
809.62, Stats.
This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
No. 95-2619
STATE OF WISCONSIN IN COURT OF APPEALS
CH2M Hill, Inc., a Florida Corporation,
Formerly Known As CH2M Hill Central, Inc.,
an Oregon Corporation,
Plaintiff-Respondent,
v.
Black & Veatch, a Missouri General
Partnership, Comprised of Individual Partners
J.E. Abbott, et al.,
Defendant-Appellant.
APPEAL from an order of the circuit court for Milwaukee County:
WILLIAM J. HAESE, Judge. Affirmed.
Before Wedemeyer, P.J., Fine and Curley, JJ.
WEDEMEYER, P.J. Black & Veatch, a Missouri general partnership,
("B&V") appeals from an order denying its motion to dismiss a complaint filed against
it by CH2M Hill ("CH2M"). B&V claims that the trial court erred as a matter of law
when it ruled that CH2M obtained personal jurisdiction over it pursuant to
§ 801.11(6),
Stats. Because under the calls of the statute CH2M properly obtained personal
jurisdiction over B&V, we affirm.
I. BACKGROUND
The facts central to a resolution of this appeal are not in dispute. CH2M,
the prime design consultant to the Milwaukee Metropolitan Sewerage District's effort
to effectuate a water pollution abatement program, sued B&V alleging various theories
of negligence, breach of contract, warranty liability, and a claim for indemnification for
additional costs incurred in the performance of its work on a portion of the total project.
After years of unsuccessfully negotiating a settlement, this action was filed on
February 2, 1995. At the time, CH2M, by its legal counsel, knew that B&V
consisted
of at least 130 general partners, but did not know the identities or the locations of the
individual partners. Thus, CH2M only named the partnership itself as defendant when
the suit was filed, pursuant to § 807.12(3), Stats.(1)
Prior to filing suit, CH2M's counsel attempted to convince B&V's
counsel to accept service on behalf of the partnership, but was told that authority was
not given to legal counsel to do so. After the action was filed, CH2M's counsel made
two further attempts between February 2, and February 20, to reach B&V's
counsel to
determine if he had obtained authority to accept service. The attempts, however, were
unsuccessful because B&V's counsel was not in Wisconsin. On February 20,
CH2M's
counsel communicated with B&V's in-house counsel again seeking consent to accept
service. On February 28, the request was refused because of insurance
indemnification
reasons. Nevertheless, efforts by CH2M continued through March 15, to obtain
consent to accept service.
In the meantime, on March 9, CH2M sent to B&V its first set of
interrogatories requesting the names and addresses of B&V's general partners. Prior
to B&V's response, CH2M advised B&V's in-house counsel that it had acquired a
list
of thirty-three of the partners and was arranging for immediate service of the summons
and complaint on those partners. CH2M obtained service on twenty-eight of the thirty-three
partners, prior to April 3, 1995, which was the sixty-day service expiration date.
Section 801.02(1), Stats.
On April 14, B&V responded to CH2M's interrogatory request for the
names of all the partners. There were 160 partners. On May 3, 1995, after CH2M
obtained all the names of the partners, it moved, pursuant to § 807.12(3), Stats.,
for
an order directing insertion of the names of the partners into the pleadings. The trial
court granted the motion June 14, 1995.
On July 15, 1995, B&V moved to dismiss CH2M's complaint. This
motion was denied. This court, by order dated November 7, 1995, granted
B&V's
petition for leave to appeal.
II. DISCUSSION
The basis for B&V's claim of trial court error involves the interpretation
of a statute in the context of undisputed facts. Both parties ask us to construe and apply
§ 801.11(6), Stats., to reach a different result. Our review, therefore, is of an
independent, nondeferential nature. See Bitters v.
Milcut, Inc., 117 Wis.2d 48, 49,
343 N.W.2d 418, 419 (Ct. App. 1983).
This appeal presents an issue of first impression in Wisconsin general
partnership law: whether service on some of the partners in a general partnership
composed of a large number of general partners is sufficient to properly commence a
civil action against the partnership that will be binding on the partnership assets and the
partners served.
The focus of our review involves the interpretation and construction of
§ 801.11(6), Stats., which provides:
(6) Partners and partnerships. A summons shall be
served individually upon each general partner known to
the plaintiff by service in any manner prescribed in sub.
(1), (2) or (5) where the claim sued upon arises out of or
relates to partnership activities within this state sufficient
to subject a defendant to personal jurisdiction under
s. 801.05 (2) to (10). A judgment rendered under such
circumstances is a binding adjudication individually
against each partner so served and is a binding
adjudication against the partnership as to its assets
anywhere.
B&V asserts that CH2M did not "serve those partners known to it, and
in the exercise of due diligence, those partners who could have been known," within
sixty days of filing its complaint as required by § 801.11(6), Stats. It argues
that by
failing to effect proper service, CH2M did not properly commence this action under
§ 801.02(1), Stats.,(2) thereby
creating a jurisdictional defect which foreclosed personal
jurisdiction over B&V and all of its partners. Thus, B&V argues, the action must
be
dismissed. Stated otherwise, B&V contends that unless CH2M obtained service upon
every known general partner, there is a fundamental defect in the commencement of the
action preventing the court from having jurisdiction over any of the general
partners--served or unserved.
B&V reaches its conclusion through the following thought process. First,
§ 801.11(6), Stats., ought to be construed in a manner to avoid inconsistency
and
conflict so as to give effect to every part, Associated Hospital Service
Inc. v. City of
Milwaukee, 13 Wis.2d 447, 463, 109 N.W.2d 271, 279 (1961), and to
prevent
superfluity. State v. Wisconsin Tel. Co., 91
Wis.2d 702, 714, 284 N.W.2d 41, 46
(1979). Next, B&V posits that the first sentence of the statute "[a] summons shall be
served individually upon each general partner known to the plaintiff" is a condition
precedent to triggering the second sentence: "A judgment rendered under such
circumstances is a binding adjudication ... against each partner so served." Thus, only
when all general partners known to the plaintiff have been served will the second
sentence take effect. Only this type of reading, proffers B&V, gives full effect to each
part of the statute.
As additional support for its argument, B&V asserts that the presence of
the verb "shall" renders the first sentence peremptory and mandatory, thereby making
service on all of the known partners a necessity for personal jurisdiction. Finally, B&V
claims that the placing of the past participle "known" in the first sentence "denotes an
objective standard which mandates due diligence under the circumstances to discover
the identities and locations of those who, with reasonable diligence could be
discovered." Wold v. State, 57 Wis.2d 344, 350,
204 N.W.2d 482, 487 (1973). In this
respect, B&V points to four reasons why objectively CH2M did not exercise due
diligence: (1) CH2M failed to request the identity of the B&V partners prior to
filing
its summons and complaint; (2) CH2M failed to schedule a pre-action deposition to
discover the partners' identity; (3) CH2M failed to take immediate action to conduct
discovery depositions upon filing of the action; and (4) CH2M failed to request the
trial
court to shorten its thirty day response time to the interrogatories CH2M did serve. We
shall address each part of B&V's construct.
The trial court, in denying B&V's motion to dismiss, concluded that
§ 801.11(6), Stats., permitted personal jurisdiction over served partners when
fewer
than all known partners were served. To support its decision, the trial court also
concluded that there was no statutory authority for B&V's claim that CH2M had to
exercise due diligence in ascertaining the identity of the general partners. Alternatively,
the trial court reasoned that even if such a requirement should be read into the statute,
CH2M had complied.
A. General construction of
§ 801.11(6), Stats.
The key element in B&V's claim of trial court error is its assertion that
the presence of the verb "shall" renders the first sentence of § 801.11(6), Stats.,
mandatory. Whether a statute is mandatory or directory is a matter of statutory
construction which is a question of law we decide independently. F.T. v.
State,
150 Wis.2d 216, 221, 441 N.W.2d 322, 324 (Ct. App. 1989). In addressing this
issue,
we begin with the rule of construction that "[s]tatutes relating to the same subject matter
may be considered in construing a statutory provision."
Chomicki v. Wittekind, 128
Wis.2d 188, 193, 381 N.W.2d 561, 563 (Ct. App. 1985).
In Karow v. Milwaukee County Civil Service
Commission, 82 Wis.2d
565, 570, 263 N.W.2d 214, 217 (1978),(3) our
supreme court addressed the issue of
whether a statute's use of the word "shall" should be given a mandatory versus a
directory interpretation in cases where the statute contains a time limit (i.e. "time
cases"). In Demmith v. Wisconsin Judicial
Conference, 166 Wis.2d 649, 480 N.W.2d
502 (1992), however, our supreme court did not apply
Karow's four-factor test to
determine if the statute was mandatory or directory when the statute did not contain a
time limit (i.e. "non-time" case). Instead, the supreme court declared:
"The general rule is that, when the word shall is used in a
statute, it is presumed mandatory unless a different
construction is necessary to carry out the clear intent of
the legislature." ... "When the words 'shall' and 'may' are
used in the same section of a statute, one can infer that the
legislature was aware of the different denotations and
intended the words to have their precise meanings."
Id., 166 Wis.2d at 657 n.5, 480 N.W.2d at 506
n.5 (1992) (citations omitted).
An examination of § 801.11, Stats., and its seven subsections
reveals
that in subsections (4), (5) and (7), relating to the service of process on defendants other
than natural persons, the word "may" is used as the operative verb. Thus, the argument
naturally flows that the use of "shall" in subsection (6) relating to partners and
partnerships is mandatory from which no deviation ought be countenanced. To impose
such a requirement, however, would introduce an element of rigidity which is not
warranted when the very purpose for which statutory interpretive rules exist is to glean
legislative intent. To plumb the meaning of a statutory subsection our considerations
ought not leave "context" and "common sense" on the courthouse steps.
State v.
Clausen, 105 Wis.2d 231, 246, 313 N.W.2d 819, 826 (1982). Instead,
we must not
only examine the statute as a whole, but also in reference to other statutes dealing with
the same general subject matter to discern the entire legislative scheme. See
2A
Norman J. Singer, Sutherland Statutory Construction § 46.05 (5th ed. 1992).
Undoubtedly, § 801.11, Stats., relates to the general subject matter of
service of process on seven different types of defendants. We must, however, be
mindful that the status of certain types of defendants are parts of discrete legislative
schemes. Thus, we cannot ignore the provisions of the Uniform Partnership Act
adopted by Wisconsin in Chapter 178, and the impact its provisions logically might
have on personal jurisdiction questions.
B&V argues that to read the statute as interpreted by the trial court would
implicate some due process concerns because the plain purpose of the subsection is to
put proposed defendants on notice of a pending action and thus avoid prejudice.
Laudatory as this concern may be, our legislature has already affected this aspect of
partnership law in several significant respects: The Uniform Partnership Act declares
that the partnership will be liable for any wrongful act or omission of any partner acting
in the ordinary course of the partnership business. Section 178.10, Stats. It imposes
joint and several liability on the general partners for everything chargeable to the
partnership in the absence of contracts to the contrary. Section 178.12, Stats. In
addition, § 178.09, Stats., "Notice to or knowledge of partner
charges partnership"
dictates:
Notice to any partner of any matter relating to partnership
affairs, and the knowledge of the partner acting in the
particular matter, acquired while a partner or then present
to the partner's mind, and the knowledge of any other
partner who reasonably could and should have
communicated it to the acting partner, operate as notice to
or knowledge of the partnership, except in the case of a
fraud on the partnership committed by or with the consent
of that partner.
Thus, the need to directly notify all partners is not as paramount as it
would be in the absence of this type of provision under the total legislative scheme.
Even with this expansive legislative approach to notice obligations, B&V's concern
about due process is sufficiently addressed in the second sentence by insulating non-served
partners and their personal assets from direct action.
Our examination of this portion of B&V's argument would not be
complete without some comment about common sense. It is a "fundamental axiom of
judicial construction ... that it avoid any result that would be absurd or unreasonable
under the facts and circumstances of the case." J.A.L. v.
State, 162 Wis.2d 940, 963,
471 N.W.2d 493, 502 (1991). Section 801.01(2), Stats.,(4) declares that statues
regulating practice and procedure in our trial courts should be construed to "secure the
just, speedy and inexpensive determination of every action...." To accede to B&V's
mandatory and peremptory approach of construing § 801.11(6), Stats., would
make
a mockery of the purpose for which the rules of construction exist. Under B&V's
construction, the larger the aggregate of partners and far spread in location, the more
insulated the partners and the partnership would be from answering in justice for acts
of commission and omission. Rules of process are not designed to operate as
instruments of obstruction, but are intended to provide the means to facilitate the just
resolution of disputes.
To read the first sentence of the statute as a mandatory condition
precedent to maintaining an action despite the protection provided individual unserved
partners in the second sentence would render the legislature's scheme for partnership
law meaningless. We thus conclude that contextual integrity, logic and common sense
require that the first sentence of this statute be construed as directory only. Our
conclusion is further supported by Wisconsin case law. See
Stangarone v. Jacobs,
188 Wis. 20, 205 N.W. 318 (1925) (judgment allowed against served partner and
partnership assets, but dismissed as to non-served partner).
B. Due Diligence.
B&V also asserts that CH2M was required to exercise due diligence to
ascertain the names of the general partners and required to serve each one within sixty
days after filing the summons and complaint. CH2M answers that the statute does not
require that all known partners or those that could be known with reasonable diligence
be served in order to acquire personal jurisdiction over the partners who actually are
served and the partnership assets.
Section 801.11, Stats., delineates the manner of service of process that
is required to exercise personal jurisdiction upon seven categories of defendants in civil
actions. The statute relates to one subject but the methodology to obtain service is not
uniform. Service of process for natural persons, § 801.11(1)(b); for natural
persons
with disabilities, § 801.11(2); and for corporations and limited liability
companies,
§ 801.11(5)(b), all require some form of due diligence. Whereas service upon
the state,
§ 801.11(3); on other political corporations, § 801.11(4); on
partners and partnerships,
§ 801.11(6); and on other unincorporated associations, § 801.11(7),
have no express
requirement for due diligence.
B&V reasons that the use of the word "known" implies a reasonable
objective due diligence requirement to ascertain whether the identities of the general
partners are available to a plaintiff suing a partnership. Although this argument has
merit, we accord more persuasive value to the well recognized intrinsic rule of
construction adopted by our supreme court: "[W]here a statute, with reference to a
subject contains a given provision, the omission of such provision from a similar statute
concerning a related subject is significant to show that a different intention existed."
Green Bay Broadcast Ins. Co. v. Redevelopment
Auth., 116 Wis.2d 1, 19,
342 N.W.2d 27, 36 (1983), modified, 119 Wis.2d 251, 349 N.W.2d
478 (1984); 2B
Singer, supra, at § 51.02. The only conclusion that can be rationally
made is that the
legislature intended a different procedure to be used in the manner in which personal
jurisdiction can be exercised over partnerships and its partners. Thus, the trial court
did not err.
Even if, arguendo, a reasonable diligence requirement can be read into
the statute, the record--contrary to B&V's contention--demonstrates that the trial court
did consider the question and reached a positive result.
"Reasonable diligence" or due diligence is treated as a finding of fact to
be affirmed unless clearly erroneous. Welty v.
Heggy, 124 Wis.2d 318, 324,
369 N.W.2d 763, 767 (Ct. App.), cert. denied, 474 U.S. 947 (1985).
Where the basic
facts are undisputed, the trial court's determination is considered a conclusion of law
to be addressed independently by this court. Cf.
id.
Here the basic facts of how CH2M effectuated service on twenty-eight
of the known thirty-three general partners are not in dispute; the dispute involves each
parties' different interpretation of those undisputed facts. Earlier in this opinion we set
forth the pertinent facts leading up to the actual service of the known partners and,
without repeating them, we incorporate them in addressing this reasonable diligence
issue. To put the matter in a few words, B&V argues that CH2M did too little too late
to obtain all the names and addresses of the general partners. On the other hand,
CH2M contends that its reasonable efforts to seek admission of service for the partners
through their legal counsel having been rejected, it did everything reasonable to effect
service on known parties within the sixty-day deadline. In this regard, the record is
somewhat sketchy, but our review reveals that the trial court did address the issue.
In its prefatory remarks prior to issuing its bench decision, the trial court
indicated it had spent considerable time reviewing the record. This is evident from the
trial court's recitation of the sequence of procedural events preceding CH2M's acts of
service. From this review, the trial court concluded that CH2M "did not close their
eyes to means of information reasonably accessible to it."(5) From our earlier review of
the same record, we reach the same conclusion.
By the Court.--Order affirmed.
No. 95-2619(C)
FINE, J. (concurring). I agree with the majority that under Rule
801.11(6), Stats., service of a summons and complaint on some partners in a general
partnership is sufficient to commence a civil action that will be binding on the
partnership assets and on the partners who are served. I do not agree, however, that
this result depends on whether the plaintiff has exercised due diligence to serve all of
the partners. Accordingly, I do not join in the last half of part II.B. of the majority
opinion, slip op. at 1516.
1. Section 807.12, Stats., provides in
pertinent part:
Suing by fictitious name or as unknown; partners' names
unknown.
....
(3) In an action against a partnership, if the names of
the partners are unknown to the plaintiff, all proceedings may
be in the partnership name until the names of the partners are
ascertained, whereupon the process, pleadings and all
proceedings shall be amended by order directing the insertion
of such names.
2. Section 801.02(1), Stats., provides in
pertinent part:
Commencement of Action.
(1) A civil action in which a
personal judgment is sought is commenced as to any defendant
when a summons and a complaint naming the person as
defendant are filed with the court, provided service of an
authenticated copy of the summons and of the complaint is
made upon the defendant under this chapter within 60 days
after filing.
3. In Karow v.
Milwaukee County Civil Service Commission, 82 Wis.2d 565,
263 N.W.2d
214 (1978), our supreme court set forth factors to be considered in "time cases." In
determining whether legislation was intended to be mandatory or directory, it listed not only
the omission of a prohibition or a penalty, but also "the consequences resulting from one
construction or the other, the nature of the statute, 'the evil to be remedied, and the general
object sought to be accomplished by the legislature.'"
Id., 82 Wis.2d at 572, 263 N.W.2d at
217 (citations omitted). It cited language of an earlier decision that "[W]here there is no
substantial reason why the thing to be done might not as well be done after the time
prescribed
as before--no presumption that by allowing it to be so done, it may work an injury or
wrong--nothing in the act itself, or in other acts relating to the same subject matter,
indicating
that the legislature did not intend that it should rather be done, after the time prescribed, than
not to be at all; there the courts assume that the intent was, that if not done within the time
prescribed, it might be done afterwards."
Id., 82 Wis.2d
at 572 n.7, 263 N.W.2d at 217 n.7
(citing State ex rel. Cothren v. Lean, 9 Wis.
254 [*279], 266 [*292] (1859)). Thus, even in
"time cases" a procrustean standard was not always adhered to if context dictated otherwise.
4. Section 801.01(2), Stats., provides:
Kinds of proceedings; scope of chs. 801 to 847.
....
(2) Scope. Chapters 801 to 847 govern
procedure and
practice in circuit courts of this state in all civil actions and
special proceedings whether cognizable as cases at law, in
equity or of statutory origin.... Chapters 801 to 847 shall be
construed to secure the just, speedy and inexpensive
determination of every action and proceeding.
5. Accordingly, in substance, the trial
court addressed and decided the issue even if it did
not specifically state that it was doing so. See
Connecticut Gen. Life Ins. Co. v. DILHR, 86
Wis.2d 393, 404-05, 273 N.W.2d 206, 211 (1979) (substance controls over trial court's
label).
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