PUBLISHED
OPINION
Case No.: 95-2785
Complete Title
of Case:
MIRO TOOL & MFG., INC.,
Plaintiff-Appellant,
v.
MIDLAND MACHINERY, INC.,
Defendant-Respondent.
Submitted on Briefs: September 3, 1996
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: October 23, 1996
Opinion Filed: October 23,1996
Source of APPEAL Appeal from an order
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Waukesha
(If "Special", JUDGE: ROBERT G. MAWDSLEY
so indicate)
JUDGES: Anderson, P.J., Nettesheim and Snyder, JJ.
Concurred: Anderson, P.J.
Dissented:
Appellant
ATTORNEYS On behalf of the plaintiff-appellant, the cause was
submitted on the brief of Scott V. Lowry of
Waukesha.
Respondent
ATTORNEYS On behalf of the defendant-respondent, the cause
was submitted on the brief of John Staks of
Milwaukee.
COURT OF APPEALS
DECISION
DATED AND
RELEASED
October 23, 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. 95-2785
STATE OF WISCONSIN IN COURT OF APPEALS
MIRO TOOL & MFG., INC.,
Plaintiff-Appellant,
v.
MIDLAND MACHINERY, INC.,
Defendant-Respondent.
APPEAL from an order of the circuit court for Waukesha County:
ROBERT G. MAWDSLEY, Judge. Reversed and cause remanded with
directions.
Before Anderson, P.J., Nettesheim and Snyder, JJ.
NETTESHEIM, J. Miro Tool & Mfg., Inc. appeals from a
nonfinal order which granted Midland Machinery, Inc.'s motion to reopen a default
judgment previously awarded to Miro.(1) The
trial court ruled that the one-year time
limitation of § 806.07(2), Stats., was tolled because of certain representations made
by Miro to Midland at a meeting in February 1994. Alternatively, the court held that
Miro was estopped by its conduct from asserting the one-year limitation. Miro claims
the trial court lacked authority to reopen the judgment after the one-year limitation
period. We agree and therefore reverse the trial court's order.
BACKGROUND
The relevant facts are not disputed. In 1993, Midland ordered fixtures
and tooling from Miro. On January 26, 1994, Miro served a summons and complaint
upon Midland, seeking payment for the materials supplied. Because the parties'
attorneys had previously been discussing the matter, Midland's personnel assumed that
Miro's attorney would advise Midland's attorney that a lawsuit had been commenced.
Therefore, Midland did not notify its attorney of the action. As a result, Midland did
not appear in the action and on February 17, 1994, the trial court awarded Miro a
default judgment. Four days later, unaware that a default judgment had already been
entered, Midland's attorney learned of the action and filed an answer. The answer
alleged, inter alia, that the materials did not conform to the requirements of the purchase
order and were not timely delivered.
On February 28, 1994, the parties met in an attempt to resolve their
differences. During this meeting, Midland first learned that a default judgment had
been awarded to Miro. According to an affidavit of Michael Ryan, a financial officer
for Midland, Miro representatives advised Midland at this meeting that Miro would not
pursue the default judgment and would, instead, seek to resolve the matter by
negotiations. At this meeting, the parties agreed that the fixtures would be returned to
Miro for testing to determine if they complied with the purchase order. Relying on this
understanding, Midland took no immediate action to reopen or set aside the default
judgment. Further negotiations between the parties proved fruitless.
On February 23, 1995, more than one year after the default judgment had
been entered, Miro filed a garnishee summons and complaint against Midland and a
banking institution. In response, on March 16, Midland filed a motion to reopen and
vacate the default judgment. Midland relied on § 806.07(1)(h), Stats.(2)
Following a hearing on Midland's motion, the trial court issued the first
of three decisions in this matter. The court denied relief to Midland under
§ 806.07(1)(h), Stats., ruling that Midland had not satisfied the extraordinary
circumstances test of State ex rel. M.L.B. v. D.G.H.,
122 Wis.2d 536, 363 N.W.2d
419 (1985). However, the court ruled that Midland was nonetheless entitled to relief
under subsec. (1)(a) of the statute which allows the court to relieve a party from a
judgment on grounds of "mistake, inadvertence, surprise, or excusable neglect."
The trial court reasoned that the representations made by Miro to Midland
at the February 28, 1994, meeting satisfied § 806.07(1)(a), Stats. The court's
written
decision stated:
[T]his assumption was an honest mistake by the
defendants, the kind a reasonably prudent person might
make. Indeed, from the court's perspective and from a
professional standpoint, information about the lawsuit
should have been provided to [Midland's attorney] as well
as information concerning the request for the default
judgment . [T]he officers of [Midland] made an honest
an [sic] erroneous assumption concerning the professional
courtesies lawyers would extend to each other.
In response to this ruling, Miro moved for reconsideration. In support,
Miro pointed out that relief under § 806.07(1)(a), Stats., must be sought within
a
reasonable time and, in any event, "not more than one year after the judgment was
entered " pursuant to § 806.07(2). Noting that Midland's motion to reopen the
judgment was brought beyond the one-year limitation, Miro asked the court to reverse
its ruling.
In response, the trial court issued its second decision. The court first
confirmed its earlier ruling that Midland had failed to meet the extraordinary
circumstances test under subsec. (1)(h), but had satisfied the excusable neglect test
under subsec. (1)(a). The court then addressed Miro's time limit argument. The court
reasoned that Miro's conduct served to toll the time limits under § 806.07(2),
Stats.
Alternatively, the court held that Miro was estopped by its conduct from invoking the
time limitations of the statute.
This ruling prompted Miro to seek further reconsideration. In support,
Miro likened this case to Johnson v. Johnson, 179
Wis.2d 574, 583, 508 N.W.2d 19,
22 (Ct. App. 1993), where this court held that the plaintiff had failed to demonstrate
sufficient facts to estop the defendant from defending on the basis of a statute of
limitations in a personal injury action. In its third decision, the court disagreed, ruling
that Johnson actually supported the court's ruling.
Miro appeals.
DISCUSSION
A motion to vacate a default judgment is addressed to the sound discretion
of the trial court, and this court will not disturb the trial court's determination absent an
erroneous exercise of that discretion. Baird Contracting, Inc. v. Mid Wis.
Bank, 189
Wis.2d 321, 324, 525 N.W.2d 276, 277 (Ct. App. 1994). Here, however, the
controlling question is one of statutory construction: whether a trial court may grant
relief pursuant to § 806.07(1)(a), Stats., when such motion is filed beyond the
one-year time limitation of § 806.07(2). Statutory construction presents a question of
law
which we review without deference to the trial court's holding. Goff v.
Seldera, 202
Wis.2d 601, 617, 550 N.W.2d 144, 151 (Ct. App. 1996).
We have searched unsuccessfully for any authority which allows a trial
court to extend the time limit imposed by § 806.07(2), Stats., when the grounds
for
relief are mistake, inadvertence, surprise or excusable neglect. Nor has Midland
directed us to any such authority. Moreover, the language of the case law in other
contexts suggests that the circuit court has no such power.
Prior to the adoption of § 806.07, Stats., in 1976, the statute governing
relief from judgments, § 269.46(1), Stats., 1973, provided that:
The court may, upon notice and just terms, at any time
within one year after notice thereof, relieve a party from
a judgment, order, stipulation or other proceeding against
him obtained, through his mistake, inadvertence, surprise
or excusable neglect . [Emphasis added.]
Construing this predecessor statute, the Wisconsin Supreme Court held that "[i]t is
clear
under sec. 269.46(1), Stats., that a court does not have the authority to open or vacate
a judgment on the grounds enumerated in the statute if more than one year has passed
after notice of the judgment to the party seeking relief." State ex rel.
Green v.
Williams, 49 Wis.2d 752, 757, 183 N.W.2d 37, 40 (1971).
Following the adoption of the present statute in 1976, the Wisconsin
Supreme Court has similarly reasoned that the one-year time limitation of § 806.07(2),
Stats., "constitutes the maximum time allowed or a 'statute of limitations' period for
bringing the motion to vacate on the grounds of mistake, surprise, inadvertence or
excusable neglect." Rhodes v. Terry, 91 Wis.2d 165,
171, 280 N.W.2d 248, 251
(1979); see also State ex rel. Cynthia M.S. v. Michael
F.C., 181 Wis.2d 618, 630-31,
511 N.W.2d 868, 873 (1994).
The trial court concluded that cases such as
Johnson establish that a
court may use estoppel to toll the time limits of § 806.07(2), Stats. However,
those
cases deal with classic statute of limitations governing the commencement of
an action.
See, e.g., Johnson, 179 Wis.2d at
577-78, 508 N.W.2d at 20. We think it entirely
proper to bar a party from invoking a statute of limitations defense when such party has
contributed to the claimant's tardy filing.
Here, however, we deal with a time limitation for reopening a case
already reduced to judgment. Regardless of Miro's role in this case, the
hard facts
remain that Midland allowed a default judgment to be taken against it and then allowed
that judgment to endure for over one year before taking any remedial action.
Unlike statutes of limitations which govern the commencement of actions,
requests for relief under § 806.07, Stats., invoke special policy considerations.
That
policy seeks to balance the competing values of finality against fairness in the resolution
of a dispute. M.L.B., 122 Wis.2d at 542, 363
N.W.2d at 422. The legislature has
accomplished this task by setting one year as the maximum time for seeking relief under
subsec. (1)(a).
If there be any question about this, § 806.07(1)(c), Stats., provides the
final answer. This subsection allows relief in circumstances of fraud, misrepresentation
or other misconduct of an adverse party. Such conduct will often (perhaps always)
constitute grounds for estoppel. Yet, relief under this subsection is also governed by
the one-year maximum limit set out in subsec. (2). Thus, in these most egregious of
situations, the legislature has clearly set out a one-year time limit. But Midland's
interpretation would have us toll the time limit in circumstances involving the less
egregious circumstances under subsec. (1)(a). That, we conclude, would be an
unreasonable interpretation of the statute.(3)
CONCLUSION
We conclude that the one-year maximum time limit set out in
§ 806.07(2), Stats., cannot be tolled or extended under any circumstances for
purposes
of relief under § 806.07(1)(a). We reverse the trial court's nonfinal order. We
remand
with directions to reinstate the default judgment.
By the Court.--Order reversed and cause remanded with directions.
No. 95-2785(C)
ANDERSON, J. (concurring). I write separately to lament the
untimely demise of common courtesy in the legal profession. The factual background
of this case is but one example of the hostile environment that is the leading cause of
the collapse of common courtesy.
Despite knowing that Midland was represented by counsel and despite
having negotiated with counsel in an attempt to resolve the dispute between the parties,
counsel for Miro did not extend any common courtesy to counsel for Midland. Miro's
counsel did not notify opposing counsel that a lawsuit was being commenced against
Midland; did not send opposing counsel a courtesy copy of the summons and complaint;
did not ask opposing counsel if an answer was forthcoming; and did not warn opposing
counsel that a default judgment would be taken.
I understand that the Rules of Civil Procedure do not require notice to
opposing counsel that a lawsuit was commenced or that a default judgment is going to
be requested. However, I believe that common courtesy imposes such an obligation.
Here, the failure to extend a common courtesy has resulted in the considerable expense
of time and money by both parties. Midland, having retained counsel to negotiate the
dispute with Miro, rightfully expected that its counsel would respond to the lawsuit;
little did it know that counsel for Miro failed to extend a common courtesy to Midland's
counsel. Midland's naive expectation resulted in an untimely answer being filed by its
counsel.(4)
The events that followed the granting of the default judgment compound
the problem. With a default judgment in hand, Miro hosted a meeting of
representatives of Miro and Midland, along with their attorneys, to discuss how to
verify and determine whether the fixtures manufactured by Miro were capable of
performing to the specifications. It was at this meeting, eleven days after Miro took the
default judgment, that Midland learned, for the first time, that there was a judgment
against it. Also at this meeting, Miro assured Midland that if the terms of the
agreement were carried out it would not execute on the default judgment. Based upon
this representation, Midland instructed its counsel not to take any further action with
respect to the litigation. Midland took steps to fulfill its obligations under the
agreement. Thus, it came as a complete surprise to Midland when a garnishment action
was commenced.
Common courtesy in the legal profession is not memorialized in the
statutes, Rules of Professional Conduct for Attorneys or the recently adopted Standards
of Courtesy and Decorum for the Courts of Wisconsin. Indeed, it is obvious that there
should not be a need to have a rule that counsel will treat each other with respect and
courtesy.(5)
Counsel for Miro cannot be faulted for complying with the technical
requirements of the Rules of Civil Procedure. However, his failure to go the extra step,
to alert counsel for Midland that a lawsuit was forthcoming and a default judgment
would be requested, overlooks the very purposes for which courts were created--that
is, to try cases on their merits and render judgments in accordance with the substantial
rights of the parties. Rather than extending respect and courtesy to opposing counsel
and having the dispute resolved on a level playing field, Miro's counsel chose to do
nothing more than meet the minimum requirements of the law.
Although Wisconsin has no reported cases on the legal or ethical
obligations of counsel to put opposing counsel on notice that a lawsuit or default
judgment is close at hand, California, among several jurisdictions, has addressed the
issue. California requires that if the plaintiff's counsel knows the identity of the lawyer
representing the defendant, he or she owes an ethical obligation to
warn before
requesting entry of the defendant's default. Failure to do so is considered a professional
discourtesy to opposing counsel that will not be condoned by the courts. "[E]ven
legitimate tactics must sometimes yield to the only goal that justifies the very existence
of our judicial system; i.e., the resolution of our citizens' disputes and the
administration of justice." Brown v. Presley of S.
Cal., 261 Cal. Rptr. 779, 784 n.3
(Cal. Ct. App. 1989). "While as a matter of professional courtesy counsel should have
given notice of the impending default, and we decry this lack of professional courtesy,
counsel was under no legal obligation to do so." Bellm v.
Bellia, 198 Cal. Rptr. 389,
390 (Cal. Ct. App. 1984) (citation omitted). "The quiet speed of plaintiffs' attorney in
seeking a default judgment without the knowledge of defendants' counsel is not to be
commended." Smith v. Los Angeles Bookbinders Union No.
63, 284 P.2d 194, 201
(Cal. Ct. App. 1955).
Admittedly, the failure to treat opposing counsel with courtesy is not the
equivalent of referring to opposing counsel as an "asshole" and remarking that he could
"gag a maggot off a meat wagon," Paramount Communications, Inc. v.
QVC Network,
Inc., 637 A.2d 34, 54 (Del. 1994), or calling the opposing party a "son
of a bitch,"
threatening to kill him and finally, running his car off the road with a front-end loader,
Disciplinary Proceedings Against Beaver, 181 Wis.2d
12, 17-18, 19, 510 N.W.2d 129,
131 (1994), but it is still symptomatic of the decline of civility in the legal profession.
Many lawyers, judges and academicians have contemplated this decline.
Mark Neal Aaronson, a professor of law at Hastings School of Law, theorizes that "the
inability of lawyers to conduct themselves in a reasonable fashion has less to do with
a lack of good manners or ignorance about what conduct is expected, but has more to
do with not having the strength of character needed to exercise self-discipline when
making practical or ethical choices." Mark Neal Aaronson, Be Just to One Another:
Preliminary Thoughts on Civility, Moral Character, and Professionalism, 8 St.
Thomas L. Rev. 113, 116 (1995). Professor Aaronson's preliminary comments on
civility and the basic virtues provide some clues to the general demise of civility:
Civility as a concept has a rich and deep etymology that
embraces much more than today's common usage of the
term--as little more than a synonym for courtesy or
politeness. It originates in classical political and moral
philosophy, and generally refers to the kinds of virtues
associated with good citizenship.
.
These distinctive virtues, which harken back to the ancient
polis, are the cardinal civic virtues: practical wisdom,
temperance, courage, and justice. They represent a set of
interdependent ideas about the relationship of moral
character to human self-fulfillment, and they comprise a
good part of the idea of civility in its classical sense.
Together they establish a moral decision-procedure for
making important choices about both means and ends in
carrying out various societal roles. To act wisely and
justly, with moderation and courage as appropriate,
requires considerable self-awareness and self-restraint.
Because, for too long, the cardinal virtues have been
either taken for granted or overlooked as presuppositions
for the practice of law, they have not been sufficiently
nurtured as part of a lawyer's education and,
consequently, have been too often neglected or forgotten
in actual practice. Their absence as a conscious or
habitual part of how individuals practice law partially
explains what others perceive as a fairly pervasive
breakdown in contemporary legal professionalism.
Id. at 116-18 (footnotes omitted).
On a more practical level, Judge Penny J. White of the Tennessee Court
of Criminal Appeals discusses common courtesy in her list of 10 Things They Never
Taught You in Law School:
#2: Becoming a lawyer does not require that you lose your
humanity. Even though you have reached that elevated
and lofty place--lawyerhood--don't leave your civility and
common decency behind. Act like a human. If you have
forgotten how, fake it. Treat other lawyers, witnesses,
clients, judges, jurors and clerks with respect and dignity.
.
Many lawyers seem to fall into a modified golden rule
posture. Do unto others what they have done unto you or
even better, before they get a chance to do unto you.
Don't do it. Treat your clients and all professional
associates with respect. Don't harangue or harass
victims, adverse witnesses, or opponents. Don't seek out
confrontation rather than cooperation.
.
Common sense and common courtesy, right and wrong,
and justice still matter. Make them your trademark.
Penny J. White, 10 Things They Never Taught You in Law School,
30-JUN Tenn. B.
J. 20, 21 (1994).
The result of this appeal is dictated by the analysis included in the lead
opinion; it is lamentable that under the prevailing law we cannot grant relief to Midland.
Default judgments are not favored because the justice system is designed to provide a
level playing field for the resolution of disputes on their merits. The failure of counsel
to be forthright, to deal with opposing counsel with respect and to extend common
courtesy is regrettable and illustrates the legal profession's neglect of the cardinal
virtues of wisdom, temperance, courage and justice.
1. We have previously granted Miro's petition for
leave to appeal the trial court's nonfinal
order reopening the default judgment.
2. Actually, Midland's motion did not identify the
specific statutory basis for its motion, nor
does the transcript of the motion hearing. However, the trial court's decision states that
Midland
relied on § 806.07(1)(h), Stats., the extraordinary circumstances provisions of
the statute.
Midland does not dispute this statement by the trial court, and we accept it.
3. If Miro's rejoinder is that tolling should also apply
to a "fraud, misrepresentation or other
misconduct" situation, then the one-year limitation becomes meaningless since, as we have
observed, estoppel would lie in nearly all such situations.
4. On February 21, 1994, Midland ultimately learned
that its attorney was unaware of the
lawsuit; counsel filed an answer on February 22, five days after the default judgment was
granted.
5. There have been efforts to provide rules requiring
attorneys to practice courtesy. In State
v. Rossmanith, 146 Wis.2d 89, 90 n.7, 430 N.W.2d 93, 94 (1988), the
supreme court noted:
The ABA newly proposed Lawyer's Code of Professionalism
section C states: "I will be a vigorous and zealous advocate while
paying heed to concepts of common courtesy and recognizing that
excessive zeal can be detrimental to my client's interest and to the
proper functioning of our system of justice."
And before the adoption of the current SCR 20, there was a requirement in SCR
20.34(3)(t)
(1986), that "[a] lawyer should be courteous to opposing counsel ."
Oostburg State Bank v.
United Sav. & Loan Ass'n, 130 Wis.2d 4, 12, 386 N.W.2d 53, 57
(1986).
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