Feb. 8, 2023 – Venue was proper in Dane County for a defendant insurance company that had 559 policies in the county and received $859,145 in revenue from those policies, the Wisconsin Court of Appeals has ruled.
Stelling v. Middlesex Insurance Company, 2022AP536 (Jan. 12, 2023), the Court of Appeals District IV held that venue was proper against two other defendants because they failed to properly challenge venue in the circuit court.
Collision in Sauk County
In October 2019, a car driven by Oliver Scanlan collided with a car in which George Stelling, a minor, was riding. The collision occurred in Sauk County.
Friede and Associates, LLC (Friede) owned the vehicle Stelling was riding in. Zachary Dorow, an employee of Friede, was driving.
Stelling, by his guardian ad litem, filed a negligence lawsuit in Dane County Circuit Court. The lawsuit named the following defendants:
Oliver Scanlan and his father Edward Scanlan (Oliver Scanlan was minor when the collision occurred);
Middlesex Insurance Company (Middlesex), Friede’s insured; and
Mt. Morris Mutual Insurance Company (Mt. Morris), Edward Scanlan’s insurer.
Jeff M. Brown , Willamette Univ. School of Law 1997, is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by
email or by phone at (608) 250-6126.
At the time, Oliver Scanlan, Stelling, and Dorow were all residents of Sauk County, and Friede had its principal office in Sauk County.
Middlesex had its principal office in Portage County. Mt. Morris had its principal place of business in Waushara County.
Change of Venue Denied
Mt. Morris filed a motion to change venue to Sauk County; Middlesex joined the motion by letter.
Mt. Morris argued that it was entitled to a change of venue under
Wis. Stat. section 801.50(2)(c) because it did not do substantial business in Dane County.
Mt. Morris and Stelling filed briefs on the motion with the circuit court. After a hearing, the circuit court issued an order denying the insurers’ motion.
Mt. Morris appealed. Three months after the court of appeals granted Mt. Morris’ petition for a leave to petition the circuit court’s order, Middlesex filed a “Statement Joining Mr. Morris’ Appeal.”
Writing for a three-judge panel, Judge Joanne Kloppenburg began her opinion by concluding that Middlesex and Friede failed to comply with Wisconsin law to appeal the circuit court’s order.
“A party must petition for leave to appeal a non-final order within 14 days after entry of order,” Kloppenburg wrote. “Middlesex … and Friede have not petitioned for leave to appeal the venue order, and those corporations have not moved to intervene in this appeal pursuant to Wis. Stat. section 809.13.”
Later in the opinion, Judge Kloppenburg pointed out that while Middlesex raised improper venue as an affirmative defense in its answer, it failed to comply with section 801.51 by filing a motion at the initial pleadings stage and failed to show (when it joined Mt. Morris’ motion a month later) that it had not discovered the venue issue at or before the time it filed its initial pleading, despite reasonable diligence.
Consequently, Judge Kloppenburg reasoned, the circuit court’s denial stood regarding Middlesex and Friede, and venue in Dane County was proper for each.
Kloppenburg explained that, as a result, Mt. Morris’ appeal must fail because under Wisconsin case law, if venue is found appropriate for any one of multiple defendants, the other defendants aren’t entitled to an appeal.
That holding was dispositive, but Judge Kloppenburg explained that the court of appeals would discuss the parties’ arguments regarding the “substantial business” standard under section 801.50(2)(c).
Quantum of ‘Substantial Business’
On appeal, Mt. Morris argued that in enacting section 801.502(2)(c), the legislature intended that, for non-natural person defendants, venue would be appropriate in, at most, two counties: the one where the defendant’s principal office was located and the one where it conducts a substantial portion of its business.
Kloppenburg looked to statutory context, case law, and dictionary definitions to ascertain the meaning of “substantial business,” a term that’s undefined in the statute.
“We interpret the phrase ‘does substantial business’ in section 801.50(2)(c) to mean that the extent of the defendant’s various commercial activities and business relationships, of any type, conducted or occurring at least in part in the county at issue, considered in isolation or relative to the defendant’s total commercial activity and business relationships, is considerable,” Kloppenburg wrote.
Parsing Words: ‘The’ vs. ‘A’
Mt. Morris argued that if the legislature had intended that venue based on a non-natural person’s substantial business be proper in more than one county, it would have used the phrase “any county” instead of “the county” in section 801.50(2)(c).
Similarly, Mt. Morris argued that the use of “the” instead of “a” before the word “county” in section 801.50(2)(c) meant that subpart (c) applies to a single county.
Judge Kloppenburg acknowledged that the definite article “the” generally means that the following noun is unique.
However, Kloppenburg wrote, adopting Mt. Morris’ argument “would require adding words to the statute to clarify that ‘substantial’ means ‘the most substantial,’ which we cannot do.”
Small Number of Places?
Mt. Morris also argued that subparts (a) and (c) of section 801.50(2) showed that the legislature had chosen to limit the proper venues for any single non-natural person defendant to a small number of places.
But that argument proceeded from a false premise, Kloppenburg concluded.
“A defendant may do business that is substantial in a large number of counties,” Kloppenburg wrote. “A complaint may contain one or more claims that arose in more than one county and parts of property that are the subject of the claim or claims may be situated in more than one county; no language in these subparts precludes a plaintiff from designating venue in any of those counties.”
Judge Kloppenburg pointed out that Mt. Morris held 559 current insurance policies in Dane County and earned $859,145 in annual revenues from the policies.
That evidence, Kloppenburg concluded, was enough to establish that Mt. Morris does substantial business in Dane County for purposes of section 801.50(2)(c).