Bench
Bar Committee Mandatory Counterclaim Proposal
Should Wisconsin Change its Counterclaim Statute?
Pro: The Bench Bar Committee proposal removes guesswork as to what
claims are mandatory counterclaims and provides finality and equity by
ensuring certain claims are litigated when they should be.
By Donald Leo Bach
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Suppose you have a client who has just been sued in circuit court.
The client advises you that she has a claim against the suing party. As
a good lawyer you do what you were taught in law school, go to the
statute book, find the one on counterclaims - section
802.07 - and read it. The statute tells you that a defendant
"may counterclaim any claim which the defendant has against a
plaintiff." You conclude that in Wisconsin counterclaims are permissive,
and you advise the client that she does not have to bring a counterclaim
in this lawsuit if she does not wish to do so.
But wait. Have you read A.B.C.G. Enterprises Inc. v. First Bank
Southeast N.A., 184 Wis. 2d 465, 515 N.W.2d 904 (1994)? In that
case, the Wisconsin Supreme Court held that the principles of res
judicata (claim preclusion) preclude a defendant who could but did not
counterclaim in a prior action from bringing a later action on the claim
if it "would nullify the initial judgment" or "impair rights established
in the initial action."
Thus, the current counterclaim statute sets a trap for the unwary;
while that statute indicates that a party may counterclaim, the
result in A.B.C.G. indicates that there are, in fact, certain
instances where a party must counterclaim.
As a result of this situation, last year the State Bar Bench Bar
Committee surveyed 1,559 State Bar members - including 1,154
lawyers and 405 judges - on counterclaims (and other issues). The
survey asked, in view of case law, whether Wisconsin should
mandate counterclaims in chapter 802 of the Wisconsin Statutes. Of those
expressing an opinion (57 percent of respondents expressed no opinion or
gave no response), 68 percent agreed to some degree that Wisconsin
should mandate counterclaims by statute. Judges were more likely than
lawyers to agree with this opinion.
In view of this survey response and because of the potential
malpractice trap present, the Bench Bar Committee and its legislative
subcommittee believe that action should be taken. The legislative
subcommittee considered several possible alternatives to address the
situation: 1) attempt to codify the A.B.C.G. case; 2) overturn
A.B.C.G. by statute; and 3) conform the Wisconsin counterclaim
statute to the Federal
Rules of Civil Procedure counterpart.
Federal
Rules of Civil Procedure Rule 13(a) provides that a pleading shall
state as a counterclaim any claim which at the time of serving the
pleading the pleader has against any opposing party, if it arises out of
the transaction or occurrence that is the subject matter of the opposing
claim and does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction. Federal
Rules of Civil Procedure Rule 13(b) indicates that any claim against
an opposing party not arising out of the transaction or occurrence that
is the subject matter of the opposing claim is a permissive
counterclaim.
The legislative subcommittee believes, and the Bench Bar Committee
agrees, that the most desirable option is to conform Wisconsin practice
to the federal requirements.
The Bench Bar Committee believes Wisconsin practice should conform to
the federal requirements because the current situation is unacceptable
especially for newer lawyers who may not have come across
A.B.C.G. Further, use of the federal rule involves less
"guesswork" as to what claims are or are not mandatory counterclaims and
provides finality and equity by ensuring certain claims be litigated
when they should be.
Though the statutes indicate the opposite, certain counterclaims
already are mandated by way of case law. Further, the State Bar
Litigation Section has overstated, in its opposition, the "specter" of
having to decide whether to bring a counterclaim within 45 days. First,
45 days is not an unreasonable period to perform an investigation.
Second, courts routinely set much later dates for amendments of
pleadings in Scheduling Orders including the assertion of counterclaims.
Third, section
802.09 of the Wisconsin Statutes allows a party to amend pleadings
within six months without leave of the court.
The Bench Bar Committee's proposed rule solves the potential
malpractice problem, eliminates much if not all of the guesswork under
A.B.C.G. as to what counterclaims must be brought, and serves
judicial efficiency by ensuring that the parties litigate the claims
they have against each other arising out of the same transaction or
occurrence.
Donald Leo Bach, U.W. 1974 cum laude,
chairs the State Bar Bench Bar Committee - a committee of lawyers and
judges tasked with evaluating and making recommendations for changes in
Wisconsin's justice system. Bach is a shareholder in DeWitt Ross &
Stevens S.C., Madison.
Wisconsin Lawyer