Vol. 71, No. 12,
December 1998
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.
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