2011 WI 10
SUPREME COURT
CASE NO.: COMPLETE TITLE:
OF
WISCONSIN
2008AP2045 and 2009AP2322 Evelyn Werner, Plaintiff-Appellant-Petitioner, v. Kenneth Hendree and Michael Honeck, Defendants-Respondents. ___________________________________________ Evelyn Werner, Plaintiff-Appellant, v. Kenneth Hendree and Michael Honeck, Defendants-Respondents.
REVIEW OF A DECISION OF THE COURT OF APPEALS
OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: ATTORNEYS:
February 16, 2011 October 7, 2010
Circuit Court Waukesha County Kathryn W. Foster
BRADLEY, J. and ABRAHAMSON, C.J. dissent in part (Opinion filed.)
For the plaintiff-appellant-petitioner, there were briefs by Andrew J. Shaw and Shaw Law Offices, and Joseph F. Owens, and Arthur & Owens, S.C., and oral argument by Joseph Owens.
For
the
Defendants-Respondents,
the
cause
was
argued
by
John J. Glinski, assistant attorney general, with whom on the brief was J.B. Van Hollen, attorney general.
2
2011 WI 10
NOTICE
This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports.
Nos.
2008AP2045 & 2009AP2322
2007CV1212)
(L.C. No.
STATE OF WISCONSIN Evelyn Werner,
:
IN SUPREME COURT
FILED
Plaintiff-Appellant-Petitioner, v. Kenneth Hendree and Michael Honeck, Defendants-Respondents.
FEB 16, 2011
A. John Voelker Acting Clerk of Supreme Court
Evelyn Werner, Plaintiff-Appellant, v. Kenneth Hendree and Michael Honeck, Defendants-Respondents.
REVIEW of a decision of the Court of Appeals, and APPEAL from an order of the Circuit Court for Waukesha
County, Kathryn W. Foster, Judge.
Reversed and cause remanded
back to the circuit court with instructions.
¶1 two
ANNETTE
KINGSLAND A
ZIEGLER, brief
J.
This of
case the
comprises facts and
separate
appeals.
summary
Nos.
2008AP2045 & 2009AP2322
procedural history is necessary to explain the posture of our review. ¶2 Eighty-four-year-old Evelyn Werner (Werner) was
physically attacked in her home and had her safe stolen by three assailants, one of whom was Kenneth Hendree (Hendree). had previously as an visited Werner's home by several the times of Hendree while the
employed
insurance
examiner
Office
Commissioner of Insurance (OCI).
Werner filed suit against both
Hendree and Michael Honeck (Honeck), Hendree's supervisor. ¶3 The Waukesha County Circuit Court, Judge Kathryn W.
Foster presiding, dismissed Werner's complaint against Honeck on the grounds of governmental immunity. the circuit court ruled that At a subsequent hearing, was ineligible for
Hendree
indemnification from the State under Wis. Stat. § 895.46 (200708).1 For purposes of combining the matters for later appeal,
Werner's counsel requested that the circuit court not sign and file the above two orders until a trial was held and judgment was entered as to Hendree's liability and damages. General, counsel for Honeck, did not voice an The Attorney objection.
Accordingly, on the record, multiple times, the circuit court assured counsel that it would the not sign ruling the and file the order was
dismissing ineligible
Honeck for
and
order
that case
Hendree was
indemnification
until
entirely
resolved as to Hendree.
However, contrary to those assurances
All subsequent references to the Wisconsin Statutes are to the 2007-08 version unless otherwise indicated. 2
1
Nos.
2008AP2045 & 2009AP2322
and unbeknownst to the parties, the circuit court prematurely signed the two orders on December 3, 2007, several months before the trial was conducted and judgment was entered against
Hendree.
Once the orders were signed, the clerk of the circuit See Wis. Stat.
court was then obligated to file the orders. § 806.06(2). ¶4
In fact, it was on June 24, 2008, that the circuit
court held a bench trial and determined Hendree's liability and Werner's damages. On July 11, 2008, the circuit court signed Werner filed her notice of appeal
the judgment against Hendree. on August 18, 2008.
Werner appealed from the following: (1) the
order dismissing Honeck on the grounds of governmental immunity, (2) the order ruling that Hendree was ineligible for
indemnification, and (3) the July 11, 2008, judgment against Hendree. ¶5 judgment court orders did for Werner timely appealed from the July 11, 2008, final entered not after trial. to and its However, assurances until because to after hold the the circuit earlier Werner's
adhere
signature
filing
trial,
notice of appeal was filed more than 90 days after the date on which the order dismissing Hendree was ineligible Honeck for and the order ruling were that
indemnification
filed.
Accordingly, as to those orders, the court of appeals dismissed Werner's appeal for lack of jurisdiction. See Wis. Stat.
§ 808.04(1). ¶6 Werner petitioned this court for review of the court
of appeals' published per curiam decision, Werner v. Hendree, 3
Nos.
2008AP2045 & 2009AP2322
2009
WI
App
103,
320
Wis. 2d 592,
770
N.W.2d 782,
which
dismissed as untimely her appeal of (1) the order dismissing Honeck and (2) the order ruling that Hendree was ineligible for indemnification. We granted Werner's petition for review, and
the parties presented oral arguments. ¶7 Subsequent to the court of appeals decision, Werner
moved the circuit court to vacate and reenter those two orders pursuant to Wis. Stat. § 806.07(1)(a). Werner's motion. Werner then The circuit court denied the circuit court's
appealed
denial of her motion to vacate and reenter the orders to the court of appeals at the time that Werner's first appeal was pending before this court. Consequently, the court of appeals
stayed Werner's second appeal pending our decision in the first appeal. ¶8 Pursuant to Wis. Stat. § (Rule) 809.612 and Article
VII, Section 3, subsection 3 of the Wisconsin Constitution,3 upon the court's own motion, we removed Werner's second appeal from the court of appeals in the interests of judicial economy.
Thus, we are also reviewing the circuit court's order denying Werner's motion to vacate and reenter the order dismissing
Wisconsin Stat. § (Rule) 809.61 provides that the supreme court may take jurisdiction of an appeal in the court of appeals "upon the supreme court's own motion." Article VII, Section 3, subsection 3 of the Wisconsin Constitution states: "The supreme court may review judgments and orders of the court of appeals, may remove cases from the court of appeals and may accept cases on certification by the court of appeals." 4
3
2
Nos.
2008AP2045 & 2009AP2322
Honeck and
the order ruling
that
Hendree
was
ineligible
for
indemnification. ¶9 ¶10 Our holding today resolves both appeals. Concerning the order ruling that Hendree was
ineligible for indemnification, we conclude that Werner's appeal survives on two alternative grounds: Werner timely appealed from the order in the first instance because the order was not final, and alternatively, the circuit court erroneously exercised its discretion when it denied Werner's motion to vacate and reenter the order. Concerning the order dismissing Honeck, we conclude
that Werner's appeal survives on the second basis; that is, the circuit court erroneously exercised its discretion when it Our
denied Werner's motion to vacate and reenter the order. analysis is broken down into two parts. ¶11
First, we hold that the court of appeals improperly
dismissed as untimely Werner's appeal of the order ruling that Hendree was ineligible for indemnification, irrespective of the date on which the order was filed. This is so because the order The order did not
was not final under Wis. Stat. § 808.03(1).
dispose of the entire matter in litigation as to either Werner or Hendree,4 and accordingly, was not appealable until July 11, 2008, when the circuit court entered judgment on Hendree's
liability and Werner's damages.
By that point in litigation, Honeck had been dismissed on the grounds of governmental immunity. Furthermore, the State was not a named party and chose not to become a party through intervention or otherwise. 5
4
Nos.
2008AP2045 & 2009AP2322
¶12 exercised
Second, its
we
hold
that when
the it
circuit denied
court
erroneously motion to
discretion
Werner's
vacate and reenter (1) the order dismissing Honeck and (2) the other order ruling that Hendree was ineligible for
indemnification.
The circuit court erroneously concluded that
it was without the power to vacate and reenter the orders given Werner's failure to bring the motion within one year after the orders were filed. ¶13 decision Accordingly, dismissing we reverse both the court and of the appeals circuit
Werner's
first
appeal
court's order denying Werner's motion to vacate and reenter the orders. We remand to the circuit court with instructions to
vacate and reenter the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification. I. FACTUAL BACKGROUND ¶14 We derive the facts of this case from Werner's As they
complaint and her testimony before the circuit court.5
have been relayed by Werner, the facts of this case are quite unsettling.
Hendree never answered Werner's complaint and has yet to appear in this action. Accordingly, we accept as true Werner's allegations against Hendree. See Wis. Stat. § 802.02(4); Estate of Otto v. Physicians Ins. Co. of Wis., 2008 WI 78, ¶42, 311 Wis. 2d 84 ("The ordinary rule is that the allegations in a complaint 'are admitted when not denied' in the answer of a defendant against whom the allegations are made. Furthermore, when a defendant is determined to be in default, the factual allegations against the defendant, except those relating to the amount of damages, ordinarily are deemed true." (Internal footnotes omitted.)). 6
5
Nos.
2008AP2045 & 2009AP2322
¶15
In
August
2005, a
Werner, complaint
then with
84-years-old OCI regarding
and her
wheelchair-ridden,6 annuities. October
filed
Beginning in September 2005 and continuing through Hendree, then employed by OCI as an insurance
2006,
examiner, visited Werner in her home.
Hendree informed Werner
that he had been assigned by OCI to gather information about her claim. ¶16 Hendree's visits to Werner's home were numerous,
unannounced, and often took place in the evenings and on the weekends. Hendree stayed for hours each visit and asked Werner Trusting of his position
detailed questions about her finances.
with OCI, Werner always let Hendree into her home and answered his questions. ¶17 Throughout this time period, Werner made several
telephone calls to OCI to complain about Hendree's frequent and strange visits. According to Werner, she spoke with Honeck, Werner averred that
Hendree's supervisor, but nothing was done.
no one at OCI ever told her that Hendree was not authorized to visit her after-hours or so frequently. ¶18 Hendree's final visit to Werner's home took place on The
Sunday, October 29, 2006, and lasted for about three hours.
next day, Werner again telephoned OCI and complained to Honeck.
Werner passed away in June 2010 subsequent to this court's decision to grant her petition for review. 7
6
Nos.
2008AP2045 & 2009AP2322
¶19
On
November
1,
2006,
Hendree
resigned
from
his
position at OCI. resignation. ¶20 woman
At the time, Werner was unaware of Hendree's
On the evening of December 13, 2006, two men and one a and gun broke her into safe. Werner's The home, physically hit
carrying her,
attacked
stole
female
attacker
Werner on the head with the gun, and one of the other attackers held a pillow over Werner's face. Werner one of never their saw the
attackers'
faces, but she
recognized
voices as
belonging to Hendree. ¶21 Werner's Around the nightshift same time, Victoria arrived Colletti (Colletti), home and
caregiver,
at
Werner's
noticed two people getting into a car parked inside Werner's garage. Colletti called out to them, but they did not respond.
A third person then came running out of the house, pointing a gun at Colletti. Colletti got back into her car, backed out of The other
the driveway, and called 911 on her cellular phone.
car followed Colletti's until she arrived at a gas station to meet up with a police officer. ¶22 Werner was transported by ambulance to a hospital,
where she was treated for head injuries. ¶23 To our knowledge, no one has been criminally charged However, during the time-
in connection with Werner's attack.
span of Hendree's visits to Werner's home and unbeknownst to Werner, Hendree had pending criminal charges for stalking and
8
Nos.
2008AP2045 & 2009AP2322
second-degree sexual assault.7 on July 21, 2005. ¶24
Those criminal charges were filed
On December 28, 2006, the Director of the Bureau of The letter
Market Regulation for OCI sent a letter to Werner. provided, in relevant part:
As I told you in our telephone conversation on December 27, 2006, Mr. Hendree resigned his position effective November 1, 2006 and is no longer a state employee. I have asked Mike Honeck to contact you regarding your questions about your complaint file. Mr. Honeck was Ken Hendree's supervisor and is very familiar with your complaint file. II. PROCEDURAL POSTURE ¶25 On February 2, 2007, Werner served a notice of claim The
on the Attorney General pursuant to Wis. Stat. § 893.82.8
notice of claim specifically named OCI as the agency involved According to court records, that criminal case has since been resolved. It is entirely unrelated to the case now before this court.
8 7
Wisconsin Stat. § 893.82(3) provides, in relevant part:
[N]o civil action or civil proceeding may be brought against any state officer, employee or agent for or on account of any act growing out of or committed in the course of the discharge of the officer's, employee's or agent's duties, . . . unless within 120 days of the event causing the injury, damage or death giving rise to the civil action or civil proceeding, the claimant in the action or proceeding serves upon the attorney general written notice of a claim stating the time, date, location and the circumstances of the event giving rise to the claim for the injury, damage or death and the names of persons involved, including the name of the state officer, employee or agent involved. . . . 9
Nos.
2008AP2045 & 2009AP2322
and Hendree as the agent involved.
In her notice of claim,
Werner alleged that Hendree's October 29, 2006, visit to her home gave rise to a cause or of action for In negligent particular, hiring, Werner
retention,
training,
supervision.
claimed that OCI should have suspended Hendree during the time of his pending criminal charges, and had it done so, Hendree never would have come into contact with Werner or targeted her home for robbery. ¶26 On April 30, 2007, Werner filed a complaint against The State was not named as a defendant, and Werner alleged
Hendree and Honeck.
the State chose not to intervene in the lawsuit.
several causes of action against Hendree, including trespass, aiding and abetting assault and battery, theft, and intentional infliction of emotional distress. As to Honeck, Werner alleged
negligent supervision of an employee. ¶27 this Hendree never filed an answer and never appeared in Nonetheless, held a bench as will on be discussed later, the and
action. court
circuit
trial
Hendree's
liability
ultimately entered judgment against him. ¶28 The Attorney General appeared on behalf of Honeck and Honeck asserted several affirmative defenses, the complaint failed to state a
filed an answer.
including, inter alia, that
claim upon which relief can be granted, Werner failed to comply with Wis. Stat. § 893.82, and Honeck is entitled to
discretionary immunity. ¶29 complaint On June 21, 2007, Honeck filed a motion to dismiss the against him. Honeck 10 argued that Werner failed to
Nos.
2008AP2045 & 2009AP2322
strictly comply with Wis. Stat. § 893.82, namely because the notice of claim did not name Honeck as the agent involved and did not allege any act by Honeck that caused injury to Werner. In addition, Honeck argued that Werner failed to plead, and
further, cannot establish, any exception to the general rule of public officer immunity. ¶30 In her brief in opposition to Honeck's motion to
dismiss, Werner argued that her notice of claim was more than sufficient to give the State meaningful notice and information to investigate her claim. Honeck was not immune In addition, Werner contended that her negligent supervision claim
from
because Honeck knew that Werner was in a dangerous situation and had no discretion not to act to protect her.9 ¶31 On September 10, 2007, the circuit court held a
hearing on Honeck's motion to dismiss.
At the outset of its
decision, the circuit court acknowledged Hendree's failure to appear and consequently expressed "no difficulty on [its] part in accepting the averment or the contents of the complaint, both the original and the amended[,] that [Werner] was the victim of
On August 1, 2007, Werner filed an amended complaint and specifically pled the "known danger" exception to governmental immunity. See Kierstyn v. Racine Unified Sch. Dist., 228 Wis. 2d 81, 96, 596 N.W.2d 417 (1999) ("[T]he known danger exception is effective only in those cases where the 'nature of the danger is compelling and known to the officer and is of such force that the public officer has no discretion not to act.'" (quoting C.L. v. Olson, 143 Wis. 2d 701, 715, 422 N.W.2d 614 (1988))). On August 29, 2007, Honeck moved the court to dismiss the amended complaint against him, relying on the same arguments made in his original motion to dismiss. 11
9
Nos.
2008AP2045 & 2009AP2322
[an] egregious crime." least
The court found that Hendree was "at within the scope of his
initially . . . obviously
employment" when he began visiting Werner's home.10 ¶32 On that same date, the circuit court granted Honeck's
motion to dismiss but stated on the record that it would not sign the order until the case was resolved as to Hendree. The
circuit court granted Honeck's motion to dismiss on the grounds that Honeck was protected from liability by governmental
immunity.
The court reasoned that even assuming Honeck had been
aware of Hendree's pending criminal charges, the circumstances did not impose on Honeck a nondiscretionary duty to act; rather, Honeck had the discretion to choose between alternative courses of action. Moreover, the circuit court concluded that Werner's
notice of claim did not strictly, or even substantially, comply with Wis. Stat. § 893.82 in regards to Honeck. The court found
that the notice of claim referred to Honeck only in passing and did not afford the State an adequate opportunity to investigate Honeck's potential responsibility for Werner's injury. ¶33 At the close of the hearing, Werner's counsel
requested that for purposes of appeal, the circuit court not Later in the hearing, the Attorney General interjected to purportedly contest the issue of whether Hendree was acting within the scope of his employment: Your Honor, may I interject something with respect to Mr. Hendree? We have in our Answer denied that he was within the scope of his employment [with] what he was doing and under the statute, 893 or 895.46 [the] Attorney General does have a right to participate to contest that issue. 12
10
Nos.
2008AP2045 & 2009AP2322
sign its order dismissing Honeck until Hendree's liability is resolved. After hearing no objection from the Attorney General,
the circuit court stated on the record: "The court will refrain from filing any orders of today's proceeding until we resolve the issue with the matter which pertains to Mr. Hendree." ¶34 On October 10, 2007, because Hendree failed to answer,
Werner moved the court to grant her a default judgment against Hendree and requested that a jury determine the amount of her damages.11 ¶35 On October 12, 2007, the Attorney General moved the
court for a ruling that Hendree had refused to cooperate in the defense of this litigation, and consequently, pursuant to Wis. Stat. § 895.46(1),12 Hendree was ineligible for indemnification
11
Werner subsequently waived her right to a jury trial and agreed to a bench trial on the issue of damages.
12
Wisconsin Stat. § 895.46(1)(a) provides:
If the defendant in any action or special proceeding is a public officer or employee and is proceeded against in an official capacity or is proceeded against as an individual because of acts committed while carrying out duties as an officer or employee and the jury or the court finds that the defendant was acting within the scope of employment, the judgment as to damages and costs entered against the officer or employee in excess of any insurance applicable to the officer or employee shall be paid by the state or political subdivision of which the defendant is an officer or employee. Agents of any department of the state shall be covered by this section while acting within the scope of their agency. Regardless of the results of the litigation the governmental unit, if it does not provide legal counsel to the defendant officer or employee, shall pay reasonable attorney fees and costs of defending 13
Nos.
2008AP2045 & 2009AP2322
from the State. acting within
The Attorney General denied that Hendree was the scope of his employment. Nevertheless,
assuming that he was, the Attorney General asserted that Hendree would still be ineligible for indemnification based on his
failure to cooperate in the defense. ¶36 Wis. Werner opposed the Attorney General's motion. § 895.46(1)(a), Werner argued that the Citing Attorney
Stat.
General waived the issue of whether Hendree was acting within the scope of his employment because the Attorney General failed
the action, unless it is found by the court or jury that the defendant officer or employee did not act within the scope of employment. The duty of a governmental unit to provide or pay for the provision of legal representation does not apply to the extent that applicable insurance provides that representation. If the employing state agency or the attorney general denies that the state officer, employee or agent was doing any act growing out of or committed in the course of the discharge of his or her duties, the attorney general may appear on behalf of the state to contest that issue without waiving the state's sovereign immunity to suit. Failure by the officer or employee to give notice to his or her department head of an action or special proceeding commenced against the defendant officer or employee as soon as reasonably possible is a bar to recovery by the officer or employee from the state or political subdivision of reasonable attorney fees and costs of defending the action. The attorney fees and expenses shall not be recoverable if the state or political subdivision offers the officer or employee legal counsel and the offer is refused by the defendant officer or employee. If the officer, employee or agent of the state refuses to cooperate in the defense of the litigation, the officer, employee or agent is not eligible for any indemnification or for the provision of legal counsel by the governmental unit under this section. 14
Nos.
2008AP2045 & 2009AP2322
to
appear
on
behalf
of
the
State
to
contest was
the
issue. for that
Moreover,
assuming
arguendo the
that
Hendree
ineligible contended for
indemnification § 895.46(1)(a) coverage. ¶37
from still
State, Hendree
Werner
rendered
eligible
insurance
On November 28, 2007, the circuit court held a hearing
on the Attorney General's motion and determined that Hendree was ineligible for indemnification under Wis. Stat. § 895.46. The
circuit court found that Hendree clearly failed to cooperate in the defense of this litigation. Moreover, according to the
circuit court, there was nothing in the record to support a finding that Hendree committed a trespass of Werner's home
during the course of his employment with OCI.13 ¶38 At the end of the hearing, Werner's counsel again
requested that the circuit court hold the order pending judgment on Hendree's liability. The circuit court again assured the
At the close of the hearing, attempted to clarify the court's finding:
13
the
Attorney
General
Assistant Attorney General Glinski [counsel for Honeck]: . . . Is [the] court also making a finding then that Mr. Hendree——nothing has been alleged that would have been within the scope of employment. The Court: Correct. Assistant Attorney General Glinski: Prior to Mr. Hendree——prior to his leaving the employment of his insurance Commissioner. The Court: Correct . . . . 15
Nos.
2008AP2045 & 2009AP2322
parties that it would not sign the order until the case was resolved as to Hendree: I can do that, so if you can submit an order in effect at your leisure [Assistant Attorney General] Glinski, I will hold it beyond five days then pending resolution of the order for judgment on liability. I can certainly accommodate what we did with the last hearing. So I will hold that. ¶39 To confirm that the circuit court was to hold the two
orders, Werner's counsel sent a letter to the court's clerk. The letter was dated December 3, 2007, but not filed until
December 5, 2007.
The letter provided, in relevant part:
Pursuant to today's conversation, I want to make sure that the trial date is set for April 22, 2008. Also, the two orders are not to be entered until the case is done. This agreement was approved by the court on the record. If you have any questions, please contact the opposing counsel John Glinski. He will confirm this agreement. I wanted to protect the record for the appeal, especially on any time issues. ¶40 The circuit court subsequently initialed a notation on
the letter, stating that "[t]his is all correct." ¶41 Nevertheless, for reasons unknown and in error, on
December 3, 2007, the circuit court prematurely signed the order dismissing ruling that Werner's Hendree complaint was against for Honeck and the order under
ineligible
indemnification
Wis. Stat. § 895.46.
Once the orders were signed, the clerk of See
the circuit court was then obligated to file the orders.
Wis. Stat. § 806.06(2) ("The judge or the clerk upon the written order of the judge may sign the judgment. entered by the clerk upon rendition."). The judgment shall be Each order was stamped
by the clerk of the circuit court as "filed" on December 3, 16
Nos.
2008AP2045 & 2009AP2322
2007, and again on April 2, 2008. court's docket April 2, 2008. reflects that both
Without explanation, the orders were filed only on
As of that date, the circuit court had not yet
held a trial on Hendree's liability and had not yet entered judgment on Hendree. Honeck and Nevertheless, both the order dismissing that Hendree was ineligible "This for a
the order ruling contain the
indemnification
following
provision:
is
final order for the purpose of filing an appeal." ¶42 On June 24, 2008, the circuit court held a bench trial After hearing the physician, verdict the
on Hendree's liability and Werner's damages. testimony circuit of Werner, awarded Colletti, Werner a and
Werner's
court
$3,175,420.77
against
Hendree, $3 million of which was punitive. ¶43 On July 11, 2008, the circuit court entered judgment
against Hendree pursuant to the trial verdict.14 ¶44 Werner filed her notice of appeal on August 18, 2008.
Her notice provided that she was appealing the circuit court's judgment against Hendree, the order dismissing Honeck, and the order ruling that Hendree was ineligible for indemnification
under Wis. Stat. § 895.46. ¶45 According to Werner's counsel, in February 2009, upon
reading Honeck's response brief to the court of appeals, Werner learned for the first time that the order dismissing Honeck and
Because Hendree failed to answer, the judgment against him was technically a default judgment. 17
14
Nos.
2008AP2045 & 2009AP2322
the order ruling that Hendree was ineligible for indemnification were mistakenly filed on April 2, 2008. ¶46 On June 17, 2009, in a per curiam decision, the court Werner, 320 Wis. 2d 592. it lacked appellate
of appeals dismissed Werner's appeal. The court of appeals concluded
that
jurisdiction because Werner filed her notice of appeal more than 90 days after April 2, 2008, the date on which the two final orders were filed. Id., ¶1.15 The court of appeals acknowledged
the circuit court's agreement to hold entry of the final orders but ruled that "[the court of appeals'] jurisdiction is based on what actually occurred and not what was intended by the
parties."
Id., ¶7.
The court of appeals declined to "pretend
that the orders were not entered more than ninety days before the filing of the notice of appeal." ¶47 Id.
In addition, the court of appeals rejected Werner's
argument that the order ruling that Hendree was ineligible for indemnification was otherwise not final. See id., ¶9.
According to the court of appeals, the Attorney General's motion for a ruling on Hendree's refusal to cooperate in the defense "had the effect of commencing Id. a special proceeding for
declaratory judgment."
Citing Wis. Stat. § 808.03(1), the
See Wis. Stat. § 808.04(1) ("An appeal to the court of appeals must be initiated within 45 days of entry of a final judgment or order appealed from if written notice of the entry of a final judgment or order is given within 21 days of the final judgment or order as provided in s. 806.06(5), or within 90 days of entry if notice is not given, except as provided in this section or otherwise expressly provided by law. . . . "). 18
15
Nos.
2008AP2045 & 2009AP2322
court of appeals concluded that the order ruling that Hendree was ineligible for indemnification was final because it "had the effect of terminating the special proceeding and the attorney general's appearance in the action." ¶48 Id.
Finally, the court of appeals noted and then dismissed
Werner's suggestion that she would return to the circuit court and move for the final orders to be vacated and reentered. ¶10. v. Id.,
The court of appeals noted this court's decision in Edland Wisconsin Physicians Service (1997), can be Insurance but Corp., 210
Wis. 2d 638, 563 N.W.2d 519 the jurisdictional infirmity
"question[ed] in that
whether
cured
fashion."
Werner, 320 Wis. 2d 592, ¶10.
The court of appeals concluded
that the circuit court "is not authorized to vacate a final judgment or order for the sole purpose of extending the time for appeal." ¶49 Id. (citing Edland, 210 Wis. 2d at 647). Werner petitioned this court for review of the court The
of appeals decision, which we granted on March 16, 2010. parties presented oral arguments on October 7, 2010. ¶50 issued
However, on July 8, 2009, after the court of appeals decision, Werner filed a motion requesting the
its
circuit court to vacate and reenter the order dismissing Honeck and the order ruling pursuant cited that to Hendree Wis. the Stat. circuit was ineligible for and
indemnification, Edland.
§ 806.07(1)(a) court's
Werner
multiple
representations that the orders would not be filed until after the case was resolved as to Hendree. Werner argued that her
19
Nos.
2008AP2045 & 2009AP2322
reliance
on
the
circuit
court's
representations
should
not
result in Werner being deprived of her right to appeal. ¶51 Honeck opposed Werner's motion to vacate and reenter arguing that the motion was untimely under Wis.
the orders,
Stat. § 806.07(2). ¶52 On August 14, 2009, the circuit court denied Werner's At the hearing on
motion to vacate and reenter the two orders.
the motion, the circuit court "acknowledge[d] right off the bat that, yes, a mistake was made" by the court and that the orders should not have been filed until judgment was entered against Hendree. According to the circuit court, its calendar clerk
mistakenly entered the orders on April 2, 2008, when handling the file with respect to another matter: "[The clerk] saw an undocketed order, didn't see the letter saying it was supposed to be held until the end, and went ahead and docketed it. . . with no notice to anyone and without specific direction of the court." The circuit for court did not hesitate to accept full the
responsibility
the
clerk's
mistake.
Furthermore,
circuit court acknowledged that Wis. Stat. § 806.07 could have provided Werner a remedy: "The reality is that it is a mistake that could have been corrected within the confines of the
statute that recognizes that errors are made on a daily basis by well-intending individuals . . . ." ¶53 Nevertheless, the circuit court declined to vacate and The
reenter the two orders pursuant to Wis. Stat. § 806.07.
circuit court admonished Werner for not bringing the mistake to the circuit court's attention within the one-year time limit 20
Nos.
2008AP2045 & 2009AP2322
prescribed by § 806.07(2).16
According to the circuit court,
Werner was twice put on notice that the orders were prematurely filed: first on October 27, 2008, when the circuit court
provided Werner with a copy of the appeal index and a second time in February 2009 when Werner received Honeck's response brief to the court of appeals. The circuit court maintained
that if Werner had made a motion to vacate and reenter the orders once Werner was put on notice of the court's error, then the motion would have been successful. ¶54 Finally, the circuit court pointed to the court of
appeals decision, see Werner, 320 Wis. 2d 592, ¶10, and regarded it as dropping a "huge hint" that the circuit court cannot
vacate the orders for the sole purpose of extending Werner's time for appeal. ¶55 Werner appealed the circuit court's denial of her
motion to vacate and reenter the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification. The court of appeals stayed briefing on that appeal pending this court's review of the court of appeals decision in Werner, 320 Wis. 2d 592.
Wisconsin Stat. § 806.07(2) provides that if a motion to vacate is based on subsection (1)(a) ("Mistake, inadvertence, surprise, or excusable neglect") or subsection (1)(c) ("Fraud, misrepresentation, or other misconduct of an adverse party"), then the motion must be made "not more than one year after the judgment was entered or the order or stipulation was made." In this case, the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification were both entered on April 2, 2008. 21
16
Nos.
2008AP2045 & 2009AP2322
¶56
On October 28, 2010, upon this court's own motion, we
removed from the court of appeals Werner's appeal of the circuit court's denial of her motion to vacate and reenter the orders. See Wis. Stat. § (Rule) 809.61; Wis. Const. art. VII, § 3(3). ¶57 We now reverse both the court of appeals decision
dismissing Werner's first appeal and the circuit court's order denying Werner's motion to vacate and reenter the orders. remand to the circuit court with instructions to We
vacate and
reenter the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification. III. STANDARD OF REVIEW ¶58 Whether an order is final for purposes of appeal, and
in turn, whether a party timely appealed from a final order, are questions of law that this court reviews independently. Sanders
v. Estate of Sanders, 2008 WI 63, ¶21, 310 Wis. 2d 175, 750 N.W.2d 806; Tyler v. Riverbank, 2007 WI 33, ¶12, 299
Wis. 2d 751, 728 N.W.2d 686. ¶59 vacate In addition, the circuit court's denial of a motion to under Wis. that we Stat. will § 806.07 not reverse is a discretionary an erroneous
determination
absent
exercise of discretion.
See Miller v. Hanover Ins. Co., 2010 WI
75, ¶29, 326 Wis. 2d 640, 785 N.W.2d 493; Mullen v. Coolong, 153 Wis. 2d 401, 406, 451 N.W.2d 412 (1990); State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 541, 363 N.W.2d 419 (1985); Edland, 210 Wis. 2d at 643. The circuit court erroneously exercises its
discretion when it applies the wrong legal standard or if the facts of record fail to support the circuit court's decision. 22
Nos.
2008AP2045 & 2009AP2322
See Bank Mut. v. S.J. Boyer Constr., Inc., 2010 WI 74, ¶20, 326 Wis. 2d 521, 785 N.W.2d 462. Furthermore, the circuit court
erroneously exercises its discretion when it refuses to exercise its discretionary power on the erroneous ground that the power does not exist. Farmers & Merchs. Bank v. Reedsburg Bank, 12
Wis. 2d 212, 228, 107 N.W.2d 169 (1961). IV. ANALYSIS ¶60 Concerning the order ruling that Hendree was
ineligible for indemnification, we conclude that Werner's appeal survives on two alternative grounds: Werner timely appealed from the order in the first instance because the order was not final, and alternatively, the circuit court erroneously exercised its discretion when it denied Werner's motion to vacate and reenter the order. Concerning the order dismissing Honeck, we conclude
that Werner's appeal survives on the second basis; that is, the circuit court erroneously exercised its discretion when it
denied Werner's motion to vacate and reenter the order. ¶61 conclude Our analysis is broken down into two parts. that the court of appeals improperly First, we as
dismissed
untimely Werner's appeal of the order ruling that Hendree was ineligible for indemnification, irrespective of the date on
which the order was filed. court erroneously
Second, we conclude that the circuit its discretion when it denied
exercised
Werner's motion to vacate and reenter (1) the order dismissing Honeck and (2) the other order ruling that Hendree was
ineligible for indemnification.
23
Nos.
2008AP2045 & 2009AP2322
A. The court of appeals improperly dismissed Werner's appeal of the order ruling that ineligible for indemnification. ¶62
as untimely Hendree was
An appeal may be taken as a matter of right only from Wis. Stat. § 808.03(1). is a judgment, order "A or
a final judgment or a final order. final judgment or final order
disposition that disposes of the entire matter in litigation as to one or more of the parties, whether rendered in an action or special proceeding . . . ." that a document must meet Id. This court has previously held conditions in order to be
three
considered a final judgment or order for purposes of appeal: the document must (1) be entered by the circuit court, (2) dispose of the entire matter in litigation as to one or more parties, and (3) state on its face that it is the final document for purposes of appeal. ¶63 ineligible In this Tyler, 299 Wis. 2d 751, ¶26. case, the order met ruling only that of Hendree those was
for
indemnification
two
three
conditions and thus could not be considered final.
While the
order was entered by the circuit court on April 2, 2008, and stated on its face that it was "a final order for the purpose of filing an appeal," the order did not dispose of the entire
24
Nos.
2008AP2045 & 2009AP2322
matter in litigation as to either Werner or Hendree.17
By that
point in litigation, Honeck had been dismissed on the grounds of governmental immunity. Moreover, the State was not a named
party and chose not to intervene in the lawsuit.
The order
ruling that Hendree was ineligible for indemnification did not dispose of the entire matter in litigation as to either Werner or Hendree because the circuit court had not yet resolved any issue as to Hendree's liability or Werner's damages. See
Kenosha Prof'l Firefighters v. City of Kenosha, 2009 WI 52, ¶38, 317 Wis. 2d 628, 766 N.W.2d 577 (concluding that a peremptory writ of mandamus did not constitute a final order under Wis. Stat. § 808.03(1) because it In left this at case, least the one matter in
litigation
unresolved).
relevant
final
document was the default judgment against Hendree entered on July 11, 2008, because only that document disposed of the entire
The court of appeals concluded that the order ruling that Hendree was ineligible for indemnification under Wis. Stat. § 895.46 constituted a final order because it was rendered in a special proceeding and had the effect of terminating the State's interest therein. Werner v. Hendree, 2009 WI App 103, ¶9, 320 Wis. 2d 592, 770 N.W.2d 782. We decline to adopt the court of appeals' conclusion. A final order in a special proceeding is one which, so long as it stands, precludes any further steps therein. Sanders v. Estate of Sanders, 2008 WI 63, ¶26, 310 Wis. 2d 175, 750 N.W.2d 806. In this case, the State's interest is attached to Hendree's liability. See Wis. Stat. §§ 893.82(3), 895.46(1). The order ruling that Hendree was ineligible for indemnification was entered before Hendree's liability had even been resolved. Again, in this case, the State was not a named party, and for whatever reason, the State chose not to intervene in the lawsuit. 25
17
Nos.
2008AP2045 & 2009AP2322
matter in litigation between Werner and Hendree. 310 Wis. 2d 175, ¶40. ¶64 Once judgment was entered against
See Sanders,
Hendree,
Werner
timely appealed from both the July 11, 2008, final judgment and the order ruling that Hendree was ineligible for
indemnification. ¶65 Therefore, we conclude that the court of appeals
improperly dismissed as untimely Werner's appeal of the order ruling that Hendree was ineligible for indemnification, On that
irrespective of the date on which the order was filed. basis, we reverse the court of appeals decision.
B. The circuit court erroneously exercised its discretion when it denied Werner's motion to vacate and reenter (1) the order dismissing Honeck and (2) the order ruling that Hendree was ineligible for indemnification. ¶66 under Wisconsin Stat. § 806.07 prescribes the circumstances the circuit court may relieve a party from a
which
judgment, order, or stipulation.18 In its entirety, Wis. judgment or order," provides:
18
M.L.B., 122 Wis. 2d at 539. § 806.07, "Relief from
Stat.
(1) On motion and upon such terms as are just, the court, subject to subs. (2) and (3), may relieve a party or legal representative from a judgment, order or stipulation for the following reasons: (a) Mistake, inadvertence, surprise, or excusable neglect; (b) Newly-discovered evidence which party to a new trial under s. 805.15(3); entitles a
(c) Fraud, misrepresentation, or other misconduct of an adverse party; (d) The judgment is void; 26
Nos.
2008AP2045 & 2009AP2322
Subsections
806.07(1)(a)
through
(g)
enumerate
the
specific
circumstances under which a party may be entitled to relief. Subsection (1)(h) extends in the grounds for relief beyond the (g),
circumstances
provided
subsections
(1)(a)
through
granting the court broad discretionary authority to relieve a party from a judgment, order, or stipulation for "[a]ny other reasons justifying relief from the operation of the judgment." § 806.07(1)(h). (e) The judgment has been satisfied, released or discharged; (f) A prior judgment upon which the judgment is based has been reversed or otherwise vacated; (g) It is no longer equitable that the judgment should have prospective application; or (h) Any other reasons justifying relief from the operation of the judgment. (2) The motion shall be made within a reasonable time, and, if based on sub. (1)(a) or (c), not more than one year after the judgment was entered or the order or stipulation was made. A motion based on sub. (1)(b) shall be made within the time provided in s. 805.16. A motion under this section does not affect the finality of a judgment or suspend its operation. This section does not limit the power of a court to entertain an independent action to relieve a party from judgment, order, or proceeding, or to set aside a judgment for fraud on the court. (3) A motion under this section may not be made by an adoptive parent to relieve the adoptive parent from a judgment or order under s. 48.91(3) granting adoption of a child. A petition for termination of parental rights under s. 48.42 and an appeal to the court of appeals shall be the exclusive remedies for an adoptive parent who wishes to end his or her parental relationship with his or her adoptive child. 27
Nos.
2008AP2045 & 2009AP2322
¶67
In this case, after the court of appeals dismissed
Werner's appeal as untimely, Werner moved the circuit court to vacate and reenter (1) the order dismissing Honeck and (2) the order ruling that Hendree was ineligible for indemnification, pursuant to Wis. Stat. § 806.07(1)(a). Subsection (1)(a)
permits the circuit court to relieve a party from a judgment, order, or stipulation on the grounds of "[m]istake,
inadvertence, surprise, or excusable neglect." ¶68 The circuit court immediately
§ 806.07(1)(a). that it
acknowledged
made a mistake and that the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification
should not have been filed until judgment was entered against Hendree. Furthermore, the circuit court recognized that its
mistake "could have been corrected" within the confines of Wis. Stat. § 806.07. Nevertheless, the circuit court denied Werner's The circuit court
motion to vacate and reenter the orders.
concluded that it was without the power to vacate and reenter the orders given Werner's failure to bring the motion within one year after the orders were filed. ¶69 § 806.07 Generally, must be a motion That conclusion was in error. for relief a based under Wis. Stat. time." on
brought a
"within motion
reasonable
§ 806.07(2).
However,
specifically
§ 806.07(1)(a) shall be made "not more than one year after the judgment was entered or the order or stipulation was made."19 The one-year time limit is also applicable to motions made under subsections (1)(b) and (c). See Wis. Stat. §§ 806.07(2), 805.16(4). 28
19
Nos.
2008AP2045 & 2009AP2322
§ 806.07(2). order ruling
In this case, the order dismissing Honeck and the that Hendree was ineligible for indemnification
were both entered on April 2, 2008.
Werner did not file her
motion to vacate and reenter the orders until July 8, 2009. Largely because Werner failed to bring the motion within one year after the orders were filed, the circuit court concluded that it was without the power to vacate and reenter the orders. In fact, the circuit court maintained that if Werner had made her motion within one year after the orders were filed, then the motion would have been successful. ¶70 However, contrary to the circuit court's conclusion,
the circuit court had the power under Wis. Stat. § 806.07 to vacate and reenter the orders, even though Werner did not file her motion within the one-year time limit prescribed in
§ 806.07(2).
This court has expressly held that even if the
movant's claim sounds in § 806.07(1)(a) and is brought outside of the one-year time limit, the motion can still be granted
29
Nos.
2008AP2045 & 2009AP2322
under the broader subsection (1)(h). 552-53.20 ¶71 Wisconsin Stat.
M.L.B., 122 Wis. 2d at
§ 806.07(1)(h)
grants
the
circuit
court broad discretionary authority to relieve a party from a judgment, justifying order, relief or from stipulation the for of "[a]ny the [] reason[] In
operation
judgment."
keeping with that broad authority, this court has recognized that § 806.07(1)(h) from a must be "'liberally construed to to provide
relief
judgment
whenever
appropriate
accomplish
justice.'" Ronnie J.,
Miller, 326 Wis. 2d 640, ¶33 (quoting Shanee Y. v. 2004 WI App 58, ¶11, 271 Wis. 2d 242, 677
N.W.2d 684); see also Conrad v. Conrad, 92 Wis. 2d 407, 418, 284
Werner filed her motion to vacate and reenter the orders 15 months after the orders were mistakenly entered. The dissent regards the 15-month time period as utterly unreasonable, lamenting that our holding subjects final judgments "to attack for an unlimited number of years," dissent, ¶90, and "indefinitely extends the timeframe for bringing a motion" under Wis. Stat. § 806.07(1)(h), id., ¶115. The dissent's position defies our holding in State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 553, 363 N.W.2d 419 (1985), in which we explicitly recognized that a motion can still be granted under § 806.07(1)(h) even when the claim sounds in § 806.07(1)(a) and, more important, even when the motion is brought outside of the one-year time limit. Hence, in M.L.B., "[t]he seminal case addressing the interpretation and application of subsection (h)," see Miller v. Hanover Ins. Co., 2010 WI 75, ¶67, 326 Wis. 2d 640, 785 N.W.2d 493 (Bradley, J., concurring), this court expressly anticipated the reasonableness of bringing a § 806.07 motion beyond 12 months after the judgment or order was entered. Contrary to the dissent's perception, our conclusion in this particular case that Werner reasonably filed her § 806.07 motion three months beyond the one-year time limit does not translate into condoning a limitless timeframe under § 806.07(1)(h). 30
20
Nos.
2008AP2045 & 2009AP2322
N.W.2d 674
(1979). the
At circuit
the
same must
time, be
when mindful
applying of the
§ 806.07(1)(h),
court
competing policy favoring the finality of judgments.
See Larry
v. Harris, 2008 WI 81, ¶18, 311 Wis. 2d 326, 752 N.W.2d 279; Edland, 210 Wis. 2d at 644; M.L.B., 122 Wis. 2d at 550. Thus,
§ 806.07(1)(h) should be applied only in those cases in which "the sanctity of the final judgment is outweighed by 'the
incessant command of the court's conscience that justice be done in light of all the facts.'" M.L.B., 122 Wis. 2d at 550
(quoting Bankers Mortg. Co. v. United States, 423 F.2d 73, 77 (5th Cir. 1970)). is justified. ¶72 In such "extraordinary circumstances," relief
Id. at 552. the proper test under Wis. Stat.
Accordingly,
§ 806.07(1)(h) for a motion that in part sounds in subsection (1)(a) but is brought outside the one-year time limit is
"whether there are extraordinary circumstances justifying relief in the interest of justice." ¶73 In this case, Id. at 553. circumstances justify
extraordinary
relief under Wis. Stat. § 806.07(1)(h).
Specifically, despite
the circuit court both orally and in writing stating that it would hold the orders so that one appeal could later be taken after trial, it did not so hold the orders. Here, Werner's
counsel's reliance on the court's representation to hold the orders provides a basis for extending Werner's time to appeal under § 806.07. Werner's counsel had no reason to be on guard
that the court would sign and file the orders before trial.
31
Nos.
2008AP2045 & 2009AP2322
¶74
Indeed,
the
circuit
court
is
without
authority
to
vacate and reenter an order or judgment "when its sole basis for doing so is the unadorned desire to allow an appeal." 210 Wis. 2d at 647. Edland,
However, in Edland, we held that a circuit
court's acknowledged mistake in failing to send notice of an order Stat. to the parties was to sufficiently the compelling goal of under Wis. and
§ 806.07(1)(a)
outweigh
finality
provide a basis for extending the time to appeal.
Id. at 648.
In that case, the circuit court did not mail a copy of its order to the parties, despite the court's contrary intention as
evidenced by the order's carbon copy signal naming the parties' attorneys. order's Id. at 641. until The parties did not become aware of the the expiration of the 90-day time The
entry
after
limit for appeal.
Id. (citing Wis. Stat. § 808.04(1)).
plaintiffs moved the circuit court to vacate and reenter the order pursuant to Wis. Stat. § 806.07(1)(a). Id. at 642. The
circuit court acknowledged its mistake and granted the motion. Id. The court of appeals then certified the case to this court,
asking us to determine whether the plaintiffs' failure to timely appeal the original Id. order deprived the court of appeals of
jurisdiction.
In Edland, however, the court did not assure
the parties orally and in writing that it would mail to them a copy of the order. ¶75 Nonetheless, on review, we held that the circuit court
appropriately exercised its discretion by granting the motion to vacate and reenter the order under Wis. Stat. § 806.07(1)(a). Id. at 648. Our holding was based on the fact that the record 32
Nos.
2008AP2045 & 2009AP2322
reflected the circuit court's intention to send notice of the order to the parties, of the court failed and to send court such notice
through no
fault
the
parties, Id.
the
acknowledged
committing the mistake.
Unlike in Edland, in which the
parties had no reason to believe that the circuit court would mail to them a copy of the order, the parties in the case now before this court had every reason to believe that the court would follow its commitment to hold the orders. ¶76 Similarly, this court recently held in Miller that the
circuit court erroneously exercised its discretion in denying the defendant's motion to vacate a $2 million default judgment under Wis. Stat. § 806.07(1)(h), in part because the circuit court's error contributed to the defendant's failure to timely answer the amended complaint. See 326 Wis. 2d 640, ¶48. In
particular, the circuit court's personnel failed to list the defendants' attorney as counsel of record on the Wisconsin
Circuit Court Access system. that served error, on several
Id., ¶22 & n.7. and
As a result of were ¶22. to not We the
correspondences or its
pleadings Id.,
the that
defendant the
attorney. error
concluded
circuit
court's that
contributed relief
extraordinary § 806.07(1)(h). ¶77
circumstances Id., ¶58.
justified
under
In this case, the circuit court failed to consider
whether extraordinary circumstances brought Werner's motion to vacate and reenter the orders within Wis. Stat. § 806.07(1)(h). Instead, the circuit court erroneously concluded that it was without the power to vacate and 33 reenter the orders given
Nos.
2008AP2045 & 2009AP2322
Werner's failure to bring the motion within one year after the orders were filed. ¶78 Pursuant to the circuit court's verbal and written
assurances that it would not sign the orders until the case was resolved as to Hendree, (1) the order dismissing Honeck and (2) the order ruling that Hendree was ineligible for indemnification should not have been signed and filed until judgment was entered against Hendree. The record leaves no doubt that the circuit
court was to hold the orders and that neither order would be filed until the case was resolved as to Hendree. Specifically,
at the close of both the hearing on Honeck's motion and the hearing on the stated Attorney on the General's record motion, it the would circuit refrain court from
expressly
that
signing the orders until the case was resolved as to Hendree. Indeed, when Werner sent a letter to the circuit court seeking to ensure that the orders were held, the court initialed its confirmation on the letter. There is simply no question that
the circuit court was to hold the orders until the case was resolved as to Hendree. ¶79 However, contrary to that unmistakable understanding
and unbeknownst to the parties, the circuit court signed and filed the orders We do months not before the judgment circuit was entered against for
Hendree.
know
court's
reasons
prematurely signing the orders, but it is clear from the circuit court's explanation that the court never intended for its clerk to then file Hendree. the orders before judgment was entered against
Nevertheless, Werner relied on the circuit court's 34
Nos.
2008AP2045 & 2009AP2322
previous assurances and did not appeal from the orders until after judgment was entered against Hendree. Werner's reliance
on the circuit court's assurances effectively deprived her of the right to appeal. Justice rings hollow if Werner is
penalized for the circuit court's failure to act according to its clear intention as stated both orally and in writing on the record. ¶80 At its core, Edland recognizes that when the circuit
court's clear and acknowledged mistake deprives a party of its right to appeal, Wis. Stat. § 806.07 may provide a basis for vacating Wis. 2d at and reentering In the order case, or judgment. than See 210 and
648.
this
rather
vacating
reentering the orders in accordance with Edland, the circuit court admonished Werner's counsel for not bringing the motion within the one-year time limit prescribed in § 806.07(2).21 circuit remedy court it acknowledged the its mistake of but then refused The to
within
confines
§ 806.07,
effectively
penalizing Werner's counsel for not discovering the mistake soon enough.
21
In so ruling, the circuit court missed the mark.
When
It is true that in Edland, there was no issue as to the timeliness of the plaintiffs' motion to vacate and reenter the order. See Edland v. Wis. Physicians Serv. Ins. Corp., 210 Wis. 2d 638, 642, 563 N.W.2d 519 (1997). However, it is also true that in Edland, the plaintiffs were not relying on any assurance by the circuit court made on the record. Indeed, the plaintiffs did not even know of the circuit court's intention to send notice of the order. That is, the only indication of the circuit court's intention to send notice of the order appeared on the face of the order itself (via a carbon copy signal), which of course was never mailed to the plaintiffs. See id. at 641. 35
Nos.
2008AP2045 & 2009AP2322
the circuit court made multiple assurances on the record that it would not sign and file the orders until the case was resolved as to Hendree, Werner's counsel was entitled to rely on those assurances. A conclusion otherwise places the onus on parties
to constantly confirm that the circuit court has lived up to its statements on the record or second-guess the court. court should exercise its authority a to right of the its The circuit own wrong to
particularly when it appeal. ¶81 without
deprives
party
opportunity
The circuit court erred when it concluded that it was the power to vacate and reenter the orders given
Werner's failure to bring the motion within one year after the orders were filed. exercised its Accordingly, the circuit court erroneously See Farmers & Merchs. Bank, 12
discretion.
Wis. 2d at 228. ¶82 We therefore reverse the circuit court's order denying We remand to
Werner's motion to vacate and reenter the orders.
the circuit court with instructions to vacate and reenter the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification. See id. (When a trial court
fails to exercise a discretionary power with which it is vested on the erroneous ground that the power does not exist, "the usual practice is for the appellate court to reverse and remand in order that the trial court may exercise the discretion it previously refused to exercise. Such procedure is unnecessary
in the instant appeal inasmuch as the [trial] court has stated in its memorandum decision that it would exercise its discretion 36
Nos.
2008AP2045 & 2009AP2322
to grant the relief requested if it possessed the power to do so."). V. CONCLUSION ¶83 First, we hold that the court of appeals improperly
dismissed as untimely Werner's appeal of the order ruling that Hendree was ineligible for indemnification, irrespective of the date on which the order was filed. This is so because the order The order did not
was not final under Wis. Stat. § 808.03(1).
dispose of the entire matter in litigation as to either Werner or Hendree,22 and accordingly, was not appealable until July 11, 2008, when the circuit court entered judgment on Hendree's
liability and Werner's damages. ¶84 exercised Second, its we hold that when the it circuit denied court erroneously motion to
discretion
Werner's
vacate and reenter (1) the order dismissing Honeck and (2) the other order ruling that Hendree was ineligible for
indemnification.
The circuit court erroneously concluded that
it was without the power to vacate and reenter the orders given Werner's failure to bring the motion within one year after the orders were filed. ¶85 decision Accordingly, dismissing we reverse both the court and of the appeals circuit
Werner's
first
appeal
court's order denying Werner's motion to vacate and reenter the
By that point in litigation, Honeck had been dismissed on the grounds of governmental immunity. Furthermore, the State was not a named party and chose not to become a party through intervention or otherwise. 37
22
Nos.
2008AP2045 & 2009AP2322
orders.
We remand to the circuit court with instructions to
vacate and reenter the order dismissing Honeck and the order ruling that Hendree was ineligible for indemnification. By the Court.—The decision of the court of appeals and the order of the circuit court is reversed, and the cause is
remanded to the circuit court with instructions.
38
Nos. 2008AP2045 & 2009AP2322.awb
¶86
ANN WALSH BRADLEY, J.
(dissenting in part). "Equity
has a well-known maxim that equitable relief will be denied to a complainant who has slept on his rights." Visser v. Koenders, 6
Wis. 2d 535, 538, 95 N.W.2d 363 (1959); see also State ex rel. Coleman v. McCaughtry, 2006 WI 49, 25, 290 Wis. 2d 352, 714 N.W.2d 900 ("equitable remedies are not available to one whose own inaction results in the harm"). ¶87 In considering the equities, the circuit court made a finding of fact that Werner's attorney had constructive notice within seven months of the entry of the orders. It explained
that if Werner had brought a motion to vacate at that time, the motion would have been successful. Additionally, the circuit
court found that Werner's attorney had actual notice within 11 months of the orders' entry. Although the circuit court did not
say whether it would have granted Werner's motion for relief had it been made at that time, it found that Werner's attorney had no excuse for failing to bring a motion once he had actual notice of the mistake. ¶88 Given the fact that Werner squandered two earlier
opportunities to "bring this mistake to the court's attention," the circuit court concluded that Werner's motion was not brought within a reasonable time. to deny equitable relief. ¶89 The majority responds by substituting its discretion In doing so, it ignores the It therefore exercised its discretion
for that of the circuit court.
well-known maxim and disregards, without explanation, the rule of law that a circuit court's findings will be upheld unless 1
Nos. 2008AP2045 & 2009AP2322.awb
they are clearly erroneous.
Even though Werner never requested
relief under Wis. Stat. § 806.07(1)(h), the majority concludes that the circuit court erroneously exercised its discretion in failing to grant this unrequested relief. ¶90 In directing that upon remand the circuit court must
vacate and reenter the orders under Wis. Stat. § 806.07(1)(h) and Edland,1 the majority compromises the goal of finality of judgments. Although Werner's motion sought relief from judgment
due to mistake under the statute that allows for a one-year window of opportunity, the majority has bequeathed an unlimited number of years under Wis. Stat. § 806.07(1)(h). At the same
time, the majority now has transformed the "narrow" equitable exception set forth in Edland into an exception that may provide relief to those who have slept on their rights. As a result,
final judgments are subject to attack for an unlimited number of years while at the same time the circumstances under which an attack can be made now has been broadened. ¶91 I would I part ways with my colleagues in the majority because uphold findings that both of the time-honored Unlike court maxim the and the I circuit cannot its
court's conclude
fact. circuit
majority,
the
erroneously
exercised
discretion by failing to consider an argument for relief that was never made. Because the majority substitutes its discretion
for that of the circuit court and because it further undermines the finality of judgments by subjecting them to broader attack,
Edland v. Wisconsin Phys. Serv. Ins. Co., 210 Wis. 2d 638, 563 N.W.2d 519 (1997). 2
1
Nos. 2008AP2045 & 2009AP2322.awb
I respectfully dissent from the part of the majority opinion that addresses relief from judgment.2 I ¶92 The majority acknowledges that Werner had constructive
knowledge that the orders had been entered within seven months of entry and actual knowledge within 11 months of entry. majority op., ¶53. It acknowledges that even though See
Werner
actually knew about the mistaken entry before the one-year time period for correcting mistakes under Wis. Stat. § 806.07(1)(a) had elapsed, Werner waited more than 15 months to seek redress. See id. Nevertheless, the majority concludes that the circuit
court erroneously exercised its discretion in denying the motion to vacate and reenter the orders. ¶93 Id. at ¶60.
According to the majority, the circuit court made a
mistake of law by focusing on the one-year time period under sub. (1)(a) and concluding that it had no authority to vacate and reenter the orders. Id., ¶¶68-69, 77. Although Werner did
not make a motion under sub. (1)(h), the majority admonishes the circuit court for failing to consider "whether extraordinary
This case involves two orders, both entered April 2, 2008. This opinion addresses the majority's conclusion that the orders should be vacated and remanded under Wis. Stat. § 806.07(1)(h) and Edland. I agree with the majority that the order providing that Hendree was not eligible for indemnification was not a final order, and that the court of appeals has jurisdiction to review that order on the merits. See majority op., ¶¶62-65. 3
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Nos. 2008AP2045 & 2009AP2322.awb
circumstances brought Werner's motion to vacate and reenter the orders within Wis. Stat. § 806.07(1)(h)." ¶94 Id., ¶77.3
Having determined that the circuit court should have
considered whether relief was appropriate under sub. (1)(h), the majority abandons our usual practice of remanding to the circuit court for its exercise of discretion. exercises its own discretion. Instead, the majority
It concludes that extraordinary
circumstances are present, and it instructs the circuit court to vacate and reenter the orders. Id., ¶73, 80-82. II ¶95 To determine whether the circuit court properly
exercised its discretion, I turn to a review of the hearing transcript. Contrary to the majority's assertion, a review
demonstrates that the circuit court did not conclude that it lacked authority to vacate and re-enter the orders given
Werner's failure to bring the motion within one year after the order was filed. Rather, the circuit court considered the
Wisconsin Stat. 806.07(1)(a) provides that "upon such terms as are just," the circuit court may relieve a party from an order for reason of "mistake, inadvertence, surprise, or excusable neglect." A motion under sub. (1)(a) must be made "not more than one year after" the order was entered. Wis. Stat. § 806.07(2). Additionally and again "upon such terms as are just," Wis. Stat. § 806.07(1)(h) permits a circuit court to relieve a party from an order for "any other reasons justifying relief"—— including a mistake——if "extraordinary circumstances" are present. Wis. Stat. § 806.07(1)(h); State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 550, 363 N.W.2d 419 (1985). A motion under sub. (1)(h) must be made "within a reasonable time," but it is not constrained by the rigid one-year time limit specified for sub. (1)(a). 4
3
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applicable decision Wisconsin
facts, a
applied
the
applicable could
law,
and
reached Kocken
a v.
that
reasonable 40,
court
reach. WI 72,
Council
AFSCME,
AFL-CIO,
2007
¶25,
301
Wis. 2d 266, 732 N.W.2d 828. ¶96 that the As an initial matter, it is difficult to make the case circuit court erroneously exercised its discretion
under Wis. Stat. § 806.07(1)(h) given that Werner did not bring a motion under sub. (1)(h). Rather, Werner's motion was based
on sub. (1)(a), and the circuit court correctly determined that motions under that subsection must be filed within one year of the entry of the orders. Werner brought a motion In effect, the majority pretends that under sub. (1)(h), and then it
admonishes the circuit court for not considering whether the test under the imaginary motion for relief under sub. (1)(h) was met. ¶97 (1)(h), circuit Even though Werner did not file a motion under sub. a review of the court implicitly hearing transcript that the reveals that the of
determined
requirements
sub. (1)(h) were not met.4
The circuit court appears to have
concluded that the motion was not made within a reasonable time. ¶98 During the motion hearing, the circuit court
acknowledged that a mistake was made.
However, it determined,
"[t]here is more than a little blame to go around here." ¶99 The circuit court indicated that Werner's attorney
should have——but failed to——make the motion to vacate the orders
The relevant portion of the transcript is attached to this opinion as an exhibit. 5
4
Nos. 2008AP2045 & 2009AP2322.awb
once it had notice that the orders had been entered.
It found
that Werner's attorney squandered at least two opportunities to ask the court to correct the mistake: "There were, in my
estimation, at least two opportunities for plaintiff's counsel to bring this mistake to the court's attention and to rectify easily within the 1 year time period and to have the Court of Appeals decide whether that error was appropriately corrected under Edland . . . . But that didn't happen." ¶100 The court made a finding of fact that Werner's
attorney should have known about the mistake within seven months of entry, at the time that he received the appeal index. The
court explained that the appeal index, which showed that the orders had been filed on April 2, 2008, was sent to Werner's attorney on October 27, 2008.5 Had he exercised reasonable
diligence in uncovering the mistake in October and made a motion "at that time," the circuit court implied, it would have granted the motion: "[I]f the court had been confronted with a motion at that time, I hazard a guess it would have been successful to correct that error."
5
(Emphasis added.)
Werner's attorney acknowledged that he received the index, but he protested that he did not discover the error because "[t]he jurisdiction issue was not a concern for me at that time": I filed my notice of appeal first and I ordered a transcript of what had taken place. Then I looked at the documents but I didn't put together they were entered on the April. I was focusing more on the judgment that was taking place on July 11 of '08. What I am saying is I am regular on everything. The jurisdiction issue was not a concern for me at that time, your Honor. 6
Nos. 2008AP2045 & 2009AP2322.awb
¶101 The circuit court called Werner's attorney's failure to uncover the error in October of 2008 "distressing" and
explained that this fact distinguished this case from Edland: "In Edland there was never any notice given, apparently, of the entry of that judgment that was intended. here." ¶102 Further, the circuit court made a finding of fact that Werner's attorney had actual knowledge of the mistaken entry in February of 2009, within 11 months of the entry of the orders. Again, Werner's attorney failed to bring a motion to correct the mistake. This second squandered opportunity occurred when There is notice given
Werner's attorney received opposing counsel's court of appeals brief. It noted that the orders were "entered on April 2, 2008"
and argued that the court of appeals "does not have jurisdiction over an appeal" from the orders. Werner's attorney acknowledged
that he read the brief and learned about the error at that time, but despite his actual knowledge, he declined to move the
circuit court to vacate the orders. ¶103 The circuit court did not say whether it would have granted a motion for relief had Werner brought the motion to the court's attention in February of 2009. However, it did find
that there was no excuse for Werner's failure to bring a motion once Werner's attorney had actual notice of the mistake: Now we have the second event [when the State filed its appellate brief in February of 2009]. Was there a motion brought in this court at that time? No. I frankly do not understand the explanation or lack of explanation here. It deprived this court of making a record at that time, whether I granted the motion then or denied it[.]" 7
Nos. 2008AP2045 & 2009AP2322.awb
(Emphasis added.) ¶104 In its oral ruling denying Werner's motion, the court in essence concluded that the motion was not made within a
reasonable time and that, given Werner's delay in bringing the motion, extraordinary circumstances were not present: "The
reality is that [the mistake] is a mistake that could have been corrected within the confines of the statute that recognizes that errors are made on a daily basis by well-intending
individuals, whether they be the judge, the clerks, . . . or by the attorneys involved in the case." ¶105 A circuit court's findings of fact will be upheld
unless clearly erroneous.
State v. Carter, 2010 WI 40, ¶19, 324 There is no argument advanced that Thus, there
Wis. 2d 640, 782 N.W.2d 695.
the court's findings of fact are clearly erroneous.
is no indication that the circuit court's exercise of discretion was based on a mistake of fact. ¶106 Further, there is no indication that the circuit court made an error of law. Rather, it is the majority here that errs
by conflating the circuit court's comments regarding the October 2008 constructive notice with the circuit court's comments
regarding the February 2009 actual notice. ¶107 In its comments regarding February of 2009, the
circuit court implicitly concluded that because Werner "slept on her rights"6 for a period of months, she was not entitled to relief under Wis. Stat. § 806.07 and that the compelling
Visser (1959).
6
v.
Koenders,
6
Wis. 2d 535, 8
539,
95
N.W.2d 363
Nos. 2008AP2045 & 2009AP2322.awb
equitable considerations present in Edland are not present here. Applying the facts and the law, the circuit court reached a decision that a reasonable court could reach. Wis. 2d 266, ¶25. III ¶108 By substituting its judgment for that of the circuit court, the majority compromises the goal of finality of See Kocken, 301
judgments.
Final judgments now are subject not only to attack
for an unlimited number of years, but also the circumstances under which an attack can be made have been broadened.
Apparently litigants can now sleep on their rights and still obtain equitable relief. ¶109 A review of this court's decision in Edland v.
Wisconsin Phys. Serv. Ins. Co., 210 Wis. 2d 638, 563 N.W.2d 519 (1997), provides a touchstone for my analysis. were asked to determine whether a circuit In Edland, we court was ever
permitted to vacate and reenter a judgment to effectively extend the time for appeal. "attempts to achieve We recognized that Wis. Stat. § 806.07 a balance between fairness in the
resolution of disputes and the policy favoring the finality of judgments." Id. at 644.
¶110 The equitable circumstances presented in Edland were compelling. expressed in When the circuit court entered judgment, it had writing its intention to notify the parties by
carbon copy, but it mistakenly neglected to do so.
Accordingly,
"none of the parties had notice of the order until after the appeal period expired" and "the plaintiffs' failure to file a 9
Nos. 2008AP2045 & 2009AP2322.awb
timely notice of appeal was the result of the court's error alone." Id. at 647.
¶111 Once the court's failure to notify the parties was discovered, the appellants moved quickly to bring the
circumstance to the court's attention by filing a motion under Wis. Stat. § 806.07(1)(a). Id. at 642. The motion was filed
less than six months after judgment was entered and less than two months after the parties discovered the court's mistake.7 Exercising its discretion under sub. (1)(a), the circuit court vacated and reinstated the judgment, which permitted the
appellants more time to appeal. ¶112 In our discussion of whether the court erroneously
exercised its discretion by vacating the judgment, we reiterated the general rule: "Considerations of finality militate strongly against resuscitating a case after the time for appeal has
expired," and the "unadorned desire to allow an appeal" will not justify a court vacating and reinstating a final judgment.
Edland, 210 Wis. 2d at 647. ¶113 Nevertheless, we concluded that a blanket rule would undermine the aim of Wis. Stat. § 806.07 to provide "a balance between fairness in the resolution of disputes and the policy According to the briefs filed in that case, judgment was entered on October 9, 1995, but it was not mailed to the parties. It was not until January 24, 1996, that either party learned that judgment had been entered. Memorandum of Appellants at 1-2, Edland v. Wisconsin Phys. Serv. Ins. Co., 210 Wis. 2d 638 (1997) (on file at the Wisconsin Law Library). The appellants moved the circuit court to vacate and reenter the order shortly thereafter on March 19. Edland v. Wisconsin Phys. Serv. Ins. Co., No. 96-1883, unpublished slip. op. at 2 (Wis. Ct. App., July 31, 1996). 10
7
Nos. 2008AP2045 & 2009AP2322.awb
favoring the finality of judgments."
Id. at 644.
We concluded
that under certain circumstances, a circuit court may determine that the "compelling equitable consideration[s] . . . outweigh[] the goal of finality and provide[] a basis for effectively
extending the time to appeal."
Id. at 648.
¶114 In Edland, we cautioned that our holding was "narrow," and we cited with approval the court of appeals' decision in Eau Claire County v. Employers Insurance of Wausau. 645-47. Id. at 648,
In Eau Claire County, the court of appeals explained
that an attorney's "inaction and assumptions" did not "justify the court stepping in to mitigate the situation." Cnty. v. Empl'rs Ins. of Wausau, 146 Wis. 2d 101, Eau Claire 111, 430
N.W.2d 579 (Ct. App. 1988).
"[I]nsufficient cause is offered in
the present case to justify an exception to the strong policy behind the finality of judgments." ¶115 In Edland, which relief was a Id. granted one-year under time Wis. limit. Stat. By
§ 806.07(1)(a),
contains
mandating relief under sub. (1)(h) (even though Werner did not request relief under sub. (1)(h)), the majority indefinitely
extends the timeframe for bringing a motion with the purpose of "effectively extending the time to appeal." Wis. 2d at 648. ¶116 We have recognized that a broad application of sub. (1)(h) could undermine the goal of finality because that statute is unmoored from any specific time limit other than what is "reasonable." Accordingly, we have stated that relief under See Edland, 210
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Nos. 2008AP2045 & 2009AP2322.awb
sub. (1)(h) should be granted "sparingly." v. D.G.H., 122 Wis. 2d at 550. ¶117 At the same time that the
State ex rel. M.L.B.
majority
bequeaths
an
unlimited number of years for extending the time for appeal, it now also expands By the circumstances the under which relief exercise is of
available.
reversing
circuit
court's
discretion when the party squandered its opportunity to file a motion within a reasonable time, the majority lowers the burden on litigants to safeguard their appellate rights. ¶118 Edland recognized that under narrow circumstances,
"compelling equitable consideration[s] . . . outweigh[] the goal of finality." to fully 210 Wis. 2d at 648. the into It But here, the majority fails fails of the to all factor the Werner's
consider delay
equities——it its
inexcusable
evaluation that
"equitable tacitly
considerations."
appears
majority
understands that its analysis of Edland is tenuous and does not support its position. At the same time that it relies on
Edland, the majority attempts to distinguish it.8 ¶119 The majority's analysis upends the reasoning in Eau Claire County, which explained that failure to appeal timely due to an attorney's "inaction and assumptions" would not "justify the court stepping in to mitigate the situation." It ignores
the time-honored maxim that "equitable relief will be denied to a complainant who has slept on his rights." Visser, 6
Wis. 2d at 538.
Instead, it now broadens the scope of attack.
8
See majority op., ¶¶75, 80 n.21. 12
Nos. 2008AP2045 & 2009AP2322.awb
Even those who have slept on their rights (as the circuit court found here) are entitled to equitable relief. ¶120 The majority compounds its expansion of attack on the finality of judgment by failing to follow the usual practice of appellate courts. According to the majority, the circuit court
erroneously concluded that it had no authority to vacate the orders once one year had passed. Majority op., ¶¶68-69, 77.
Even if the circuit court had erroneously concluded that it had no authority to vacate the orders, however, such a result would not justify the majority imposing its own exercise of
discretion. ¶121 When a circuit court fails to exercise its
discretionary power on the erroneous ground that the authority does not exist, it is the "usual practice" for an appellate court to reverse and remand so that the circuit court is
permitted to exercise the discretion it previously failed to exercise. Farmers & Merchs. Bank v. Reedsburg Bank, 12
Wis. 2d 212, 228, 107 N.W.2d 169 (1961) ("In such a situation the usual practice is for the appellate court to reverse and remand in order that the trial court may exercise the discretion it previously refused to exercise."); see also Paschong v.
Hollenbeck, 13 Wis. 2d 415, 425, 108 N.W.2d 668 (1961). ¶122 In sum, I conclude that the circuit court did not erroneously exercise its discretion by failing to consider an argument majority court for relief that its it was never advanced. for that of Because the the
substitutes because
discretion further 13
circuit of
and
undermines
the
finality
Nos. 2008AP2045 & 2009AP2322.awb
judgments by subjecting them to broader attack, I respectfully dissent in part. ¶123 I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON, C.J. joins this opinion.
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