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COURT OF
APPEALS DECISION DATED AND
RELEASED March
20, 1997 |
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A party may file with the Supreme Court a petition to review an
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See § 808.10 and Rule
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This opinion is subject to further editing. If published, the official version will appear in the bound
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No. 96-0791
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT IV
CATHERINE
G. HENRY, M.D.,
Plaintiff-Appellant,
v.
RIVERWOOD
CLINIC, S.C., a domestic corporation,
DAVID
E. DENNSTEDT; REGIS R. CHAMBERLIN, M.D.;
CHRISTINE
L. UBER, M.D.; JANET A. WILSON, M.D.;
ROBERT
L. VAN DYKEN, M.D.; AND CHARLES CONGER, M.D.,
Defendants-Respondents.
APPEAL
from an order of the circuit court for Wood County: LEWIS MURACH, Judge. Reversed
and cause remanded.
Before
Dykman, P.J., Vergeront and Deininger, JJ.
DEININGER,
J. Catherine Henry, M.D., appeals an order for summary
judgment dismissing her conspiracy and intentional interference with contract
claims against Riverwood Clinic and several individual physicians employed by
Riverwood. The issues are: (1) whether Henry is barred by claim preclusion from
litigating these claims and (2) if not, whether either issue preclusion or
estoppel by record bars her claims. We
conclude that these doctrines do not bar Henry's claims and thus reverse the
summary judgment.
BACKGROUND
Catherine
Henry joined the Riverwood Clinic (Riverwood) staff in 1984 as a part-time
pediatrician. In 1989, Henry's husband,
William Henry, M.D., also a member of the Riverwood staff, resigned from
Riverwood because of a conflict with the other Riverwood physicians. In November 1989, Riverwood notified Henry
that it was terminating her employment on the basis that she had begun working
full-time without authorization, had contacted the state medical society
concerning the earlier conflict between Riverwood and William Henry, and had
referred potential clinic patients to him.
In
April 1992, Henry filed an action against Riverwood alleging breach of her
employment contract ("first action"). Henry moved to amend the pleadings in August 1993, adding
allegations against six individual clinic physicians for statutory conspiracy
under § 134.01-03, Stats.,
and for violations of the Wisconsin Fair Dealership Law, § 135.02-04, Stats., for their actions leading up to
her termination. On October 12, 1993, the trial court denied the motion,
stating that the claims in the proposed amendment would complicate and extend
the litigation and might confuse the jury.
The trial court then granted summary judgment for Riverwood on the
contract claim, on the basis that Riverwood had not terminated Henry without
good cause as set out in the contract.[1]
On
October 28, 1993, Henry filed a separate suit ("second action")
repeating the statutory conspiracy claim and adding claims against the
individual physicians for common law conspiracy, intentional interference with
contractual relations, post-termination conspiracy and post-termination
interference with prospective contractual relations (collectively, the
"conspiracy and intentional interference claims"). Henry amended her complaint in the second
action to add claims against Riverwood for post-termination interference with
prospective contract and conspiracy on the grounds that it, as an entity acting
through its agents, engaged in anti-competitive conduct after Henry's
termination from Riverwood.
Riverwood
moved for summary judgment in the second action on the basis of claim
preclusion, issue preclusion and estoppel by record. The trial court granted summary judgment, ruling that because the
claims in the second action arose out of the same factual situation as the
first action, the second action was barred by claim preclusion.[2] Henry appeals.
ANALYSIS
We
review summary judgment de novo, applying the same standards as the trial
court. Voss v. City of Middleton, 162 Wis.2d 737, 748, 470 N.W.2d
625, 629 (1991). Summary judgment is
proper when the pleadings, answers, admissions and affidavits show no genuine
issues of material fact and the moving party is entitled to judgment as a
matter of law. Maynard v. Port
Publications, Inc., 98 Wis.2d 555, 558, 297 N.W.2d 500, 502-03
(1980). The application of claim
preclusion is a question of law, which this court also reviews de novo. Lindas v. Cady, 183 Wis.2d
547, 552, 515 N.W.2d 458, 460 (1994).
Claim Preclusion[3]
Under claim preclusion,
"`"a final judgment is conclusive in all subsequent actions between
the same parties [or their privies] as to all matters which were litigated or
which might have been litigated in the former proceedings."'" Northern
States Power Co. v. Bugher, 189 Wis.2d 541, 550, 525 N.W.2d 723, 727
(1995) (quoted sources omitted).[4] In order for an earlier proceeding to bar
subsequent claims under claim preclusion, the following factors must be
present: (1) an identity between the parties (or their privies) in the prior
and present suit; (2) an identity between the causes of action in the two
suits; and (3) a final judgment on the merits in a court of competent
jurisdiction. Id. at 551,
525 N.W.2d at 728.
In
dismissing Henry's proposed amendment to the pleadings in the first action, the
trial court made the following ruling:
The
Court is denying ... the conspiracy [claim].... As far as the motion to amend
the conspiracy claim, the Court is using and absolutely intends to exercise its
discretion in excluding and not permitting a conspiracy claim to be tried with
the breach of contract claim.
....
There's also, I give very little weight, but
some weight to the fact that the motion to amend the pleadings was not timely
filed, and it was of some importance because it was mentioned and it was
discussed at the time for setting those motions. And it was filed a day late; however, if I thought that the --
the amendments were crucial to the decision of the outcome of this controversy
between the parties, I would perhaps feel differently, but I don't think that
it is.
The 134 claim seeks to add six individuals ...
it is pled that they were acting as individuals and not in their corporate
capacity. As such, each of them are
going to have antagonistic positions and positions that are antagonistic with
each other and as such are going to require six separate counsel.
Of course, you're adding an extremely complex
piece of litigation to what should be a fairly straightforward dispute over the
contract between these parties.... And I think that you're talking -- it looks
like you're talking a fairly complicated and fairly lengthy trial, but not only
that, the conspiracy scenario is a whole separate claim.
....
... And I fear that the inclusion of the
conspiracy theory is very likely to lead to confusion of the issues, a fairly
clear-cut good cause issue to a confusion of the issue and to overtones that
may affect the jury's finding on the essential claim of your client, and that
is the breach of contract claim.
....
For those reasons the Court is going to -- and
if you want to file a separate claim on conspiracy, have at it. I think if it
were permitted here, even a motion to sever the claims might be appropriate
because of the mixing of the intentional with the breach of the contract claim
because of the overtones of the maliciousness and the intention, the overtones
of the conspiracy....
It's going to
delay the trial significantly. It's
going to significantly expand the amount of time that's been set aside for the
trial. This is the second time this
case has been set for trial. And for
all of those reasons I'm exercising the discretion to permit you to file
someplace else if you wish, but we're not going to try it in this lawsuit.
(Emphasis supplied).
Henry
argues, citing Schneider v. Mistele, 39 Wis.2d 137, 158 N.W.2d
383 (1968), that because the trial court in the first action
"invited" her to file her claims elsewhere, claim preclusion should
not apply when she did so. We
agree. In Schneider, the
plaintiff stated claims for alienation of affections and criminal conversation,
and requested that both claims be submitted to the jury. The trial court denied the request as to the
criminal conversation claim, stating that the denial "by no way denies
plaintiff[] ... from pursuing a cause of action for criminal conversation
...." Id. at 141,
158 N.W.2d at 385. The plaintiff then
brought the criminal conversation claim in a separate suit. The trial court in the second action ruled
that the second claim was barred by claim preclusion. On appeal, the Wisconsin Supreme Court reversed, stating:
It is particularly true that a prior judgment is not res
adjudicata or an estoppel bar as to any matter which the court in the earlier
case expressly refused to submit to the jury and expressly directed should be
litigated in another forum or in another action.
Id.
Here
the first trial court denied Henry's proposed amendment and ruled that Henry
could "file someplace else if [she] wish[ed], but [the trial court was]
not going to try it in this lawsuit."[5] We conclude that the trial court's direction
to Henry that she could file her proposed claim in another action prevents the
application of claim preclusion by defendants to bar her second action.
Defendants
argue that claim preclusion bars Henry's claims regardless, because under the
"transactional view," Henry could have brought her claims for
conspiracy and intentional interference with her contract claim in the first
action. Under the transactional view, a
later claim might have been brought in prior proceedings if it arises out of
one transaction or factual situation, regardless of the number of bases for
relief which are possible. See Juneau
Square Corp. v. First Wisconsin Nat'l Bank, 122 Wis.2d 673, 683-84, 364
N.W.2d 164, 170 (Ct. App. 1985) (applying transactional view).
The
supreme court in DePratt v. West Bend Mutual Insurance Co., 113
Wis.2d 306, 311-12, 334 N.W.2d 883, 885-86 (1983), adopted the transactional
view, relying on Restatement (Second)
of Judgments § 24 cmt. a.[6] But § 24 cmt. a also states that the
transactional view is justified "only when the parties have ample
procedural means for fully developing the entire transaction in the one
action." The purpose of using the
transactional view analysis is to ascertain whether a party had an opportunity
to previously litigate an issue.
Because the trial court dismissed Henry's claims for conspiracy with the
proviso that she could file them elsewhere, Henry could not have litigated the
conspiracy and intentional interference claims in the first action.[7]
Finally,
defendants contend that the "equities" in this case support dismissal
because (1) Henry has taken inconsistent positions between the first action and
second action on the issue of identity between claims; (2) Henry's failure to appeal the trial court's
dismissal in the first action bars the claims in the second action; and (3) the
litigation should be brought to an end.
Defendants
argued to the trial court in the first action that "claims under these
Statutes do not arise out of the original occurrence stated in the original
Complaint" and that allowing the proposed amendment would lead to
complications of the litigation. The latter argument was ultimately adopted by
the trial court. We conclude defendants
have little room to complain that Henry has taken inconsistent positions in the
two actions.
Further,
we cannot conclude that Henry's failure to appeal the trial court's dismissal
of the conspiracy claims in the first action warrants dismissing the second
action. Henry has not argued that the
trial court's dismissal of the claims in the first action was erroneous. Given our conclusion that the trial court
permitted Henry to file the second action, her failure to appeal the first
action does not affect the outcome of this action.
Claim
preclusion is based on the principle that sound judicial administration and
fairness to the parties require that litigation must, at some point, come to an
end. A.B.C.G. Enters., Inc. v.
First Bank Southeast, 184 Wis.2d 465, 473, 515 N.W.2d 904, 906
(1994). We are aware that there has
been extensive litigation surrounding the termination of Henry's employment at
Riverwood. However, we conclude that
this does not mean that an end of the litigation by claim preclusion is
appropriate. While there must be an end
to litigation, it should not occur before a party has been given a reasonable
opportunity to have "her day in court."
Affirmance on Other Grounds
Defendants
also urge us to affirm the summary judgment on grounds other than claim
preclusion. See Koestler
v. Pollard, 162 Wis.2d 797, 809 n.8, 471 N.W.2d 7, 12 (1991) (appellate
court may affirm lower court's decision on grounds different than those relied
on below). We discuss each in turn.
Issue Preclusion
Issue preclusion is a
narrower doctrine than claim preclusion.
Northern States Power Co. v. Bugher, 189 Wis.2d 541, 551,
525 N.W.2d 723, 727 (1995). Issue preclusion bars relitigation of an issue of
ultimate fact previously determined by a final judgment. Landess v. Schmidt, 115 Wis.2d
186, 198, 340 N.W.2d 213, 219 (Ct. App. 1983).
An identity of the parties is not required. Michelle T. v. Crozier, 173 Wis.2d 681, 690-91, 495
N.W.2d 327, 331 (1993). The issue in
the prior action must have been actually litigated by the parties for issue
preclusion to bar subsequent claims. Lindas
v. Cady, 183 Wis.2d 547, 559, 515 N.W.2d 458, 463 (1994). Summary judgment in the prior action is
sufficient to meet the "actually litigated" requirement. Landess, 115 Wis.2d at 198,
340 N.W.2d at 219. Issue preclusion
applies where the matter raised in the second suit is identical in all respects
to that decided in the first proceeding and where the controlling facts and
applicable legal rules are the same. Id.;
see Manu-Tronics, Inc. v. Effective Management Sys., Inc.,
163 Wis.2d 304, 316, 471 N.W.2d 263, 268 (Ct. App. 1991). The second proceeding must involve
"`the same bundle of legal principles' that contributed to the disposition
of the first legal proceeding." Landess,
115 Wis.2d at 198, 340 N.W.2d at 219 (quoted source omitted).
In
ruling on the motion for summary judgment in the first action, the trial court
found nothing in the parties' submissions to indicate that the decision of the
Riverwood Board to terminate Henry was "arbitrary or capricious," a
result of "improper motive" or a "pretext" in order to fire
her because of the conflict with her husband.
Defendants contend that these findings preclude litigation of
dispositive issues on the intentional interference and conspiracy claims. We disagree.
Whether
the prerequisites for issue preclusion have been met (identity of issues and
issues actually litigated) is a question of law which we review de novo. Lindas v. Cady, 183 Wis.2d
547, 552, 515 N.W.2d 458, 460 (1994); see also Moore v. LIRC,
175 Wis.2d 561, 567-71, 499 N.W.2d 288, 290-92 (Ct. App. 1993) (applying de novo
review to whether identity of issues exists between two actions).[8]
In
the first action, the issue presented to the trial court was whether the
Riverwood Board had good cause to terminate Henry. The trial court construed the contract to define good cause as:
what three-fourths of the Board of Directors say it is
so long as the decision does not appear to be arbitrary, capricious, so long as
it is not based upon an improper motive, [and] that it has a basis in fact ....
As is appropriate for summary judgment, the first trial
court declined to make findings regarding whether Henry actually violated
Riverwood's policies.[9] Rather, the court ruled that the Board had
good cause as a matter of law because the Board could have found, at the very
least, "that it would be contrary to the clinic's best interest to have
the wife of someone with whom they are in litigation as a member of the clinic
and who might be privy to some inside information that might not otherwise be
available."[10]
By
contrast, Henry's claims in this action are intentional interference with a
contract and conspiracy. Specifically,
Henry alleges that the individual defendants, or a group comprised of some or
all of the individual defendants, either made false statements to the Board or
used improper means including economic coercion to secure the three-fourths
vote necessary for Henry's termination.
To
show intentional interference with a contract or a prospective contract, a plaintiff
must demonstrate that: (1) the plaintiff had a contract or a prospective
contractual relationship with a third party; (2) the defendant interfered with
the relationship; (3) the interference was intentional; (4) a causal connection
exists between the interference and the damages; and (5) the defendant's
conduct was improper, i.e., not justified or privileged. See Lorenz v. Dreske,
62 Wis.2d 273, 286, 214 N.W.2d 753, 759-60 (1974); Hale v. Stoughton Hosp. Ass'n, 126 Wis.2d 267,
281-82, 376 N.W.2d 89, 96 (Ct. App. 1985) (unprivileged or unjustified conduct
equated with "improper" conduct);
Cudd v. Crownhart, 122 Wis.2d 656, 659-60, 364 N.W.2d 158,
160 (Ct. App. 1985).
A
common law conspiracy is "a combination of two or more persons by some
concerted action to accomplish some unlawful purpose or to accomplish by some
unlawful means some purpose not in itself unlawful." Radue v. Dill, 74 Wis.2d 239,
241, 246 N.W.2d 507, 509 (1976).
Statutory conspiracy expressly requires the element of
"malice," which is defined as "`an intent to do a wrongful harm
and injury.'" Maleki v.
Fine-Lando Clinic Chartered, S.C., 162 Wis.2d 73, 87, 469 N.W.2d 629,
634-35 (1991) (quoted source omitted).
We
conclude that the two actions are not based upon the same controlling facts.
The first trial court did not determine whether individual defendants may have
acted improperly, but merely ruled that the Board had good cause to terminate
Henry's employment. While the first
trial court concluded that the Board, under the definition of good cause
outlined in the employment contract, could have found good cause to terminate,
there was no finding that the Board was required to do so. Here, the allegations are that, but for the
wrongful acts of the defendants, the Board would not have terminated Henry.
Further,
the applicable legal principles are not the same. To meet the element of good cause, the trial court in the first
action properly framed the question as a lack of arbitrariness, capriciousness,
pretext or improper motive on the part of the Board. That differs from the elements for either the conspiracy claim
(that the individual defendants acted together for some unlawful purpose with
an intent to do a wrongful harm or injury) or the intentional interference
claim (that some of the defendants acted intentionally and without privilege or
justification).
Estoppel by Record
Finally,
defendants contend that Henry is barred from bringing the second action by the
doctrine of estoppel by record.
Estoppel by record prevents a party from relitigating what was litigated
or what might have been litigated in a prior proceeding. Acharya v. AFSCME, 146 Wis.2d
693, 696, 432 N.W.2d 140, 142 (Ct. App. 1988).
Estoppel by record is closely related to claim preclusion, except that
under estoppel by record, it is the record of the earlier proceedings, rather
than the judgment itself, that bars the second proceeding. Brooks v. Bank of Wisconsin Dells,
161 Wis.2d 39, 46, 467 N.W.2d 187, 190 (Ct. App. 1991). Both rules require an identity of parties
and an identity of causes of action or claims in the two proceedings. Id. at 46-47, 467 N.W.2d at
190.
As
we discussed above, we have concluded that claim preclusion does not bar
Henry's second action. Defendants have
not explained how the record, as opposed to the judgment, would bar Henry's
claims. We decline to review the issue
further. Fritz v. McGrath,
146 Wis.2d 681, 686, 431 N.W.2d 751, 753 (Ct. App. 1988).
Accordingly,
we reverse the order for summary judgment and remand to the trial court for
further proceedings.
By
the Court.—Order reversed and
cause remanded.
Not
recommended for publication in the official reports.
[1] We affirmed the summary judgment on appeal in
Henry v. Riverwood Clinic, No. 94-1250, unpublished slip op. (Ct.
App. June 15, 1995).
[2] The trial court granted defendants' motion
for "dismissal or, in the alternative, summary judgment" without
specifying which it was granting.
However, because matters outside the pleadings were presented to and not
excluded by the trial court, we must construe the order as one for summary
judgment. See
§ 802.06(2)(b), Stats.
[3] Henry argues that the defendants should be
judicially estopped from raising claim preclusion because they argued in the
first action that the conspiracy claims did not arise out of the same transaction
as the breach of contract claim.
Because we conclude claim preclusion does not apply, we do not address
this argument.
[4] The supreme court has adopted the terms
"claim preclusion" to replace "res judicata" and
"issue preclusion" to replace "collateral estoppel." Northern States Power Co. v. Bugher,
189 Wis.2d 541, 550, 525 N.W.2d 723, 727 (1995). We do likewise.
[5] Defendants contend that the trial court
denied the proposed amendment on the basis of timeliness, rather than because
the conspiracy and intentional interference claims constituted separate causes
of action. We disagree. The trial court emphasized that it gave
"very little weight" to the late filing of the proposed amendment and
later stated that "the conspiracy scenario is a whole separate
claim."
[6] The transactional view is described in Restatement (Second) of Judgments § 24
cmt. a:
The present trend
is to see [a] claim in factual terms and to make it coterminous with the
transaction regardless of the number of substantive theories, or variant forms
of relief flowing from those theories, that may be available to the plaintiff;
regardless of the number of primary rights that may have been invaded; and
regardless of the variations in the evidence needed to support the theories or
rights. The transaction is the basis of
the litigative unit or entity which may not be split.
[7] Defendants point out that Henry did not
include the common law conspiracy claim and the intentional interference claims
in the proposed amendments in the first action. Defendants argue that claim preclusion bars the additional claims
in the second action because Henry could have brought them in the first action
but did not. However, each of the
additional claims implicate the same difficulties cited by the trial court in
dismissing the statutory conspiracy claims:
the complications of adding six individual defendants, potential
confusion of the issues for the jury, and questions of the individual
defendants' intent. We conclude that
had Henry attempted to raise the intentional interference claims in the first
action, they would have suffered the same fate as the conspiracy claims. The additional claims, like the statutory
conspiracy claim, are thus not barred by issue preclusion.
[8] Even where there is an identity of issues
which have been actually litigated, issue preclusion may still not be applied
to a particular case unless the application of issue preclusion conforms with
principles of fundamental fairness. Michelle
T. v. Crozier, 173 Wis.2d 681, 698, 495 N.W.2d 327, 335 (1993). Because we conclude that defendants have
failed to show an identity of the issues, we do not address whether application
of issue preclusion would conform with the principles of fundamental fairness
in this case.
[9] A trial court does not decide issues of fact
in a summary judgment proceeding, but may only determine whether a genuine
factual issue exists. See State
Bank of La Crosse v. Elsen, 128 Wis.2d 508, 511-12, 383 N.W.2d 916,
917-18 (Ct. App. 1986).
[10] We concluded likewise on appeal. See Henry v. Riverwood Clinic,
No. 94-1250, unpublished slip op. at 11 (Ct. App. June 15, 1995) (Henry's
assertions regarding participation in advancing her husband's claims showed
only that the Riverwood Board concluded that her continued employment was
contrary to the clinic's best interests and potentially injurious to its
business).