PUBLISHED OPINION
Case No.: 96-0827
Complete Title
of Case:
STEPHEN G. WALKER,
Plaintiff-Appellant,
v.
MONTE B. TOBIN,
COLLEEN F. TOBIN and
TIRES NATIONWIDE, INC.,
Defendants-Respondents.
Submitted on Briefs: December 26, 1996
Oral Argument:
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: February 19, 1997
Opinion Filed: February
19, 1997
Source of APPEAL Appeal from an order
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Ozaukee
(If
"Special", JUDGE: WALTER J. SWIETLIK
so indicate)
JUDGES: Snyder, P.J., Brown and Anderson, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn behalf of the plaintiff-appellant, the cause was
submitted on the briefs of Michael D. Dean of Waukesha.
Respondent
ATTORNEYSOn behalf of the defendants-respondents, the cause was
submitted on the briefs of Joseph C. Niebler, Jr. of Niebler &
Muren, S.C. of Brookfield.
COURT OF
APPEALS DECISION DATED AND
RELEASED FEBRUARY
19, 1997 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 96-0827
STATE OF WISCONSIN IN
COURT OF APPEALS
STEPHEN
G. WALKER,
Plaintiff-Appellant,
v.
MONTE
B. TOBIN,
COLLEEN
F. TOBIN and
TIRES
NATIONWIDE, INC.,
Defendants-Respondents.
APPEAL
from an order of the circuit court for Ozaukee County: WALTER J. SWIETLIK, Judge. Reversed and cause remanded.
Before
Snyder, P.J., Brown and Anderson, JJ.
ANDERSON,
J. Stephen
G. Walker appeals from an order barring his motion to set aside a stipulation
and settlement. The trial court
determined that ten of his twelve claims were based on fraud of an adverse
party and were therefore time barred.[1] The trial court further concluded that §
806.07(2), Stats., only allows an
independent action that alleges a fraud on the court; since Walker did not
allege fraud on the court, an independent action was not available to him. We conclude that § 806.07(2) does permit
Walker’s independent equitable action based on fraud. Accordingly, we remand to the trial court for a determination
consistent with this opinion.
In
addition, Monte B. Tobin, Colleen F. Tobin and Tires Nationwide, Inc. (collectively
Tobin) filed a motion for an award of attorney's fees in connection with the
defense of this appeal. Because
Walker’s appeal is not frivolous, the respondent’s motion is denied.
This
action stems from a series of loans between March and November 1990 that Walker
provided to help Tobin start Tires Nationwide, Inc. (TNI). TNI was set up to establish a nationwide
network of dealers to sell tires through mobile truck service centers. However, TNI went out of business in late
1990 or early 1991. Walker’s total
losses were allegedly in excess of $300,000.
In
early 1991, Walker filed suit in Ozaukee County against Tobin seeking
enforcement of an earlier agreement that required Tobin to pay monthly payments
of $2371.88 and to allow Walker to inspect the TNI books. Walker also alleged additional claims
arising from fraud, contract, fraudulent conveyances, security interests and
negotiable instruments in connection with the prior business relationship involving
TNI. The lawsuit and the additional
claims were resolved through a written mutual release and stipulation signed by
the parties on September 4, 1991. An
addendum to the stipulation required Tobin to pay off a TNI account, Walker was
allocated certain tax losses and the “computer/walkie talkie resolved in favor
of Walker to Monte as he see [sic] fit.”
An order was signed on October 16, 1991, dismissing the action on its
merits with prejudice and without further costs to either party.
In
October 1993, Walker sought to enforce a portion of the 1991 settlement by
demanding reimbursement for the payment of the TNI account. Tobin reimbursed Walker in November.
Walker
then filed an original complaint in Milwaukee County, setting forth five
claims. Tobin filed a motion for
summary judgment; however, the circuit court determined that Ozaukee County was
the proper venue and on its own motion ordered the case transferred back to
Ozaukee County.
After
the case was transferred to Ozaukee County, Walker filed a motion to amend the
complaint dated April 5, 1995, consisting of twelve causes of action. The motion was granted. The claim relevant to this appeal alleged
that Tobin made numerous misrepresentations that induced Walker to enter into
the 1991 stipulation and specifically sought relief from the stipulation on the
grounds that Tobin procured it by fraud.
Tobin again filed a motion for summary judgment relying on the 1991
stipulation executed by the parties.
The trial court granted Tobin’s motion as to ten of the twelve claims,
concluding that “all of the causes of action ¼ are based on fraud of an adverse party and therefore
the Motion for Relief was limited to one year after the order or stipulation
was made.” As to the provision allowing
for an independent action, the trial court determined that it only applies to
causes of action based upon an alleged fraud on the court. Since Walker did not allege a fraud on the
court, the trial court found that “an independent action is not available to
[Walker].” Walker waived the two
surviving claims in order to expedite this appeal.
We
review a motion for summary judgment using the same methodology as the trial
court. See M & I First Nat’l
Bank v. Episcopal Homes Management, Inc., 195 Wis.2d 485, 496, 536
N.W.2d 175, 182 (Ct. App. 1995). That
methodology is well known, and we will not repeat it here except to observe
that summary judgment is appropriate when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. See M & I First Nat’l Bank,
195 Wis.2d at 496-97, 536 N.W.2d at 182; § 802.08(2), Stats.
Although
the trial court dismissed Walker’s complaint by an order for summary judgment,
the threshold issue before us is whether § 806.07(2), Stats., preserves equitable relief from judgments or final
orders which are procured by fraud.
This involves the interpretation of a statute. The interpretation of a statute presents a question of law which
we review de novo. See NBZ, Inc.
v. Pilarski, 185 Wis.2d 827, 835, 520 N.W.2d 93, 95 (Ct. App.
1994). This case also requires a
determination of whether the circuit court misused its discretion in denying
relief under § 806.07(2). See Schauer
v. DeNeveu Homeowners Ass’n, 194 Wis.2d 62, 70, 533 N.W.2d 470, 473
(1995).
Here,
the trial court found that the provision allowing for an independent action
only applies to causes of action based upon an alleged fraud on the court,
which Walker failed to allege. We
disagree; rather, we conclude that a party may also commence an independent equitable
action under § 806.07(2), Stats. Section 806.07(2) provides: “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.” This statement clearly furnishes a party
with two additional avenues for relief from a judgment or order, with Walker’s
falling under the former.
Prior
to the advent of the Wisconsin Rules of Civil Procedure (WRCP), it was
well-established law that four avenues of relief were available to a party
challenging the enforcement of the judgment; three were statutory and the
fourth was an independent action in equity to restrain the enforcement of an
unconscionable judgment. See Conway
v. Division of Conservation, 50 Wis.2d 152, 156 n.1, 183 N.W.2d 77, 79
(1971);[2]
see also State v. Conway, 40 Wis.2d 429, 435, 162 N.W.2d
71, 75 (1968). Courts have long had the
equity power to set aside a judgment for fraud even though the time for appeal
has expired. See State
Cent. Credit Union v. Bayley, 33 Wis.2d 367, 373 n.8, 147 N.W.2d 265,
269 (1967).
Equitable
relief against a judgment, although not regarded with favor by the courts, may
nevertheless be had where sufficient grounds appear; and under some
circumstances, the remedy in equity is exclusive. See Dunn v. Dunn, 258 Wis. 188, 192, 45 N.W.2d 727,
729 (1951) (citing 49 C.J.S., Judgments § 341 (1947)). Upon a showing of proper circumstances, and
when required by the ends of justice, appropriate relief against a judgment may
be had in equity, the power of equity in this connection being inherent and
existing irrespective of any statute authorizing such relief. A bill attacking a judgment is not regarded
with favor by the courts and will lie only in exceptional cases. Such relief may be had, not as of right, but
in the exercise of sound legal discretion, and each case must stand on its own
peculiar merits. See id.,
(citing 49 C.J.S., Judgments § 341 (1947)).
The
adoption of § 806.07, Stats.,
within the WRCP “attempt[ed] to achieve a finer balance between the policy
favoring the finality of judgments and the requirements of substantial justice
than that represented by former section 269.46.” Patricia Graczyk, The New Wisconsin Rules of Civil Procedure
Chapters 805-807, 59 Marq. L. Rev.
671, 727 (1976). The new rule set out a
procedure to relieve either a party or his or her legal representative from
judgment and expanded the number of circumstances under which a motion to
vacate a judgment could be sought. See
id. Subsection (2) also
“add[ed] an important reminder that orders of relief from judgment do not
reduce the court’s power to entertain an independent equitable action, for
example, an action based on fraud, to relieve a party from judgment.”[3] Id.
An
independent action has been described as:
“[T]he facts upon which it is sought to avoid the effect of the alleged
fraudulent judgment ¼ [which] constitute a pretended separate cause of action
¼.” See Zinc Carbonate Co. v. First
Nat’l Bank, 103 Wis. 125, 138, 79 N.W. 229, 233 (1899). More precisely, federal courts have defined
an independent action, under Rule 60(b) of the Federal Rules of Civil
Procedure,[4]
as “actions that ‘established doctrine’ had held to be within the court’s power
prior to enactment of the rules of procedures.” Travelers Indemnity Co. v. Gore, 761 F.2d 1549,
1551 (11th Cir. 1985) (quoting Fed. R.
Civ. Proc. 60(b) advisory committee notes). The elements of an independent action are:
(1) a
judgment which ought not, in equity and good conscience, to be enforced;
(2) a
good defense to the alleged cause of action on which the judgment is founded;
(3)
fraud, accident, or mistake which prevented the [plaintiff] in the judgment
from obtaining the benefit of his [claim];
(4)
the absence of fault or negligence on the part of [plaintiff]; and
(5) the absence of any remedy at law.
See id. (quoted sources omitted).
It
is clear that § 806.07(2), Stats.,
allows a party to commence an independent equitable action and we so hold. Accordingly, the trial court’s order to the
contrary must be reversed.[5] However, it does not appear from the record
that the parties presented evidence or specifically addressed whether Walker’s
first amended complaint constitutes an independent action or whether, as Walker
alleges in claim one, the misrepresentations recited in paragraph 17 constitute
fraud, thereby allowing Walker relief from the stipulation. Since the trial court has not had the
opportunity to make these determinations, we remand the case to allow it to do
so.[6]
Although
Tobin has not raised a timeliness argument beyond the one-year statute of
limitations, we do note that § 806.07(2), Stats.,
does not prescribe a time limitation for bringing independent actions. “In the absence of a controlling statute,
the only time limitation is the equitable doctrine of laches.” Crosby v. Mills, 413 F.2d
1273, 1276 (10th Cir. 1969); see also Suburbon Motors of Grafton,
Inc. v. Forester, 134 Wis.2d 183, 187, 396 N.W.2d 351, 353 (Ct. App.
1986) (actions at law are governed by statutes of limitations and actions in
equity are governed by considerations of laches), and McDermott v.
Lumbermen’s Nat’l Bank, 236 Wis. 554, 566, 295 N.W. 784, 789 (1941) (an
existence of suspicion of fraud does not constitute laches where facts to
justify the suspicion are not within the knowledge of the petitioners).
By
the Court.—Order reversed and
cause remanded.
[1] Although claim numbers two and nine were not
dismissed, Walker waived them “solely for purposes of permitting the Court to
issue a final order so that appeal of its decision dated February 20, 1996, may
be expedited.”
[2] The three statutes were: (1) § 269.46, Stats. (relief from a judgment on the grounds of mistake,
inadvertence, surprise or excusable neglect at any time within one year); (2) §
270.50, Stats. (motion for new
trial based on newly-discovered evidence at any time within one year); and (3)
§ 274.36, Stats. (further
proceedings in trial court where supreme court orders further action or
proceedings). See Conway
v. Division of Conservation, 50 Wis.2d 152, 156 n.1, 183 N.W.2d 77, 79
(1971).
[3] A statute does not abrogate any rule of
common law unless the abrogation is so clearly expressed as to leave no doubt
of the legislature’s intent. See NBZ,
Inc. v. Pilarski, 185 Wis.2d 827, 836, 520 N.W.2d 93, 96 (Ct. App.
1994). Since the legislature did not
expressly abolish equitable actions, it follows that this remedy is compatible
with § 806.07, Stats., motions.
[4] For assistance in the construction of §
806.07, Stats., we may refer to
federal cases interpreting Rule 60(b) of the Federal Rules of Civil Procedure,
upon which § 806.07 is based. See Nelson
v. Taff, 175 Wis.2d 178, 187, 499 N.W.2d 685, 689 (Ct. App. 1993).
[5] It is also obvious from our holding in this
case that Tobin’s motion for attorney's fees under § 809.25(3), Stats., is unwarranted, and therefore,
it is denied.
[6] If the trial court finds fraud, then it may
set aside the stipulation and return to the original complaint. If the trial court concludes that Walker
failed to plead fraud, then the stipulation stands. Because this is an action in equity, the remedies for actions in
law, such as damages, are not available to Walker. See Kramer v. Bohlman, 35 Wis.2d 58, 64-65,
150 N.W.2d 357, 360 (1967).