COURT OF APPEALS DECISION DATED AND FILED February 5, 2008 David R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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Appeal No. |
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STATE OF |
IN COURT OF APPEALS |
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DISTRICT III |
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Bruce G. Phelps,
Plaintiff-Appellant, v. Harvey Phelps, Jr. and Karen Phelps,
Defendants-Respondents. |
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APPEAL
from a judgment of the circuit court for
Before
¶1 PER CURIAM. Bruce Phelps appeals a
summary judgment dismissing his adverse possession and trespass action against
his brother, Harvey Phelps. Bruce
contends the circuit court erred by concluding his claims were barred under the
doctrine of claim preclusion because of a prior action by
¶2 We conclude that Bruce’s claims are not barred. Therefore, we reverse the summary judgment and remand to the circuit court for further proceedings on Bruce’s claims.
BACKGROUND
¶3 Bruce and Harvey each own two forty-acre parcels of adjacent
real estate, with
¶4 When
¶5 A couple months later, Harvey had his parcels surveyed and
discovered that an apparent boundary fence did not sit on the surveyed
boundary, but instead was about sixty feet on his side of the surveyed boundary
line.
¶6 Then, in the present action, Bruce sued
DISCUSSION
¶7 Pursuant to Wis. Stat.
§ 802.07(1),[1]
the permissive counterclaim statute, the general rule is that a defendant who can
bring a counterclaim, but fails to do so, is not precluded from maintaining a
subsequent action on that claim. Menard,
282
¶8 For the common-law compulsory counterclaim rule to apply, the
elements of claim preclusion must first be present. Menard, 282
¶9 Here, the parties disagree about whether the second element
of claim preclusion exists—whether there was an identity between Harvey’s and
Bruce’s claims. To determine whether an
identity exists,
¶10 Harvey and Bruce both rely upon our supreme court’s decision in
Menard.[2] In that case, Menard purchased lighting
fixtures from Liteway and failed to pay for them.
¶11 Our supreme court concluded that Menard’s claims were barred by
the doctrine of claim preclusion and the common-law compulsory counterclaim
rule.
¶12 The court also emphasized that the facts underlying Menard’s
claims existed and were known when Liteway commenced its initial suit.
¶13 Ultimately, the Menard court’s holding was limited and fact-specific. The court described the issue and its holding as follows:
The issue presented is whether a buyer’s claims based on credit for returned goods are barred under the doctrine of claim preclusion and the common-law compulsory counterclaim rule when the seller had previously sued the buyer for breach of contract based on unpaid invoices, a default judgment was entered due to the buyer’s failure to timely file an answer, the parties had terminated their business relationship prior to the instigation of the first suit, the defective goods were returned prior to the time the first lawsuit was filed, and the issue of credit for the defective goods was the basis of the entire dispute between the parties that led to the filing of the initial lawsuit. We hold that under these facts, the doctrine of claim preclusion and the common-law compulsory counterclaim rule bar any subsequent suit by the buyer for credit for the returned goods.
¶14 In light of Menard, we conclude that the doctrine of claim preclusion and the common-law compulsory counterclaim rule do not bar Bruce’s claims. Bruce’s and Harvey’s claims simply do not arise from a common nucleus of operative facts.
¶15 The only connection between their claims is a single fact—
¶16 Also, the Menard court relied upon the fact
that Menard did not pay for the goods for which Liteway sought payment in the
initial action because Menard
allegedly returned those goods.
¶17 Finally, in Menard, the court emphasized that
the facts underlying Menard’s claims existed and were known before Liteway
commenced its action. Menard,
282
By the Court.—Judgment reversed and cause remanded for further proceedings.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
[1] All references to the Wisconsin Statutes are to the 2005-06 version unless otherwise noted.
[2] Bruce
also relies on our supreme court’s decision in Kruckenberg v. Harvey,
2005 WI 43, 279 Wis. 2d 520, 694 N.W.2d 879, particularly the
court’s commentary about how the facts in that case might relate to the second
element of claim preclusion. Kruckenberg
is not useful here for several reasons.
The Kruckenberg court expressly declined to decide the claim
preclusion issue, instead creating an exception to that doctrine. Also, Kruckenberg did not involve the
permissive counterclaim statute or the common-law compulsory counterclaim rule.
Finally, unlike here, both cases in Kruckenberg revolved around boundary
disputes, which was the basis for the discussion relied upon by Bruce.
[3] Of course, another common fact is the identity of the parties involved, but that fact relates to a separate element of the claim preclusion analysis not at issue here.