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COURT OF APPEALS DECISION DATED AND RELEASED November
9, 1995 |
NOTICE |
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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. 93-1397
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT IV
IN THE
MATTER OF BOWMAN ENTERPRISES,
INC.,
ET AL V. DANE COUNTY DAIRY,
INC.,
ET AL:
DONALD
HUE,
Appellant,
v.
MARY
ANN TERPSTRA (FORMERLY BOWMAN),
Defendant-Respondent.
APPEAL
from an order of the circuit court for Dane County: GERALD C. NICHOL, Judge. Reversed.
Before
Gartzke, P.J., Dykman and Sundby, JJ.
SUNDBY,
J. Attorney Donald Hue appeals from an order entered February
22, 1993, finding that he commenced and maintained a frivolous action contrary
to § 814.025(1) and (3)(b), Stats.[1] The trial court raised the question of the
frivolousness of the underlying action sua sponte and permitted the
defendant, Mary Ann Terpstra (formerly Bowman), to bring a motion for costs and
fees under § 814.025. The trial
court was incensed that Hue would bring an action on behalf of Bowman
Enterprises, Inc. and Bowman Farms, Inc. (collectively "Bowman")
against Ms. Terpstra for contribution to a back wage judgment entered against
the parties pursuant to the complaint of the National Labor Relations Board
(NLRB) where Hue failed to timely answer NLRB's complaint and represented Ms.
Terpstra before NLRB and the Seventh Circuit Court of Appeals. We conclude that Hue's possible malpractice
and conflict of interest do not make the underlying action frivolous. Ms. Terpstra's remedy to protect herself
from Hue's conflict of interest was to move to disqualify him from appearing in
Bowman's action. See Berg
v. Marine Trust Co., 141 Wis.2d 878, 416 N.W.2d 643 (Ct. App.
1987). If she has been damaged by Hue's
malpractice, she may have a cause of action against him. However, whether this action for
contribution is frivolous must be determined by examining whether the action
has a reasonable basis in law or equity and is well-grounded in fact.[2] Hue's argument that the trial court erred
when it found that he represented Terpstra is moot because our decision is
based on an examination of the underlying action and not on Hue's relation to
any of the parties.
The
ultimate conclusion whether a party or an attorney has commenced or maintained
a frivolous action is a question of law which we decide independently of the
conclusion of the circuit court. Stern
v. Thompson & Coates, Ltd., 185 Wis.2d 220, 236, 517 N.W.2d 658,
664 (1994).
The
liability of the parties herein for the judgment in favor of the employees is
joint and several. Where liability is
joint and several, if one party is forced to pay more than his or her share of
the liability, he or she has a claim against another responsible party for
contribution. See Brown v.
LaChance, 165 Wis.2d 52, 64, 477 N.W.2d 296, 302 (Ct. App. 1991). It is undisputed that Bowman paid the entire
judgment. Unless there is something in
the facts that makes it inequitable for Ms. Terpstra to pay her share of NLRB's
judgment, Bowman has a claim against her to recover her share of the
judgment. It is true that NLRB obtained
a judgment against her by default caused by Hue's negligence; however, any
estoppel which could be invoked against him does not extend to Bowman. Though Hue was both legal counsel and a
director of Bowman, the record does not show that he had an ownership interest
in Bowman's companies.
On
April 11, 1984, Local 695, representing the employees of Dane County Dairy
(Dairy), filed charges with NLRB alleging that Dairy had laid off Dairy
employees and transferred bargaining unit work to other parties. The trial court found that Dairy laid off
these employees because they had cooperated in past NLRB proceedings against
Dairy and presented affidavit evidence against Dairy.
On
June 13, 1984, NLRB issued a complaint against Dairy and the other parties to
this action, alleging that they constituted a single enterprise. NLRB sought back pay and injunctive
relief. Hue represented all of the
named parties except Duane Bowman, who represented himself and Dairy. Hue failed to file a timely answer to NLRB's
complaint and the board moved for summary judgment. Finally, on December 11, 1984, Hue filed a brief requesting that
the board accept the parties' answer.
The board rejected his brief and held that the parties had not shown
good cause for failing to file a timely answer.
NLRB
found that each of the parties was an alter ego of Dairy. It entered summary judgment ordering Dairy
to cease and desist from its unfair labor practices. It also ordered Dairy to make the laid-off employees whole for
any loss of earnings. NLRB's judgment
was affirmed by the Seventh Circuit Court of Appeals. NLRB v. Dane County Dairy, 795 F.2d 1313 (7th Cir.
1986). Thereafter, the board moved for
sanctions against Hue for failing to answer its complaint; for contempt of NLRB
orders; and for failure to make a reasonable inquiry into the facts and the law
and "to deal with clearly established and binding precedent contrary to
his client's position." NLRB found
that Hue's actions "have plainly been both disingenuous and
dilatory." NLRB imposed monetary
sanctions against him.
The
court affirmed NLRB's finding that Dairy and the other parties to this action
"are affiliated business enterprises and are a single integrated business
[and] are alter egos of one another." Id. at 1322.
The court noted that the parties failed to offer affidavits, depositions
or documentary evidence to establish their defense to the alter ego
claim. The court also concluded that
the allegations of alter ego status in the complaint were deemed to be
admitted by the parties' failure to file a timely answer. Id. at 1323.
NLRB's judgment was
satisfied by Bowman's rent receipts which NLRB had made subject to a protective
order, and Olympia M. Bowman's personal check in the amount of $144,257.22,
payable to Bowman Farms, Inc. and NLRB.
On May 23, 1989, NLRB notified Hue that the cases against Dairy and the
other defendants were "closed."
We
see nothing in these facts which makes Bowman's contribution action
frivolous. The elements of a contribution
claim are: "(1) joint
causally negligent wrongdoers, (2) common liability because of such
negligence to the same person and (3) one bears more than his or her fair share
of the burden." Brown,
165 Wis.2d at 64, 477 N.W.2d at 302.
These elements are present here.
Perhaps Ms. Terpstra could have avoided a judgment against her if Hue
had not been dilatory. She may have a
cause of action against Hue for legal malpractice. However, once NLRB obtained a judgment against her which Bowman
paid, Bowman had a possible claim against her for contribution. Whether Bowman can succeed in that action is
not the test of frivolousness; the test is whether Bowman's claim
"admitted of lawyer-like argument such as courts should listen
to." Kelly v. Clark,
192 Wis.2d 633, 662, 531 N.W.2d 455, 465 (Ct. App. 1995). Bowman's claim meets that test.
By
the Court.—Order reversed.
Not
recommended for publication in the official reports.
[1] Section 814.025(1) and (3)(b), Stats., provide in part:
(1) If an action or
special proceeding commenced or continued by a plaintiff ... is found, at any
time during the proceedings or upon judgment, to be frivolous by the court, the
court shall award to the successful party costs determined under s. 814.04 and
reasonable attorney fees.
....
(3) In order to
find an action, special proceeding, ... to be frivolous under sub. (1), the
court must find one or more of the following:
....
(b) The party or
the party's attorney knew, or should have known, that the action, special
proceeding, ... was without any reasonable basis in law or equity and could not
be supported by a good faith argument for an extension, modification or
reversal of existing law.