Case Title: Menard, Inc. v. Liteway Lighting Products

Citation: 2005 WI 98

Docket Number: 2003AP001391

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2005-06-29T00:00:00Z

Document:
2005 WI 98 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2003AP1391 
COMPLETE TITLE: 
 
 
Menard, Inc.,  
          Plaintiff-Respondent-Petitioner, 
     v. 
Liteway Lighting Products,  
          Defendant-Appellant. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2004 WI App 95 
Reported at: 273 Wis. 2d 439, 685 N.W.2d 365 
(Ct. App. 2004 – Published) 
 
 
OPINION FILED: 
June 29, 2005   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
February 2, 2005   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Eau Claire   
 
JUDGE: 
Lisa K. Stark   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
CROOKS, J., dissents (opinion filed). 
BUTLER, J., joins the dissent.   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiff-respondent-petitioner there were briefs 
by Stephanie L. Finn, Webster A. Hart and Herrick & Hart, S.C., 
Eau Claire, and oral argument by Webster A. Hart. 
 
For the defendant-appellant there was a brief by Carol S. 
Dittmar, Teresa E. O’Halloran and Garvey, Anderson, Johnson, 
Geraci & Mirr, S.C., Eau Claire, and oral argument by Carol S. 
Dittmar. 
 
 
2005 WI 98 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2003AP1391  
(L.C. No. 
01 CV 471) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Menard, Inc.,  
 
          Plaintiff-Respondent-Petitioner, 
 
     v. 
 
Liteway Lighting Products,  
 
          Defendant-Appellant. 
 
FILED 
 
JUN 29, 2005 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
JON P. WILCOX, J.   Menard, Inc. (Menard) seeks review 
of a published court of appeals decision, Menard, Inc. v. 
Liteway Lighting Products, 2004 WI App 95, 273 Wis. 2d 439, 685 
N.W.2d 365, that reversed a judgment of the Eau Claire County 
Circuit Court, Lisa K. Stark, Judge, in favor of Menard and an 
order denying summary judgment to Liteway Lighting Products 
(Liteway).   
¶2 
The court of appeals concluded that Menard's lawsuit 
against Liteway, which seeks credit for allegedly defective 
products Menard returned to Liteway, was barred by the doctrine 
of claim preclusion based on Liteway's previous suit against 
No. 
2003AP1391   
 
2 
 
Menard for nonpayment of invoices.  Id., ¶1.  Because it is 
undisputed that all of the allegedly defective goods for which 
Menard seeks credit in its suit against Liteway were returned 
prior to Liteway's original action for unpaid invoices, the 
issue of returned products formed the basis of the dispute 
between the parties from the beginning, and allowing Menard to 
recover in the present case would undermine Liteway's original 
judgment, we conclude that Menard's suit is barred under the 
doctrine of claim preclusion and the common-law compulsory 
counterclaim rule.  Therefore, we affirm the decision of the 
court of appeals.   
I. 
FACTUAL BACKGROUND AND PROCEDURAL POSTURE 
¶3 
Menard purchased lighting products from Liteway for 
approximately six years beginning sometime in late 1993 until 
December 1999.  During their business relationship, Menard often 
held back sums of money due to Liteway as "credit" for products 
Menard claimed were defective.  Following the cessation of their 
business relationship, the parties began disputing the amount of 
money Menard owed Liteway.   
¶4 
Menard filed a complaint against Liteway on August 23, 
2001, alleging that it had returned some of the products due to 
their defective condition and that Liteway had not reimbursed it 
No. 
2003AP1391   
 
3 
 
for the returns.1  Menard alleged that as a result, Liteway had 
been unjustly enriched and that it breached its obligations 
under the Uniform Commercial Code (UCC).  Menard sought damages 
in the sum of $315,345.54, representing the cost of all goods 
returned plus storage and shipping fees.  
¶5 
Liteway answered, asserting claim preclusion as an 
affirmative 
defense. 
 
Specifically, 
Liteway 
alleged 
that 
Menard's claims could have been brought in a prior action 
Liteway filed against Menard.   
¶6 
Liteway's previous action began on October 19, 2000, 
when it filed suit for breach of contract against Menard, 
seeking a money judgment of $354,954.77 for unpaid invoices on 
lighting fixtures as of September 1, 2000.  The record indicates 
that Liteway attached copies of accounting records to its 
complaint in order to establish the amount owed by Menard.  The 
record reflects that Menard stopped buying products from Liteway 
by at least December 1999, and that the parties began disputing 
the amount owed to Liteway as early as August 18, 1999.  During 
oral argument before this court, counsel for Menard conceded 
that all the allegedly defective goods were discovered and 
returned to Liteway prior to the time when Liteway filed suit.   
                                                 
1 While Menard's complaint stated that Liteway failed to 
reimburse it for any of the returns, Menard later admitted in 
its "Position Statement" that Liteway had, in fact, credited 
Menard for returns, although not in the amount claimed by 
Menard.  Also it appears that not all of the defective goods 
were returned; according to Menard, some were "field destroyed" 
at Liteway's request.   
No. 
2003AP1391   
 
4 
 
¶7 
Menard's answer was due on December 11, 2000.  On 
December 12, 2000, Liteway filed a motion for a default 
judgment.  Menard, realizing it was in default, filed an 
untimely answer on December 12, 2000.2  Menard also filed a 
motion to enlarge the time to respond to Liteway's complaint on 
this date.  The Eau Claire County Circuit Court, Eric J. Wahl, 
Judge, granted Liteway's motion for default judgment on December 
13, 2000, and docketed it on December 14, 2000.    
¶8 
On December 27, 2000, a hearing was held on Menard's 
motion to enlarge the time to file its answer.  During the 
hearing, Menard alleged that it should be allowed to answer 
based on excusable neglect.  Menard also asserted that while it 
owed Liteway money, it was not the amount alleged in the 
complaint.  Following the hearing, the circuit court entered an 
order on January 8, 2001, staying the effect of the default 
judgment for 30 days in order to provide Liteway an opportunity 
to respond to Menard's motion to enlarge the time to answer.  
The circuit court also strongly advised the parties to attempt 
to settle the matter out of court and stated its belief that 
Menard's failure to timely answer was not excusable neglect.   
¶9 
On February 15, 2001, Menard filed a motion to extend 
the stay of enforcement of the default judgment.  Attached to 
this motion was an affidavit of Dawn Sands, coordinator of 
Menard's legal department, which discussed the parties' dispute 
                                                 
2 Apparently, there was some confusion between Menard's in-
house counsel and outside attorney as to who was handling the 
case, although both knew of the Liteway suit.    
No. 
2003AP1391   
 
5 
 
over the amount of money Menard owed Liteway.  In the affidavit, 
Ms. Sands confirmed that Menard stopped buying products from 
Liteway by at least December 1999, and that the parties began 
disputing the amount owed to Liteway as early as August 18, 
1999.  This affidavit also contained an internal company 
memorandum from Menard indicating that the dispute between the 
parties over amounts due to Liteway related to customer returns.  
The Menard memorandum stated:  "We have held back payment in 
order to cover future customer returns. . . . The difference 
between their numbers and our numbers are most likely customer 
returns."  (Emphasis added.)   
¶10 On June 24, 2001, a status conference was held that 
resulted in the circuit court entering a scheduling order on 
July 27, 2001.  The scheduling order directed Menard and Liteway 
to file briefs discussing, inter alia, whether Menard's failure 
to timely answer constituted excusable neglect and whether 
Menard's claims based on return of defective products would 
constitute compulsory counterclaims that would be precluded if 
the default judgment were to stand.  Menard filed its brief on 
August 31, 2001, arguing:  1) the circuit court erred in 
granting the default judgment; 2) Menard's failure to timely 
answer was excusable neglect because of ongoing discussions with 
Liteway and miscommunication between Menard's legal staff; 3) 
Menard was entitled to a hearing on damages; and 4) Menard's 
claims for credit for defective products did not constitute 
compulsory counterclaims.   
No. 
2003AP1391   
 
6 
 
¶11 The same day Menard filed its brief, it filed the 
present action against Liteway.  As noted, Menard alleged that 
Liteway had been unjustly enriched and that it breached its 
obligations under the UCC.   
¶12 The 
circuit court 
subsequently entered 
an 
order 
lifting the stay on enforcement of the default judgment on 
October 9, 2001.  The circuit court stated:  "Menards has now 
attempted to avoid the effect of its default during December, 
2000 by raising various procedural arguments and again claiming 
its failure to answer within the statutory time limits was 
excusable."  The court also noted that Menard had, in the year 
since the default judgment was entered, continuously attempted 
to litigate the dispute by raising various claims and defenses 
rather than attempting to resolve the controversy.  Thus, the 
circuit court entered an order that lifted the stay on the 
default judgment and granted judgment to Liteway in the amount 
prayed for plus costs and one year's statutory interest.  Menard 
did not satisfy the default judgment until November 16, 2001.  
Menard, 273 Wis. 2d 439, ¶24.   
¶13 Menard's present action against Liteway proceeded 
before the Honorable Lisa K. Stark, and on November 16, 2001, 
Liteway filed a motion for summary judgment, arguing that 
Menard's action was barred by claim preclusion.  In an oral 
ruling on February 7, 2002, the circuit court entered a partial 
ruling in favor of Menard but allowed Liteway to supplement the 
record before it entered a final decision.  Liteway's supplement 
contained much of the circuit court record in its previous 
No. 
2003AP1391   
 
7 
 
action.  On May 3, 2002, the circuit court entered a formal 
order denying Liteway's motion for summary judgment.   
¶14 The matter was tried to the court, and on April 14, 
2003, a judgment was entered in favor of Menard.  An amended 
judgment was filed on May 14, 2003, nunc pro tunc to May 12, 
2003, in the amount of $140,478.41.  On May 20, 2003, Liteway 
filed its notice of appeal.   
¶15 The court of appeals reversed the judgment of the 
circuit court and its order denying summary judgment to Liteway.  
Menard, 273 Wis. 2d 439, ¶1.  The court of appeals, addressing 
the issue of claim preclusion, concluded that Menard's claims 
against Liteway were part of the same transaction that gave rise 
to Liteway's claims against Menard:   
A buyer's return of a set of goods for credit or an 
offset is a component of the transaction that began 
when the seller shipped those goods. 
. . . .  
 . . . The common "nucleus of operative facts" is the 
exchange of goods for payment.  The transaction will 
be complete when Menard no longer has a balance due 
and owing.     
Id., ¶¶14, 18.   
¶16 The court of appeals further reasoned: 
Liteway alleged sufficient information in its first 
complaint for us to conclude there was the single 
transaction as described above. It alleged that it 
sold fixtures to Menard on credit pursuant to a 
contract, that Menard accepted the goods, that Liteway 
sent invoices for payment, and that Menard refused to 
pay for the items.  Menard's claimed return for credit 
of these items is part of the transaction Liteway 
pled.     
No. 
2003AP1391   
 
8 
 
Id., ¶19.   
¶17 Next, the court of appeals concluded that all of 
Menard's claims could have been raised as affirmative defenses 
or counterclaims in Liteway's original action.  Id., ¶21.  The 
court also noted that the factual predicates for both actions 
were in existence at the time Liteway filed suit.  Id., ¶¶22-24.   
¶18 Moreover, the court of appeals ruled that Menard's 
claims in its second suit were covered under the common-law 
compulsory counterclaim rule set forth in A.B.C.G. Enterprises 
v. First Bank Southeast, 184 Wis. 2d 465, 472, 515 N.W.2d 904 
(1994).  The court of appeals reasoned that "Liteway established 
the amount at issue in the invoices in its pleadings[]" and "[a] 
judgment in favor of Menard would thus directly undermine the 
original default judgment that Judge Wahl determined to be 
proper under the circumstances."  Menard, 273 Wis. 2d 439, ¶27.   
¶19 Finally, the court of appeals concluded that claim 
preclusion contained a fundamental fairness prong and that it 
would not be fundamentally unfair "to preclude the claim Menard 
inexcusably neglected to pursue in the first action."  Id., 
¶¶29, 31.  The court of appeals noted that Menard failed to 
resolve the dispute during the year the default judgment was 
stayed, failed to appeal the default judgment, and instead 
attempted 
to 
undermine 
the 
original 
default 
judgment 
by 
instituting the present action in another branch of the circuit 
court.  Id., ¶¶30-31.   
 
 
No. 
2003AP1391   
 
9 
 
II. ISSUE 
¶20 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.   
¶21 We conclude that for purposes of claim preclusion, 
Menard's claims in its second suit are part of the same 
transaction as the claims in Liteway's original suit because 
both suits arise from the same common nucleus of operative 
facts.  It is uncontested that the dispute over the amount of 
money Menard owed Liteway on unpaid invoices was based on 
Menard's practice of taking a "credit" for defective products.  
Further, Menard's claims in its second suit could have been 
raised in Liteway's original action, as the parties had 
terminated their business relationship almost a year before 
No. 
2003AP1391   
 
10 
 
Liteway filed its original complaint and all of the allegedly 
defective goods were returned prior to Liteway's action.   
¶22 Moreover, we conclude that Menard's claims fall under 
the common-law compulsory counterclaim rule because allowing 
Menard to proceed with its present suit would impair Liteway's 
rights as determined in the original action and would undermine 
the validity of the judgment Liteway obtained.  Both suits 
involve the amount of money Menard owed Liteway, and Liteway 
could not have recovered the price of goods sold to Menard if 
those goods were defective.  Therefore, because under the facts 
of this case, Menard's claims fall within the doctrine of claim 
preclusion and the common-law compulsory counterclaim rule, we 
affirm the decision of the court of appeals.     
III. STANDARD OF REVIEW 
 
¶23 This case concerns application of claim preclusion and 
the common-law compulsory counterclaim rule.  Whether claim 
preclusion and the common-law compulsory counterclaim rule apply 
to a given set of facts is a question of law that this court 
decides de novo.  N. States Power Co. v. Bugher, 189 
Wis. 2d 541, 551, 525 N.W.2d 723 (1995); A.B.C.G. Enters., 184 
Wis. 2d at 472.   
IV. ANALYSIS 
 
¶24 Menard advances several arguments as to why the claims 
it asserts in its suit against Liteway should not be barred 
under the doctrine of claim preclusion.  Menard argues that the 
claims asserted in its suit against Liteway are not part of the 
same transaction that gave rise to Liteway's original suit.  
No. 
2003AP1391   
 
11 
 
According to Menard, a claim based on the return of goods is not 
part of the same transaction as a claim seeking payment for the 
sale of those goods.  Menard asserts that treating both claims 
as one transaction conflicts with a buyer's rights under the 
UCC.   
¶25 Further, Menard claims that applying claim preclusion 
and the common-law compulsory counterclaim rule in this instance 
would be inconsistent with Wisconsin's permissive counterclaim 
statute, Wis. Stat. § (Rule) 802.07(1) (1999-2000),3 the limited 
effect 
of 
a 
default 
judgment, 
and 
fundamental 
fairness.  
Finally, Menard argues that this case should be governed by our 
decision in National Operating L.P. v. Mutual Life Insurance Co. 
of New York, 2001 WI 87, 244 Wis. 2d 839, 630 N.W.2d 116, rather 
than A.B.C.G. Enterprises.  We disagree and affirm.    
¶26 Under the doctrine of 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."'"  N. States Power, 189 Wis. 2d at 550 (quoting 
Lindas v. Cady, 183 Wis. 2d 547, 558, 515 N.W.2d 458 (1994)(in 
turn 
quoting 
DePratt 
v. 
West 
Bend 
Mut. 
Ins. 
Co., 
113 
Wis. 2d 306, 
310, 
334 
N.W.2d 883 
(1983)))(emphasis 
added).  
Claim preclusion has three elements:  "(1) an identity between 
the parties or their privies in the prior and present suits; (2) 
                                                 
3 All subsequent references to the Wisconsin Statutes are to 
the 1999-2000 version unless otherwise noted. 
No. 
2003AP1391   
 
12 
 
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 551.4  Claim preclusion "is 'designed to 
draw a line between the meritorious claim on the one hand and 
the vexatious, repetitious and needless claim on the other 
hand.'"  Id. at 550 (quoting Purter v. Heckler, 771 F.2d 682, 
689-90 (3d Cir. 1985)).   
¶27 Claim 
preclusion, 
in 
addition 
to 
precluding 
a 
plaintiff in a subsequent action from asserting claims that were 
litigated or could have been litigated in a prior action, may 
operate to preclude a plaintiff from asserting claims in a 
subsequent action that the party failed to assert in a previous 
action in which it was a defendant.  A.B.C.G. Enters., 184 
Wis. 2d at 480.  Although "the general rule in Wisconsin [under 
Wis. Stat. § (Rule) 802.07(1)] is that where a defendant may 
interpose a counterclaim but fails to do so, he is not precluded 
from maintaining a subsequent action on that claim[,]" id. at 
476, 
this 
court 
has 
adopted 
the 
common-law 
compulsory 
                                                 
4 Earlier this term in Kruckenberg v. Harvey, 2005 WI 43, 
¶¶55, 62, ___Wis. 2d ___, 694 N.W.2d 879, this court held that 
claim preclusion does not have a fourth, "fundamental fairness," 
element. 
 
We 
held 
that 
unlike 
issue 
preclusion, 
"claim 
preclusion is strictly applied[,]" id., ¶53, and that "an ad hoc 
exception to the doctrine of claim preclusion cannot be 
justified simply by concluding that it is too harsh to deny an 
apparently valid claim by balancing the values of claim 
preclusion against the desire for a correct outcome in a 
particular case."  Id., ¶55.  Therefore, we will not address 
Menard's arguments concerning the equities of applying claim 
preclusion in this case.   
No. 
2003AP1391   
 
13 
 
counterclaim rule set forth in the Restatement (Second) of 
Judgments § 22(2)(b)(1982).  Id.  
¶28 The common-law compulsory counterclaim rule creates an 
exception to the permissive counterclaim statute and bars a 
subsequent action by a party who was a defendant in a previous 
suit if "a favorable judgment in the second action would nullify 
the judgment in the original action or impair rights established 
in the initial action."  Id. at 476-77.  The common-law 
compulsory 
counterclaim 
rule 
operates 
to 
"preserve[] 
the 
integrity and finality of judgments and the litigant's reliance 
on them, by precluding a collateral attack upon a judgment in a 
subsequent proceeding when the attack would completely undermine 
the rights established in the initial judgment."  Id. at 477 
(emphasis 
added).5 
 
Thus, 
for 
the 
common-law 
compulsory 
counterclaim rule to apply, a court must conclude that all the 
elements of claim preclusion are present and that a verdict 
favorable to the plaintiff in the second suit would undermine 
the judgment in the first suit or impair the established legal 
rights of the plaintiff in the initial action.  Id. at 480-82.   
                                                 
5 Further, in relation to default judgments, the doctrine 
serves to provide certainty and finality to litigants because 
"defendants get better notice of what they will lose by 
default."  Kevin M. Clermont, Common-Law Compulsory Counterclaim 
Rule:  Creating Effective and Elegant Res Judicata Doctrine, 79 
Notre Dame L. Rev. 1745, 1754 (Oct. 2004)[hereinafter "Elegant 
Res Judicata Doctrine"].  Although the dissent seems to question 
the legitimacy of the common-law compulsory counterclaim rule, 
it is clearly part of Wisconsin's established law.  See Dissent, 
¶¶69-70 & n.3.   
No. 
2003AP1391   
 
14 
 
 
¶29 In the present case, there is no dispute that there is 
an identity of parties.  In the first suit, Liteway sued Menard 
and obtained a default judgment.  Further, as we recognized in 
A.B.C.G. Enterprises, a default judgment is a final judgment for 
purposes of claim preclusion.  Id. at 481.6  Thus, the resolution 
of the present case depends upon whether there is an identity of 
claims in the two suits and whether a verdict in favor of Menard 
in the second suit would completely undermine the judgment 
Liteway obtained in the first suit or would impair any legal 
rights of Liteway that were established in the first suit.  
 
¶30 We now proceed to examine whether there is an identity 
of claims in Liteway's original suit and Menard's present suit.  
For purposes of determining whether there is an identity of 
claims 
in 
the 
two 
actions, 
Wisconsin 
has 
adopted 
the 
"transactional 
approach" 
from 
the 
Restatement 
(Second) of 
Judgments § 24 (1982).  N. States Power, 189 Wis. 2d at 553.   
In determining whether there is an identity of causes 
of action we must examine the causes of action in both 
suits 
within 
the 
framework of 
the transactional 
analysis adopted from the Restatement (Second) of 
Judgments § 24 (1982).  DePratt, 113 Wis. 2d at 311.  
"Under this analysis, all claims arising out of one 
transaction or factual situation are treated as being 
part of a single cause of action and they are required 
to be litigated together."  Parks v. City of Madison, 
171 Wis. 2d 730, 735, 492 N.W.2d 365 (Ct. App. 1992).  
The concept of a transaction, "connotes a natural 
grouping 
or common 
nucleus of 
operative 
facts."  
Restatement (Second) of Judgments § 24 cmt. b. (1982).  
                                                 
6 See also National Operating L.P. v. Mut. Life Ins. Co. of 
N.Y., 2001 WI 87, ¶105, 244 Wis. 2d 839, 630 N.W.2d 116 (Crooks, 
J., dissenting).   
No. 
2003AP1391   
 
15 
 
In determining if the claims of an action arise from a 
single transaction, we may consider whether the facts 
are related in time, space, origin, or motivation.  
Id.   
A.B.C.G. Enters., 184 Wis. 2d at 480-81.   
 
¶31 Menard argues that the two suits here do not arise out 
of the same transaction because Liteway's original suit was a 
contract action based on nonpayment of invoices, whereas 
Menard's suit is based on a breach of obligations under the UCC.  
Menard states that it is seeking to enforce separate and 
distinct rights under the UCC and takes issue with the court of 
appeals' conclusion that "in the realm of the sale of goods, 
shipment by the seller and acceptance or return by the buyer 
deserve 'treatment as a unit[.]'"  Menard, 273 Wis. 2d 439, ¶18.  
Although we do not agree with the bright-line rule established 
by the court of appeals, we nonetheless conclude that the claims 
in Liteway's original suit and Menard's present suit are part of 
the same transaction.   
¶32 Under the transactional analysis, it is irrelevant 
that "the legal theories, remedies sought, and evidence used may 
be different between the first and second actions.  The concept 
of a transaction connotes a common nucleus of operative facts."  
Kruckenberg, ___Wis. 2d ___, ¶26.  Thus, the fact that Menard is 
asserting different substantive legal theories arising from 
rights and obligations under the UCC in its suit is not 
No. 
2003AP1391   
 
16 
 
dispositive.  See Restatement (Second) of Judgments § 24 cmt c. 
(1982).7 
The goal in the transactional approach is to see 
a claim in factual terms and to make a claim 
coterminous with the transaction, regardless of the 
claimant's substantive theories or forms of relief, 
regardless 
of 
the 
primary 
rights 
invaded, 
and 
regardless of the evidence needed to support the 
theories or rights.   
Kruckenberg, ___Wis. 2d ___, ¶26 (emphasis added).8   
 
¶33 Furthermore, the fact that the sale of goods and the 
return of those goods may be considered separate "financial 
transactions" in common parlance is not dispositive.  "[T]he 
concept of a transaction is here used in the broad sense it has 
come to acquire in the interpretation of statutes and rules 
governing pleading and other aspects of civil procedure.  Thus 
the overtones of voluntary interchange often associated with the 
term in normal speech do not obtain."  Restatement (Second) of 
                                                 
7 We do not ignore the fact that Menard has rights under the 
UCC.  See dissent, ¶58.  However, that is not the issue in this 
case.  The issue is the appropriate time for Menard to assert 
those rights.  As demonstrated infra, the fact that Menard is 
asserting rights originating from the UCC, as opposed to the 
common law, bankruptcy code, or other substantive body of law, 
is simply not of importance under the transactional analysis set 
forth in the Restatement (Second) of Judgments.  The source of 
the right or the type of legal theory asserted is not relevant; 
it is the factual basis for that right which controls.   
8 The dissent simply refuses to acknowledge this legal 
authority that clearly provides the existence of different 
theories 
of 
relief 
is 
irrelevant 
for 
purposes 
of 
the 
transactional analysis.  Dissent, ¶62 (asserting that there is 
no identity of claims because the two suits involved "different 
legal theories"). 
No. 
2003AP1391   
 
17 
 
Judgments § 24 cmt b. (1982).9  Therefore, the fact that "[in] 
everyday business, the sale, delivery and responsibility on 
invoices is commonly understood to be one transaction and the 
subsequent return . . . a separate transaction[,]" Resp't Br. at 
18, is irrelevant for purposes of a claim preclusion analysis.  
In sum, the transactional approach views claims under a 
pragmatic standard that focuses on whether the two causes of 
action arise out of the same common set of material facts.  See 
Restatement (Second) of Judgments § 24 cmt b. (1982). 
 
¶34 An additional consideration applies in the present 
case because Liteway's original suit resulted in a default 
judgment. 
 
For 
purposes 
of 
claim 
preclusion: 
 
"The 
conclusiveness of a default judgment . . . 'is limited to the 
material 
issuable 
facts 
which 
are 
well 
pleaded 
in 
the 
declaration or complaint.  The judgment does not extend to 
issues which were not raised in the pleadings.'"  A.B.C.G. 
Enters., 184 Wis. 2d at 481 (quoting Klaus v. Vander Heyden, 106 
Wis. 2d 353, 359-60, 316 N.W.2d 664 (1982)).    
 
¶35 Liteway's original complaint alleged, in part, as 
follows:   
Breach of Contract 
3. 
From time to time, Menards requested Liteway 
sell Menards certain Lighting Fixtures, supplies and 
equipment . . . on credit.  Liteway sold and shipped 
the Lighting Fixtures to Menards on credit.   
                                                 
9 Again, the dissent refuses to acknowledge this authority 
and proceeds to utilize the term "transaction" in the colloquial 
financial context.  See dissent, ¶60. 
No. 
2003AP1391   
 
18 
 
4. 
Liteway sent invoices for payment of the 
purchase 
price 
of 
the 
Lighting 
Fixtures . . . to 
Menards.  Copies of Liteway's accounting records 
showing the dates and amounts of the Invoices sent to 
Menards are attached as Exhibit "A." 
5. 
Despite 
demand, 
Menards 
has 
failed 
and 
refused to pay the Invoices. 
6. 
The unpaid balance on the Invoices as of 
September 1, 2000, is $354,954.77. 
7. 
Failure of Menards to pay for the Lighting 
Fixtures 
constitutes 
a 
breach 
of 
contract 
with 
Liteway.   
Liteway also alleged causes of action for "Open Account," "Goods 
Sold," and "Bad Faith" based on these facts and demanded a 
judgment in the sum of $354,954.77, plus interest and incidental 
damages.   
 
¶36 In the present suit, Menard sought a judgment of 
$315,345.54 for goods returned to Liteway.  According to 
Menard's complaint, it purchased goods from Liteway beginning 
around 1994 until December of 1999.  It is undisputed that the 
parties stopped doing business after December 1999.  Liteway 
commenced its original action on October 19, 2000, for unpaid 
invoices as of September 1 of that year.  It is also undisputed 
that Menard purchased these products from Liteway on credit.  
Further, Menard has conceded that all the allegedly defective 
goods that it returned to Liteway were returned before Liteway 
No. 
2003AP1391   
 
19 
 
instituted its original action.10  An affidavit filed by one of 
Menard's attorneys clearly states that the parties began 
                                                 
10 Although the dissent states that the record reflects 99 
invoices for returned products after Liteway filed its suit, 
this is an inaccurate reading of the record.  Dissent, ¶61.  
Menard submitted an exhibit, titled "Returned Product Summary 
Chart," that unambiguously indicates the last "chargeback" for 
returned goods to Liteway was claimed as of May 16, 2000, more 
than five months before Liteway filed its original action.  The 
"invoices" to which the dissent refers are invoices of the times 
and amounts Liteway reimbursed or "credited" Menard for its 
allegedly defective returns.  These records do not reflect that 
any goods were actually returned after Liteway filed its suit, 
only that Liteway provided credit after that date.  Thus, in 
addition to the concession from counsel, Menard's own records 
indicate that the last time it returned product was May 16, 
2000, a full five months before Liteway's suit.  At no point 
does the record reflect Menard actually returned goods after May 
16, 2000.   
In addition to being factually incorrect, the dissent 
places the cart before the horse.  The issue here is whether 
Menard's suit should have been allowed to proceed in the first 
instance.  While the record from Menard's subsequent suit may 
reflect that Liteway provided some credit after it filed its 
suit, the time for Menard to argue that the sum demanded by 
Liteway was incorrect was in Liteway's original action.   
Further, if it is appropriate to consult the trial record 
from the second suit, we note in its pre-trial filings regarding 
the applicability of claim preclusion, Liteway attached as 
Exhibit C, a copy of Menard's untimely answer in the first suit, 
in which Menard "[a]ffirmatively allege[d] that Menards had to 
return product sent to it by Liteway as being defective or 
unsuitable and allege[d] that Liteway has failed to properly 
credit Menard for those return shipments."  In addition, Menard 
"[a]ffirmatively allege[d] that there has been an ongoing good 
faith dispute with Liteway over what sums of money, if any, 
Menard, Inc. owes to Liteway."  It was Menard's position that 
"Liteway has miscalculated its claimed amounts due and has not 
properly credited Menard, Inc. for any returned product or 
product not accepted by Menard, Inc."  In sum, the record 
reflects that the claims being asserted by Menard in its second 
suit are precisely the same defenses it attempted to assert in 
Liteway's original suit.   
No. 
2003AP1391   
 
20 
 
disputing how much money Menard's owed Liteway as of August 18, 
1999, and that while Menard conceded it owed some money to 
Liteway for the goods it purchased on credit, it disputed the 
sum claimed by Liteway.   
¶37 Moreover, an internal memorandum from one of Menard's 
attorneys that was filed as an exhibit plainly states that 
Menard disputed the sum claimed by Liteway because of the amount 
it took as an "offset" for damaged and returned goods: 
Bottom 
line——we 
stopped 
purchasing 
product 
from 
Liteway in mid-December.  We have held back payment in 
order to cover future customer returns. . . .  
 . . . The difference between their numbers and our 
numbers are most likely customer returns.  There was a 
history of customer return discrepancies with Liteway 
that we always worked out after providing proofs of 
deliveries, etc.  They have always claimed that they 
did not receive back the same amount of product that 
we deducted for.   
(Emphasis added.) 
 
¶38 Therefore, it is clear that all the facts giving rise 
to Menard's suit were in existence at the time Liteway filed its 
original action.  More importantly, it is obvious that these 
facts formed the foundation of both lawsuits.  Liteway sold 
goods to Menard on credit.  Menard returned some of the goods as 
allegedly defective and took a "credit" for these and future 
customer returns.  Liteway demanded payment on the open 
accounts.  The parties stopped doing business and Menard did not 
pay the sum demanded by Liteway for the invoices because it 
disputed the amount of "credit" to which it was entitled for the 
returned goods.  The claims Menard asserts in its second suit 
No. 
2003AP1391   
 
21 
 
are not based on a separate series of underlying events; rather, 
they are defenses and counterclaims to Liteway's original claims 
and are premised on the same common nucleus of operative facts.  
That a number of different legal theories casting 
liability on an actor may apply to a given episode 
does 
not 
create multiple 
transactions 
and 
hence 
multiple claims.  This remains true although the 
several legal theories depend on different shadings of 
the facts, or would emphasize different elements of 
the facts, or would call for different measurements of 
liability or different kinds of relief.  
Restatement (Second) of Judgments § 24 cmt. c (1982).   
 
¶39 Thus, we conclude that the two causes of action 
constituted a single "transaction" for purposes of claim 
preclusion.11 
 
Such 
a 
conclusion 
does 
not 
expand 
the 
                                                 
11 Contrary to the dissent's assertion that "[c]ommon sense 
dictates that thousands of purchases and returns over such a 
long period of time cannot constitute a single transaction for 
the purposes of claim preclusion[,]"  Dissent, ¶60, under the 
Restatement (Second) of Judgments, such a series of events can, 
in law, constitute a single transaction if both suits are based 
on that entire series of events or connected transactions.  
Restatement (Second) of Judgments, § 24 (1982).  Liteway's 
original suit encompassed all of the purchases for which it was 
not paid.  Clearly, Liteway and Menard had terminated their 
business 
relationship 
almost 
a 
full 
year 
before 
Liteway 
commenced its action against Menard.  As discussed infra, Menard 
had retuned all of the allegedly defective goods prior to 
Liteway's suit.  Menard's suit now seeks reimbursement for a 
number of those purchases.  Thus, both suits relate to the same 
series of events.   
What common sense does dictate is that a party should not 
be permitted to sit back and allow a default judgment to be 
entered against it, through its own inexcusable neglect, and 
then attempt to circumvent the effect of that default judgment 
by raising its original defenses and counterclaims as a separate 
action under the UCC, in a different branch of the circuit 
court.   
No. 
2003AP1391   
 
22 
 
conclusiveness of Liteway's default judgment beyond the material 
issuable facts that were well pleaded in Liteway's complaint 
because Liteway's original complaint plainly raised the issue of 
the amount of money Menard owed on the open invoices.  Menard 
disputed the amount claimed by Liteway because of the "credit" 
it took for customer returns of allegedly defective products.  
The reasons why Menard asserts it does not owe as much as 
Liteway originally claimed are not unpleaded issues or new 
transactions; they are merely defenses and/or counterclaims to 
Liteway's original claims based on the same set of facts as 
Liteway's claims.  See A.B.C.G. Enters., 184 Wis. 2d at 482.12  
Despite the different substantive theories asserted by Menard, 
its position has always been that Liteway was not entitled to as 
much money as it claimed because Menard was entitled to an 
offset for defective products that were returned.  See N. States 
Power, 189 Wis. 2d at 555.  In the end, both suits raise the 
                                                 
12 The dissent fails to appreciate that the ultimate issue 
in both suits is how much money Menard owed Liteway.  This issue 
was clearly pleaded in Liteway's original suit.  Menard's claims 
in its subsequent suit are merely reasons why it believes it is 
not liable for the sum Liteway claimed.  What Menard should have 
asserted as defenses and/or counterclaims in the first action 
have now been re-characterized by Menard as affirmative causes 
of action in Menard's subsequent suit.  The dissent relies 
heavily on the fact that Liteway did not, in its complaint, 
"address any issue relating to Menard's rights to return 
defective, 
damaged 
and 
unsatisfactory 
products 
for 
credit . . . ."  Dissent, ¶64.  However, we are aware of no rule 
of law that requires a claimant to predict and respond to 
potential defenses and counterclaims of the party it is suing in 
its complaint.   
No. 
2003AP1391   
 
23 
 
single issue of how much money Menard owed Liteway for the goods 
Liteway sold to Menard on credit.13   
 
¶40 However, we do not go as far as the court of appeals' 
conclusion that "in the realm of the sale of goods, shipment by 
the seller and acceptance or return by the buyer deserve 
'treatment as a unit[.]'"  Menard, 273 Wis. 2d 439, ¶18.  The 
UCC expressly provides the buyer of goods with a reasonable time 
to reject nonconforming goods and seasonably notify the seller, 
Wis. Stat. § 402.606(1), and allows a buyer to revoke acceptance 
of nonconforming goods within a reasonable time after the buyer 
discovers 
or 
should 
have 
discovered 
the 
nonconformity.  
Wis. Stat. § 402.608.  It is entirely plausible that in some 
cases, a buyer may not in fact discover the nonconformity, or 
legally be required to discover the nonconformity, until after 
the seller has obtained a judgment in a suit for the price of 
the goods.  The court of appeals' decision would hold that any 
subsequent action based on the return of the goods was part of 
                                                 
13 Menard relies heavily upon the fact that its suit 
involves the obligations of a seller of goods who has maintained 
an action for the price of goods under Wis. Stat. § 402.709.  In 
addition to again emphasizing that the substantive theories of 
recovery 
asserted 
are 
irrelevant 
for 
purposes 
of 
claim 
preclusion, we note that in an action for price under the UCC, a 
seller of goods may recover only the price of "goods accepted or 
of conforming goods lost or damaged within a commercially 
reasonable time after risk of their loss has passed to the 
buyer."  Wis. Stat. § 402.709(1)(a).  Thus, the fact that the 
goods were accepted or conforming is a necessary prerequisite to 
recovery in an action for price.  As such, the question of 
whether the goods sold were accepted and/or conforming is part 
of the issues raised in an action for the price of goods.    
No. 
2003AP1391   
 
24 
 
the same transaction as the original suit.  Such a conclusion 
would clearly interfere with a buyer's rights under the UCC in 
some circumstances.   
 
¶41 Under a correct application of the transactional 
analysis, this result would be avoided.  The Restatement 
(Second) of Judgments § 24 cmt f. (1982) provides:  "Material 
operative facts occurring after the decision of an action with 
respect to the same subject matter may in themselves, or taken 
in conjunction with the antecedent facts, comprise a transaction 
which may be the basis of a second action not precluded by the 
first."  This exception is consistent with the "pragmatic" view 
of what constitutes a transaction, in that it takes into account 
whether the operative facts are separated by time.  See A.B.C.G. 
Enters., 184 Wis. 2d at 481.   
 
¶42 Had Menard not discovered that Liteway's goods were 
defective 
and 
nonconforming 
until 
after Liteway's default 
judgment, it would have a good argument that the separation in 
time between the facts in the two suits was sufficient to render 
its return of the defective goods a separate transaction.  
However, here, Menard has conceded that all of the allegedly 
defective goods for which it seeks credit were discovered and 
returned to Liteway prior to Liteway's original suit.  It is 
uncontested that the parties stopped doing business almost a 
year prior to Liteway's original suit and that the issue of 
customer returns of defective products was the root of their 
dispute.  Thus, Menard's claims could clearly have been raised 
in Liteway's prior suit.  See N. States Power, 189 Wis. 2d at 
No. 
2003AP1391   
 
25 
 
555 ("[T]he transactional view of claim preclusion requires 'the 
presentation in the action of all material relevant to the 
transaction without artificial confinement to any substantive 
theory 
or 
kind 
of 
relief . . . .'")(quoting 
DePratt, 
113 
Wis. 2d at 311-12).  
 
¶43 The fact that all of the allegedly defective goods 
were returned prior to Liteway's original suit is precisely what 
distinguishes this case from National Operating.  In that case, 
a debtor, National Operating, borrowed a substantial sum of 
money from MONY to purchase commercial real estate.  Nat'l 
Operating, 244 Wis. 2d 839, ¶¶4-7.  The loan was secured by a 
mortgage note.  Id., ¶7.  Later, the debtor sold the property to 
another company, Bridgeview, in exchange for a wrap-around note, 
which 
required 
monthly 
payments 
in 
excess 
of 
National 
Operating's monthly obligation to MONY.  Id., ¶8.  The parties 
renegotiated the loan after MONY called the loan.  Id., ¶¶9-11.  
As part of the renegotiation, National Operating assigned 
certain rights in the Bridgeview wrap-note to MONY.  Id., ¶11.  
National Operating eventually defaulted, and MONY instituted a 
declaratory judgment action seeking to confirm its assumption of 
the wrap-note and the extinguishment of National Operating's 
rights under the note and mortgage.  Id., ¶¶13, 15. 
 
¶44 National Operating failed to answer, and a default 
judgment was entered.  Id., ¶¶13, 17.  As a result of the 
declaratory judgment, MONY stepped into National Operating's 
shoes, took over the wrap-note and the mortgage, and began to 
receive 
monthly 
payments 
from 
Bridgeview. 
 
Id., 
¶18.  
No. 
2003AP1391   
 
26 
 
Subsequently, MONY and Bridgeview entered into an agreement 
whereby Bridgeview would satisfy the total amount outstanding on 
the wrap-note for less than the total amount due, but for more 
than the total amount due on National Operating's underlying 
note.  Id., ¶19.  When National Operating became aware that MONY 
intended to keep the difference, it filed suit against MONY, 
contending 
that 
MONY 
was 
unlawfully 
disposing 
National 
Operating's collateral in violation of Article 9 of the UCC.  
Id., ¶¶20-21. 
¶45 Thus, National Operating's suit was based on a 
different transaction——MONY's alleged unlawful conversion of 
collateral——than 
MONY's 
original 
suit——National 
Operating's 
default on its loan.  Further, National Operating's suit was 
based on facts that did not exist at the time of MONY's original 
suit.  See Restatement (Second) of Judgments § 24 cmt. f & 
illus. 10 (1982).  Therefore, National Operating is factually 
distinguishable from the present case.   
¶46 Having concluded that Menard's claims in this case are 
part of the same transaction that gave rise to Liteway's claims, 
we now turn and address the final element of the common-law 
compulsory counterclaim rule——whether a judgment in favor of 
Menard in its suit would undermine Liteway's judgment or impair 
the rights of Liteway that were established in the previous 
action.   
¶47 We begin by again emphasizing that Wisconsin, by 
statute, 
is 
a 
permissive 
counterclaim 
state. 
 
See 
Wis. Stat. § (Rule) 802.07(1).  In A.B.C.G. Enterprises, 184 
No. 
2003AP1391   
 
27 
 
Wis. 2d at 480, this court carved out a narrow exception to our 
permissive counterclaim statute by adopting the common-law 
compulsory counterclaim rule as set forth in the Restatement 
(Second) of Judgments § 22(2)(b)(1982).  The rule applies only 
where a favorable verdict to the plaintiff in the second suit 
would undermine the judgment in the first suit or impair legal 
rights established in the first suit.  Id. at 477, 480-82.   
¶48 However, we note that the Restatement's formulation of 
the common-law compulsory counterclaim rule "applies whether or 
not the prior judgment was by default.  The rule indeed is 
especially important because it works to guarantee that even 
default judgments mean something and cannot normally be undone 
by later litigation."  Elegant Res Judicata Doctrine at 1753.  
Further, the common-law compulsory counterclaim rule "emerged as 
a specific aspect of the broad principle whereby a valid and 
final judgment generally precludes the defendant from later 
asserting mere defenses to the claim."  Id. at 1756.  Thus, the 
Restatement's view of the common-law compulsory counterclaim 
rule "indicates at least that the application of the rule to a 
judgment should not 'be affected by the course of the first 
case' in terms of default, dismissal, or the like."  Id.   
 
¶49 Examining the facts of this case, it is clear that the 
present case is governed by the reasoning of this court in 
A.B.C.G. Enterprises.  In that case, First Bank, the mortgagee, 
sued ABCG, seeking to foreclose its interests in certain 
properties pursuant to mortgage assumption agreements.  A.B.C.G. 
Enters., 184 Wis. 2d at 471.  ABCG did not defend, and First 
No. 
2003AP1391   
 
28 
 
Bank obtained a default judgment.  Id.  Later, ABCG filed suit 
against First Bank, asserting that First Bank's breach of 
contract, misrepresentations, and failure to properly manage the 
properties and collect rental payments caused ABCG to default on 
its 
mortgage 
obligations 
and 
lose 
its 
interest 
in 
the 
properties.  Id. at 471-72.   
 
¶50 After concluding that both suits arose from the same 
transaction, id. at 481-82, this court concluded that a judgment 
favorable to ABCG would nullify the default judgment entered in 
First Bank's prior foreclosure action: 
Essentially, 
ABCG 
alleges 
that 
the 
original 
foreclosure was improper.  First Bank established the 
validity of ABCG's mortgage obligation; ABCG claims 
that 
its 
obligation 
was 
not 
valid 
because 
of 
misrepresentations 
by 
First 
Bank. 
 
First 
Bank 
established that ABCG was in default; ABCG alleges 
that absent the Bank's action, it would not be in 
default.  Finally, First Bank established the amount 
at issue in the mortgages; ABCG attempts to put the 
amount at issue again by alleging that payments were 
not properly received and applied to the mortgage 
debt.  A judgment in favor of ABCG would thus directly 
undermine the original default judgment in which the 
court held that under the circumstances, foreclosure 
was proper. 
If we were to allow ABCG to recover damages from 
First Bank, or if we were to grant other "equitable" 
remedies (as ABCG requests), the judgment awarding 
First Bank the amounts due on the properties and 
additional costs would be rendered meaningless.  If a 
court found the mortgages invalid or First Bank to 
have 
caused 
the 
default, 
First 
Bank 
could 
be 
essentially forced to return its previous recovery.  
In the interest of equity and finality, we hold that 
ABCG is barred from raising its present claims against 
First Bank. 
Id. at 482-83.   
No. 
2003AP1391   
 
29 
 
 
¶51 Likewise, here, Liteway established the amount due and 
owing on its open invoices for the goods it sold to Menard in 
the first action.  Now, Menard essentially challenges that 
amount by claiming that some of the goods for which it did not 
pay were defective and nonconforming.  Menard attempts to put 
the amount of the judgment in issue by claiming that Liteway did 
not properly credit it for returned goods that were allegedly 
defective and was thus unjustly enriched.  As evidenced by the 
Menard internal memorandum discussed supra, Menard's claims for 
credit for defective products were always integrally related to 
Liteway's demand for payment on open invoices and were always 
the means by which Menard contested the amount claimed by 
Liteway on those invoices.  As counsel for Menard stated in an 
affidavit:  "Menard, Inc. has consistently disputed the amount 
of damages as requested in [Liteway's] Complaint and as set 
forth in the default judgment."  Further, Menard admitted during 
the course of its lawsuit that Liteway did provide some credit 
to Menard for returned goods, although Menard claimed it was 
entitled to a greater amount.  Both suits involve the amount of 
money Menard owed Liteway.14   
                                                 
14 In addition to falling squarely within the rationale of 
A.B.C.G. Enterprises v. First Bank Southeast, 184 Wis. 2d 465, 
515 N.W.2d 904 (1994), this case is closely analogous to the 
following illustration in the Restatement: 
9. 
A brings an action against B for failure to 
pay the contract price for goods sold and delivered 
and recovers judgment by default.  After entry of 
final judgment and payment of the price, B brings an 
action against A to rescind the contract for mutual 
mistake, seeking restitution of the contract price and 
No. 
2003AP1391   
 
30 
 
¶52 Moreover, as discussed supra, a recovery for the price 
of goods sold under the UCC is dependent upon those goods being 
accepted or conforming.  See Wis. Stat. § 402.709(1)(a).  By 
claiming that some of the products Liteway sold were defective, 
Menard is necessarily attacking the legitimacy of Liteway's 
original judgment.  A seller in an action for price of goods 
sold may recover only the price of "goods accepted or of 
conforming 
goods 
lost 
or 
damaged 
within 
a 
commercially 
reasonable time after risk of their loss has passed to the 
buyer."  Wis. Stat. § 402.709(1)(a).  Liteway could therefore 
not have recovered the price of goods that were nonconforming or 
whose acceptance was lawfully revoked.  By now alleging that 
some of these goods were defective and that it is entitled to 
credit for these goods, Menard is necessarily challenging the 
very premise of Liteway's original suit:  that Liteway sold 
conforming goods for which it was not paid.  A judgment in favor 
of Menard based on returns of defective products would thus 
directly undermine the original default judgment.  Were we to 
allow Menard to enforce its judgment in the second action, 
Liteway would essentially be forced to return a portion of its 
previous recovery.  Menard's suit is merely an attempt to 
collaterally attack the original judgment by raising defenses 
and counterclaims to Liteway's original suit and avoid the 
                                                                                                                                                             
offering 
to 
return 
the 
goods. 
 
The 
action 
is 
precluded.   
Restatement (Second) of Judgments § 22 illus. 9 (1982).   
No. 
2003AP1391   
 
31 
 
circuit court's determination that the failure to raise these 
claims in a timely fashion did not constitute excusable neglect.   
¶53 Again, Menard argues that this case should be governed 
by National Operating and not A.B.C.G. Enterprises.  However, 
National Operating is again distinguishable.  First, the prior 
judgment in National Operating arose from a declaratory judgment 
action, the preclusive effect of which is limited to those 
matters pled with sufficient clarity.  Nat'l Operating, 244 
Wis. 2d 839, ¶¶17, 93.  The court in National Operating 
concluded that the claims in National Operating's subsequent 
suit raised issues concerning certain rights that National 
Operating possessed in the wrap-note, which rights were not 
implicated in MONY's prior declaratory judgment complaint.  Id., 
¶¶94-96.  While, as discussed supra, the preclusive effect of a 
default judgment is limited to those matters actually litigated, 
we have already determined that Liteway's prior suit raised the 
issue of how much Menard owed on the open invoices and that 
Menard's present suit is simply a means of collaterally 
challenging this amount.   
¶54 Thus, we conclude that all the prerequisites to the 
application of claim preclusion and the common-law compulsory 
counterclaim rule are present in this case.15  Therefore, we 
                                                 
15 We again note that the instances in which the common-law 
compulsory counterclaim rule "applies are to be distinguished 
from instances in which the defendant has grounds for relief 
from the judgment that were not available to him in the form of 
a counterclaim in the original action."  Restatement (Second) of 
Judgments § 22 cmt. f. (1982).   
No. 
2003AP1391   
 
32 
 
conclude that Menard is barred from maintaining its present suit 
against Liteway.16   
V. 
CONCLUSION 
¶55 We conclude that for purposes of claim preclusion, 
Menard's claims in its second suit are part of the same 
transaction as the claims in Liteway's original suit because 
both suits arise from the same common nucleus of operative 
facts.  It is uncontested that the dispute over the amount of 
money Menard owed Liteway on unpaid invoices was based on 
Menard's practice of taking a "credit" for defective products.  
Further, Menard's claims in its second suit could have been 
raised 
in 
Liteway's 
original 
action 
as 
the 
parties 
had 
terminated their business relationship almost a year before 
Liteway filed its original complaint and all of the allegedly 
defective goods were returned prior to Liteway's action.   
¶56 Moreover, we conclude that Menard's claims fall under 
the common-law compulsory counterclaim rule because allowing 
                                                 
16 Finally, we are perplexed by the assertion of the dissent 
that this opinion "only encourages acrimony and distrust between 
buyer and seller[.]"  Justice Crooks' dissent, ¶15.  Were the 
relationship between Menard and Liteway not acrimonious and 
distrustful, the parties would still be doing business or would 
have resolved their dispute out of court, as suggested by the 
circuit court in the first lawsuit.  It is precisely because of 
such acrimony and distrust that the parties ceased doing 
business and began to litigate this dispute.  What this opinion 
does do is encourage parties to be vigilant and timely assert 
their claims.  It discourages a party from allowing a default 
judgment to be entered against it and then, through artful 
pleading, attempting to avoid the effect of that judgment by 
asserting as new claims what it intended to assert as defenses 
and counterclaims had the default judgment not been entered.   
No. 
2003AP1391   
 
33 
 
Menard to proceed with its present suit would impair Liteway's 
rights as determined in the original action and would undermine 
the validity of the judgment Liteway obtained.  Both suits 
involve the amount of money Menard owed Liteway, and Liteway 
could not have recovered the price of goods sold to Menard if 
those goods were defective.  Menard certainly has rights under 
the UCC, but the occasion to timely assert those rights has 
passed.  Therefore, because under the facts of this case, 
Menard's claims fall within the doctrine of claim preclusion and 
the common-law compulsory counterclaim rule, we affirm the 
decision of the court of appeals.    
By the Court.—The decision of the court of appeals is 
affirmed.   
 
No.  2003AP1391.npc 
 
1 
 
 
¶57 N. PATRICK CROOKS, J.   (dissenting).  I strongly 
disagree with the majority that Menard's lawsuit against Liteway 
is barred by the doctrine of claim preclusion.17  The majority 
concludes that all three elements for claim preclusion are 
present and, additionally, that Menard was required to raise its 
claims in the action brought by Liteway pursuant to the common-
law compulsory counterclaim exception to Wisconsin's permissive 
counterclaim statute, Wis. Stat. § (Rule) 802.07(1) (1999-2000)18  
I respectfully dissent because there is no identity of claims or 
causes of action between the first and second suits involving 
these parties, and Menard's claim here does not come within the 
narrow exception to Wisconsin's permissive counterclaim statute.   
¶58 The majority concludes that, for the purposes of claim 
preclusion, 
the 
transactional 
approach 
set 
forth 
in 
the 
Restatement (Second) of Judgments, § 24 (1982) describes the 
correct methodology for determining whether there is an identity 
of claims or causes of action.  While I do not dispute this, I 
disagree with the majority's conclusion that the thousands of 
                                                 
17 Claim preclusion provides that a final judgment on the 
merits in one action bars parties from relitigating any claim 
that arises out of the same relevant facts, transactions, or 
occurrences.  Kruckenberg v. Harvey, 2005 WI 43, ¶19, ___ 
Wis. 2d ___, 694 N.W.2d 879.  In Wisconsin, the doctrine of 
claim preclusion has three elements: identity of the parties or 
those in privity with the parties in the first and second suits, 
identity of the causes of action in the first and second suits, 
and the prior litigation must have ended in a final, valid 
judgment on the merits.  Id., ¶21.   
18 Unless 
otherwise 
indicated 
all 
references 
to 
the 
Wisconsin Statutes are to the 1999-2000 edition. 
No.  2003AP1391.npc 
 
2 
 
transactions between these parties over a six-year period 
involving the purchase of goods and the return of defective, 
damaged and unsatisfactory products to Liteway constitute one 
transaction as a matter of law.  In reaching such a conclusion, 
the majority makes the same mistake as the court of appeals——it 
fails to apply the Uniform Commercial Code (UCC).  The court of 
appeals dismissed Menard's UCC claims as "nothing more than 
affirmative defenses and counterclaims——various theories or 
kinds of relief counterposed to Liteway's claim."  Menard, Inc. 
v. 
Liteway 
Lighting 
Prods., 
2004 
WI 
App 
95, 
¶21, 
273 
Wis. 2d 439, 685 N.W.2d 365.  Like the court of appeals, the 
majority ignores the UCC in this case. 
¶59 As the governing law in Wisconsin on contractual 
disputes, see Wis. Stat. §§ 401.101-411.901,  such as those 
involved here, the UCC is highly relevant to determining what 
constitutes a transaction for the purposes of claim preclusion.  
Restatement (Second) § 24(2) states:  
What factual grouping constitutes a "transaction", and 
what groupings constitute a "series", are to be 
determined 
pragmatically, 
giving 
weight 
to 
such 
considerations as whether the facts are related in 
time, space, origin, or motivation, whether they form 
a convenient trial unit, and whether their treatment 
as a unit conforms to the parties' expectations or 
business understanding or usage.   
(Emphasis added.)  When the Wisconsin Legislature adopted the 
UCC, it did so to "permit the continued expansion of commercial 
practices through custom, usage and agreement of the parties."  
Wis. Stat. § 401.102(2)(b) (emphasis added); see also Mayberry 
v. Volkswagen of Am., Inc., 2005 WI 13, 278 Wis. 2d 39, 692 
No.  2003AP1391.npc 
 
3 
 
N.W.2d 226. 
 
The 
UCC 
was 
adopted 
to 
give 
commercially 
sophisticated parties the opportunity to conduct business and 
resolve disputes in an efficient manner, based on business 
understanding, usage, and custom in their respective businesses.  
Its 
provisions 
are 
clearly 
relevant 
in 
determining 
the 
expectation of the parties, their business understanding, usage, 
and custom in the businesses involved here.  I can think of 
nothing more relevant for such an inquiry than the applicable 
law of Wisconsin.  This court has stated:  
The Uniform Commercial Code is one of the 
preeminent achievements of American law.  It is 
constantly under review so that it can address 
changing practices in the world of commerce.  Our role 
as a court is not to question the effect of Code 
provisions in a particular case.  Our role is to apply 
the law. 
Nat'l Operating, L.P. v. Mut. Life Ins. Co. of N.Y., 2001 WI 87, 
¶99, 244 Wis. 2d 839, 630 N.W.2d 116 (footnote omitted). I 
therefore cannot accept the majority's position that the 
provisions of the UCC in regard to the sale and subsequent 
return of goods being separate transactions are "irrelevant."  
Majority op., ¶33.     
¶60 Turning to the UCC, it seems clear from its structure 
and language that the purchase of goods and the return of goods 
involve separate transactions.  The UCC sets out separate rights 
and remedies for sellers in the Code, see Wis. Stat. § 402.703, 
and specifically gives a buyer the right to revoke its 
acceptance of goods within a commercially reasonable time.  See 
Wis. Stat. § 402.608(2).  In this case, the trial record from 
Menard's 
action 
against 
Liteway 
reveals 
the 
extensive 
No.  2003AP1391.npc 
 
4 
 
relationship that Menard and Liteway had in the six years they 
did business together.  The bills of lading from January 1999-
May 2000 alone show over 300 separate shipments of returned 
products from Menard to Liteway in those months.  There were 
literally thousands of purchases and returns over the six-year 
course of dealing between the two companies.  The exchanges 
between Liteway and Menard totaled nearly $18 million over the 
six years that they did business with each other.  Common sense 
dictates that thousands of purchases and returns over such a 
long period of time cannot constitute a single transaction for 
the purposes of claim preclusion. 
¶61 Although Menard's attorney seemed to concede at oral 
argument that Menard had, prior to the filing of Liteway's suit, 
invoiced Liteway for all of the returned products, exhibits from 
the circuit court record in this case clearly demonstrate that 
reimbursement transactions continued well after Liteway filed 
its lawsuit against Menard.   During discovery in the current 
lawsuit, Menard submitted an interrogatory to Liteway asking for 
the complete list of reimbursements from Liteway to Menard from 
1995 forward.  The records that Liteway provided in response 
revealed 99 invoices dated after October 19, 2000, the date of 
commencement of Liteway's action against Menard.  It appears 
quite clear that Liteway was still providing reimbursement or 
credit to Menard for returned defective products months after 
the date its action against Menard was filed, and thus that the 
two companies still had unsettled disputes involving such 
No.  2003AP1391.npc 
 
5 
 
defective 
products 
for 
a 
considerable 
time 
after 
the 
commencement of Liteway's suit.   
¶62 In the decision of the Eau Claire County Circuit 
Court, Judge Lisa Stark presiding, the court correctly denied 
Liteway's motion for summary judgment in Menard's action.  The 
court's reasoning was as follows: 
Looking at the transactional analysis, you have 
to look, as the Liteway attorneys point out, at the 
facts that are underlying each claim, and if, indeed, 
I am correct, Judge Wahl's analysis is based on the 
Complaint, which basically said there were goods sold 
by Liteway to Menards (sic).  They were delivered, 
they weren't paid for and they're entitled to the 
unpaid value of the invoices, and that was how the 
judgment amount was reached. 
 
In the present case none of that is at issue.  
There's no question the goods were delivered, that 
some weren't paid for, that there were dollar values 
due.  Mr. Hart alleges that they have now been paid, 
but now the question is: Were some of the goods 
defective?  If they were, were they returned in a 
timely and appropriate manner under the contract or 
the UCC?  What was the value of the returned goods?  
And how much damages is Menard entitled to? 
 
The factual analysis (sic) on those issues are 
different, and I am assuming that they were not 
litigated in the first case. 
 
I agree wholeheartedly with the circuit court's decision 
that Liteway's suit for unpaid invoices involved claims and 
issues that were separate from Menard's current lawsuit for 
reimbursement 
for 
Liteway's 
defective 
products, 
involving 
Menard's remedies as a buyer under the UCC.  Contrary to the 
majority's assertion that the only difference between the claims 
No.  2003AP1391.npc 
 
6 
 
in the two actions is Menard's legal theory, see majority op., 
¶¶32, 38, the circuit court correctly pointed out that the facts 
underlying 
the 
lawsuits 
were 
different. 
 
The 
claim 
for 
reimbursement for defective, damaged and unsatisfactory products 
returned to Liteway in the present action is distinct from the 
claim based on unpaid invoices that Liteway sought payment for 
in the first suit.  Since the two lawsuits involved distinct 
facts, separate transactions and different legal theories for 
recovery, there is no identity of claims or causes of action.   
¶63 The circuit court also addressed claim preclusion in 
light of the fact that the first suit ended in a default 
judgment, and that such judgments are not favored in the law.  
Split Rock v. Lumber Liquidators, 2002 WI 66, ¶64, 253 
Wis. 2d 238, 646 N.W.2d 19.  A default judgment can be a valid, 
final judgment for the purposes of claim preclusion.  However, 
this court has held that a default judgment "'does not extend to 
issues which were not raised in the pleadings.'"  A.B.C.G. 
Enters. v. First Bank Southeast, 184 Wis. 2d 465, 481, 515 
N.W.2d 904 
(1994) 
(quoting 
Klaus 
v. 
Vander 
Heyden, 
106 
Wis. 2d 353, 359-60, 316 N.W.2d 664 (1982)).  In commenting on a 
default judgment in a declaratory judgment action, this court 
stated: "To be actually litigated in this context, a matter must 
be pled with the sufficient clarity to give notice to the 
opposing party and the court of what claims are at stake so that 
they will understand the claims that will be barred in future 
litigation."  Nat'l Operating, 244 Wis. 2d 839, ¶93. 
No.  2003AP1391.npc 
 
7 
 
¶64 Because Liteway was granted judgment by default in the 
first lawsuit, the pleading the court must focus on for the 
purposes of claim preclusion is Liteway's complaint in that 
action, and it makes no mention of Menard's claims under the 
UCC, or of Menard's common-law claim for unjust enrichment.  
Liteway's complaint involving unpaid invoices set forth claims 
for breach of contract, for demand on an open account, for goods 
sold, and for bad faith.  Liteway did not address any issue 
relating to Menard's rights to return defective, damaged and 
unsatisfactory products for credit under the UCC, or Menard's 
rights to recover for unjust enrichment.  When the circuit court 
entered a default judgment for Liteway, it entered a default 
judgment on Liteway's claims asking for payment on its invoices 
to Menard.  It did not enter a judgment that encompassed the 
issues of credit for the return of defective, damaged, and 
unsatisfactory products and for unjust enrichment.  
¶65 I do not dispute that "'a final judgment is conclusive 
in all subsequent actions between the same parties . . . as to 
all matters which were litigated or which might have been 
litigated. . . .'"  Majority op., ¶26.  However, this statement 
must not be construed as strictly as the majority does.  To do 
so results in one of two unfavorable and inappropriate outcomes: 
either Wisconsin's permissive counterclaim statute is rendered 
meaningless, or the scope of what will be precluded after a 
default judgment is granted is expanded well beyond what is 
covered in a complaint such as Liteway's.   
No.  2003AP1391.npc 
 
8 
 
¶66 It is important to emphasize, as the circuit court 
recognized, that default judgments have never been favored in 
the law.  See Split Rock, 253 Wis. 2d 238, ¶64; Miro Tool & 
Mfg., Inc. v. Midland Mach., Inc., 205 Wis. 2d 650, 663, 556 
N.W.2d 437 (Ct. App. 1996).  "'[T]he law prefers, whenever 
reasonably possible, to afford litigants a day in court and a 
trial on the issues . . .; and . . . default judgments are 
regarded with particular disfavor.'"  Shirk v. Bowling, Inc., 
2001 WI 36, ¶16, 242 Wis. 2d 153, 624 N.W.2d 375 (quoting 
Dugenske v. Dugenske, 80 Wis. 2d 64, 68, 257 N.W.2d 865 (1977)).  
In this case, the majority seeks to deny Menard the relief it 
seeks on its UCC and unjust enrichment claims, after Menard 
proved during the trial before the circuit court that Liteway 
owes it $140,478.41 in reimbursements and costs, based on the 
return of defective, damaged and unsatisfactory products to 
Liteway.   
¶67 With the above principles in mind, I am convinced that 
the majority decision in National Operating controls this case.  
There, this court held that the original action filed by MONY, 
based on a contract, did not preclude a subsequent action by 
National Operating, based on the UCC.  This court declined to 
apply 
the 
narrow 
exception 
to 
Wisconsin’s 
permissive 
counterclaim statute to National Operating's action, because 
National Operating had a claim based on the UCC.  Similarly, in 
this case, Liteway's suit focused on a claim based on unpaid 
invoices, a breach of contract claim, whereas the subsequent 
action by Menard was based chiefly on the rights of a buyer to 
No.  2003AP1391.npc 
 
9 
 
return defective, damaged or unsatisfactory products for credit, 
in accord with the UCC.  The majority opinion inconsistently 
applies the reasoning of both A.B.C.G. Enterprises and National 
Operating, 
claiming 
that 
the 
distinguishing 
fact 
between 
National Operating and the present case is that Menard had 
returned all of the disputed products to Liteway before Liteway 
commenced its lawsuit.  However, as I noted earlier, the record 
before the circuit court in this action contains evidence that 
there were 99 invoices dated after Liteway commenced its action 
on October 19, 2000.  It is important that reimbursements for 
returned products continued for months after Liteway filed suit.  
The majority is clearly wrong when it asserts "that all the 
facts giving rise to Menard's suit were in existence at the time 
that Liteway filed its original action."  Majority op., ¶38.  
¶68 Like the majority here, the court of appeals also 
failed to apply National Operating correctly to the case at bar.  
The court of appeals attempted to distinguish National Operating 
from 
this 
case, 
because 
National 
Operating 
involved 
a 
declaratory judgment rather than a claim for damages.  Menard, 
273 Wis. 2d 439, n.3.  As noted earlier, in National Operating, 
the declaratory judgment action resulted in a default judgment, 
and this court held: 
In a declaratory judgment action, claim preclusion is 
limited to those matters that are actually litigated.  
To be actually litigated in this context, a matter 
must be pled with sufficient clarity to give notice to 
the opposing party and the court of what claims are at 
stake so that they will understand the claims that 
will be barred in future litigation.   
No.  2003AP1391.npc 
 
10 
 
Here, there was a default judgment.  By failing 
to answer 
the complaint, 
National 
Operating was 
conceding every claim actually pleaded.  But National 
Operating was not given fair notice in the complaint 
that MONY sought to extinguish all its rights. . . .  
The declaratory judgment——a document drafted by 
MONY——granted precisely the relief sought in MONY’s 
complaint, nothing more. 
 
Nat'l 
Operating, 
244 
Wis. 2d 839, 
¶¶93-95 
(citation 
omitted).  A default judgment, whether or not the action is one 
for declaratory judgment as in National Operating, is limited to 
those claims pled in the original complaint, and does not extend 
to matters not raised in the pleadings.  A.B.C.G. Enters., 184 
Wis. 2d at 
481 
(quoting 
Klaus, 
106 
Wis. 2d at 
359-60).  
Therefore, I remain convinced that Liteway’s complaint was 
limited to contract claims, since it made no mention of 
extinguishing Menard’s rights to credit for the return of 
defective, damaged and unsatisfactory products under the UCC.  
In the first action, Menard was not given any notice in 
Liteway's complaint that Liteway was attempting to extinguish 
all of Menard's rights as a buyer under the UCC, as well as any 
claim for unjust enrichment.  
¶69 Although the resolution of this case rests on whether 
there was an identity of claims or causes of action for purposes 
of claim preclusion, it is also necessary to highlight the 
majority's 
misinterpretation 
of 
Wisconsin's 
counterclaim 
statute.  In Wisconsin, the joinder of counterclaims is 
permissive, not mandatory.  Wisconsin Stat. § 802.07(1) states 
in relevant part: "[a] defendant may counterclaim any claim 
No.  2003AP1391.npc 
 
11 
 
which the defendant has against a plaintiff, upon which a 
judgment may be had in the action."  (Emphasis added.)   
¶70 I recognize, as does the majority, that this court has 
established a narrow exception to the permissive counterclaim 
statute.  In A.B.C.G. Enterprises, we stated that there is a 
"'common-law compulsory counterclaim' rule which requires a 
defendant to counterclaim if its claim, when brought in a 
subsequent, separate action, would nullify the initial judgment 
or impair rights established in the initial action."  A.B.C.G. 
Enters., 184 Wis. 2d at 474.  However, the court emphasized that 
the application of this "common-law counterclaim" rule is 
definitely an exception to the general rule and is meant to 
preclude a collateral attack when the attack would completely 
nullify the rights established in the first judgment.19  See id. 
                                                 
19 One commentator stated: 
Despite all its virtues, the common-law compulsory 
counterclaim rule, tucked away in an unfrequented cul-
de-sac of the Second Restatement, does not seem to be 
sweeping the country.  The Westlaw database indicates 
that only twenty-one cases have used the term "common-
law compulsory counterclaim" in the thirty-one years 
since the rule's publication. 
. . . .   
So perhaps the common-law compulsory counterclaim rule 
is one of those rules constantly invoked in planning 
and discussing litigation, even though it seldom 
figures in a judicial opinion.  But the rule does not 
appear to be in ubiquitous play, at least on any 
conscious level above intuition.  For one thing, the 
twenty-one 
cases 
are 
concentrated 
geographically.  
Fifteen of them come from Wisconsin or the Seventh 
Circuit.  The fact that the rule appears in opinions 
there but not elsewhere implies that the rule has not 
really caught on in the rest of the country.  For 
No.  2003AP1391.npc 
 
12 
 
at 476-77.  Specifically, it stated that the rule "applies only 
if a favorable judgment in the second action would nullify the 
judgment in the original action or impair rights established in 
the original action."  Id. (emphasis added).  In this case, 
consistent with our holding in National Operating, the narrow 
exception should not be applied, because the test for its 
application is not met here.  Menard’s UCC and unjust enrichment 
claims would not nullify, but would merely reduce, the amount 
that Liteway would realize on its judgment.  The majority 
opinion extends the compulsory counterclaim exception in a 
manner contrary to Wisconsin’s permissive counterclaim statute, 
the UCC, and the public policy expressed by the legislature in 
its adoption of the UCC.20  
                                                                                                                                                             
another thing, the academy is not abuzz.  The Westlaw 
database indicates that before this article catapulted 
the rule to title status, only two law review articles 
had used the term in any way.  Kevin M. Clermont, 
Common-Law 
Compulsory 
Counterclaim 
Rule: 
Creating 
Effective and Elegant Res Judicata Doctrine, 79 Notre 
Dame L. Rev. 1745, 1756-57 (Oct. 2004) (footnotes 
omitted). 
20 The majority opinion's application of the common-law 
compulsory counterclaim rule expands well beyond the scope of 
what courts and commentators have deemed appropriate.  In Carey 
v. Neal, Cortina & Associates, 576 N.E.2d 220 (Ill. App. Ct 
1991), the Illinois Appellate Court chose not to apply the rule, 
explaining that "when analyzing the identity of causes of action 
for res judicata purposes, the second suit is not barred if the 
proof of its elements differ from the proof required to prove 
the prior action."  Id. at 223.  Notably, it asserted that 
"[c]ourts should carefully examine the circumstances presented 
in a specific case to ensure that a party is not precluded from 
litigating a claim simply because it 'might have' been raised, 
if the nature of the claim is sufficiently separate from that 
which was actually litigated."  Id. at 228. 
No.  2003AP1391.npc 
 
13 
 
¶71 I 
conclude 
that 
the 
majority 
opinion 
causes 
significant problems for Wisconsin businesses.  The majority's 
opinion encourages sellers to initiate litigation for unpaid 
invoices as soon as possible, because winning a judgment for 
price will bar the buyer's rights to revoke acceptance of 
defective or non-conforming goods, return the goods, and protect 
the buyer's interests upon return.  The majority expands 
commercial "transactions" without regard to the buyer's rights 
under the UCC and obliterates a buyer's other potential claims, 
such as one for unjust enrichment.  As stated above, the 
Wisconsin Legislature enacted the UCC in order to "permit the 
continued expansion of commercial practices through custom, 
usage 
and 
agreement 
of 
the 
parties."  
Wis. Stat. § 401.102(2)(b).  The majority opinion, in contrast, 
only encourages acrimony and distrust between buyer and seller, 
and places Wisconsin in the unique and undesirable position of 
being a state that denies to buyers the remedies available under 
the UCC.  Common sense leads me to conclude that $18 million 
worth 
of 
transactions 
over 
a 
six-year 
period, 
involving 
literally thousands of orders and returns, cannot be labeled as 
a single transaction for claim preclusion purposes, thus denying 
a Wisconsin business its rightful recovery of $140,478.41 for 
its claims under the UCC.  This is the amount that the circuit 
court correctly determined was due to Menard.  
¶72 For these reasons, I respectfully dissent.  
¶73 I am authorized to state that Justice LOUIS B. BUTLER, 
JR. joins this dissent.   
 
No.  2003AP1391.npc 
 
 
 
1