COURT OF APPEALS

DECISION

DATED AND FILED

July 18, 2023

Samuel A. Christensen

Clerk of Court of Appeals

NOTICE

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. 

Appeal No. 2021AP1398 Cir. Ct. No. 2016CV317

STATE OF WISCONSIN IN COURT OF APPEALS

DISTRICT III

COLEMAN & HARTMAN, S.C., LARRY COLEMAN AND SUE HARTMAN,

 PLAINTIFFS-RESPONDENTS-CROSS-APPELLANTS,

 V.

IAMG, LLC,

 DEFENDANT-APPELLANT-CROSS-RESPONDENT,

SETH PARKER, AMANDA OESTREICH AND MELISSA BARTHMAN,

 DEFENDANTS,

CARLSONSV, LLP,

 CROSS-CLAIM DEFENDANT-RESPONDENT.

APPEAL and CROSS-APPEAL from orders of the circuit court for 

Polk County: J. MICHAEL BITNEY, Judge. Affirmed in part; reversed in part 

and cause remanded with directions. 
No. 2021AP1398

2

Before Stark, P.J., Hruz and Gill, JJ.

¶1 GILL, J. Prior to 2014, Coleman & Hartman, S.C., Larry Coleman, 

and Sue Hartman (collectively, C&H) owned and operated an accounting firm. In 

2014, C&H entered into two agreements to sell the accounting business to iAMg, 

LLC, Seth Parker, Amanda Oestreich, and Melissa Barthman (collectively, 

iAMg).1 C&H ultimately sued iAMg, asserting a number of causes of action 

arising out of that sale. iAMg, in turn, counterclaimed asserting various causes of 

action arising out of C&H’s claimed breach of the sale agreements.

¶2 iAMg now appeals and C&H cross-appeals. Both parties claim that 

the circuit court erroneously exercised its discretion by dismissing with prejudice 

all of their respective claims based upon discovery violations. The parties also 

argue that the court erred in denying their respective motions for reconsideration, 

and CarlsonSV—where Hartman works as a CPA and which was impleaded by 

iAMg—asserts that the court properly exercised its discretion in dismissing 

iAMg’s counterclaims because dismissal of only C&H’s claims would unfairly 

prejudice CarlsonSV.2 

¶3 We conclude that the circuit court did not erroneously exercise its 

discretion in sanctioning C&H for discovery violations, pursuant to WIS. STAT.

 

1

 iAMg’s name in the record before us is at times inconsistent. For example, documents 

refer to it as iAM G and iAMG. For the sake of this opinion, we use the name given in iAMg’s 

notice of appeal. 

2

 There is some confusion as to whether CarlsonSV is properly identified as a 

cross-claim defendant, as opposed to a counterclaim defendant or a third-party defendant. 

Resolution of this issue is not relevant to our analysis. Accordingly, and following the parties’ 

lead in their pleadings, we will identify iAMg’s claim against CarlsonSV as a “counterclaim.” 
No. 2021AP1398

3

§ 804.12(2) (2021-22),

3 by dismissing its claims with prejudice after finding that 

C&H’s violations were “egregious,” without excuse, and “extreme, substantial, 

and persistent.” Nor did the court erroneously deny C&H’s motion for 

reconsideration. However, we further conclude that the court did erroneously 

exercise its discretion in sanctioning iAMg for discovery violations by dismissing 

its counterclaims with prejudice because the court did not make a finding that 

iAMg violated any discovery order, or that it did so egregiously or in bad faith and 

without excuse. Section 804.12(2) only permits a court to sanction an offending 

party for discovery violations. Furthermore, the court erroneously found that 

CarlsonSV would be prejudiced if iAMg’s counterclaims were not dismissed. 

¶4 We therefore affirm the circuit court’s decision dismissing C&H’s 

claims with prejudice. We reverse the court’s decision dismissing iAMg’s 

counterclaims with prejudice, and we remand for the court to reinstate those 

claims. 

BACKGROUND

¶5 In October 2016, C&H, a services corporation engaged in 

accounting and tax preparation and planning, filed the present lawsuit against 

iAMg, an investment and wealth management firm. C&H’s complaint alleged

seven claims, including breach of contract, defamation, and intentional infliction 

of emotional distress. 

 

3

 All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise 

noted. 
No. 2021AP1398

4

¶6 According to the complaint, in late 2014 and early 2015, C&H 

entered into two agreements with iAMg. The first agreement was an Asset 

Purchase Agreement (APA), providing for iAMg’s purchase of “various assets of 

[C&H’s] business” from C&H. The APA included non-compete and 

non-solicitation provisions which prohibited C&H from “directly or indirectly” 

inducing or attempting to induce “any client ... to cease doing business with 

[iAMg] ... or in any way interfere with the relationship between any such 

customer.” 

¶7 The second agreement, a Management Services Agreement (MSA), 

involved the two parties combining their business services “subject to [C&H] 

retaining control over [its] daily management operation.” As part of the 

agreements, Coleman would serve as an employee of iAMg. C&H alleged that in 

August 2016, iAMg terminated Coleman’s employment, terminated the MSA, and 

declared the MSA to be no longer in effect. 

¶8 iAMg filed an answer and counterclaimed against C&H alleging that 

C&H breached the APA’s restrictive covenants. iAMg also sought a declaration 

of the restrictive covenants’ validity. Later, the circuit court granted iAMg’s 

motions to implead CarlsonSV and to file an amended answer and counterclaims

alleging, among other things, that CarlsonSV tortiously interfered with the APA 

by hiring Hartman.4 

 

4

 The circuit court later granted CarlsonSV’s motion for summary judgment as to 

iAMg’s other counterclaim against CarlsonSV (tortious interference with a prospective contract). 

That counterclaim is not at issue in iAMg’s appeal. 
No. 2021AP1398

5

¶9 The lawsuit continued for nearly five years. In that time, iAMg and 

C&H filed numerous motions to compel against each other. iAMg continuously 

alleged that C&H was withholding discoverable information and, at one point, 

alleged that Coleman, specifically, accessed iAMg’s servers and then destroyed 

the evidence of his access to the servers (i.e., iAMg accused C&H of spoliation). 

¶10 As relevant to this appeal, the circuit court ordered C&H to provide 

specific discovery to iAMg on two occasions: February 2018 and

November 2019. In the February 2018 discovery order, the court required C&H to 

provide iAMg with discovery “regarding when, why and how clients of [iAMg] 

came to do business with Mr. Coleman or Ms. Hartman or her firm after 

August 26, 2016.” The November 2019 discovery order against C&H stated that 

C&H failed to comply with the court’s February 2018 order, and it directed C&H 

to provide iAMg with specific information, including documents related to C&H’s 

alleged business with iAMg clients. The court issued only one discovery order 

directed specifically to iAMg.5 That order, issued in November 2019, required 

iAMg to respond to C&H’s interrogatory requests and C&H’s documents requests. 

¶11 Throughout the litigation, the circuit court repeatedly warned the 

parties that discovery sanctions were a possibility. For example, in its November 

2019 discovery orders, the court warned C&H and iAMg that “[f]ailure to comply 

shall result in sanctions being imposed.” The court also gave oral warnings to the 

 

5

 The circuit court had previously signed a similar discovery order that was prepared by 

C&H. The court later vacated that order because it did not accurately reflect the court’s oral 

rulings. The court also signed numerous scheduling orders, some of which included discovery 

compliance deadlines. 
No. 2021AP1398

6

parties. At a November 2019 hearing regarding pending motions to compel from 

both C&H and iAMg, the court admonished counsel for both parties, stating:

And instead of finalizing jury trial preparations this 

afternoon for the half hour that I allotted for this hearing, 

the [c]ourt is now bombarded with discovery motions, 

alleged discovery violations and a motion to amend the 

final scheduling order again, including resetting the trial, 

which will necessitate, at the very least, a six-month delay 

in this litigation. To say that the [c]ourt is disappointed and 

concerned would be an understatement, gentlemen. 

 ....

I expect the [c]ourt’s orders to be followed. If they’re not, 

there will be the appropriate sanctions levied against the 

offender or the offenders. It is obvious to this [c]ourt that 

the parties are nowhere near ready to try this case .... The 

new dates that the [c]ourt will set are expected to be 

complied with to the letter and without fail. 

 ....

I can advise counsel for the record that in looking at what I 

have seen thus far, there have been discovery violations on 

both sides of the ledger. What troubles the [c]ourt is that 

not only have the parties failed to comply with the 

discovery demands that were issued, but they then failed to 

approach the [c]ourt for the appropriate relief, be it by way 

of protective orders or otherwise, until way late in the game 

to where we could no longer salvage this trial date. That’s 

not going to happen again, gentlemen, because if it does, 

there will be the appropriate sanctions levied by the [c]ourt 

and we will try this case and bring this matter to conclusion 

for the parties on the next jury trial date that’s available to 

the [c]ourt and counsel’s calendar. 

 .... 

The parties are expected to comply fully with any and all 

outstanding interrogatories, production of documents or 

other discovery demands that have been made thus far. I 

have read them, I believe that they are reasonable, I believe 

that they were likely to lead to evidence at trial. Whether 

and how much of that will ultimately be admissible 

obviously will be determined at a later date. But the 

requests that are outstanding must be complied with in full 
No. 2021AP1398

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under penalty of contempt and the appropriate sanctions by 

January 31st of 2020. Do you understand that, counsel? 

 .... 

This is the last kick at the cat you’re going to get to wrap 

this up to make sure that you’re fully prepared .... 

¶12 In February 2021, iAMg filed a motion for discovery sanctions

against C&H, stating that C&H had recently produced emails between C&H and 

iAMg clients—which, according to iAMg, proved that C&H violated the APA—

“five years after they were requested,” “more than three years after the [c]ourt 

ordered that they be produced,” and “more than fifteen months after the [c]ourt 

again ordered these documents to be produced.” (Emphasis omitted.) iAMg filed 

a proposed order that requested, among other things: (1) $50,000 for reasonable 

costs and fees; (2) a finding that C&H intentionally breached the APA and that 

C&H was “dishonest in their representations to iAMg regarding the existence, 

nature and scope of their breaches”; and (3) an order stating that C&H was 

prohibited from arguing or introducing evidence regarding their breach of the 

APA. 

¶13 C&H responded to iAMg’s motion for discovery sanctions by 

arguing that C&H had “made a good faith effort to provide discovery” and that 

C&H “produced information [on January 31, 2020,] ... that included lists of 

people that [C&H] had worked with after the [MSA] was wrongfully terminated.” 

C&H also requested that iAMg be sanctioned for attorney’s fees and expenses due 

to iAMg’s own failure to respond to discovery requests. 

¶14 CarlsonSV also opposed iAMg’s motion for discovery sanctions 

against C&H. Specifically, CarlsonSV argued that if iAMg’s discovery sanctions 

motion and the relief sought were granted, iAMg’s counterclaim against it—that 
No. 2021AP1398

8

CarlsonSV tortiously interfered with the APA—would not be defendable at trial. 

CarlsonSV stated that “[a] significant portion of [its] defense at trial w[ould] be 

presenting evidence and argument that [Hartman] did not breach the [APA] 

through her employment with CarlsonSV.” According to CarlsonSV, iAMg’s 

proposed court-ordered finding that C&H intentionally violated the APA would 

directly conflict with CarlsonSV’s theory of defense. To the extent the circuit 

court granted iAMg’s motion for discovery sanctions and granted its relief sought, 

CarlsonSV argued that the court should “make arrangements to remove the 

prejudicial effect ... by allowing the [counter]claim against CarlsonSV to be tried 

separately.” 

¶15 iAMg responded to CarlsonSV’s objection, conceding that 

CarlsonSV did not engage in discovery violations. However, iAMg asserted that 

CarlsonSV “was repeatedly made aware that [Hartman] was the subject of 

restrictive covenants when they hired her ... [and] CarlsonSV was a beneficiary of 

her misconduct.” Therefore, iAMg argued, the issue could be “remedied with jury 

instructions at the time of trial[] so that CarlsonSV [would] not [be] unfairly 

punished for [Hartman’s] discovery failures.” 

¶16 Following iAMg’s discovery sanctions motion, the circuit court held 

a scheduling conference on February 19, 2021. The court informed the parties:

Having read all the pleadings filed since we were last 

together in October, it’s obvious that I’m going to have to 

make significant decisions regarding the issues of 

discovery despite my hope that counsel would be able to 

work together and in concert with their experts to resolve 

these. That, unfortunately, hasn’t been done .... 

 ....

I think counsel both know that when I make the decision on 

what is going to be ultimately discoverable and the 

mechanism for which that’s gonna be done by, if that’s not 
No. 2021AP1398

9

complied with by a date certain in advance of trial, standard 

sanctions would be the exclusion of evidence or the 

exclusion of witnesses as may be appropriate, and that goes 

both ways .... 

¶17 The circuit court then scheduled a motion hearing for March 29, 

2021, to address iAMg’s discovery sanctions motion as well as C&H’s motion to 

compel iAMg to produce specific discovery and allow C&H to forensic image 

certain devices. On March 26, iAMg filed a letter with the court requesting an 

adjournment due to an iAMg attorney’s “serious health concern.” According to 

iAMg, C&H did not object to the adjournment. 

¶18 As the circuit court had warned, it imposed discovery sanctions on 

both C&H and iAMg, and it denied iAMg’s adjournment request. In a written 

decision and order, the court dismissed with prejudice C&H’s claims and iAMg’s 

counterclaims. In rendering its decision, the court focused on C&H’s discovery 

violations—specifically violations of the court’s February 2018 and 

November 2019 discovery orders. The court did not find in its decision that iAMg 

had violated the court’s November 2019 discovery order against it or any other 

order. Despite this omission, the court dismissed iAMg’s counterclaims because, 

according to the court, dismissing only C&H’s claims would unfairly prejudice 

CarlsonSV. 

¶19 Following motions for clarification and reconsideration from iAMg 

and C&H, the circuit court affirmed its discovery sanctions decision and order. Of 

note, the court denied iAMg’s motion because the court “granted the relief 

requested by” iAMg and because all of the claims from both parties “are so 

inextricably intertwined ... that to partially reopen th[e] litigation” would create 

“an inability to fairly and fully prosecute or defend” the counterclaims. The court 

reaffirmed its reasoning that CarlsonSV would be unfairly prejudiced if iAMg’s 
No. 2021AP1398

10

counterclaims continued. Again, the court did not make a finding that iAMg 

violated the November 2019 discovery order against it or any other order. 

¶20 iAMg appeals, and C&H cross-appeals. Additional facts will be 

presented below where necessary. 

DISCUSSION

¶21 C&H and iAMg both argue that the circuit court erroneously 

exercised its discretion by sanctioning them with dismissal of their respective 

claims with prejudice. As relevant to this appeal and cross-appeal, a party “may 

apply for an order compelling discovery” “[i]f a deponent fails to answer a 

question propounded or submitted”; “a party fails to answer an interrogatory 

submitted”; or “if a party, in response to a request for inspection ... fails to 

produce documents or fails to respond that inspection will be permitted as 

requested or fails to permit inspection as requested.” See WIS. STAT.

§ 804.12(1)(a). An order compelling discovery may require “an answer, or a 

designation, or” an inspection. Id. 

¶22 Upon a party’s failure “to obey an order to provide or permit 

discovery,” a circuit court “in which the action is pending may make such orders 

in regard to the failure as are just,” including “dismissing the action or proceeding 

or any part thereof, or rendering a judgment by default against the disobedient 

party.” WIS. STAT. § 804.12(2)(a)3. (emphasis added); see also WIS. STAT.

§ 805.03 (“[F]or failure of any party ... to obey any order of court, the court in 

which the action is pending may make such orders in regard to the failure as are 

just, including but not limited to orders authorized under [§] 804.12(2)(a).”). Prior 

to issuing sanctions, due process “requires at least a fair and adequate warning by 

court rule or notice of the imposition of the sanctions or penalties to be invoked 
No. 2021AP1398

11

for the failure to comply with a court order.” Latham v. Casey & King Corp., 23 

Wis. 2d 311, 316, 127 N.W.2d 225 (1964). 

¶23 Before dismissing a party’s claims based upon a party’s failure to 

obey a circuit court order to provide or permit discovery pursuant to WIS. STAT.

§ 804.12(2)(a)3., a circuit court must “make a finding of ‘egregious conduct’ or 

‘bad faith’ without a ‘clear and justifiable excuse.’” Mohns Inc. v. BMO Harris 

Bank Nat’l Ass’n, 2021 WI 8, ¶36, 395 Wis. 2d 421, 954 N.W.2d 339 (citations 

omitted). “Where the ... court finds that failures to respond to discovery and 

follow court orders are ‘extreme, substantial, and persistent’ it may dismiss the 

action with prejudice on the grounds that the conduct is egregious.” Industrial 

Roofing Servs., Inc. v. Marquardt, 2007 WI 19, ¶43, 299 Wis. 2d 81, 726 N.W.2d 

898 (citation omitted). 

¶24 “A discovery sanction represents a discretionary determination of [a]

circuit court and is examined under the erroneous exercise of discretion standard 

of review.”6 Mohns, 395 Wis. 2d 421, ¶33. A circuit court’s discretionary power 

 

6

 iAMg argues for a de novo review of the circuit court’s discovery sanction against 

iAMg because it is “only challenging the legal conclusion that [its] [counter]claims were properly 

dismissed.” We disagree that iAMg’s framing of its argument on appeal alters the standard of 

review we apply to a court’s discovery sanctions decision. Regardless of whether the party 

challenging a discovery sanction takes issue with a court’s factual findings or legal conclusions, 

the court still must “examine[] the relevant facts, appl[y] a proper standard of law [and] us[e] a 

demonstrated rational process [to] reach[] a conclusion that a reasonable judge could reach.” 

See Mohns Inc. v. BMO Harris Bank Nat’l Ass’n, 2021 WI 8, ¶33, 395 Wis. 2d 421, 954 

N.W.2d 339. Therefore, we apply the erroneous exercise of discretion standard to the court’s 

decisions to issue discovery sanctions, including the dismissal of claims. 

iAMg and CarlsonSV both discuss the circuit court “abus[ing]” its discretion in issuing 

the discovery sanctions. Our supreme court, however, long ago abandoned the practice of using 

the language “abuse of discretion” in place of “erroneous exercise of discretion” because the 

former “carries unjustified negative connotations.” City of Brookfield v. Milwaukee Metro. 

Sewerage Dist., 171 Wis. 2d 400, 423, 491 N.W.2d 484 (1992). While the two phrases refer to 

the same standard of review, id., we urge counsel to use the correct terminology going forward. 
No. 2021AP1398

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to issue discovery sanctions “is absolutely essential to the court’s ability to 

efficiently and effectively administer its calendar.” Sentry Ins. v. Davis, 2001 

WI App 203, ¶19, 247 Wis. 2d 501, 634 N.W.2d 553. We will uphold a court’s 

discretionary decision if the court “examined the relevant facts, applied a proper 

standard of law, and, using a demonstrated rational process, reached a conclusion 

that a reasonable judge could reach.” Mohns, 395 Wis. 2d 421, ¶33 (citation 

omitted). “We affirm a circuit court’s factual findings unless they are clearly 

erroneous.” Id. (citing WIS. STAT. § 805.17(2)). “Additionally, this case involves 

questions of statutory interpretation and application,” which present questions of 

law that we review de novo. Townsend v. ChartSwap, LLC, 2021 WI 86, ¶11, 

399 Wis. 2d 599, 967 N.W.2d 21. 

I. Discovery violation sanction against C&H

¶25 The circuit court did not erroneously exercise its discretion when it 

dismissed C&H’s claims with prejudice pursuant to WIS. STAT. § 804.12(2)(a)3.

as a sanction for C&H’s failure to comply with the court’s discovery orders, which 

failure the court described as “extreme, substantial, and persistent.” Specifically, 

the court found that iAMg served “multiple discovery demands,” including 

interrogatories, requests for the production of documents, and depositions, on 

C&H beginning in December 2016. These demands sought “all communications 

relating to when, why and how clients of [iAMg] came to do business with Mr. 

Coleman or Ms. Hartman or her firm [CarlsonSV], despite their agreed-upon 

restrictive covenants.” 

¶26 The circuit court further found that:

Despite the plaintiffs’ and their attorney’s claim that no 

such communication existed, [iAMg] discovered from 

documents subpoenaed from former clients that both of the 

plaintiffs had used a variety of email accounts to 
No. 2021AP1398

13

communicate with and provide tax and accounting services 

to [iAMg’s] clients beginning in the fall of 2016 through 

early 2017. The plaintiffs, however, produced none of 

these emails themselves, and even denied their existence, 

despite these disclosures and [iAMg’s] repeated demands 

therefor and [c]ourt [o]rders compelling the production 

thereof. 

 .... 

It was not until late February[] 2021 that the plaintiffs

finally produced at least some of the emails that [iAMg] 

ha[d] sought over the last five years and which this [c]ourt 

ordered be produced by two separate [o]rders. 

Furthermore, many of the emails that the plaintiffs finally 

turned over to [iAMg] appeared to have been altered to 

delete information regarding the date and time that the 

emails were originally sent and to what email addresses 

they were sent to, leading this [c]ourt to suspect a possible 

effort to cover up the plaintiffs’ violations of the restrictive 

covenants, which again are material to [iAMg’s] defense 

and counterclaims. 

The court then discussed both its February 2018 and November 2019 orders, with

which the court found that C&H had refused to comply. The court’s first 

discovery order required C&H to provide discovery relating to “when, why and 

how clients of [iAMg] came to do business with Mr. Coleman or Ms. Hartman or 

her firm [CarlsonSV] after August 23, 2016.” The court’s second discovery order 

required C&H to “provide responses to” specific iAMg requests for the production 

of documents and an interrogatory concerning “when, why and how clients of 

[iAMg] came to do business with Mr. Coleman or Ms. Hartman or her firm 

[CarlsonSV] after August 23, 2016.” 

¶27 After outlining the factual basis for its decision, the circuit court 

found that C&H “repeated[ly] and persistent[ly] refus[ed] to comply with” both 

iAMg’s discovery demands and the court’s discovery orders. The court 

characterized C&H’s refusals as “egregious in every sense of the word ... leaving 
No. 2021AP1398

14

the [c]ourt with no option[] but to dismiss this action under” WIS. STAT.

§§ 804.12(2)(a)3. and 805.03. 

¶28 The circuit court’s findings that C&H “repeated[ly] and 

persistent[ly] refus[ed] to comply with” both iAMg’s discovery demands and the 

court’s discovery orders, and that the refusals were “extreme, substantial, and 

persistent” and “egregious,” are not clearly erroneous and support the court’s 

discovery sanction against C&H. It is undisputed that the court required C&H to 

comply with iAMg’s discovery requests regarding communication between C&H 

and iAMg clients. After the court’s November 2019 order, C&H did provide 

iAMg with some documents. However, iAMg then sent C&H responses it had 

received, pursuant to multiple subpoenas to former clients, showing that both 

Coleman and Hartman used a variety of email accounts to communicate and 

provide tax and accounting services to iAMg clients in the fall of 2016 and early 

2017. Almost none of these emails were provided through discovery by C&H up 

to that point. Almost immediately thereafter, C&H produced the documents 

requested by iAMg and required by the court’s earlier orders. In total, C&H 

delayed in responding to the court’s February 2018 order by over 1,100 days, and 

it delayed in responding to the court’s November 2019 order by over 450 days. 

¶29 Despite the record before the circuit court, C&H contends that an 

evidentiary hearing was required prior to the dismissal of its claims because,

according to C&H, “all the facts relied upon by the circuit court [in its decision 

and order] were disputed.” Citing the affidavits of its forensic expert, who was 

hired to address “technical issues ... related to the discovery of electronically 

stored information (ESI),” C&H argues that there were “technical issues 

underlying the parties’ discovery dispute” and that it denies failing to produce 

emails that were available to it. 
No. 2021AP1398

15

¶30 Regardless of whether there were technical discovery issues, C&H’s 

reliance on its forensic expert’s affidavits and discovery issues to argue that an 

evidentiary hearing was required prior to the circuit court’s issuance of its 

dismissal order is misplaced. A circuit court is required to hold an evidentiary 

hearing on a discovery sanctions motion “if the [court] relies upon disputed facts 

or inferences from those facts in its decision” and if the motion is for dismissal 

with prejudice. Industrial Roofing, 299 Wis. 2d 81, ¶66 n.13. However, an 

evidentiary hearing is not required if the court relies on undisputed facts that are 

reasonably supported by the record. Id. 

¶31 First, the forensic expert did not opine that the purported “technical 

issues” caused C&H to not comply with the circuit court’s discovery orders; 

specifically, the expert did not explain how C&H was able to produce the emails 

in February 2021, but not previously. Second, the court did not find that technical 

issues had any impact on C&H’s ability to produce the ordered discovery, and the 

court did not consider any factual disputes surrounding technical issues when 

sanctioning C&H. This reasoning is supported by the record given that there was 

no evidence before the court to the contrary. Furthermore, C&H’s motion to 

compel at the February 2021 hearing dealt with “forensic imaging” of certain 

iAMg devices, and did not deal with C&H’s ability to produce documents related 

to communications with iAMg’s clients.7 Therefore, the court’s findings that 

C&H “repeated[ly] and persistent[ly] refus[ed] to comply with” both iAMg’s 

discovery demands and the court’s discovery orders, and that the refusals were 

 

7

 At the February 19, 2021 hearing, C&H admitted as much when it argued to the circuit 

court that its “motion to compel has to do with the production of devices that our experts are 

prepared to look at and conduct a forensic imaging of those devices. [iAMg’s] motion for 

sanctions is not really interrelated to that.” 
No. 2021AP1398

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“extreme, substantial, and persistent,” are not clearly erroneous and support the 

court’s discovery sanction against C&H. 

¶32 C&H also argues that the circuit court made erroneous factual 

findings in its written decision and order demonstrating “a fundamental 

misunderstanding concerning the nature of the discovery demands” and “the 

nature of the parties’ claims.” For example, C&H points to the court’s 

misstatement that the MSA was terminated because C&H violated the restrictive 

covenants. However, C&H fails to explain how the court’s misstatement of these

particular background facts affected the court’s ultimate decision regarding 

discovery violations. We conclude that these findings, although erroneous, were

not material to the court’s decision and therefore provide no grounds for reversal. 

¶33 Next, C&H argues that the circuit court failed to “give warning to 

either party that its claims were subject to dismissal.” Instead, C&H cites the 

court’s statements at the February 2021 hearing, at which it stated that “standard 

sanctions would be the exclusion of evidence or the exclusion of witnesses as may 

be appropriate.” Furthermore, C&H argues that because the court scheduled a 

hearing for March 29, 2021, to address the sanctions motion, the court was barred 

from issuing a decision prior to holding that hearing. In support of this latter 

argument, C&H cites the court’s statement that C&H should have “a full 

opportunity to respond” prior to the court’s sanctions decision. 

¶34 C&H’s arguments fail for several reasons. First, C&H 

mischaracterizes the circuit court’s statement regarding it giving C&H an 

opportunity to respond to iAMg’s motion for sanctions. The court stated that it 

was giving C&H an opportunity to “support ... their position that they are entitled 

to the discovery that they are demanding” iAMg to produce. In other words, the 
No. 2021AP1398

17

court was offering C&H an opportunity to reply to iAMg’s response to C&H’s 

motion to compel discovery related to forensic imaging. Regarding iAMg’s 

motion for sanctions, the court asked C&H “how long is a fair and reasonable 

opportunity for you to respond to” iAMg’s motion, indicating that it wanted C&H 

to file a written response. And, following the February 19, 2021 hearing, C&H 

indeed filed a response to iAMg’s motion for sanctions. The court, therefore, was 

fully apprised of C&H’s position as to iAMg’s motion for sanctions prior to 

issuing its order. Even assuming dismissal of C&H’s claims with prejudice was

not “the self-evident remedy for an overt violation of a court order or rule,” the 

court gave C&H an opportunity to respond to iAMg’s sanctions motion. See B & 

B Invs. v. Mirro Corp., 147 Wis. 2d 675, 683-84, 434 N.W.2d 104 (Ct. App. 

1988). 

¶35 Second, as noted above, the circuit court warned the parties on a

number of occasions that if a party violated its discovery orders, it could impose 

serious sanctions. At the November 2019 hearing, the court warned of sanctions 

on three occasions. Initially, the court stated that it expected its “orders to be 

followed. If they’re not, there will be the appropriate sanctions levied against the 

offender or the offenders.” Later, the court again warned that “the [discovery] 

requests that are outstanding must be complied with in full under penalty of 

contempt and the appropriate sanctions.” And again, at the end of the hearing, the 

court informed the parties that if the parties “aren’t willing to comply, be fair and

be fully disclosing what’s being ordered, there will be the appropriate sanctions by 

way of either admissions or exclusions of evidence or testimony, as well as any 

other necessary sanctions that the [c]ourt finds reasonable and appropriate. 

Counsel, do you understand?” Similarly, the court’s November 2019 order 

identified that C&H failed to comply with its previous February 2018 discovery 
No. 2021AP1398

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order and required C&H to provide iAMg with specific discovery. The order 

further stated that “[f]ailure to comply shall result in sanctions being imposed.”8 

These warnings were more than adequate to give “a fair and adequate warning 

by ... notice of the imposition of the sanctions or penalties to be invoked for the 

failure to comply with” the court’s discovery order. See Latham, 23 Wis. 2d at 

316. 

¶36 Additionally, WIS. STAT. § 804.12(2)(a)3. expressly provides circuit 

courts the authority to dismiss an action for a party’s failure to comply with a 

discovery order. Therefore, the court’s warnings to C&H that “appropriate 

sanctions” could be imposed for a party’s failure to follow the court’s discovery 

orders—in addition to the circumstances of this particular case, including the 

numerous warnings and length of litigation—clearly put C&H on notice that 

dismissal with prejudice was a possibility. See Latham, 23 Wis. 2d at 316 

(holding that the absence of a court rule allowing sanctions meant an attorney was 

not on notice of sanctions for failure to “obey an order to appear at a pretrial 

conference”). 

¶37 C&H relies on Industrial Roofing to argue that statutory notice is 

insufficient to give notice of sanctions. In Industrial Roofing, our supreme court 

stated that “before a client is subjected to dismissal with prejudice, the client 

should have notice that [a circuit] court is considering such a harsh sanction.” 

 

8

 At a September 21, 2020 hearing, the circuit court warned the parties that “one of 

the ... requests on the table ... is the ultimate dynamite sanction, which is a dismissal of this 

case.” The court’s statement was in response to iAMg’s motion for dismissal relating to the 

spoliation issue. While the court’s warning at this particular hearing was not expressly in relation 

to alleged discovery violations, it further supports the fact that the court warned the parties that 

they could be sanctioned for their improper actions, including sanction with dismissal of claims. 
No. 2021AP1398

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Industrial Roofing, 299 Wis. 2d 81, ¶71. This holding was made in the context of 

an argument made on appeal by a sanctioned party. Specifically, the sanctioned 

party argued “that it was an erroneous exercise of discretion for the circuit court to 

impute the conduct of the attorney to the client where the client is blameless.” Id., 

¶57. 

¶38 Ultimately, our supreme court determined “that it is an erroneous 

exercise of discretion for a circuit court to enter a sanction of dismissal with 

prejudice, imputing the attorney’s conduct to the client, where the client is 

blameless.” Id., ¶61. In this context, the court held that the attorney’s conduct in 

that case could be imputed upon the client because the client “knew that the court 

was considering the dismissal with prejudice sanction and was given an 

opportunity by the court to avoid those consequences.” Id., ¶71. 

¶39 Here, C&H does not argue that Coleman and Hartman were 

blameless or that they, specifically, did not receive proper notice. Even so, the 

circuit court found that the attorneys, as well Coleman and Hartman, were also to 

blame. For example, the circuit court found in its order dismissing C&H’s claims 

with prejudice, that “[d]espite the plaintiffs’ and their attorney’s claim that no such 

communication” between Coleman and Hartman and iAMg clients “existed, 

[iAMg] discovered from documents subpoenaed from former clients that both of 

the plaintiffs had used a variety of email accounts to communicate with and 

provide tax and accounting services” to iAMg’s clients. Yet, Coleman and 

Hartman “denied” that the emails existed “despite these disclosures and the 

defendant’s repeated demands therefor and [c]ourt [o]rders compelling the 

production thereof.” This finding is not clearly erroneous. Therefore, we do not 

find persuasive C&H’s reliance on Industrial Roofing’s notice standard. In any 

event, we conclude that C&H did receive notice of the impending sanction. 
No. 2021AP1398

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¶40 We therefore conclude that the circuit court’s discovery sanction 

decision against C&H was not without warning. Additionally, the fact that the

court did not wait to issue its discovery sanction decision until after another

motion hearing—when the case had already languished for nearly five years, after 

the court expressed its irritation with the parties’ discovery tactics, and after the 

court gave C&H an opportunity to respond to iAMg’s motion for sanctions—does 

not constitute an erroneous exercise of the court’s discretion. 

II. Discovery violation sanction against iAMg

¶41 We conclude that the circuit court erroneously exercised its 

discretion when it dismissed iAMg’s counterclaims because WIS. STAT.

§ 804.12(2), by its plain language, allows a circuit court to impose sanctions only 

on a party that it finds violated a discovery order.9 See Rao v. WMA Sec., Inc., 

2008 WI 73, ¶36, 310 Wis. 2d 623, 752 N.W.2d 220. 

¶42 WISCONSIN STAT. § 804.12(2)(a) begins by stating that sanctions are 

permissible “[i]f a party ... fails to obey an order.” Id. Section 804.12(2)(a) limits 

a court’s discovery sanctions “in regard to the failure.” Id. (emphasis added). 

Dismissal of the action is one such sanction listed under § 804.12(2)(a), but the 

 

9

 In its written decision and order regarding discovery sanctions, the circuit court cited 

three cases to support dismissal of iAMg’s counterclaims: (1) Industrial Roofing Services., Inc. 

v. Marquardt, 2007 WI 19, 299 Wis. 2d 81, 726 N.W.2d 898; (2) Lister v. Sure-Dry Basement 

Systems, Inc., 2008 WI App 124, 313 Wis. 2d 151, 758 N.W.2d 126; and (3) Garfoot v. 

Fireman’s Fund Insurance Co., 228 Wis. 2d 707, 599 N.W.2d 411 (Ct. App. 1999). Although it 

is not clear from the decision whether the court was relying on these three cases to support 

dismissal against iAMg—as opposed to dismissal against C&H only—we conclude that the cases 

do not support dismissal against a non-violating party under WIS. STAT. § 804.12(2)(a). See 

Industrial Roofing, 299 Wis. 2d 81, ¶¶20-38 (disobedient party appealing); Lister, 313 Wis. 2d 

151, ¶8 (same); Garfoot, 228 Wis. 2d at 711 (same). 
No. 2021AP1398

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sanction is limited to “the disobedient party.” Sec. 804.12(2)(a)3. The statute is 

devoid of any language allowing a court to sanction a non-violating party. 

¶43 This interpretation of WIS. STAT. § 804.12(2) produces the most 

logical outcome, particularly where a non-violating party has claims pending. The 

statute allows the non-violating party harmed by the discovery abuses to continue 

its claims instead of further harming that party by also dismissing its claims. 

Conversely, dismissing the non-violating party’s claims would benefit the 

“disobedient” party by dismissing claims against it. 

¶44 The circuit court’s decision and order did not make any finding 

regarding iAMg’s purported discovery violations. The court issued only one 

discovery order to iAMg—the November 2019 order. That order required iAMg 

to respond to interrogatories and produce documents, but the court never found 

that iAMg violated the order.10 

¶45 C&H concedes that “the circuit court did not make any specific 

findings of egregiousness against iAMg” in its written decision and order. Despite 

this concession, C&H urges this court to “imply such a finding given the record in 

this case.” In making this argument, C&H cites the court’s statements throughout 

the nearly five-year litigation, in which the court placed blame on both C&H and 

iAMg for discovery issues. 

¶46 Be that as it may, the circuit court did not make a single finding that 

iAMg violated a discovery order. As outlined above, a circuit court is authorized 

 

10

 Nor did the circuit court find that iAMg failed to comply with any of the court’s 

scheduling orders that included discovery compliance deadlines. 
No. 2021AP1398

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to issue the discovery sanctions at issue here only “against the disobedient party.” 

See WIS. STAT. § 804.12(2)(a)3. The court cannot be said to have made an 

implicit finding of egregiousness warranting the dismissal of iAMg’s 

counterclaims when there was no underlying finding of a discovery order 

violation. Even then, the court never made a finding that iAMg violated such an 

order through “‘egregious conduct’ or ‘bad faith’ without a ‘clear and justifiable 

excuse.’” See id.; Mohns, 395 Wis. 2d 421, ¶36 (citations omitted). Furthermore, 

to dismiss iAMg’s counterclaims with prejudice, the court was required to find, 

but failed to on the record before us, that iAMg ignored discovery requests and 

orders in an “extreme, substantial, and persistent” manner. See Industrial 

Roofing, 299 Wis. 2d 81, ¶43 (citation omitted). The only comment the court 

made regarding iAMg’s discovery violations came at the November 2019 hearing, 

where it stated that the court observed “discovery violations on both sides of the 

ledger.” This statement—made prior to a discovery order specifically directed at 

iAMg—does not meet the standard required to dismiss a party’s claims with 

prejudice under § 804.12(2)(a)3. 

¶47 C&H cites a number of cases in support of its assertion that even if a 

circuit court does not make an express finding that a party acted egregiously, we 

can look for implicit findings in the record. We disagree that these cases support 

C&H’s proposition as applied to this case. For example, in Teff v. Unity Health 

Plans Insurance Corp., 2003 WI App 115, ¶14, 265 Wis. 2d 703, 666 N.W.2d 38, 

the circuit court ordered a default judgment against the plaintiff for discovery 

violations. While the court did not specifically use the words “‘egregious’ or ‘bad 

faith’ to describe [the plaintiff’s] conduct,” we concluded that there was “an 

implicit finding” of such conduct. Id. Notably, the court found at a motion 

hearing that the plaintiff violated numerous discovery orders and did not “take the 
No. 2021AP1398

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lawsuit seriously and give it the attention it deserved.” Id., ¶¶9, 14; see also 

Englewood Cmty. Apts. Ltd. P’ship v. Alexander Grant & Co., 119 Wis. 2d 34,

39 n.3, 349 N.W.2d 716 (Ct. App. 1984) (circuit court’s failure to use precise 

“magic words” did not preclude this court from relying on the circuit court’s 

factual findings regarding the disobedient party’s discovery violations). 

¶48 Again, here, unlike in Teff, the circuit court never found that iAMg 

violated a discovery order. We cannot search the record for implicit findings 

supporting a court’s discovery sanction for egregious or bad faith conduct in 

violation of court orders if the court never found that iAMg violated the court’s 

discovery orders to begin with. Further, unlike in Teff, here, the court never made 

a finding—implicitly or expressly—that iAMg engaged in egregious conduct. 

¶49 Following iAMg’s motion for clarification and reconsideration, the 

circuit court defended its dismissal of iAMg’s counterclaims on two different 

grounds. We conclude that the court erroneously exercised its discretion in 

dismissing iAMg’s counterclaims under both grounds.

¶50 First, the circuit court stated that it “granted the relief requested by 

[iAMg], that this matter be dismissed with prejudice because of [C&H’s] 

egregious discovery abuses.” However, as iAMg argues on appeal, its motion for 

discovery sanctions did not request dismissal of the entire case. Instead, as it 

related to the discovery sanctions, iAMg only requested: (1) $50,000 for 

reasonable costs and fees; (2) a finding that C&H intentionally breached the APA 

and that C&H was “dishonest in their representations to iAMg regarding the 

existence, nature and scope of their breaches”; (3) an order stating that C&H was 

prohibited from arguing or introducing evidence regarding their breach of the 
No. 2021AP1398

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APA; and (4) the requested discovery. We therefore conclude the court 

erroneously exercised its discretion in this sense. 

¶51 Second, the circuit court justified dismissing the entire case because 

the parties—specifically, CarlsonSV—would be unfairly prejudiced if the entire 

case was not dismissed. In particular, the court found in its order denying iAMg’s 

motion for reconsideration that all of the parties’ claims were “so inextricably 

intertwined with [C&H’s] alleged violations of the restrictive covenants ... and the 

discovery abuses surrounding them ... that to partially reopen this litigation would 

put the parties right back in the same quagmire that existed at the time of the” 

court’s original sanctions decision and order, “namely, an inability to fairly and 

fully prosecute or defend all of the claims and counterclaims.” (Formatting

altered.) 

¶52 Assuming without deciding that the circuit court’s decision to 

analyze the potential prejudice to CarlsonSV when applying WIS. STAT.

§ 804.12(2) was not in error, we disagree with the court’s finding that CarlsonSV 

would be unfairly prejudiced if iAMg’s counterclaim against CarlsonSV were not 

dismissed. The court dismissed C&H’s claims against iAMg for violating the 

court’s discovery orders. Notably, the court did not grant iAMg’s request to make 

a finding that C&H intentionally breached the APA, which would have some 

bearing on CarlsonSV’s ability to defend itself against the tortious interference 

claim. See Briesemeister v. Lehner, 2006 WI App 140, ¶48, 295 Wis. 2d 429, 720 

N.W.2d 531 (listing the elements for tortious interference with contract). Nor did 

the court order a default judgment in favor of iAMg’s claims against C&H. 

See § 804.12(2)(a)3. (a circuit court is authorized to dismiss the action or 

proceeding, or render a default judgment against the disobedient party). In other 

words, there has been no ruling on the merits of any parties’ claims in this case. 
No. 2021AP1398

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We therefore conclude that the court erroneously exercised its discretion by 

finding that CarlsonSV would be unfairly prejudiced by allowing iAMg’s 

counterclaims to continue. 

¶53 Lastly, CarlsonSV argues in the alternative that even if this court 

reverses and remands on iAMg’s counterclaims, we should “order the 

[counter]claim against [CarlsonSV] be tried separately to insulate [it] from the 

prejudicial taint of the sanctions imposed against C&H.” Again, in granting 

iAMg’s motion for discovery sanctions against C&H, the circuit court did not 

adopt iAMg’s requested relief. Instead, the court dismissed C&H’s claims with 

prejudice. CarlsonSV’s request on appeal would require this court to issue an 

advisory opinion, which we refuse to do in this case. See State v. Armstead, 220 

Wis. 2d 626, 631, 583 N.W.2d 444 (Ct. App. 1998) (“If the resolution of a claim 

depends on hypothetical or future facts, the claim is not ripe for adjudication and 

will not be addressed by this court.”). Regardless, the court on remand is in the 

best position to determine the manner and mode of the remaining litigation. 

¶54 In all, the circuit court did not erroneously exercise its discretion in 

dismissing C&H’s claims with prejudice under WIS. STAT. § 804.12(2). Nor did 

the court erroneously deny C&H’s motion for reconsideration. The court did, 

however, erroneously sanction iAMg without finding that it had violated a 

discovery order or engaged in egregious conduct. We therefore reverse the court’s 

decision dismissing iAMg’s counterclaims with prejudice and we remand for the 

court to reinstate those claims. We affirm the court’s order dismissing C&H’s 

claims with prejudice. 

¶55 No costs are awarded to any party. 
No. 2021AP1398

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By the Court.—Orders affirmed in part; reversed in part and cause 

remanded with directions. 

Not recommended for publication in the official reports.