Title: Manitowoc Western Company, Inc. v. Allan Montonen
Citation: 2002 WI 21
Docket Number: 2000AP000420
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: February 27, 2002

2002 WI 21 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
00-0420 
 
 
COMPLETE TITLE: 
 
 
Manitowoc Western Company, Inc.,  
 
Plaintiff-Respondent-Cross-Appellant, 
 
v. 
Allan Montonen,  
 
Defendant-Third-Party Plaintiff-Appellant- 
 
Cross-Respondent-Petitioner, 
 
v. 
Manitex, Inc., The Manitowoc Company, Inc., Fred 
Butler, Robert R. Friedl, and Does 1 through 20, 
inclusive,  
 
Third-Party Defendants-Respondents- 
 
Cross-Appellants. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at:  244 Wis. 2d 285, 628 N.W.2d 438 
(Ct. App. 2001-Unpublished) 
 
 
OPINION FILED: 
February 27, 2002   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
January 10, 2002   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Manitowoc   
 
JUDGE: 
Darryl W. Deets   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For 
the 
defendant-third-party 
plaintiff-appellant-cross 
respondent-petitioner there were briefs by John J. Prentice, 
Andrew T. Phillips and Prentice & Phillips, Milwaukee, and oral 
argument by Andrew T. Phillips. 
 
For 
plaintiff-respondent-cross-appellant 
and 
third-party 
defendants-respondents-cross-appellants there was a brief by 
Richard C. Ninneman, Brian D. Winters and Quarles & Brady LLP, 
Milwaukee, and oral argument by Richard C. Ninneman. 
 
 
 
2
 
2002 WI 21 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  00-0420  
(L.C. No. 
96 CV 117) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Manitowoc Western Company, Inc.,  
 
          Plaintiff-Respondent-Cross- 
          Appellant, 
 
     v. 
 
Allan Montonen,  
 
          Defendant-Third-Party Plaintiff- 
          Appellant-Cross-Respondent- 
          Petitioner, 
 
     v. 
 
Manitex, Inc., The Manitowoc Company,  
Inc., Fred Butler, Robert R. Friedl, and  
Does 1 through 20, inclusive,  
 
          Third-Party Defendants- 
          Respondents-Cross-Appellants. 
 
FILED 
 
FEB 27, 2002 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
ANN 
WALSH 
BRADLEY, 
J.   The 
petitioner, 
Allan 
Montonen, seeks review of an unpublished court of appeals 
decision affirming a circuit court grant of summary judgment in 
No. 
00-0420   
 
2 
 
favor of the respondent, Manitowoc Western Company.1  Montonen 
asserts that this court should extend the fraud exception to the 
transient rule of personal jurisdiction in order to prohibit 
service of a lawsuit on a person who comes to Wisconsin for 
settlement negotiations.  Because we conclude that the public 
policies at stake are best served by the fraud exception as it 
presently stands, we decline to extend the exception as Montonen 
asks.  Accordingly, we affirm the court of appeals. 
I 
 
¶2 
The pleadings and affidavits set forth the following 
facts.  Manitowoc Western Company is a Wisconsin corporation 
that employed Montonen, a California resident, in its Benicia, 
California facility.  In October 1994, Manitowoc Western sent a 
letter to Montonen outlining proposed terms for Manitowoc 
Western's sale of its Benicia Boom Truck Crane Dealership to 
Montonen.  Manitowoc Western believed the letter to be a non-
binding general expression of intent, but Montonen maintained 
that the letter was a binding and enforceable agreement.  
 
¶3 
Although the parties dispute many of the details 
surrounding events subsequent to the signing of the October 
letter, the following three facts are undisputed.  First, 
Montonen came to Wisconsin with his attorney on April 30, 1996, 
to meet with representatives of Manitowoc Western to discuss 
                                                 
1 See Manitowoc Western Co. v. Montonen, No. 00-0420, 
unpublished slip op. (Wis. Ct. App. April 25, 2001) (affirming a 
judgment of the circuit court for Manitowoc County, Darryl W. 
Deets, Judge). 
No. 
00-0420   
 
3 
 
their disagreement over the letter.  Second, Manitowoc Western 
filed this lawsuit against Montonen in Wisconsin earlier that 
day.  Third, Manitowoc Western served Montonen with process at 
the end of the meeting. 
¶4 
Montonen moved to set aside the service of process and 
asked the circuit court to declare that it lacked jurisdiction 
over his person.  He argued that Manitowoc Western engaged in 
fraud and deceit by tricking or enticing him to come to 
Wisconsin for settlement negotiations, then subsequently serving 
him with process.  The circuit court denied Montonen's motion 
and eventually granted summary judgment in favor of Manitowoc 
Western. 
¶5 
In the court of appeals, Montonen argued that the 
court should adopt a rule forbidding service of process on a 
person who comes to Wisconsin for settlement discussions.  The 
court of appeals acknowledged that some jurisdictions follow the 
rule Montonen proposed.  However, the court explained, such a 
rule would represent a "wholesale change in the law of personal 
jurisdiction" 
in 
Wisconsin. 
 
Whether 
such 
a 
change 
was 
warranted, the court concluded, was for this court to decide.  
Accordingly, the court of appeals declined to adopt Montonen's 
rule and affirmed the circuit court. 
II 
¶6 
Montonen renews his request in this court.  He asks 
that we expand or interpret broadly the fraud exception to the 
transient rule of personal jurisdiction to prohibit service of a 
lawsuit on a person who comes to Wisconsin for settlement 
No. 
00-0420   
 
4 
 
negotiations.  Whether to expand the fraud exception to the 
transient rule of personal jurisdiction presents a question of 
law subject to independent appellate review.  See P.C. v. C.C., 
161 Wis. 2d 277, 299, 468 N.W.2d 190 (1991). 
¶7 
In addressing the question before us, we briefly 
summarize the law of personal jurisdiction relevant to this 
case, then turn to examine the expanded versions of the fraud 
exception that Montonen advances.  After examining these rules 
in light of the public policies at stake, we reject the 
proffered rules as unnecessary to effectuate these policies and 
conclude that Montonen has provided no compelling reason to 
extend the fraud exception as he requests.  Instead, we reaffirm 
the fraud exception in its current form. 
III 
¶8 
We begin with a brief recitation of the relevant law 
of personal jurisdiction.  Under Wisconsin's long-arm statute, a 
court has jurisdiction over an individual who is a natural 
person served with process while voluntarily present within this 
state.  Wis. Stat. § 801.05(1)(a) (1995-96)2; see also Oxmans' 
                                                 
2 Wisconsin Stat. § 801.05(1)(a) provides:   
A court of this state having jurisdiction of the 
subject matter has jurisdiction over a person served 
in an action pursuant to s. 801.11 under any of the 
following circumstances: 
(1)  LOCAL PRESENCE OR STATUS.  In an action 
whether arising within or without this state, against 
a defendant who when the action is commenced: 
 
(a)  Is a natural person present within this 
state when served  . . . . 
No. 
00-0420   
 
5 
 
Erwin Meat Co. v. Blacketer, 86 Wis. 2d 683, 687, 273 N.W.2d 285 
(1979) (discussing the statute).3  Physical presence is, in fact, 
the traditional basis of personal jurisdiction.  Burnham v. 
Superior Court, 495 U.S. 604, 612 (1990); Oxmans' Erwin, 86 
Wis. 2d at 687.  Personal jurisdiction based only on physical 
presence within a state at the time of service has been referred 
to alternatively as "transient jurisdiction" or the "transient 
rule" of personal jurisdiction.  Burnham, 495 U.S. at 629 n.1 
(Brennan, J., concurring); Oxmans' Erwin, 86 Wis. 2d at 687 
nn.2-3. 
¶9 
Of course, courts may achieve personal jurisdiction 
over an individual on a basis other than physical presence 
within the state at the time of service.  See, e.g., Schlosser 
v. Allis-Chalmers Corp., 86 Wis. 2d 226, 241, 271 N.W.2d 879 
(1978) (citing International Shoe Co. v. Washington, 326 U.S. 
                                                                                                                                                             
All subsequent references to the Wisconsin Statutes are to the 
1995-96 version unless otherwise indicated. 
3 This court in Oxmans' Erwin Meat Co. v. Blacketer, 86 
Wis. 2d 683, 688 n.4, 273 N.W.2d 285 (1979), did not need to 
decide 
whether 
Wis. Stat. § 801.05(1)(a)'s 
provision 
for 
transient jurisdiction was constitutional because it resolved 
the case under the due process "minimum contacts" framework of 
International Shoe Co. v. Washington, 326 U.S. 310 (1945).  At 
the time of Oxmans' Erwin, the question of whether the "minimum 
contacts" 
limitation on 
the 
constitutionality 
of personal 
jurisdiction also applied to a transient defendant through a 
long-arm statute such as § 801.05 was unresolved.  See 86 
Wis. 2d at 688.  However, the Supreme Court in Burnham v. 
Superior Court, 495 U.S. 604 (1990), decided that question.  The 
Court concluded that voluntary physical presence at the time of 
service is sufficient to satisfy due process for purposes of 
personal jurisdiction.  Id. at 619, 628-29. 
No. 
00-0420   
 
6 
 
310 (1945)).  In this case, however, we address personal 
jurisdiction and service only under the transient rule. 
¶10 The transient rule is not without exception.  Where an 
individual is brought within a jurisdiction by fraud or 
trickery, service will be set aside upon the proper showing. 
 
If a person is induced by false representations 
to come within the jurisdiction of a court for the 
purpose 
of 
obtaining 
service 
of 
process 
upon 
him . . . it is an abuse of legal process, and, the 
fraud being shown, the court will, on motion, set 
aside the service.  
Townsend v. Smith, 47 Wis. 623, 626, 3 N.W. 439 (1879); see also 
Saveland v. Connors, 121 Wis. 28, 31, 98 N.W. 933 (1904). 
¶11 Montonen 
has 
consistently 
and 
forthrightly 
acknowledged that his position represents an expansion of the 
fraud exception to the transient rule.  He concedes that he is 
unable to show actual fraudulent intent and thus does not fall 
within the fraud exception as it stands under Townsend and 
Saveland.  Rather, he emphasizes the vintage of the two cases 
and asserts that it is time for the exception to expand and 
evolve. 
¶12 Citing cases from other jurisdictions, Montonen asks 
that 
we 
extend the fraud 
exception 
by adopting a 
flat 
prohibition 
on 
service 
under 
the 
transient 
rule 
during 
settlement negotiations.  In support of this rule, Montonen 
relies primarily on E/M Lubricants, Inc. v. Microfral, 91 F.R.D. 
235 (N.D. Ill. 1981), and K Mart Corp. v. Gen-Star Indus. Co., 
110 F.R.D. 310 (E.D. Mich. 1986). 
No. 
00-0420   
 
7 
 
¶13 The federal district court in E/M Lubricants, 91 
F.R.D. at 238, determined that the fraud exception should be 
extended to cover cases where a defendant "reasonably relies on 
plaintiff's agreement to discuss settlement and where, later, 
plaintiff, without notice to defendant, decides to sue."  In 
such cases, the court explained, the duty is on the plaintiff to 
either (1) communicate to the defendant before the defendant 
enters the jurisdiction that pre-suit negotiations are no longer 
feasible or that the plaintiff has chosen a legal remedy, or (2) 
forego service on the defendant if the defendant is in the 
jurisdiction for the exclusive purpose of discussing settlement.  
Id. 
¶14 Likewise, in K Mart, 110 F.R.D. at 313, the district 
court concluded that service was prohibited during settlement 
talks unless the plaintiff either (1) warns the defendant before 
entering the jurisdiction that it may be subject to service, or 
(2) gives the defendant an opportunity to leave the jurisdiction 
after settlement talks fail.  The court in K Mart characterized 
its standard as a "bright-line" rule that would eliminate "a 
determination of whether the plaintiff intended to file a 
complaint at the time the parties were arranging the settlement 
meeting."  Id. 
 ¶15 As an alternative, Montonen asserts that this court 
could expand the fraud exception to require the quashing of 
service when a plaintiff invites a defendant into Wisconsin for 
purposes of settlement talks and fails to inform the defendant 
of the possibility of service.  Among other cases, he cites to 
No. 
00-0420   
 
8 
 
Coyne v. Grupo Indus. Trieme, 105 F.R.D. 627 (D.D.C. 1985), and 
Henkel Corp. v. Degremont, 136 F.R.D. 88 (E.D. Pa. 1991), in 
support of this rule. 
¶16 In Coyne, the district court applied the fraud 
exception and recognized a presumption of fraud, given certain 
facts.  In essence, the court adopted an "invitation rule" that 
establishes an evidentiary presumption of fraud when a plaintiff 
invites a defendant into the plaintiff's jurisdiction to discuss 
settlement and then effects service.  Coyne, 105 F.R.D. at 630. 
¶17 Similarly, the district court in Henkel, relying on 
Coyne, concluded that service should be quashed "whenever a 
defendant enters a jurisdiction for settlement talks at the 
plaintiff's suggestion and the plaintiff has not clearly and 
unequivocally informed the defendant of the possibility of 
service should the settlement negotiations fail."  Henkel, 136 
F.R.D. at 96.  Thus, the focus of the test under Coyne and 
Henkel is the plaintiff's role in initiating the settlement 
meeting in the plaintiff's jurisdiction and subsequently serving 
the defendant without forewarning. 
¶18 Although the standards set forth under either approach 
have much in common, it is apparent that they are not the same.  
As we read the cases, the essential difference between the two 
is that under Coyne and Henkel, the plaintiff must have 
initiated the settlement meeting while E/M Lubricants and K Mart 
purport to apply a "bright-line" rule that makes irrelevant the 
inquiry into which party initiated the meeting. 
No. 
00-0420   
 
9 
 
¶19 Other 
cases 
Montonen 
cites 
illustrate 
further 
variations on the theme.  See TMF Tool Co. v. H.M. Financiere & 
Holding, 689 F. Supp. 820 (N.D. Ill. 1988); Commercial Bank & 
Trust Co. v. District Court, 605 P.2d 1323 (Okla. 1980); Western 
States Refining Co. v. Berry, 313 P.2d 480 (Utah 1957).  In 
Western States, for example, the Utah Supreme Court determined 
that a showing of actual fraudulent intent was unnecessary where 
the following conditions were met:  (1) the plaintiff "extends 
an invitation" to the defendant to enter the jurisdiction for 
purposes 
of 
settlement; 
(2) 
the 
defendant 
was 
in 
the 
jurisdiction for the "sole purpose" of discussing settlement; 
(3) service was effected either during settlement negotiations 
or during a "reasonable period" involved in coming to the 
negotiations and returning therefrom; and (4) the plaintiff did 
not advise the defendant at the time of the invitation that the 
defendant would be served if settlement negotiations failed.  
313 P.2d at 481-82. 
¶20 In TMF Tool, the district court adopted a rule similar 
to that in E/M Lubricants and K Mart, but framed it as a three-
prong test.  The court in TMF Tool determined that service may 
be quashed on a transient defendant when (1) the parties agreed 
to have a settlement discussion; (2) the defendant entered the 
jurisdiction "only for that purpose;" and (3) the plaintiff 
No. 
00-0420   
 
10 
 
failed to notify the defendant, before the defendant arrived, 
that it might be served.  689 F. Supp. at 823.4 
¶21 The courts in the cases cited gave a variety of 
reasons for adopting their respective rules.  Most of these 
reasons, however, may be distilled into two important public 
policy considerations. 
¶22 First, the courts relied on the public policy of the 
promotion and encouragement of settlement negotiations.  See 
Henkel, 136 F.R.D. at 95; K Mart, 110 F.R.D. at 313; Coyne, 105 
F.R.D. at 630; E/M Lubricants, 91 F.R.D. at 238; Commercial 
Bank, 605 P.2d at 1325.  Second, the courts sought to avoid 
thorny factual inquiries, particularly where such inquiries 
amount to nothing more than "swearing matches about who said 
what to whom."  Henkel, 136 F.R.D. at 94 (quoting Coyne, 105 
F.R.D. at 630); see also K Mart, 110 F.R.D. at 313; E/M 
Lubricants, 
91 
F.R.D. 
at 
238. 
 
Montonen 
echoes 
these 
considerations in his assertions, arguing that an extension of 
the fraud exception is necessary to promote these important 
public policies in Wisconsin. 
¶23 We agree that encouraging the efficient resolution of 
disputes through settlement negotiations and avoiding factual 
inquiries that are certain to devolve into swearing matches are 
important public policy considerations.  These public policy 
                                                 
4 On appeal in the TMF Tool litigation, the Seventh Circuit 
Court of Appeals noted that there was no controlling law of the 
circuit on the fraud exception.  See TMF Tool Co. v. Muller, 913 
F.2d 1185, 1191 (7th Cir. 1990). 
No. 
00-0420   
 
11 
 
goals may, upon initial examination, appear to justify rules 
like the ones Montonen advances.  Ultimately, however, we are 
not convinced that they are best achieved by an expansion of 
Wisconsin's fraud exception to the transient rule. 
¶24 The rules as advanced by Montonen create at least as 
many factual inquiries as they eliminate.  This is true even of 
the rule that Montonen, citing K Mart, characterizes as a 
bright-line rule.  That rule leaves questions such as the 
following ripe for contention:  What constitutes a settlement 
negotiation?  Was the served party in the jurisdiction for the 
sole purpose of those negotiations?  What happens if it is the 
primary purpose but not the sole purpose?  When does one purpose 
end and another begin? 
¶25 Under other variations of the rules, such as those 
adopted in Coyne or Western States, still further factual 
inquiries are added to the mix:  Did the plaintiff "invite" or 
"suggest" the settlement negotiations?  In any given case, what 
is a "reasonable period" of time before and after a settlement 
negotiation in which a person may expect to remain immune from 
service? 
¶26 Indeed, the disputes that would arise from these types 
of questions are foreshadowed by the facts in this case.  For 
example, Montonen asserts that Manitowoc Western "invited" him 
to Wisconsin although Manitowoc Western argues that it was 
Montonen who requested the meeting.  Manitowoc Western also 
argues that the meeting in Wisconsin may not have constituted a 
"settlement discussion," yet Montonen maintains that it is 
No. 
00-0420   
 
12 
 
beyond dispute that the purpose of the meeting was to "discuss 
settlement."  Both parties submitted affidavits in support of 
their positions, each with competing versions of the facts. 
¶27 In addition, we note that although Montonen helpfully 
has attempted to categorize cases expanding the fraud exception 
into essentially two rules, there is substantial variation among 
the cases cited as to the exact bounds of the rules.  This 
further illustrates that an expanded fraud exception provides no 
more of a bright-line standard than does the fraud exception as 
it now exists. 
  
¶28 We do not agree with Montonen that the fraud exception 
in 
its 
present 
form 
significantly 
discourages 
settlement 
negotiations, thus undermining the efficient resolution of 
disputes through settlement negotiations.  Parties who wish to 
engage in face-to-face settlement negotiations without risking 
service are not without alternatives.  As technologies such as 
internet video conferencing become increasingly commonplace, the 
benefits of face-to-face settlement negotiations may be realized 
without an in-person meeting. 
¶29 Perhaps more significantly, parties may agree ahead of 
time that they will not attempt service during the settlement 
negotiations.  Thus, a party who is fearful of service can be 
protected by simply insisting on a clear statement from the 
other party that service will not be attempted.  At oral 
argument, Manitowoc Western conceded that service in violation 
of such 
a safe 
harbor 
agreement 
would fall 
within the 
No. 
00-0420   
 
13 
 
traditional fraud exception as it is presently formulated under 
Saveland and Townsend. 
¶30 The rules that Montonen advances also fail to account 
for another important public policy that provides a compelling 
reason to retain the present fraud exception's relatively narrow 
formulation.  Wisconsin has a definite interest in providing a 
forum where its citizens may seek legal redress.  Clement v. 
United Cerebral Palsy of S.E. Wisconsin, Inc., 87 Wis. 2d 327, 
338, 274 N.W.2d 688 (1979); Nagel v. Crain Cutter Co., 50 
Wis. 2d 638, 649, 184 N.W.2d 876 (1971).  Expanding immunity 
from 
service 
of 
process 
to 
cover 
parties 
in 
settlement 
negotiations may limit and obfuscate the availability of a 
Wisconsin forum for Wisconsin litigants.  As the dissenting 
justice in Western States noted in criticizing Utah's version of 
the rule: 
This [rule] opens the door to the unscrupulous 
nonresident present in the state, who, on being served 
by a resident, need only conveniently to state that he 
is present in the state at the invitation of the 
plaintiff for the purpose of settling a claim, thus 
inoculating himself . . . .  Before such immunity 
should be granted, there should be a finding of an 
allurement, enticement, trickery, fraud, legal or 
otherwise, or some other kind of bad faith on the part 
of him, who did the inviting to negotiate, as the 
great weight of authority requires.  
313 P.2d at 482-83 (Henriod, J., dissenting). 
¶31 We agree with the dissent in Western States that the 
better rule is to continue to require a showing of actual fraud 
when a party seeks to set aside service under the fraud 
exception to the transient rule.  Montonen has failed to provide 
No. 
00-0420   
 
14 
 
a compelling reason why this court should depart from the rule 
of Saveland and Townsend. 
¶32 In sum, Montonen asks that this court extend the fraud 
exception to the transient rule of personal jurisdiction in 
order to prohibit service of a lawsuit on a person who comes to 
Wisconsin to engage in settlement negotiations.  We decline to 
do so.  The public policies at stake do not warrant an expansion 
of that exception.  Rather, the public policies are best served 
by the fraud exception as it presently stands.  Accordingly, we 
affirm the court of appeals. 
By the Court.—The decision of the court of appeals is 
affirmed. 
 
 
  
 
 
No. 
00-0420   
 
 
 
1