Title: Wis. Pub. Serv. Corp. v. Arby Constr., Inc.
Citation: 2012 WI 87
Docket Number: 2010AP000878
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: July 11, 2012

2012 WI 87 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2010AP878 
COMPLETE TITLE: 
Wisconsin Public Service Corporation, 
          Plaintiff, 
Associated Electric & Gas Insurance Services 
Limited  
(AEGIS), 
          Plaintiff-Appellant-Petitioner, 
     v. 
Arby Construction, Inc., 
          Defendant-Respondent. 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at: 333 Wis. 2d 184, 798 N.W. 2d 715 
(Ct. App. 2011 – Published) 
PDC No: 2011 WI App 65  
 
 
OPINION FILED: 
July 11, 2012   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
January 12, 2012 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Brown 
 
JUDGE: 
Donald R. Zuidmulder 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
ABRAHAMSON, C.J., concurs in part and dissents 
in part (Opinion filed).    
 
DISSENTED: 
BRADLEY, J., joins concurrence/dissent.  
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiff-appellant-petitioner there were briefs 
filed by W. Thomas Terwilliger, Cassandra B. Westgate and 
Terwilliger, Wakeen, Piehler & Conway, S.C., Wausau, and oral 
argument by W. Thomas Terwilliger and Cassandra B. Westgate. 
For the defendant-respondent there was a brief filed by 
Charles P. Graupner, Aaron H. Kastens, Adam E. Witkov and 
Michael Best & Friedrich, LLP, Milwaukee, and oral argument by 
Charles 
P. 
Graupner.
 
 
2012 WI 87
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2010AP878   
(L.C. No. 
2009CV1779) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Wisconsin Public Service Corporation, 
 
          Plaintiff, 
 
Associated Electric & Gas Insurance Services 
Limited (AEGIS), 
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
Arby Construction, Inc., 
 
          Defendant-Respondent. 
 
 
 
FILED 
 
JUL 11, 2012 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
DAVID T. PROSSER, J.    This is a review of a 
published decision of the court of appeals, Wisconsin Public 
Service Corp. v. Arby Construction, Inc., 2011 WI App 65, 333 
Wis. 2d 184, 798 N.W.2d 715, affirming an order of the Brown 
County Circuit Court, Donald R. Zuidmulder, Judge.  The two 
plaintiffs, Wisconsin Public Service Corporation (WPSC) and 
Associated Electric & Gas Insurance Services Limited (AEGIS), 
No. 
  2010AP878 
 
2 
 
brought suit against the defendant, Arby Construction, Inc. 
(Arby), for indemnification of the damages that the plaintiffs 
paid in the settlement of a tort suit in federal court.  The 
circuit court dismissed the AEGIS claim against Arby on the 
basis of claim preclusion.   
¶2 
AEGIS contends that the circuit court erred.  The 
issue presented is whether AEGIS raised, in the form of an 
affirmative defense, a cross-claim against Arby in the prior 
federal action and is therefore precluded from pursuing the same 
claim in this action because the claim was adjudicated in the 
federal judgment of dismissal.  
¶3 
We affirm the court of appeals.  We conclude that 
AEGIS's claim was raised, in substance, in the prior federal 
action and was decided.  Therefore, the claim is subject to 
claim preclusion and was properly dismissed by the circuit 
court. 
I. FACTUAL BACKGROUND 
¶4 
The parties in this suit are three of many named 
defendants in a personal injury suit that was filed in the 
United States District Court for the Eastern District of 
Wisconsin.  Brooks v. Old Republic Ins. Co., Case No. 06-C-996 
(E.D. Wis.).1 
¶5 
Wisconsin Public Service Corporation is a major public 
utility headquartered in Green Bay.  WPSC provides electricity 
                                                 
1 The federal case was handled by United States District 
Court Judge William C. Griesbach. 
No. 
  2010AP878 
 
3 
 
to a large part of northeast and central Wisconsin, including 
Door County. 
¶6 
AEGIS is a mutual insurance company that provides 
liability insurance to utility and energy-related industries.  
It is based in East Rutherford, New Jersey.  AEGIS provided 
excess insurance coverage for WPSC.  AEGIS also provided excess 
insurance coverage for two other named defendants in the federal 
suit, including Arby.2 
¶7 
Arby Construction, Inc. is a construction company 
based in New Berlin.  Arby does excavation work on underground 
power lines.  Arby had a longstanding relationship with WPSC.  
In 1995, the two corporations executed an agreement that Arby 
would hold WPSC and its insurers harmless for any damages that 
resulted from contract excavation work performed for WPSC.  The 
indemnification agreement read in part: 
To the fullest extent permitted by law, the Contractor 
[Arby] shall fully indemnify and completely hold 
harmless the Company [WPSC], its agents, insurers 
[i.e., AEGIS] and/or employees from and against all 
actions, claims, demands, damages, losses, costs and 
expenses . . . which relate to personal or bodily 
injury . . . where all or any of such actions . . . in 
any way arise out of or by reason of . . . , in whole 
or in part, any act or omission of the Contractor. 
(Emphasis added.) 
                                                 
2 Like the court of appeals, we do not address the 
significance of the parties' relationships to each other as the 
parties here do not argue to this court that the relationship 
among the parties bears upon the issue of claim preclusion. 
No. 
  2010AP878 
 
4 
 
¶8 
Cedar Grove Resort is a resort located in the village 
of Ellison Bay in Door County.  Sometime prior to July 10, 2006, 
Ferrellgas, Inc., another named defendant in the federal suit, 
installed a propane gas pipeline to the Cedar Grove Resort.  
Ferrellgas was the other named defendant with excess insurance 
coverage provided by AEGIS. 
¶9 
Shortly before July 10, 2006, Arby was engaged by WPSC 
to install underground electrical lines to the Cedar Grove 
Resort.  During the course of its excavation or boring, Arby 
struck the buried unmarked propane pipeline that had been 
installed by Ferrellgas, causing a leak. 
¶10 On July 10, 2006, the leak caused a massive explosion 
and fire that killed two people and injured several others, 
including the three minor children of the deceased.  These 
victims and the estates of the deceased brought the Brooks suit 
in federal court.  The plaintiff victims of the accident were 
visiting Door County from Michigan.   
¶11 The Brooks suit was eventually settled and dismissed 
in a stipulated Order of Dismissal.  The present case involves 
some of the jockeying among three of the defendants in 
attempting to allot damages from the liability settlement. 
¶12 To understand the dispute about claim preclusion, we 
must describe the procedure in federal court. 
II. THE FEDERAL SUIT 
¶13 The Brooks complaint was filed in federal district 
court on September 22, 2006.  WPSC and Arby were among the named 
defendants.  AEGIS was not. 
No. 
  2010AP878 
 
5 
 
¶14 The Brooks complaint was amended on July 31, 2007.  It 
added AEGIS as a defendant.  On the same day, WPSC filed three 
separate cross-claims, two of which named Arby Construction and 
its insurers as defendants.  One of these cross-claims, directed 
solely at Arby and its insurers, made specific reference to the 
Arby-WPSC indemnification agreement from 1995.3 
¶15 The Brooks amended complaint required new answers from 
the defendants. 
                                                 
3 The cross-claim provided in part:  "That by way of a 
contract or agreement . . . dated July 6, 1995 [and other 
agreements] . . . Arby 
Construction, 
Inc., 
Old 
Republic 
Insurance Co., Inc., Associated Electric and Gas Insurance 
Services, Ltd. [AEGIS] and RSUI Indemnity Company are obligated 
to provide insurance coverage to Wisconsin Public Service 
Corporation as an additional insured or otherwise, with respect 
to the accident giving rise to this case by way of one or more 
insurance policies or contracts required to be procured by Arby 
Construction, Inc. and/or its insurers or re-insurers and that 
by way of the above-referenced contracts and/or agreements, or 
otherwise, Arby Construction [and its insurers] are required, to 
the fullest extent permitted by law, to fully indemnify, 
completely hold harmless and defend Wisconsin Public Service 
Corporation, its agents, insurers, reinsurers and/or employees 
from and against this action and all claims, demands, damages of 
any sort, losses, costs and expenses, including but not limited 
to attorney's fees, and any other costs associated with the 
handling or defense of this action and any claims within it 
which relate to or arise out of . . . the incident which gives 
rise to this claim and this lawsuit.  Further, this requirement 
that Arby Construction, Inc., Old Republic Insurance Co., Inc., 
Associated Electric and Gas Insurance Services, Ltd. [AEGIS] and 
RSUI 
Indemnity 
Company 
and 
their 
additional 
insurers 
or 
reinsurers fully indemnify, hold harmless and defend Wisconsin 
Public Service Corporation, its insurers and reinsurers, its 
agents and employees is not limited to the language of this 
Cross-Claim, but is set forth in full in the above-referenced 
contract/Agreement and related documents."   
No. 
  2010AP878 
 
6 
 
¶16 On August 10, 2007, WPSC and AEGIS filed an answer to 
the Brooks amended complaint.  This joint answer included the 
following statement under an "AFFIRMATIVE DEFENSES" heading: 
172. That, upon information and belief, based 
upon the contractual language and other agreements 
between Wisconsin Public Service Corporation and Arby 
Construction, Inc., Arby Construction, Inc. and its 
insurers and reinsurers is required to fully defend, 
indemnify and hold harmless Wisconsin Public Service 
Corporation and its insurers with respect to the 
negligence and any other act or violation alleged 
against Wisconsin Public Service Corporation in this 
case, and any damages asserted against Wisconsin 
Public 
Service 
Corporation 
and 
its 
insurers 
or 
reinsurers in this matter.     
(Emphasis added.) 
¶17 On August 14, 2007, Arby filed an answer to the Brooks 
amended complaint.  This answer included several affirmative 
defenses.  It also included cross-claims for contribution and 
indemnity against "every Defendant [including WPSC and AEGIS] 
(except Arby and its third-party insurers)" and an unrelated 
third-party defendant.  Arby also separately answered WPSC's 
general and specific cross-claims.4  
¶18 On August 21, 2007, AEGIS separately answered the 
Brooks amended complaint.  In this answer, AEGIS included, under 
                                                 
4 The answer to the WPSC general cross-claim contained a 
simple denial of the allegation.  The answer to the WPSC 
specific cross-claim provided: "Arby admits the existence of the 
alleged contractual provision during the time periods alleged, 
but denies that said agreement is enforceable to the extent 
alleged by WPS[C] with respect to the claims made by Plaintiffs 
and, therefore, Arby denies Paragraph 2 of WPS[C's] specific 
cross claim."   
No. 
  2010AP878 
 
7 
 
a 
section 
titled 
"AFFIRMATIVE 
DEFENSES," 
the 
following 
statement: 
48. As and for a third and separate affirmative 
defense, 
this 
answering 
defendant 
alleges, 
upon 
information and belief, that as an excess indemnity 
insurer, it is liable only if one or more of its 
insureds is found to be liable, and, therefore, to 
that extent, any affirmative defense available to its 
insureds is available to it and, therefore, this 
answering 
defendant 
affirmatively 
incorporates 
by 
reference any affirmative defense raised by any of its 
insureds, namely, Arby Construction, Inc., Wisconsin 
Public Service Corporation and/or [Ferrellgas, Inc.] 
and/or Ferrellgas, L.P.     
(Emphasis added.) 
¶19 On April 1, 2008, the federal litigation settled.  
Several defendants paid confidential amounts to the Brooks 
plaintiffs.  Based on the settlement agreement and a later 
stipulation by the parties, the district court entered an order 
of dismissal.  
¶20 The June 5, 2008, Order for Dismissal reads: 
 
WHEREAS, upon representation of counsel, all 
issues in this case are resolved and all claims are 
settled with the exception of certain contribution and 
indemnification claims which will be addressed outside 
the confines of this lawsuit; 
NOW, THEREFORE, IT IS HEREBY ORDERED: 
 
1. 
The cross-claims for contribution asserted 
by Arby Construction and Ferrellgas against each 
other, 
and 
the 
contractual 
indemnification 
claim 
asserted 
by 
Wisconsin 
Public 
Service 
Corporation 
against Arby 
Construction and its insurers, are 
dismissed without prejudice and without costs. 
 
2. 
This lawsuit, together with any and all 
claims set forth in the pleadings other than those 
No. 
  2010AP878 
 
8 
 
[referred to] in paragraph one, above, is dismissed on 
the merits, with prejudice, but without costs. 
III. PROCEDURAL HISTORY OF THIS CASE 
¶21 On June 29, 2009, WPSC and AEGIS filed a complaint in 
Brown County Circuit Court against Arby seeking indemnification 
for amounts paid in the underlying settlement as well as more 
than $400,000 in attorney fees spent defending the action. 
¶22 Arby 
answered 
the 
complaint 
and 
alleged 
myriad 
affirmative defenses including claim preclusion.  Arby also 
filed a motion to dismiss AEGIS from the action "for failure to 
state 
a 
claim 
and 
based 
on 
res 
judicata 
(i.e. 
claim 
preclusion)."   
¶23 AEGIS opposed Arby's motion to dismiss, arguing that 
AEGIS was not adverse to Arby in the prior federal suit, that no 
identity of claims existed, and that the common law compulsory 
counterclaim rule was inapplicable to this case. 
¶24 Arby replied that because AEGIS did "not dispute that, 
in the prior litigation, [AEGIS] raised an affirmative defense 
seeking indemnification from Arby," claim preclusion applied.   
¶25 After a hearing on the motion, the circuit court 
granted Arby's motion to dismiss AEGIS from the suit.  As part 
of its reasoning, the circuit court concluded that the federal 
dismissal order "covers AEGIS, covers this claim, and there was 
no carve out . . . .  [T]hese things happen."  In essence, the 
circuit court ruled that AEGIS did not carve out any exception 
to the order of dismissal. 
No. 
  2010AP878 
 
9 
 
¶26 The court of appeals, in a published opinion, affirmed 
the circuit court.  The court of appeals held that AEGIS's 
affirmative defense, asserting Arby's duty to indemnify AEGIS 
and WPSC, "was the functional equivalent of a cross-claim for 
purposes of claim preclusion."  Wis. Pub. Serv. Corp., 333 
Wis. 2d 184, ¶2.  The court of appeals added that, "The only 
reasonable 
inference 
is 
that 
AEGIS's 
claim 
for 
contract 
indemnification against Arby was dismissed with prejudice unless 
it was specifically excepted from dismissal with prejudice.  
AEGIS does not contend that its indemnification claim was 
specifically excepted."  Id., ¶¶29-30. 
¶27 After a brief discussion of common law compulsory 
counterclaims, id., ¶¶16-19, the court of appeals determined 
that AEGIS had, in substance if not in form, raised a cross-
claim by asserting it as an affirmative defense.  Id., ¶¶20-28.  
As a result, the court determined that all elements of claim 
preclusion were present.  Id., ¶31. 
IV. STANDARD OF REVIEW 
¶28 We review the grant of a motion to dismiss based upon 
claim preclusion in the same manner we review a grant of summary 
judgment.  Wis. Stat. § 802.06(2)(a)8. and (b) and Wis. Stat. 
§ 802.08. 
¶29 Thus, we review the decision de novo applying Wis. 
Stat. § 802.08(2) in the same manner as the circuit court.  
Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 
N.W.2d 816 (1987); Wickenhauser v. Lehtinen, 2007 WI 82, ¶15, 
302 Wis. 2d 41, 734 N.W.2d 855. 
No. 
  2010AP878 
 
10 
 
¶30 "The question of whether claim preclusion applies 
under a given factual scenario is a question of law that this 
court reviews de novo."  N. States Power Co. v. Bugher, 189 
Wis. 2d 541, 551, 525 N.W.2d 723 (1995).  In determining the 
claim-preclusive effect of the judgment of a federal district 
court 
located 
in 
Wisconsin 
and 
sitting 
in 
diversity 
jurisdiction, we apply Wisconsin law of claim preclusion.  
Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 
(2001). 
V. DISCUSSION 
¶31 Claim preclusion or res judicata has its roots in 
Roman law.  Robert von Moschzisker, Res Judicata, 38 Yale L.J. 
299 (1929).  Res judicata is a rule of "public policy, and, 
secondarily, of private benefit to individual litigants."  Id. 
at 299.  "[T]he protection from the annoyance of repeated 
litigation, which the individual suitor is afforded, is, after 
all, only an incident of the first principle, that the best 
interests of society demand that litigation be concluded."  Id.   
¶32 Chief Justice Luther Dixon, writing for this court, 
reflected these principles in the early case of Pierce v. 
Kneeland, 9 Wis. 19 (*23) (1859).  Pierce involved the claim-
preclusive effect of a confirmation of sale in the context of 
the foreclosure of a mortgage.  Chief Justice Dixon wrote: 
 
We presume that no one will be found to dispute 
the proposition, that when a question of law or fact 
has once been determined by a court of competent 
jurisdiction, it cannot, except in some of the modes 
of review provided by law, be again contested between 
the same parties, whether in the same or any other 
No. 
  2010AP878 
 
11 
 
court. This rule has found a place in every well 
regulated system of laws for the government of 
mankind. The necessity for it exists in the very 
nature of things; without it no laws could be 
enforced, litigation would be fruitless as well as 
endless, and rights, whether public or private, could 
never be protected, and wrongs never redressed. 
 
It follows, as a consequence of this rule, that a 
party, when called upon in legal form to establish a 
cause of action or defense, must do so by proving all 
the facts within his power and that if he purposely or 
negligently fail in doing this, he will not afterwards 
be 
permitted 
to 
deny 
the 
correctness 
of 
the 
determination, or renew the controversy. 
Id. at 25 (*30-31). 
¶33 Wisconsin law of claim preclusion exists to prevent 
endless litigation.  Under claim preclusion, "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 in the former proceeding."  Lindas v. Cady, 183 
Wis. 2d 547, 558, 515 N.W.2d 458 (1994) (quoting DePratt v. West 
Bend Mut. Ins. Co., 113 Wis. 2d 306, 310, 334 N.W.2d 883 
(1983))(internal quotation marks omitted).   
¶34 As Lindas noted, "[c]laim preclusion . . . extends to 
any and all claims that . . . could have been asserted in the 
previous litigation."  Id. at 559.  To illustrate the point, in 
Wickenhauser v. Lehtinen, 302 Wis. 2d 41, ¶26, the court 
recognized the common-law compulsory counterclaim rule as "a 
narrow 
exception 
to 
the 
general 
rule 
of 
permissive 
counterclaims."  See Wis. Stat. § 802.07.  In cases where the 
common-law 
compulsory 
counterclaim 
rule 
is 
applicable, 
counterclaims that could have been pleaded but were not pleaded 
No. 
  2010AP878 
 
12 
 
are subject to claim preclusion.  This case does not require us 
to deal with the common-law compulsory counterclaim rule or the 
hypothetical possibility of a compulsory cross-claim rule.  
Rather, the issue is whether the actual statement of a claim as 
an affirmative defense is substantively the same as its 
statement in a cross-claim.  If the statement is substantively 
the same, as we conclude it is, then a claim has actually been 
raised, and we do not need to decide whether AEGIS was required 
to raise the claim.   
¶35 The elements of claim preclusion are traditionally 
stated as "(1) an identity between the parties or their privies 
in the prior and present suits; (2) 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."  N. States 
Power Co., 189 Wis. 2d at 551; see also Kruckenberg v. Harvey, 
2005 WI 43, ¶21, 279 Wis. 2d 520, 694 N.W.2d 879; Sopha v. 
Owens-Corning Fiberglas Corp., 230 Wis. 2d 212, 233-34, 601 
N.W.2d 627 (1999). 
¶36 Here the parties dispute whether the elements of claim 
preclusion are present.  We determine that they are. 
¶37 In reaching this determination, we note that "the 
entire tenor of modern law is to prevent the avoidance of 
adjudication on the merits by resort to dependency on non-
prejudicial and non-jurisdictional technicalities."  Cruz v. 
Dep't of Indus., Labor & Human Relations, 81 Wis. 2d 442, 449, 
260 N.W.2d 692 (1978).  Courts now look beyond "hypertechnical" 
defects in the pleadings such as mislabeling or miscaptioning 
No. 
  2010AP878 
 
13 
 
parts of a pleading.  Id. at 446, 449.  They look beyond the 
form of a pleading to the substance of the pleading in order to 
decide a matter on the merits.  bin-Rilla v. Israel, 113 
Wis. 2d 514, 521, 335 N.W.2d 384 (1983). 
¶38 Once cases have been decided on the merits, it is in 
the interest of society (as well as the parties) for litigation 
to cease.  Claim preclusion must mirror the modern approach to 
pleadings if adjudication on the merits is to have real meaning.  
Giving claim-preclusive effect only to claims that are perfectly 
pleaded would seriously undermine the tenor of the modern law. 
¶39 Because, like the court of appeals, we determine that 
the substance of the "affirmative defense" in AEGIS's answers 
was a cross-claim against Arby, we determine that the dismissal 
with prejudice and on the merits in the stipulated Order of 
Dismissal has claim preclusive effect.  WPSC's claim against 
Arby, which was explicitly preserved in the federal order of 
dismissal, may go forward.  AEGIS's claim, which was not 
preserved, may not.   
¶40 We now turn to the elements of claim preclusion.  
AEGIS's argument against applying claim preclusion relates to 
both the identity of parties and the identity of claims elements 
of claim preclusion.   
¶41 We view AEGIS to be arguing that because AEGIS did not 
label its claim against Arby as a cross-claim and instead 
labeled it an affirmative defense, it did not assert that claim 
and therefore did not create adversity between itself and Arby——
thus defeating the identity of parties and identity of claims 
No. 
  2010AP878 
 
14 
 
elements of claim preclusion.  Adversity is not itself an 
element; it is a prerequisite for determining an identity of the 
parties. 
¶42 However, the substance of AEGIS's assertion in its 
answers was a cross-claim against Arby.  AEGIS was seeking 
indemnification from Arby in both its joint answer with WPSC as 
well as its own answer to the amended Brooks complaint.  AEGIS's 
assertion mirrored the language of WPSC's prior cross-claim 
against Arby as well as the cross-claim by Arby against WPSC and 
AEGIS that Arby included in its Answer to the Amended Complaint.   
¶43 The fact that AEGIS did not assert its claim in 
perfect form does not change our analysis.  A party is not 
entitled to rekindle litigation when it has imperfectly asserted 
a claim against a party in a previous action.  Such a decision 
would undercut finality and proper adjudication in the earlier 
suit.  As we will address more fully later, AEGIS's prior 
assertion regarding indemnification is the same claim that it is 
seeking here. 
¶44 This 
court's 
previous 
cases 
regarding 
adversity 
support our conclusion in this case that the identity of the 
parties element is met.  The early cases regarding adversity 
involved the equitable doctrine of contribution.  Wait v. 
Pierce, 
191 
Wis. 202, 
225-26, 
210 
N.W. 
822 
(1926) 
(on 
rehearing); Chas. B. Quarles, Contribution Between Joint Tort-
Feasors, 1 Marq. L. Rev. 141 (1917).  Although the discussion of 
pleadings in those cases is not directly on point, the 
discussion of adversity is illuminating and helpful. 
No. 
  2010AP878 
 
15 
 
¶45 Bakula v. Schwab, 167 Wis. 546, 168 N.W. 378 (1918), 
involved a suit by a woman who was injured while she was a 
passenger in a hired vehicle driven by Schwab.  Schwab swerved 
to avoid hitting a horse and buggy that began to turn left as 
Schwab started to pass.  Bakula was injured when the Schwab 
vehicle drove into a ditch.  As the case went to trial, Schwab 
brought in the driver of the horse and buggy as a party 
defendant.  Id. at 547-48 (statement of the case).  "No cross-
complaint was made or filed by either defendant, and there was 
no issue between them."  Id. at 548.  The defendants simply 
defended against the plaintiff regarding their liability to the 
plaintiff.  Id.  The court granted a directed verdict in favor 
of the driver of the horse and buggy before the case went to the 
jury.  Id.  Thereafter, Schwab was found to be negligent.  Id. 
¶46 Schwab raised several issues on appeal including a 
challenge to the directed verdict that had been granted to his 
co-defendant.   
¶47 This court, in discussing whether one defendant could 
appeal a judgment in favor of the other defendant, addressed the 
question of the claim-preclusive effect of the verdict in favor 
No. 
  2010AP878 
 
16 
 
of the one defendant as it relates to his liability to the other 
defendant.  Id. at 552-53 (opinion of the court).5   
¶48 The court said:  "It is generally held that a judgment 
in favor of the plaintiff against one or more codefendants is 
res adjudicata in subsequent actions between such codefendants 
so far as the question of indebtedness of the defendants to the 
plaintiff is concerned, but no farther."  Id. at 553.  The court 
held that the defendant automobile-driver had no right to appeal 
the dismissal of his co-defendant because he could still bring a 
claim for contribution against the co-defendant.  Id. at 553-58. 
¶49 The court explained that the parties, who had not 
filed cross-claims against each other, were not adverse.  The 
court summarized adversity as follows: 
 
It is fundamental and universal that the former 
judgment proffered as res adjudicata in a subsequent 
suit must have been rendered in an action in which the 
parties to the subsequent suit were adverse parties.  
What is meant by adverse parties scarcely needs 
definition.  Its significance is apparent from the 
expression itself.  They must be opposite parties to 
an issue between them.  The issue must be proffered by 
one and controverted by the other.  They must be 
arrayed on opposite sides of the issue. 
Id. at 555-56 (emphasis added). 
                                                 
5 Before the court considered this question, it first had to 
determine whether the co-defendant was a proper party to the 
appeal.  The court considered "substance rather than form" to 
determine the effect of the judgment and the parties' rights to 
appeal.  Bakula v. Schwab, 167 Wis. 546, 552, 168 N.W. 378 
(1918).  The court construed the judgment so that the rights of 
both of the co-defendants had been determined with respect to 
the plaintiff.  See id. 
No. 
  2010AP878 
 
17 
 
¶50 Bakula demonstrates that when joint-tortfeasors are 
tried together but do not assert or contest cross-claims, they 
are not necessarily precluded from making contribution claims 
against each other later.  Bakula also supports the principle of 
looking at the substance of an underlying judgment and pleadings 
rather than their form to determine the claim-preclusive effect 
of the judgment. 
¶51 Bakula was modified by this court in 1926.  The basis 
for this modification in Wait v. Pierce, 191 Wis. 202 (on 
rehearing), was that the parties wanted to dispose of the entire 
case including claims among defendants.  The court discussed the 
role of procedural statutes, in determining liability of 
defendants both to the plaintiff and with respect to one 
another, in the context of interpleader and filed cross-claims.  
The 
court 
also 
discussed 
theories 
underlying 
equitable 
contribution.  Id. at 225.  The court looked at the spirit and 
letter of the procedural statute to determine that the cross-
claim could be disposed of within the underlying action.  Id. at 
230. 
¶52 In 1973, this court, in Gies v. Nissen Corp., 57 
Wis. 2d 371, 204 N.W.2d 519 (1973), recounted Bakula and Wait.  
The court noted that in Wait, co-defendants litigated cross-
claims in order that "the entire controversy may be settled in 
one action."  Id. at 382 (quoting Wait, 191 Wis. at 231-
32)(internal quotation marks omitted).  The Gies court then 
turned to the case before it, a case by an injured plaintiff 
against her college, a trampoline manufacturer, and others.   
No. 
  2010AP878 
 
18 
 
¶53 In that case, one of the defendants, Burghardt, was 
impleaded as a party defendant by the other defendants.  Id. at 
375.  Two co-defendants "then filed a cross complaint seeking 
contribution from Burghardt, resting their claim, in part, upon 
the joint liability" of Burghardt and the other defendants to 
the plaintiffs.6  Id. at 382.  Burghardt did not answer the cross 
complaint.  Id. at 383.  Rather, Burghardt moved for summary 
judgment from the amended complaint of the plaintiffs, which was 
granted when plaintiffs and co-defendants did not oppose that 
motion.  Id. at 376.  Burghardt then moved for summary judgment 
from the cross-complaint, which also was granted.  Id.  In 
affirming the circuit court, this court reviewed whether the 
initial grant of summary judgment was res judicata with regard 
to the cross-complaint by the co-defendants.  The court 
determined that it was.  Id. at 382-83.  Even though Burghardt 
filed no response to the cross complaint, as none was then 
required by the statute, the issue was proffered by one side and 
controverted by the other and they were sufficiently adverse 
                                                 
6 Notably, the cross complaint against Burghardt by the 
other defendants was mislabeled as a "third-party complaint."  
Gies v. Nissen Corp., 57 Wis. 2d 371, 375 & n.1, 204 N.W.2d 519 
(1973).  When the trial court later addressed and dismissed that 
complaint (which dismissal this court upheld on claim preclusion 
grounds), the trial court treated it as a cross-complaint even 
though it was not labeled as such. 
No. 
  2010AP878 
 
19 
 
parties.  Id. at 383 & n.4.7  Therefore, when judgment was 
granted 
with 
regard 
to 
Burghardt's 
liability, 
the 
cross 
complaint was necessarily decided as well. 
¶54 U.S. Fidelity & Guaranty Co. v. Goldblatt Bros., Inc., 
142 Wis. 2d 187, 417 N.W.2d 417 (Ct. App. 1987), supports this 
analysis.  The U.S. Fidelity case was decided in the context of 
estoppel 
by 
record, 
which 
this 
court 
has 
determined 
is 
"identical to claim preclusion except that it is the record of 
the earlier proceeding, rather than the judgment itself, which 
bars the subsequent proceeding."  Lindas v. Cady, 183 Wis. 2d at 
558.   
¶55 In U.S. Fidelity, the court of appeals rejected an 
argument by one defendant regarding adversity by saying: 
"Goldblatt argues that parties need not be literal adversaries, 
nor even functional adversaries, to constitute an identity of 
parties.  We cannot agree. . . .  [T]he concept of identity of 
parties requires that the parties be formally adverse."  U.S. 
Fid., 142 Wis. 2d at 191.   
¶56 While the court of appeals used the term "formally 
adverse," it did not change the law regarding adversity and 
                                                 
7 The rules governing procedure for cross-claims have 
changed since Gies.  The significance of Gies is its discussion 
of adversity.  This is especially relevant in the context of 
AEGIS's assertion that Arby did not answer its affirmative 
defense.  The lack of an answer to a claim does not prevent 
adversity and thus claim preclusion.  If that were the case, 
default judgments due to lack of an answer would become 
meaningless and no cross-claim nor complaint would ever be 
answered. 
No. 
  2010AP878 
 
20 
 
identity of parties.  In U.S. Fidelity, Goldblatt and U.S. 
Fidelity were co-plaintiffs in a prior action operating under a 
joint prosecution agreement.  Id. at 189.  U.S. Fidelity 
"brought no cross-claim against Goldblatt."  Id.  U.S. Fidelity 
later sued Goldblatt; Goldblatt obtained summary judgment based 
on estoppel by record.  The court of appeals reversed, 
determining that the co-plaintiffs in the prior action were not 
adverse when no claim had been filed between them.  Id. at 189, 
192.  This context is critical.  U.S. Fidelity requires no more 
for adversity than Bakula and Gies.   
¶57 The identity of parties element is satisfied in this 
case.  The three parties in this case were all parties in the 
federal case.  In the federal case, AEGIS was pitted against 
Arby 
in 
the 
pleadings 
with 
respect 
to 
the 
specific 
indemnification claim that is at issue here.  The pleadings were 
not required to be in perfect form to create and reveal 
adversity.  This is not a situation, like U.S. Fidelity, in 
which the claim in dispute never surfaced in pleadings from and 
between the relevant parties so that it was not evident where 
the parties stood.   
¶58 Moving to the identity of claims, the claim was and is 
financial 
liability 
arising 
out 
of 
a 
contract 
for 
indemnification.  The parties allege that the contract between 
WPSC and Arby requires Arby to reimburse WPSC and its insurers 
for any amounts they have paid, regardless of the negligence of 
the two parties.   
No. 
  2010AP878 
 
21 
 
¶59 What is important in fulfilling the identity of claims 
element of claim preclusion is that the precise claim for 
indemnification existed and was known in the prior litigation.  
Even though AEGIS contends that it was not trying to assert this 
claim, the claim appears repeatedly in the pleadings, including 
its pleadings.  Moreover, as the court of appeals recognized, 
indemnification is not an affirmative defense.  Contractual 
indemnification does not affect AEGIS's liability with respect 
to the plaintiffs.  
¶60 The parties direct us to Mountan v. Chautauqua 
Airlines, Inc., Unpublished Decision and Order, No. 06C1026 
(E.D. Wis. Mar. 11, 2009).  This case is entirely consistent 
with our decision today.  A federal court in Wisconsin 
recognized that indemnification is a claim, not a defense.  In 
Mountan, United States District Court Judge Lynn Adelman stated:   
 
As a preliminary matter, I note that neither 
Delta nor Comair has filed any pleading containing a 
separate 
section 
asserting 
a 
cross-claim 
against 
Chautauqua for defense and indemnification. However, 
in Delta and Comair's answer to the amended complaint, 
they assert contribution and indemnification as an 
affirmative defense, and, in the conclusion, request a 
judgment 
against 
Chautauqua 
for 
contribution 
and 
indemnification. (Delta and Comair's Ans. to Am. 
Compl. at 7.) Chautauqua has not objected to the 
motion for declaratory judgment on the ground that it 
did not receive adequate notice of the claims against 
it, and the grounds upon which those claims rest. 
Thus, I conclude that the request for a judgment in 
contribution and indemnity set forth in the answer is 
sufficient to assert a cross-claim against Chautauqua 
under notice pleading standards, and I will proceed to 
the merits of the motion without further addressing 
this issue. 
No. 
  2010AP878 
 
22 
 
Mountan, Unpublished Decision and Order, No. 06C1026 (E.D. Wis. 
Mar. 11, 2009). 
¶61 Additionally, the fact that the claim was never 
clarified or relabeled as a claim is relevant only because AEGIS 
chose to participate in the settlement and the case did not go 
to trial.  We do not believe that AEGIS would be making the 
argument, had the case gone to trial, that it was not actually 
seeking indemnification from Arby.  It was. 
¶62 Both the Wisconsin rules of civil procedure and the 
federal rules support our treating the affirmative defense claim 
as a cross-claim because we ought to look at the substance 
rather than the form of pleadings.  Fed. R. Civ. P. 8(c)(2); 
Wis. Stat. § 802.02(3).    
¶63 Here, the identity of parties and identity of claims 
elements are met. 
¶64 The final element of claim preclusion is a judgment on 
the merits.  This element also has been met.  A stipulated 
judgment (as a result of a settlement) on the merits may have 
the same preclusive effect as a claim litigated to conclusion.  
Great Lakes Trucking Co. v. Black, 165 Wis. 2d 162, 168-69, 477 
N.W.2d 65 (Ct. App. 1991). 
¶65 Here, the federal court in the prior action issued a 
judgment on the merits.  While the phrase "on the merits" is not 
enough for a judgment to be on the merits for purposes of claim 
preclusion, Semtek, 531 U.S. at 501-02; Hernke v. Coronet Ins. 
Co., 72 Wis. 2d 170, 177, 240 N.W.2d 382 (1976), the judgment in 
this case explicitly referred to the representations of counsel 
No. 
  2010AP878 
 
23 
 
that 
all 
claims 
(except 
specific 
contribution 
and 
indemnification claims) were to be dismissed with prejudice.  
Thus, this judgment disposed of the action on the merits and has 
claim-preclusive effect.  Because we determine that AEGIS did, 
in substance, raise the cross-claim, its claim has been 
adjudicated.  The substance of this claim was raised and was 
decided as demonstrated by the court explicitly reserving other 
cross-claims that had been raised. 
¶66 Certainly this case demonstrates a certain tension 
between the principle of substance over form in permitting 
litigation to continue and the finality that results from 
applying substance over form in the cross-claim context.  We are 
not unmindful that our decision bars AEGIS, unlike WPSC, from 
litigating the claim on the merits at trial.  However, we 
perceive that a contrary decision would undermine the principles 
of claim preclusion because AEGIS raised the substance of the 
claim in the prior action, and the court dismissed the claim on 
the merits, and this suit is simply an attempt to re-litigate 
the merits of the claim. 
¶67 Because the modern approach to the law focuses on 
substance over form in pleadings, the principle carries forward 
to claim preclusion.  Claim preclusion is the doctrine that 
gives 
pleading 
and 
litigation 
meaning. 
 
Without 
claim 
preclusion, litigation "would be fruitless as well as endless."  
Pierce, 9 Wis. at 25 (*31).  If we were to give claim preclusive 
effect only to claims that were formally-perfect in prior 
litigation, we would be re-injecting a focus on formalism into 
No. 
  2010AP878 
 
24 
 
modern civil procedure that has been soundly rejected and that 
is at odds with the entire tenor of the modern law.   
¶68 It was within AEGIS's control to be clearer in its 
pleadings.  If a party is negligent in labeling its claims or in 
preserving its interests, that is the problem of that party 
alone.  
¶69 Before 
we 
conclude, 
we 
briefly 
address 
AEGIS's 
contention that this decision "is incompatible with federal 
interests" under Semtek, 531 U.S. at 509.  AEGIS has provided no 
support for this proposition.  As we have discussed, federal 
procedural rules are consistent with this result.  Our decision 
in this case is the same as it would be if the Brooks action had 
been filed in Wisconsin circuit court.  The Semtek decision was 
aimed at ensuring uniformity in the claim-preclusive effects of 
judgments whether claims are filed in state or federal court. 
¶70 Our decision today is wholly consistent with our past 
precedents, the principles of claim preclusion, and the entire 
tenor of the modern law. 
VI. CONCLUSION 
¶71 We affirm the court of appeals.  We conclude that 
AEGIS's claim was raised, in substance, in the prior action and 
was decided.  Therefore, the AEGIS claim is subject to claim 
preclusion and was properly dismissed by the circuit court.  
¶72 By the Court.—The decision of the court of appeals is 
affirmed. 
 
 
No.  2010AP878.ssa 
 
1 
 
 
¶73 SHIRLEY S. ABRAHAMSON, C.J.   (concurring in part and 
dissenting in part).  This case involves the interpretation and 
application of a federal district court's Order dismissing a 
prior federal action.  An appellate court typically interprets a 
judgment in the same manner that it interprets other written 
documents, including contracts.1  The majority appears to have 
taken a different approach in the present case.2  Like the 
circuit court, I would structure the opinion around the federal 
court's Order rather than immediately and exclusively jumping 
into analyzing the elements of claim preclusion.  
¶74 The federal court's Order for Dismissal provides: 
                                                 
1 See, e.g., First Wis. Trust Co. v. Pereles, 259 Wis. 263, 
271, 48 N.W.2d 601 (1951) (overruled on other grounds by MacLean 
v. First Nat'l Bank of Madison, 47 Wis. 2d 396, 404, 177 
N.W.2d 874 (1970)) ("If the ambiguities appear in the final 
judgment they must, of course, be clarified and the judgment 
construed or interpreted so that parties asserting conflicting 
rights under it may be informed and those charged with a duty to 
act may be instructed."); Waters v. Waters, 2007 WI App 40, ¶6, 
300 Wis. 2d 224, 730 N.W.2d 655 ("In reviewing legal issues, 
such as construction of a divorce judgment, appellate courts 
apply a de novo standard of review.  We will do likewise.  We 
construe divorce judgments at the time of their entry and in the 
same manner as other written instruments.  We apply the rules of 
contract construction to a divorce judgment.  This is true even 
when the divorce judgment is based on the parties' stipulation." 
(citations omitted)); Spencer v. Spencer, 140 Wis. 2d 447, 450, 
410 N.W.2d 629 (Ct. App. 1987) ("We apply the rules of contract 
construction to a judgment."). 
2 The court of appeals' and the majority's focus on claim 
preclusion is understandable because the parties focused on the 
elements of claim preclusion in their briefs.  Had the majority 
approached the case as I suggest, it might have been advisable 
to request supplemental briefing. 
No.  2010AP878.ssa 
 
2 
 
WHEREAS, upon representation of counsel, all 
issues in this case are resolved and all claims are 
settled with the exception of certain contribution and 
indemnification claims which will be addressed outside 
the confines of this lawsuit;  
NOW, THEREFORE, IT IS HEREBY ORDERED: 
1. The cross-claims for contribution asserted by 
Arby Construction and Ferrellgas against each other, 
and the contractual indemnification claim asserted by 
Wisconsin Public Service Corporation against Arby 
Construction and its insurers, are dismissed without 
prejudice and without costs. 
2. This lawsuit, together with any and all claims 
set forth in the pleadings other than those referenced 
in paragraph one, above, is dismissed on the merits, 
with prejudice, but without costs.   
¶75 As I see it, there are three possible interpretations 
of the federal court's Order for Dismissal and three ways to 
apply the Order to the present case.   
¶76 One interpretation is that AEGIS's indemnification 
claim falls within paragraph 1 of the federal Order and was 
dismissed without prejudice.  Under this interpretation of the 
Order, AEGIS clearly may proceed in the present case.  Neither 
party argues that AEGIS's claim was explicitly preserved by 
paragraph 1 of the Order for Dismissal.3  No court has adopted 
this interpretation of the Order. 
¶77 A 
second 
interpretation 
is 
that 
AEGIS's 
indemnification claim falls within paragraph 2 of the federal 
                                                 
3 Like the parties and like the majority, I do not address 
the impact of the fact that AEGIS insured both Arby and WPSC.  
Nor do I address the possibility that AEGIS's claim was 
preserved with WPSC's claim against Arby in paragraph 1 of the 
Order for Dismissal.  See majority op., ¶20; Wis. Pub. Serv. 
Corp. v. Arby Constr., Inc., 2011 WI App 65, ¶12 n.2, 333 
Wis. 2d 184, 798 N.W.2d 715. 
No.  2010AP878.ssa 
 
3 
 
Order 
and 
was 
dismissed 
with 
prejudice. 
 
Under 
this 
interpretation of the Order, AEGIS loses and Arby is entitled to 
judgment on the basis of the Order, without further analysis 
regarding claim preclusion. 
¶78 The circuit court took this approach.  It determined 
as a matter of law that AEGIS's claim was dismissed with 
prejudice by the federal court's Order for Dismissal.  For the 
circuit court, that was the end of the discussion.  The circuit 
court did not analyze the elements of claim preclusion when it 
granted Arby's motion to dismiss.4       
¶79 Arby seems to focus most of its attention on arguing 
that it is entitled to judgment on the basis of claim preclusion 
as opposed to arguing that it is entitled to judgment solely on 
the basis of the text of the Order for Dismissal. 
¶80 The court of appeals and the majority opinion can be 
read to hold that AEGIS's pleading of its affirmative defense in 
the federal lawsuit is, as a matter of Wisconsin law, the 
functional equivalent of a cross-claim for indemnification and 
                                                 
4 Although the parties made reference to claim preclusion in 
the circuit court, detailed analysis of the elements of claim 
preclusion comes into the parties' argument at the court of 
appeals. 
No.  2010AP878.ssa 
 
4 
 
that as a "claim" it fits within paragraph 2 of the federal 
Order.5 
¶81 Under 
both 
courts' 
interpretation 
of 
Wisconsin 
pleading, it seems to me that neither the court of appeals nor 
the majority need reach the issue of claim preclusion; Arby is 
entitled to judgment on the basis of the Order.  Nevertheless, 
the court of appeals and the majority analyzed each element of 
claim preclusion. 
¶82 A third interpretation of the Order is that the Order 
is ambiguous with regard to whether AEGIS's indemnification 
claim is addressed in paragraph 1 or paragraph 2 or is not 
addressed in the Order at all.  If a court concludes that the 
Order is ambiguous, the court might look to extrinsic materials 
                                                 
5 I agree with the majority that under Semtek International 
Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001), it is 
appropriate to apply Wisconsin claim preclusion law to determine 
the preclusive effect of a judgment of a federal court that was 
sitting in diversity jurisdiction.  See majority op., ¶¶30, 69.  
That being said, if the court is interpreting the text of the 
federal court's Order, it might be appropriate to consider 
federal law regarding the meaning of the word "claim" and the 
federal interpretation of imperfect pleadings, because it seems 
that the Order might have been crafted on the basis of federal 
pleading law. 
No.  2010AP878.ssa 
 
5 
 
clarifying the parties' intent6 or might apply a claim preclusion 
analysis to determine whether AEGIS's indemnification claim may 
proceed.   
¶83 An analysis of the parties' intent appears in the 
opinion of the court of appeals.  The court of appeals stated 
that "[t]he only reasonable inference is that, had the parties 
intended that AEGIS be able to assert in a separate action a 
claim for indemnification from Arby for that payment, they would 
have included AEGIS in this [first] exception."7  The inference 
drawn by the court of appeals is not, in my opinion, the only 
reasonable inference to be drawn from the Order.  There are 
other reasonable inferences and interpretations of the Order.   
¶84 This case is before the court on either a motion to 
dismiss (according to the circuit court) or a motion for summary 
judgment (according to the court of appeals).  The record is the 
                                                 
6 See, e.g., Town Bank v. City Real Estate Dev., LLC, 2010 
WI 134, ¶33, 330 Wis. 2d 340, 793 N.W.2d 476 ("Only when the 
contract is ambiguous, meaning it is susceptible to more than 
one reasonable interpretation, may the court look beyond the 
face of the contract and consider extrinsic evidence to resolve 
the parties' intent."); Miller v. Miller, 67 Wis. 2d 435, 441, 
227 N.W.2d 626 (1975) ("In this case, both the stipulation and 
the judgment incorporating it specify only that support payments 
shall be made 'until the further order of the court.' . . . No 
ambiguity appears on the face of the stipulation, therefore 
resort to the subjective intents of the parties at the time of 
the stipulation is unnecessary."); Pereles, 259 Wis. at 271 
(overruled on other grounds by MacLean v. First Nat'l Bank of 
Madison, 47 Wis. 2d 396, 404, 177 N.W.2d 874 (1970)) ("If the 
ambiguities appear in the final judgment they must, of course, 
be clarified and the judgment construed or interpreted so that 
parties asserting conflicting rights under it may be informed 
and those charged with a duty to act may be instructed."). 
7 Arby Constr., 333 Wis. 2d 184, ¶30. 
No.  2010AP878.ssa 
 
6 
 
federal pleadings.  The federal Order for Dismissal was based on 
"representation[s] of counsel" and on the settlement in the 
prior federal action; no representations or settlement documents 
are part of the record before us.  Can a court determine, as a 
matter of law on the limited record of the federal pleadings, 
that the only reasonable inference is that the parties did not 
intend AEGIS to be able to pursue its claim against Arby at a 
later date?  
¶85 Perhaps 
the 
parties 
agreed 
to 
resolve 
AEGIS's 
indemnification claim at a later date.  Perhaps counsel 
represented that AEGIS's indemnification claim did not need to 
be carved out of the Order for Dismissal (as WPSC's claim was) 
because the affirmative defense was not labeled as a "claim" in 
the federal pleadings and was not properly pleaded as a cross-
claim under the federal rules.8 
¶86 The majority does not explicitly make the interpretive 
inference that the court of appeals made.  Rather, the majority 
concludes, as a matter of law, that any mislabeled pleading, the 
substance of which would be properly considered a cross-claim, 
will serve to bar the party from later litigating that claim, 
regardless of the parties' intent and understandings in the 
                                                 
8 An additional possibility is that the parties do not want 
to resort to extrinsic materials relating to the settlement, 
which has been kept confidential. 
No.  2010AP878.ssa 
 
7 
 
prior litigation, if the requirements of claim preclusion are 
met.9  
¶87 The majority asserts that "[a] party is not entitled 
to rekindle litigation when it has imperfectly asserted a claim 
against a party in a previous action."  Majority op., ¶43.  
Similarly, the majority concludes that "this suit is simply an 
attempt to re-litigate the merits of the claim."  Majority op., 
¶66.   
¶88 I agree with the majority's assertion that a party 
should not be allowed to re-litigate or rekindle a claim by 
hiding behind the guise that the claim was improperly pleaded in 
the prior action.  I agree with the majority that a mislabeled 
cross-claim may be given preclusive effect in a subsequent 
action.10  But at this stage in the present case, I am unable to 
                                                 
9 The majority states that identity of claims is satisfied 
because the claim "existed and was known" in the prior 
litigation.  Majority op., ¶59.  A cross-claim for contractual 
indemnification can "exist and be known" without becoming 
compulsory.  The majority's language is too broad.  
10 In a much different context, treating AEGIS's affirmative 
defense as a cross-claim would be a classic application of 
"substance over form."  If AEGIS were at risk of losing its 
claim based on the technical pleading error, and it would not be 
prejudicial to Arby to treat the affirmative defense as a cross-
claim, the "tenor of modern law" would certainly support raising 
substance over form.  Cf. majority op., ¶37. 
No.  2010AP878.ssa 
 
8 
 
determine from the record before the court whether AEGIS is, in 
fact, attempting to re-litigate or rekindle its claim, or if the 
parties instead left the claim to be resolved in a subsequent 
action.11 
¶89 For the reasons stated above, I respectfully write 
separately.  
¶90 I am authorized to state that Justice ANN WALSH 
BRADLEY joins this concurrence/dissent. 
                                                                                                                                                             
The principle of substance over form is usually invoked (1) 
to allow litigants their day in court; (2) to resolve issues on 
the merits; and (3) after careful consideration of potential 
prejudice that will result from overlooking a technical defect 
in a pleading.  See, e.g., Cruz v. DILHR, 81 Wis. 2d 442, 449, 
260 N.W.2d 692 (1978).  The majority acknowledges, but does not 
explore, the fact that there is some "tension" between its 
strict application of substance over form to preclude a party 
from bringing a claim and the typical reliance on substance over 
form as a method of preserving a party's opportunity to 
litigate.  Majority op., ¶66. 
11 The case would be different if the claim in question were 
an ordinary claim as opposed to a cross-claim.  In that 
scenario, it would not matter whether the claim was actually 
brought or whether the parties actually addressed the claim.  
Under the transactional approach to claim preclusion, an 
ordinary claim arising from the same transaction may be 
precluded even if it was mislabeled or not brought at all, in 
any form. 
Much of the majority's discussion regarding the potential 
consequences of an alternative holding does not make clear that 
the present case affects only cross-claims and other claims that 
are permissive, as opposed to compulsory.  See, e.g., majority 
op., ¶38, 67. 
No.  2010AP878.ssa 
 
 
 
1