Title: J.L. Phillips & Associates, Inc. v. E & H Plastic Corporation
Citation: N/A
Docket Number: 1996AP003151
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: April 24, 1998

SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
96-3151 
 
 
Complete Title 
of Case: 
 
 
J.L. Phillips & Associates, Inc.,  
 
Plaintiff-Respondent, 
 
v. 
E & H Plastic Corporation,  
 
Defendant-Appellant.  
 
ON CERTICATION FROM THE COURT OF APPEALS 
 
 
Opinion Filed: 
April 24, 1998 
Submitted on Briefs: 
 
Oral Argument: 
February 19, 1998 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Walworth 
 
JUDGE: 
James L. Carlson 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating:  
 
 
ATTORNEYS: 
For the defendant-appellant there were briefs (in 
the Court of Appeals) by Jerome C. Johnson, Maria S. Lazar and 
Galanis, Pollack & Jacobs, S.C., Milwaukee and oral argument by 
Maria S. Lazar. 
 
 
For the plaintiff-respondent there was a brief 
(in the Court of Appeals) by Harry F. Worth, Jr. and Godfrey, 
Neshek, Worth, Leibsle & Conover, S.C., Elkhorn and oral argument 
by Harry F. Worth, Jr. 
 
No. 96-3151 
 
1 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear in 
the bound volume of the official reports. 
 
 
No. 96-3151  
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
J.L. Phillips & Associates, Inc.,  
 
          Plaintiff-Respondent, 
 
     v. 
 
E & H Plastic Corporation,  
 
          Defendant-Appellant.  
FILED 
 
APR 24, 1998 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
APPEAL from an order of the Circuit Court for Walworth 
County, James L. Carlson, Judge.  Reversed and cause remanded. 
¶1 
JON P. WILCOX, J.   This case is before the court on 
certification from the court of appeals following an order of 
the Circuit Court for Walworth County, James L. Carlson, Judge, 
which denied the appellant E & H Plastic Corporation's ("E & H") 
motion to vacate a default judgment.  The circuit court entered 
the default judgment against E & H for failure to answer the 
respondent J.L. Phillips & Associates, Inc.'s ("Phillips") 
complaint in a timely manner, and, despite a finding of 
excusable neglect, the circuit court denied the subsequent 
motion 
to 
vacate 
the 
judgment 
because 
the 
answer 
and 
accompanying documents did not show a valid defense by which E & 
H had a good chance of success on the merits.  E & H appealed. 
¶2 
On certification, we consider whether a party moving 
to 
vacate 
a 
default 
judgment 
pursuant 
to 
Wis. 
Stat. 
No. 96-3151 
 
2 
§ 806.07(1)(a) (1993-94)1 must establish the existence of a 
"meritorious defense" in order to succeed on that motion.  If 
so, we must determine what constitutes a "meritorious defense" 
and consider whether E & H filed an answer that established such 
a defense in this case.  We hold that a party moving to vacate a 
default judgment pursuant to § 806.07(1)(a) must set forth a 
meritorious defense—that is, a defense good at law which 
requires no more and no less than that which is needed in a 
timely-filed answer to survive a motion for judgment on the 
pleadings.  See Wis. Stat. § 802.06(3).  Because E & H has 
satisfied that standard in this case, we reverse the order of 
                     
1 All future statutory references are to the 1993-94 volume 
unless otherwise noted. 
Wisconsin Stat. § 806.07 provides in part: 
806.07  Relief from judgment or order. (1)  On motion 
and upon such terms as are just, the court may relieve 
a party or legal representative from a judgment, order 
or stipulation for the following reasons: 
 
(a) Mistake, inadvertence, surprise, or excusable 
neglect; 
 
(b) Newly-discovered evidence which entitles a 
party to a new trial under s. 805.15(3); 
 
(c) Fraud, misrepresentation, or other misconduct 
of an adverse party; 
 
(d) The judgment is void; 
 
(e) The judgment has been satisfied, released or 
discharged; 
 
(f) A prior judgment upon which the judgment is 
based has been reversed or otherwise vacated; 
 
(g) It is no longer equitable that the judgment 
should have prospective application; or 
 
(h) Any other reasons justifying relief from the 
operation of the judgment. 
. . . 
No. 96-3151 
 
3 
the circuit court and remand the cause for further proceedings 
consistent with this opinion. 
¶3 
The relevant facts are not in dispute.  In June 1996, 
Phillips filed and served a summons and complaint upon E & H 
alleging breach of contract.  Shortly after being served, and 
for a period of approximately six weeks thereafter, counsel for 
the two parties and the parties themselves communicated verbally 
and in writing to discuss the merits of the lawsuit in an 
attempt to resolve the matter without further litigation. 
¶4 
On July 15, 1996, the last day of correspondence 
between the parties' attorneys, Phillips' counsel notified 
Illinois counsel for E & H that a default judgment would be 
sought 
within 
seven 
days. 
 
Nevertheless, 
additional 
correspondence on that day left E & H counsel with the 
impression that Phillips' counsel was making its final decision 
on how to resolve the matter and that Phillips would be 
communicating that decision within the next few days.  Instead, 
counsel for E & H received Phillips' motion for default judgment 
and accompanying papers on July 29, 1996.  On the same day that 
counsel for E & H received the motion, the circuit court 
executed the order for default judgment in the approximate 
amount of $75,000. 
¶5 
Utilizing local counsel, E & H brought a motion to 
vacate 
the 
default 
judgment 
on 
the 
basis 
of 
"mistake, 
inadvertence, surprise or excusable neglect."  See Wis. Stat. 
§ 806.07(1)(a).  Specifically, E & H argued that its actions 
constituted excusable neglect since a reasonably prudent person 
No. 96-3151 
 
4 
under the circumstances would have concluded, as E & H did, that 
so long as the parties were seriously contemplating settlement, 
a delay in filing an answer was not unreasonable.  To the same 
end, E & H asserted that the default judgment should be vacated 
due to its mistake in assuming that the time to file an answer 
had been stayed while the negotiations continued. 
¶6 
Accompanying the motion and brief in support of the 
motion to vacate, E & H filed supporting affidavits and a 
proposed answer to the complaint which denied the material 
allegations of Phillips' complaint and recited five affirmative 
defenses: (1) failure to mitigate; (2) improper party defendant; 
(3) mistake; (4) estoppel; and (5) breach of contract by 
Phillips.2 
 
Recognizing 
that 
case 
law 
still 
required 
a 
meritorious defense in order to vacate a default judgment, E & H 
asserted that its proposed answer and affirmative defenses were 
sufficient to constitute a meritorious defense to the complaint. 
¶7 
Phillips responded by arguing that since there was no 
written confirmation that the parties agreed to extend the time 
period for filing an answer, and since E & H had notice that a 
motion for default judgment would be filed, E & H's conduct did 
not constitute excusable neglect.  For many of the same reasons, 
Phillips asserted that E & H's mistake was not excusable under 
the circumstances.  Finally, Phillips argued that E & H did not 
                     
2 The answer also asserted that the complaint had failed to 
state a claim upon which relief could be granted.  
No. 96-3151 
 
5 
have a meritorious defense because the defense was substantively 
inadequate on its face. 
¶8 
On September 6, 1996, the circuit court held a hearing 
on the motion to vacate the default judgment.  Despite a finding 
of "excusable neglect or some good faith," the circuit court 
denied the motion to vacate on grounds that E & H did not 
establish a meritorious defense.  The circuit court reasoned 
that neither the answer nor the accompanying documents showed a 
"valid defense," since it was "encumbent [sic] upon [E & H] at 
this step to bring forth some type of a showing that at least 
shows . . . a good chance of success on the merits . . . ."  
Motion Hearing (Record on Appeal, 18:15). 
¶9 
E & H appealed, and the court of appeals certified the 
case to this court pursuant to Wis. Stat. § (Rule) 809.61 (1995-
96).  The only issues raised on appeal relate to the circuit 
court's conclusion regarding a meritorious defense.  Whether the 
circuit court appropriately exercised its discretion in finding 
excusable neglect in this case is a matter that is not before us 
on review. 
I. 
¶10 The first issue we must consider is whether a 
meritorious defense must be established in order to vacate a 
default judgment pursuant to Wis. Stat. § 806.07(1)(a).  As a 
question of statutory interpretation, this issue is a question 
of law that we review de novo, without deference to the decision 
of the circuit court.  See Colby v. Columbia County, 202 Wis. 2d 
342, 349, 550 N.W.2d 124 (1996). 
No. 96-3151 
 
6 
¶11 E & H advances several arguments to show that a party 
moving to vacate a default judgment need not establish a 
meritorious defense.  First, E & H contends that once a finding 
of excusable neglect is made, the circuit court is required to 
vacate the default judgment.  Although E & H acknowledges that 
the vacation of a default judgment is left to the discretion of 
the circuit court, see, e.g., Charolais Breeding Ranches v. 
Wiegel, 92 Wis. 2d 498, 510, 285 N.W.2d 720 (1979), E & H 
asserts that the only discretion enjoyed by the circuit court 
lies in the determination of whether any of the statutorily-
based reasons for granting a motion to vacate are satisfied.  
See Wis. Stat. § 806.07(1)(a).  Once a party's actions fall 
within one of these categories, the circuit court has no choice 
but to vacate the judgment. 
¶12 Consistent with this argument is E & H's assertion 
that the "meritorious defense" prong is no longer a prerequisite 
to the vacation of a default judgment.  To support its argument, 
E & H illustrates that Wis. Stat. § 806.07, unlike its 
predecessor Wis. Stat. § 269.46 (1973), makes no reference to a 
meritorious defense requirement.  According to E & H, case law 
which interprets § 806.07 as requiring the establishment of a 
meritorious defense has done so erroneously, without considering 
the consequential changes to the statute. 
¶13 We conclude that a party moving to vacate a default 
judgment must, in addition to showing that it meets one of the 
criteria for relief from a default judgment, see Wis. Stat. 
§ 806.07(1)(a), demonstrate that it has a meritorious defense to 
No. 96-3151 
 
7 
the 
complaint. 
 
This 
conclusion 
is 
amply 
supported 
by 
legislative history, and by case law which has previously 
interpreted the provisions of § 806.07. 
¶14 Because 
Wis. 
Stat. 
§ 806.07 
makes 
no 
explicit 
reference to a meritorious defense requirement, we begin by 
looking outside the statute at legislative history to determine 
the intent of the legislature.  See Odd S.-G. v. Carolyn S.-G., 
194 Wis. 2d 365, 371, 533 N.W.2d 794 (1995).  Wisconsin Stat. 
269.46 (1973), the predecessor to Wis. Stat. § 806.07, provided 
in pertinent part: 
 
269.46 
 
Relief 
from 
judgments, 
orders 
and 
stipulations; review of judgments and orders. (1) The 
court may, upon notice and just terms, at any time 
within one year after notice thereof, relieve a party 
from 
a 
judgment, 
order, 
stipulation 
or 
other 
proceeding against him obtained, through his mistake, 
inadvertence, surprise or excusable neglect and may 
supply an omission in any proceeding.  In addition to 
the required affidavits, all motions to vacate a 
judgment entered upon default or cognovit and to 
obtain a trial upon the merits shall be accompanied by 
a proposed verified answer disclosing a defense. 
. . . 
Effective January 1, 1976, this court revised the Rules of Civil 
Procedure for the state of Wisconsin.  See Wisconsin Rules of 
Civil Procedure, 67 Wis. 2d 585.  The revisions changed § 269.46 
to Wis. Stat. § 806.07, as it is reproduced above. 
¶15 Although the revision clearly removed the previous 
reference to "a proposed verified answer disclosing a defense," 
it did not, as E & H contends, eliminate the prerequisite of a 
meritorious defense to the complaint.  See, e.g., Dugenske v. 
Dugenske, 80 Wis. 2d 64, 67, 257 N.W.2d 865 (1977) (interpreting 
No. 96-3151 
 
8 
Wis. Stat. § 269.46 to require the showing of a meritorious 
defense).  The Judicial Council Committee's Note (1974) that is 
attached to Wis. Stat. § 806.07 makes this clear.  It indicates 
that "[t]his section is substantially equivalent to Federal Rule 
60 (b) and replaces s. 269.46."  67 Wis. 2d at 726;3 see also 
Wis. Stat. § 806.07 (1975). 
¶16 It is a well-settled principle of Wisconsin law "that 
where a Wisconsin Rule of Civil Procedure is based on a Federal 
Rule of Civil Procedure, decisions of the federal courts, to the 
extent they show a pattern of construction, are considered 
persuasive authority."  Neylan v. Vorwald, 124 Wis. 2d 85, 99-
100, 368 N.W.2d 648 (1985) (citations omitted).  In this 
instance, federal courts have consistently construed Federal 
Rule 60(b) to require that a party seeking relief from a default 
judgment demonstrate that he or she has a meritorious defense to 
the action.  See, e.g., In re Busick, 719 F.2d 922, 925 (7th 
Cir. 1983) ("Rule 60(b) has been judicially interpreted to 
require a showing that  . . . a meritorious defense to the 
complaint exists."); Olson v. Stone, 588 F.2d 1316, 1319 (10th 
Cir. 1978) ("In the case of default judgments, courts have 
                     
3 Federal Rule of Civil Procedure 60(b) provides in relevant 
part: 
(b) Mistakes; Inadvertence; Excusable Neglect; Newly 
Discovered Evidence; Fraud, etc.  On motion and upon 
such terms as are just, the court may relieve a party 
or a party's legal representative from a final 
judgment, order, or proceeding for the following 
reasons: 
(1) 
mistake, 
inadvertence, 
surprise, 
or 
excusable neglect; . . . 
 
No. 96-3151 
 
9 
established the further requirement that a movant demonstrate 
the existence of a meritorious defense."). 
¶17 Since the change in the Wisconsin Rules of Civil 
Procedure, we have also construed Wis. Stat. § 806.07(1)(a) to 
require that a party seeking to vacate a default judgment 
demonstrate that he or she has a meritorious defense to the 
action.  See, e.g., Hollingsworth v. American Finance Corp., 86 
Wis. 2d 172, 184-85, 271 N.W.2d 872 (1978); Maier Construction, 
Inc. v. Ryan, 81 Wis. 2d 463, 472, 260 N.W.2d 700 (1978).  As 
counsel for E & H demonstrated at oral argument in this case, 
these decisions, though rendered after the changes to the 
Wisconsin Rules of Civil Procedure, affirmed that a meritorious 
defense must be shown for motions brought under § 806.07(1)(a) 
by relying upon cases which were controlled by the former 
statute, Wis. Stat. § 269.46.4 
¶18 We are not persuaded, however, that this fact should 
render 
our 
previous 
decisions 
any 
less 
meaningful 
or 
authoritative on this issue.  Because Wis. Stat. § 806.07 is 
modeled 
after 
Federal 
Rule 
60(b), 
and 
since 
federal 
jurisprudence has consistently interpreted Rule 60(b) to require 
the establishment of a meritorious defense, we are persuaded, 
                     
4 We relied upon Dugenske v. Dugenske, 80 Wis. 2d 64, 257 
N.W.2d 865 (1977), and Hansher v. Kaishian, 79 Wis. 2d 374, 255 
N.W.2d 564 (1977), respectively.  These cases were controlled 
not by Wis. Stat. § 806.07(1)(a), but by Wis. Stat. § 269.46 
since the default judgments were entered prior to § 806.07's 
effective date of January 1, 1976.  See Dugenske, 80 Wis. 2d at 
66-67; Hansher, 79 Wis. 2d at 380. 
No. 96-3151 
 
10
and hereby clarify, that our prior decisions interpreted 
§ 806.07(1)(a) correctly.  Therefore, a party moving to vacate a 
default 
judgment 
pursuant 
to 
§ 806.07(1)(a) 
must: 
(1) 
demonstrate that the judgment against him or her was obtained as 
a result of mistake, inadvertence, surprise or excusable 
neglect; and (2) demonstrate that he or she has a meritorious 
defense to the action. 
II. 
¶19 We now proceed to the second issue presented in this 
case: what is a "meritorious defense?"  In defining the 
appropriate legal standard to be satisfied in order to vacate a 
default judgment, we are presented with a question of law, which 
we review de novo, without deference to the determination of the 
circuit court.  See Kleinke v. Farmers Coop. Supply & Shipping, 
202 Wis. 2d 138, 142-43, 549 N.W.2d 714 (1996). 
¶20 The requirement that a party moving to vacate a 
default judgment show a meritorious defense to the action has 
existed in Wisconsin since the early days of statehood.  See, 
e.g., Sayles v. Davis, 22 Wis. 217, [*225], 222, [*230-31] 
(1867) (referring to R.S. ch. 125, § 38 (1858), the predecessor 
to Wis. Stat. § 806.07).  Few of our cases citing this 
requirement, however, have expounded upon the standard to be met 
once a party has shown mistake, inadvertence, surprise or, as in 
this case, excusable neglect.  See, e.g., Maier, 81 Wis. 2d at 
472 (proposed answer "concededly poses at least an arguably 
meritorious defense").  Today we are called upon to do so.  
No. 96-3151 
 
11
¶21 In defining this standard, we must attempt to strike 
the appropriate balance 
between the 
countervailing 
policy 
considerations that consistently pull at either end of the 
default judgment spectrum.  On one hand, we must consider "a 
policy in favor of the finality of judgments, the probability 
that a policy which excused or tolerated a lawyer's neglect 
would foster delay in litigation and a further belief that the 
quality of legal representation is best maintained by refusing 
to overlook the effects of a lawyer's negligence."  Dugenske, 80 
Wis. 2d at 70. 
¶22 On the other hand, we must also keep in mind 
traditional principles of equity and justice in order to fashion 
a 
standard 
that 
does 
not 
unduly 
restrict 
a 
litigant's 
opportunity to defend against an action when a reasonable 
"excuse" has already been offered for the default.  This policy 
is best exemplified by the three considerations we have advised 
the circuit courts to be aware of in their deliberation over 
motions to vacate default judgments: "(1) that [Wis. Stat. 
§ 806.07] is remedial in nature and . . . should be liberally 
construed; (2) that the general policy of the law favors giving 
litigants their day in court with an opportunity to try the 
issues; and (3) that default judgments are regarded with 
disfavor in the eyes of the law."  Maier, 81 Wis. 2d at 472 
(citing Dugenske, 80 Wis. 2d 64). 
¶23 These 
considerations 
lead 
us 
to 
conclude 
that, 
contrary to the circuit court's conclusion in this case, "[i]n 
determining whether a defaulted defendant has a meritorious 
No. 96-3151 
 
12
defense '[l]ikelihood of success is not the measure.' . . . 
Rather, if any defense relied upon states a defense good at law, 
then a meritorious defense has been advanced."  United Coin 
Meter v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir. 
1983) (citations omitted). 
¶24 A defense "good at law" is a defense that requires no 
more and no less than that which is needed in a timely-filed 
answer to survive a motion for judgment on the pleadings.  See 
Wis. Stat. § 802.06(3).  Such a defense must also satisfy the 
other various requirements for a valid pleading as set forth in 
Chapter 802 of the Wisconsin Statutes. 
¶25 As cited above, one Wisconsin decision has purported 
to define a meritorious defense in relation to Wis. Stat. 
§ 806.07(1)(a) since the adoption of the revised Rules of Civil 
Procedure in Wisconsin.  See Maier, 81 Wis. 2d at 472.  The 
Maier court stated: 
 
Under sec. 806.07, Stats., the question addressed 
to the court on the motion to vacate the judgment was 
whether that mistake and that neglect were excusable. 
 For a defendant to be entitled to relief, he must not 
only demonstrate that the judgment against him was 
obtained 
as 
the 
result 
of 
excusable 
mistake, 
inadvertence, surprise, or neglect, but also that he 
has a meritorious defense to the action.  Hansher, 
supra, at 389. 
 
In the instant case, at the time when the 
defendant moved to vacate the judgment, he appeared 
with an attorney and appended to his motion papers was 
a proposed answer, which concededly poses at least an 
arguably 
meritorious 
defense. 
 
Accordingly, 
[the 
defendant] has made a sufficient showing in that 
respect. . . . 
No. 96-3151 
 
13
Id. (emphasis added). 
¶26 To the extent that the "definition" of a meritorious 
defense set forth in Maier is inconsistent with the standard we 
adopt today, that portion of the Maier decision is hereby 
overruled. 
¶27 At oral argument in this case, counsel for Phillips 
asserted that a higher standard should be imposed upon defaulted 
defendants, since they were late to begin with in filing their 
answers.  More specifically, Phillips argued that affidavits are 
needed to prove the facts supporting that defense, and to 
illustrate that there is a reliable opportunity to succeed with 
the defense.  According to Phillips, counter-affidavits can also 
be considered if the original affidavits are insufficient. 
¶28 We disagree and explicitly adopt the standard above in 
light of the overall purpose of Wis. Stat. § 806.07.  As one 
commentator has noted: 
 
This section attempts to achieve a finer balance 
between the policy favoring the finality of judgments 
and the requirements of substantial justice than that 
represented by former section 269.46. . . . The former 
rule limited the number of circumstances under which a 
motion to vacate a judgment could be sought.  The new 
rule considerably expands this list, while subsection 
(1)(h) gives the court wide discretion to entertain 
the motion for other justifiable reasons. 
Patricia Graczyk, The New Wisconsin Rules of Civil Procedure, 
Chapters 805-807, 59 Marq. L. Rev. 671, 727 (1976).  This 
"expanded" version of the default judgment rule leads us to the 
conclusion that the most formidable barriers to the vacation of 
a default judgment are those which are set forth in § 806.07 
No. 96-3151 
 
14
itself.  See Wis. Stat. §§ 806.07(1)(a)-(1)(h).  Therefore, we 
conclude that the prerequisite of a meritorious defense for a 
motion to vacate brought pursuant to subsection (1)(a) should 
not place a greater burden upon the defaulted defendant than 
that already imposed by § 806.07. 
¶29 In this case, for example, E & H convinced the circuit 
court that its conduct under the circumstances was "excusable 
neglect."  This standard places a substantial obstacle in the 
path of parties seeking relief from a default judgment5 and we do 
not deem it necessary or even equitable to require a party who 
has met its burden under that standard to establish a defense 
which is somehow more "complete" or thorough than a timely-filed 
answer would need to be.  To do so would be to ignore the 
                     
5 "Excusable 
neglect 
is 
not 
synonymous 
with 
neglect, 
carelessness or inattentiveness.  [Rather, it] 'is that neglect 
which might have been the act of a reasonably prudent person 
under the same circumstances.'"  Giese v. Giese, 43 Wis. 2d 456, 
461, 168 N.W.2d 832 (1969) (citations omitted).  Accordingly, 
courts have held that neglect due to the pressure of a lawyer's 
work, without more, is not "excusable" neglect.  See id.; Wagner 
v. Springaire Corp., 50 Wis. 2d 217, 218, 184 N.W.2d 88 (1971); 
see also Hollingsworth v. American Finance Corp., 86 Wis. 2d 
172, 185-86, 271 N.W.2d 872 (1978) (confusion as to which 
attorney had been retained to handle a matter and confusion in 
forwarding 
papers 
from 
one 
office 
to 
another 
due 
to 
reorganization of a business not excusable neglect); Dugenske, 
80 Wis. 2d at 68-71 (lawyer's failure to answer complaint not 
"excusable neglect" where failure was result of lawyer's 
misplacement 
of 
client's 
files 
while 
relocating 
his 
law 
offices). 
For a review of federal case law on the equivalent section 
of Federal Rule of Civil Procedure 60(b), consult 11 Charles 
Alan Wright et al., Federal Practice and Procedure § 2858 (2d 
ed. 1995). 
No. 96-3151 
 
15
circuit court's initial finding of excusable neglect in this 
case. 
¶30 Moreover, as counsel for Phillips conceded, Phillips' 
approach is more akin to a summary judgment analysis, in which 
the circuit court reviews papers and affidavits outside the 
pleadings that are submitted by the parties to determine whether 
a genuine issue of fact remains for trial.  See Wis. Stat. 
§ 802.08.  In essence, a "trial by affidavit" would be required 
at the earliest stages of litigation.  We decline to impose such 
a demanding standard on defaulted defendants whose neglect has 
already been adjudged to be excusable under the circumstances.6 
¶31 In sum, we hold that a meritorious defense is a 
defense good at law that requires no more and no less than that 
which is needed to survive a motion for judgment on the 
pleadings.  Although the facts of this case involve only a 
finding of "excusable neglect," this holding and definition of a 
meritorious defense also applies to the remaining "excuses" set 
forth 
in 
Wis. 
Stat. 
§ 806.07(1)(a), 
including 
"mistake," 
"inadvertence," 
and 
"surprise." 
 
Our 
case 
law 
clearly 
                     
6 We also note that the revised Wisconsin Rule of Civil 
Procedure, Wis. Stat. § 806.07, eliminated the requirement that 
answers be verified.  Cf. Wis. Stat. § 269.46 (1973).  Wisconsin 
Stat. § 802.05(1)(a) makes this clear: "[E]xcept when otherwise 
specifically provided by rule or statute, pleadings need not be 
verified or accompanied by affidavit."  See also Charles D. 
Clausen & David P. Lowe, The New Wisconsin Rules of Civil 
Procedure, Chapters 801-803, 59 Marq. L. Rev. 1, 48 (1976) 
("This rule abolishes verification with but few exceptions. . . 
. In the majority of cases, the burden for the truthfulness of 
pleadings is on the attorney as an officer of the court.  In 
effect, his signature becomes the verification."). 
No. 96-3151 
 
16
illustrates that a meritorious defense must be shown for all 
relief under this subsection.  See, e.g., Hollingsworth, 86 
Wis. 2d at 184-87.  See also 3A Jay E. Grenig & Walter L. 
Harvey, Wisconsin Practice: Civil Procedure § 607.03 (2d ed. 
1994).  Moreover, we are convinced that the additional grounds 
for vacation of a default judgment set forth in subsection 
(1)(a) impose an equally substantial burden upon parties seeking 
to vacate a default judgment, such that the same standard for a 
meritorious defense should be employed.  See Hansher, 79 Wis. 2d 
at 390-91 ("[W]hichever of the enumerated grounds are relied 
upon in a particular case, the primary question is whether the 
conduct 
of 
the 
moving 
party 
was 
excusable 
under 
the 
circumstances."). 
III. 
¶32 Having 
defined 
a 
"meritorious 
defense," 
we 
now 
consider whether E & H's proposed answer and affirmative 
defenses have satisfied this standard in this case.  As 
mentioned, the circuit court denied E & H's motion to vacate the 
default judgment, despite a finding of excusable neglect, based 
on the lack of a meritorious defense.  "The application to 
vacate a judgment on the ground that it was obtained through 
mistake, 
inadvertence, 
surprise 
or 
excusable 
neglect 
is 
addressed to the discretion of the trial court, and the trial 
court's order will not be reversed except for abuse of 
discretion."  Howard v. Duersten, 81 Wis. 2d 301, 305, 260 
N.W.2d 274 (1977); see also State ex rel. M.L.B. v. D.G.H., 122 
Wis. 2d 536, 541-42, 363 N.W.2d 419 (1985). 
No. 96-3151 
 
17
¶33 However, 
"[t]his 
court 
will 
find 
an 
abuse 
of 
discretion if the record shows that the trial court failed to 
exercise its discretion, the facts fail to support the trial 
court's decision, or this court finds that the trial court 
applied the wrong legal standard."  Oostburg State Bank v. 
United Sav. & Loan Ass'n, 130 Wis. 2d 4, 11-12, 386 N.W.2d 53 
(1986).  As we have shown, the circuit court applied an improper 
legal standard to this case by examining the likelihood that E & 
H's defense would succeed on its merits.  Because the circuit 
court thereby erroneously exercised its discretion in denying E 
& H's motion to vacate the default judgment, we perform our own 
analysis, using the appropriate standard of law as set forth 
above, to determine whether E & H has a meritorious defense to 
this action.  We conclude that it does. 
¶34 "For well over 100 years, this court has consistently 
held that pleadings shall be liberally construed with a view to 
substantial justice between the parties."  Lewis v. Sullivan, 
188 Wis. 2d 157, 164, 524 N.W.2d 630 (1994).  In this case, E & 
H filed a proposed answer which stated "in short and plain terms 
the defenses to each claim asserted" and which "admit[ted] or 
den[ied] the averments upon which the adverse party relies."  
Wis. Stat. § 802.02(2).  The denials contained in the proposed 
answer "fairly meet the substance of the averments denied," id., 
No. 96-3151 
 
18
and E & H has set forth its affirmative defenses in compliance 
with § 802.02(3).7 
¶35 In sum, we require no more of the proposed answer in 
this case than we would of an answer that was filed in a timely 
fashion, since the circuit court found E & H's neglect to be 
"excusable" within the meaning of Wis. Stat. § 806.07(1)(a).  
Judgment on the pleadings would be improper in this case, since 
the answer now calls for an examination of "matters outside the 
pleadings," see Wis. Stat. § 802.06(3), in order to prove the 
material allegations of Phillips' complaint. 
¶36 Because E & H's neglect was "excusable" under the 
circumstances, and because E & H has a meritorious defense to 
the action, the order of the circuit court is reversed and the 
cause is remanded. 
By the Court.—The order of the circuit court is reversed 
and the cause is remanded for further proceedings consistent 
with this opinion. 
                     
7 Two affidavits were also filed in support of the motion to 
vacate the default judgment, but these affidavits relate only to 
the facts surrounding and leading up to E & H's failure to file 
a timely answer.  That is, they do not support the substance of 
E & H's defense.  
 
 
1