Opinion ID: 2152692
Heading Depth: 1
Heading Rank: 2

Heading: issue one: motion to strike and default judgment

Text: [1] ¶ 14. We examine two orders issued by the circuit court. The first order, entered on November 30, 1998, addressed four separate motions. Two of these motionsa motion to strike the defendant's entire answer and a motion for default judgmentwere both properly brought by the plaintiffs in response to the defendant's untimely answer. See Martin v. Griffin, 117 Wis. 2d 438, 441-42, 344 N.W.2d 206 (Ct. App. 1984). The other two motionsa motion to accept the answer and a motion to enlarge the time for serving an answerwere then filed by the defendant. The defendant's motions are appropriately considered as one motion because they both essentially seek relief under Wis. Stat. § 801.15(2)(a) on the basis of excusable neglect. See Clark County v. B.T.U. Structures, Inc., 144 Wis. 2d 11, 15-16, 422 N.W.2d 910 (Ct. App. 1988) (evidence of a courtesy extension agreement is excusable neglect). [2] ¶ 15. The circuit court noted that it only needed to address the plaintiffs' motions in this case. The court did not err in this respect. It could proceed in this manner because, under either party's motions, the court was required to determine whether excusable neglect was present. See Leonard v. Cattahach, 214 Wis. 2d 236, 248-49, 571 N.W.2d 444 (Ct. App. 1997); Rutan v. Miller, 213 Wis. 2d 94, 101, 570 N.W.2d 54 (Ct. App. 1997); Martin, 117 Wis. 2d at 442. The court correctly applied the excusable neglect standard in this case. [3, 4] ¶ 16. Excusable neglect is not the same as neglect, carelessness or inattentiveness. Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 468, 326 N.W.2d 727 (1982). Instead, it is `that neglect which might have been the act of a reasonably prudent person under the same circumstances.' Id. (quoting Giese v. Giese, 43 Wis. 2d 456, 461, 168 N.W.2d 832 (1969)). In the context of an untimely answer, reasonable grounds for noncompliance with the statutory period constitutes excusable neglect. Id. [5, 6] ¶ 17. A circuit court has great discretion in granting relief based on excusable neglect. Id. at 467. In exercising this discretion, the court must consider whether the interests of justice would be served in its finding. Id. at 468. The interests of justice require the court to be aware that a failure to find excusable neglect could result in a default judgment and that the law generally disfavors default judgments and prefers a trial on the merits. Id. at 469. The court should also balance other competing interests of a default judgment, such as promoting prompt adjudication and encouraging quality legal representation. Id. [7-9] ¶ 18. We will not disturb a circuit court's decision regarding excusable neglect unless an erroneous exercise of discretion is clearly shown. Id. at 471. An erroneous exercise of discretion will result [i]f the record indicates that the circuit court failed to exercise its discretion, if the facts of record fail to support the circuit court's decision, or if this court's review of the record indicates that the circuit court applied the wrong legal standard.... Id. at 471-72. If the circuit court enumerates its reasons for finding excusable neglect, we will focus on the facts of record to determine whether they support the court's reasons. Id. at 471. ¶ 19. Upon review, we conclude that the circuit court properly exercised its discretion in finding that excusable neglect was not present and in granting default judgment. The reasons articulated by the court provide a reasonable basis for this determination and are supported by the record. ¶ 20. One reason articulated by the court was that Polich's affidavit did not provide clear evidence of an oral courtesy extension agreement. The affidavit only stated that Polich understood that there was an agreement based on prior communications with Juneau and their mutual cooperation. [2] This assertion, the court determined, was insufficient to support a finding of a clear agreement. At that time, the record also contained an affidavit from Juneau, which denied the existence of the agreement [3] and alleged that, on a prior occasion when an adjournment was necessary, the parties entered into a written agreement. This evidence supports the conclusion that no agreement for an extension of time to answer existed. Thus, the court correctly concluded that the alleged agreement could not constitute a basis for excusable neglect. [10] ¶ 21. The defendant argues that this finding by the court essentially concluded that the courtesy extension agreement was unenforceable because it was not in writing or confirmed in writing. This is an incorrect interpretation of the circuit court's decision. The court only concluded that the affidavit did not reflect a clear agreement between the parties; it did not conclude that the agreement was unenforceable because it was not in writing. In fact, the only mention the court made about the agreement not being in writing was that most attorneys confirm such extensions in writing. It did not state that the agreement had to be in writing. Indeed, courtesy agreements that are not reduced to writing may be enforceable in certain instances. See Rutan, 213 Wis. 2d at 102. Here, however, the parties disputed the existence of the agreement; therefore, the court was forced to make a determination as to whether the agreement even existed. Certainly, this case reemphasizes our previous warning that, as a matter of good practice, such agreements should be reduced to writing with additional notification to the court. See Oostburg State Bank v. United Savings & Loan Ass'n, 130 Wis. 2d 4, 13, 386 N.W.2d 53 (1986). ¶ 22. Also, with respect to the courtesy extension agreement, the defendant argues that the court erred by failing to acknowledge that Polich's misunderstanding of the agreement may have constituted excusable neglect. However, at the time of this hearing, there was no evidenceno notes, confirmation letters, or other documentation from Polichto indicate that he misunderstood that there was an agreement. Further, the record did not contain any testimony from Polich to indicate that he ever asked for an extension or that Juneau ever misled him into thinking that an extension was granted. Indeed, the defendant could have provided additional evidence to the court on this and other factors; however, she decided to rest her case on Polich's affidavit without seeking a continuance for an evidentiary hearing where Polich could have appeared and given testimony. Polich was not present because of a scheduling conflict. Thus, in light of the lack of evidence showing any misunderstanding, the court did not err in failing to find excusable neglect based on this alleged misunderstanding. ¶ 23. Another reason articulated by the court was that the defendant had reasonable time to serve the answer. In particular, the court noted that the defendant had 14 days in which to file from the time of the temporary injunction hearing to the statutory deadline and concluded that this amount of time was sufficient to file an answer. The defendant argues that this factor was outside the scope of the court's analysis for excusable neglect. She asserts that the court's focus should have been on whether there was a justifiable explanation for the untimely answer, not on whether there was adequate time to serve the answer. [11] ¶ 24. However, in this case, the defendant made this time frame an issue when it entered Polich's affidavit into evidence, which alleged: [I]t was my understanding that I had been granted a reasonable time to answer after the hearing regarding the Injunction on July 16, 1998 and that, in fact, I answered just four days beyond the statutory time. In an apparent response to this statement, the court concluded that the time between the hearing and the statutory deadline was a reasonable time to answer, implying that the defendant did not need extra time in which to answer. The time to answer was reasonable, the court concluded, in light of the fact that Polich did not provide any reason as to why he could not answer by the deadline. Thus, because the defendant made this time period an issue, the court acted properly in considering it and using it as a basis for rejecting the defendant's excusable neglect argument. [12, 13] ¶ 25. Based on the above, we conclude that the record supports the circuit court finding that the defendant failed to show excusable neglect and that it appropriately entered the default judgment. The defendant contends that the court erred because it failed to consider policy reasons weighing against default judgment in its determination. The court, however, was aware of these factors at the hearing. In particular, the defendant informed the court that it had broad discretion in granting motions to enlarge the time to answer and that the law generally treats default judgment as an extreme measure. The fact that the court did not specifically articulate its consideration of these policy factors does not mean that it was not cognizant of these factors before granting the plaintiffs' motions. The court acted properly.