Opinion ID: 2152692
Heading Depth: 1
Heading Rank: 3

Heading: issue two: reconsideration and vacating judgment

Text: ¶ 26. We next review the court's order that denied the defendant's motion for reconsideration and denied her motion to vacate the judgment pursuant to Wis. Stat. § 806.07(1). In her motion for reconsideration, the defendant argued that the court erred by considering the time between the temporary injunction hearing and the statutory deadline as a factor for excusable neglect. However, as we concluded above, the court did not err in this respect, and we will not revisit this issue. Our analysis is limited to the motion to vacate the judgment. [14, 15] ¶ 27. A circuit court's decision to grant or deny a motion under Wis. Stat. § 806.07(1) is reviewed subject to an erroneous exercise of discretion standard. State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 541-42, 363 N.W.2d 419 (1985). In its exercise of discretion, the court must attempt to strike the appropriate balance between the countervailing policy considerations that consistently pull at either end of the default judgment spectrum. J.L. Phillips & Assocs. v. E & H Plastic Corp., 217 Wis. 2d 348, 359, 577 N.W.2d 13 (1998). These considerations were mentioned above. In short, we balance the competing values of finality and fairness in the resolution of a dispute. State ex rel. M.L.B., 122 Wis. 2d at 542. [16, 17] ¶ 28. The defendant sought relief under Wis. Stat. § 806.07(1)(a), (b), (g) and (h). This statute provides: On motion and upon such terms as are just, the court, subject to subs. (2) and (3), 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); .... (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. Wis. Stat. § 806.07(1)(a), (b), (g) & (h). This statute is construed liberally because of its remedial nature. J.L. Phillips, 217 Wis. 2d at 359. The defendant bears the burden to prove that the requisite conditions existed. Hansher v. Kaishian, 79 Wis. 2d 374, 389, 255 N.W.2d 564 (1977). ¶ 29. In her motion, the defendant argued that relief was warranted based on the following: (1) Polich's misunderstanding of the courtesy extension agreement constituted excusable neglect; (2) the information provided by Polich in his second affidavit constituted newly discovered evidence; and (3) application of the judgment was not equitable. The defendant did not specifically enumerate any basis for relief under subsection (h) in her motion. ¶ 30. We first review whether the circuit court properly exercised its discretion by denying relief under subsection (a). We conclude that it did. The defendant presented Polich's second affidavit as a basis for relief under this subsection. In it, Polich alleged that he delayed filing the answer because he wanted to first conduct depositions of the plaintiffs before filing the answer. Polich asserted that he and the plaintiffs' attorney reached an agreement that an answer would not have to be filed until the depositions were taken. As stated above, the plaintiffs' attorney specifically denied that any such agreement was reached between the parties. [18] ¶ 31. During the hearing on the motion, the court dismissed Polich's affidavit as self-serving. It stated that it did not believe Polich's assertion that the parties had reached an agreement to allow the defendant to file her answer after the depositions. We regard this conclusion as a dismissal of Polich's sworn statements based on the court's finding that Polich lacked credibility. We uphold this ruling by the circuit court because it is the ultimate arbiter of the credibility of a witness. Homa v. East Towne Ford, Inc., 125 Wis. 2d 73, 80 n. 7, 370 N.W.2d 592 (Ct. App. 1985). After the court rejected this explanation by Polich, the court was basically presented with the same facts and explanations presented by the defendant at the first hearing. As a result, the court could properly exercise its discretion and deny relief under subsection (a) because the record would again support a finding by the court that excusable neglect was not present. [19] ¶ 32. The defendant argues that the court erred in several respects in reaching this determination. First, she contends that the court again erred by basing its decision on the fact that oral courtesy extension agreements are unenforceable unless they are in writing or confirmed in writing. Again, the court did not make any such finding. Instead, the court only noted that there was a lack of any documentation in the record and that, in practice, there would have normally been confirmation letters sent. The court certainly may consider the lack of documentation in making a determination as to whether an agreement existed. Such consideration must not be construed as a requirement that courtesy extension agreements must be in writing. ¶ 33. Second, the defendant contends that the court failed to reconcile the conflicting affidavits in this case to determine whether an oral courtesy extension agreement existed or whether the affidavits showed substantial confusion between the parties as to the existence of an agreement to support a finding of excusable neglect. However, the court resolved the various conflicts in the affidavits by dismissing the affidavits of Polich and relying on affidavits submitted by the plaintiffs. This decision was a proper determination of credibility. In light of the remaining testimony, the court did not erroneously exercise its discretion by concluding that an extension agreement had not been reached or that any other basis for excusable neglect was present. ¶ 34. Third, the defendant argues that the court failed to consider and articulate interests of justice factors in denying the motion to vacate the judgment. In particular, the defendant asserts that the court should have considered such factors as the drastic consequences of the default judgment in this case, the meritorious defenses presented in the answer, and the lack of any prejudice to the plaintiffs from the late answer. Again, however, the court was made aware of these factors during the hearing and made its decision in light of these relevant interests. ¶ 35. Fourth and finally, the defendant contends that the court erred by imputing the negligence of Polich to her in this case. She argues that Polich's negligence took on many forms, including that he was ineffective at the temporary injunction hearing, that he failed to secure a written courtesy extension agreement, and that he failed to provide her with affidavits to prepare for hearings in a prompt manner. According to the defendant, Polich's conduct was so egregious in this case that the judgment must be vacated. ¶ 36. A court is not bound to impute to a client everything his lawyer does or omits to do. Charolais Breeding Ranches, Ltd. v. Wiegel, 92 Wis. 2d 498, 514, 285 N.W.2d 720 (1979). However, [m]istakes, ill advice, or other failures of a lawyer may constitute excusable neglect on the part of the client, when the client has acted as a reasonable and prudent person in engaging a lawyer of good reputation, has relied upon him to protect his rights, and has made reasonable inquiry concerning the proceedings. Id. In deciding whether to impute the negligence of the lawyer to the client, the trial court must exercise its `equitable powers to secure substantial justice between the parties.' Id. (quoting Paschong v. Hollenbeck, 13 Wis. 2d 415, 424, 108 N.W.2d 668 (1961)). [20] ¶ 37. The defendant asserts that she took all reasonable steps to protect her position, including forwarding the complaint immediately to her attorney, attending the temporary injunction hearing, and substituting counsel when she believed that Polich was ineffective. On this issue, however, we agree with the conclusion reached by the court of appeals. As the court noted, although the defendant decided to substitute Sostarich for Polich as counsel, the record does not reflect that she made any reasonable inquiry into the status of the case before firing Polich to secure her position in the litigation. As a result, without any such inquiry, we conclude that it is reasonable to impute any alleged negligence on the part of Polich in failing to file the answer to the defendant. [4] [21] ¶ 38. Finally, we examine the court's determination with respect to subsections (b), (g) and (h). On these subsections, the circuit court failed to set forth any specific reasons for its denial for relief. Regardless, we may conduct our own examination of the record to determine whether the circuit court properly exercised its discretion and whether the facts provide support for the court's decision. Hedtcke, 109 Wis. 2d at 471; Homa, 125 Wis. 2d at 79. We note that remand to the circuit court for an evidentiary hearing may be warranted in some cases where the defendant's claim sets forth a basis for relief and a hearing is necessary to determine the truth of the allegations. See State ex rel. M.L.B., 122 Wis. 2d at 553-54. However, in this case, we make our determination based solely on the record in light of the fact that the defendant effectively waived any right to an evidentiary hearing during the motion hearing. The waiver occurred when the defendant rejected the court's repeated inquiries as to whether an adjournment for an evidentiary hearing was necessary. [22] ¶ 39. On review, we first conclude that the record does not support a finding that Polich's second affidavit constituted newly discovered evidence under subsection (b). The defendant failed to present any evidence to establish the elements of newly discovered evidence, particularly that the information did not arise from lack of diligence in seeking to discover it. See Wis. Stat. § 805.15(3)(b). As the plaintiffs argued, the affidavit contained information that the defendant could have likely discovered before the first hearing. Thus, in light of this failure to prove these elements, it was not an erroneous exercise of discretion for the court to deny relief under this subsection. [23] ¶ 40. We also conclude that subsection (g) does not apply in this case. This subsection specifically requires a person seeking relief from the judgment to show that the prospective application of the judgment is no longer equitable. Thus, under the clear language of this statute, a change in circumstances is specifically contemplated which makes the judgment no longer equitable. See State ex. rel M.L.B., 122 Wis. 2d at 543-44. The defendant did not allege any such change in circumstances, and as a result, the court did not err by failing to grant relief under this subsection as well. ¶ 41. Finally, we conclude that the court properly denied relief to the defendant under subsection (h). Under this subsection, relief is warranted only when extraordinary circumstances are present. Id. at 552. A circuit court considers the following factors in determining whether extraordinary circumstances exist: whether the judgment was the result of the conscientious, deliberate and well-informed choice of the claimant; whether the claimant received the effective assistance of counsel; whether relief is sought from a judgment in which there has been no judicial consideration of the merits and the interest of deciding the particular case on the merits outweighs the finality of judgments; whether there is a meritorious defense to the claim; and whether there are intervening circumstances making it inequitable to grant relief. Id. at 552-53. ¶ 42. The defendant never clearly articulated its reason for seeking relief under this subsection. However, during the hearing on the motion to vacate the judgment, the defendant argued that she should be entitled to relief from the judgment because the entry of judgment in this case inequitably and permanently impaired her property. She contended that any remedy available  such as an ineffective assistance of counsel claim against Polich  would not alleviate the impairment of her property. It would only lead to compensation for the property. We construe this argument as one seeking relief based on extraordinary circumstances, but conclude that in this case this argument does not provide a basis for relief. [24] ¶ 43. Certainly, the effects of the entry of default judgment should be considered by the court; however, simply because the entry of judgment impairs or affects property does not warrant a finding of extraordinary circumstances. Extraordinary circumstances may exist only in extreme and limited cases. This case does not present such extraordinary circumstances.