Opinion ID: 1873671
Heading Depth: 3
Heading Rank: 1

Heading: Opening the default judgment

Text: ¶ 17 A circuit court's authority to open a default judgment is derived from statute. Wis. Stat. § 806.07. Section 806.07(1) lists conditions under which a circuit court may exercise its discretion and open a default judgment. It provides: Relief from judgment or order. (1) 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); (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. ¶ 18 We have previously recognized that Wis. Stat. § 806.07 seeks to strike a balance between the judiciary's interest in achieving fair resolutions of disputes and the policy favoring finality of judgments. Edland, 210 Wis.2d at 644, 563 N.W.2d 519. Indeed, § 806.07 serves both interests, enhancing fairness in the administration of justice by authorizing a circuit court to vacate judgments on various equitable grounds. Id. ¶ 19 Here, the circuit court vacated the judgment against Rutherford on its own motion under Wis. Stat. § 806.07 on equitable grounds, but without prior notice to the parties that it was considering such relief from judgment. Our first tasks are to determine whether: (1) the court's sua sponte vacation of Rutherford's default judgment, and (2) the court's providing an opportunity for the parties to be heard after it had vacated the judgment, rather than before it did so, constituted proper exercises of discretion.
¶ 20 The relief that may be accorded under Wis. Stat. § 806.07 need not be sought by one of the parties; a court may act on its own motion pursuant to § 806.07, as long as the court provides the parties notice of its action and an opportunity to be heard. Gittel v. Abram, 2002 WI App 113, ¶ 27, 255 Wis.2d 767, 649 N.W.2d 661. In Gittel, Nickolas Persha executed a will naming Ruth Abram, who was also Persha's personal representative in the probate proceedings, as his sole beneficiary. Id., ¶ 1. Persha's sister, Mary Gittel, challenged the will, arguing in part that the will was invalid because it was the product of Abram's undue influence. Id. Because the circuit court concluded that the will was tainted by undue influence and that the testator was incompetent, it refused to probate the will. Id., ¶¶ 7-8. ¶ 21 Abram objected to the court's award of costs and fees to Gittel, and the court held a hearing on Abram's motion. Id., ¶¶ 8, 10. At the hearing and without prior notice to the parties that it planned to do so, the court vacated the portion of its order that declared the will the product of undue influence. Id., ¶ 11. Gittel filed a motion for reconsideration, which the court denied, indicating that it had the authority to vacate its original order pursuant to Wis. Stat. § 806.07(1)(h). Id., ¶ 13. ¶ 22 The court of appeals held in Gittel that a circuit court is authorized to grant relief from its own orders sua sponte under the authority of Wis. Stat. § 806.07, but that the circuit court did not provide the parties with the requisite notice of its action. Id., ¶¶ 24, 29. The court of appeals explained, Gittel did not have notice and the opportunity to be heard on the specific issue of the court's authority under Wis. Stat. § 806.07, because the court did not refer to § 806.07 until the written order denying Gittel's motion for reconsideration without a hearing. [11] Id., ¶ 29. ¶ 23 We agree with Gittel that circuit courts are vested with the authority to grant relief from their judgments, on their own motion under Wis. Stat. § 806.07. We have recognized a wide swath of contexts in which Wisconsin courts are permitted to act on their own motion. See, e.g., Howell v. Denomie, 2005 WI 81, ¶ 19, 282 Wis.2d 130, 698 N.W.2d 621 (concluding that the court of appeals may inquire, on its own motion, whether a frivolous claim has been filed); City of Sun Prairie v. Davis, 226 Wis.2d 738, ¶ 19, 595 N.W.2d 635 (1999) (recognizing the inherent power of courts to vacate void judgments); State v. Peterson, 104 Wis.2d 616, 628, 312 N.W.2d 784 (1981) (holding that a circuit court may amend pleadings on its own motion); State v. Hanson, 85 Wis.2d 233, 237, 270 N.W.2d 212 (1978) (stating that a circuit court may on its own motion reopen [a case] for further testimony in order to make a more complete record in the interests of equity and justice); Behning v. Star Fireworks Mfg. Co., 57 Wis.2d 183, 188, 203 N.W.2d 655 (1973) (concluding that circuit courts may, on their own motion, grant a new trial in the interests of justice). [12] The wide recognition of courts' abilities to act sua sponte comports with the balance of the interests served by § 806.07, fairness and finality. Indeed, as we have stated, Every court has inherent power, exercisable in its sound discretion, consistent within the Constitution and statutes, to control disposition of causes on its docket with economy of time and effort. Neylan v. Vorwald, 124 Wis.2d 85, 94, 368 N.W.2d 648 (1985). That a court should raise issues sua sponte is the natural outgrowth of the court's function to do justice between the parties. State v. Holmes, 106 Wis.2d 31, 39, 315 N.W.2d 703 (1982). ¶ 24 In addition, the plain language of Wis. Stat. § 806.07(1) does not foreclose the court from acting sua sponte under the statute's authority. When interpreting a statute, we look to its language, and if that language conveys a plain, clear statutory meaning, we construe the statute according to that meaning. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 46, 271 Wis.2d 633, 681 N.W.2d 110 (quoting Bruno v. Milwaukee County, 2003 WI 28, ¶ 20, 260 Wis.2d 633, 660 N.W.2d 656). Section 806.07(1) provides in part: On motion and upon such terms as are just, the court[ ] . . . may relieve a party . . . from a judgment. . . . Because the language of the statute provides that a court may relieve a party from judgment, without qualifying that the relief may be granted only upon a motion brought by one of the parties, the statute does not restrict the court from acting on its own motion. ¶ 25 In sum, we reaffirm Gittel 's conclusion that courts have the power to act sua sponte under the provisions of Wis. Stat. § 806.07. The interests underlying § 806.07 parallel the interests that we have held permit courts to act sua sponte. In addition, we construe the plain language of § 806.07 to permit a court to act sua sponte under its authority.
¶ 26 As we recounted above, sua sponte actions are permissible under Wis. Stat. § 806.07(1) if the court provides the parties notice of its action and an opportunity to be heard. Gittel, 255 Wis.2d 767, ¶ 27, 649 N.W.2d 661. The court in Gittel concluded that the circuit court had not provided the parties adequate notice when it vacated its initial order declaring that Persha's will was the product of undue influence. Id., ¶ 29. The circuit court withdrew that portion of its order during a hearing on Abram's objection to the circuit court's assignment of costs. Id., ¶¶ 8, 11. Abram's motion was grounded in the theory that the circuit court had erred in allocating costs because the court had erred in concluding that the will was the product of undue influence. Id., ¶ 9. At the opening of the motion hearing, the circuit court asked Abram's attorney if he was requesting that the court reconsider the portion of its order relating to undue influence, and the attorney answered affirmatively. Id., ¶ 10. The court of appeals concluded that, although the circuit court's question to Abram's counsel about undue influence gave Gittel's attorney some notice that it was perhaps reconsidering its previous order, Gittel had insufficient notice that the circuit court may vacate a portion of its order. Id., ¶ 29. Gittel did not have notice that the circuit court was acting sua sponte pursuant to § 806.07 until the circuit court referred to § 806.07 in its denial of Gittel's motion for reconsideration. Id. ¶ 27 The facts here stand in sharp contrast to the facts in Gittel. Even though the circuit court acted on its own motion without prior notice to Larry or any defendant, as the circuit court had in Gittel, the circuit court here, unlike the circuit court in Gittel, provided an opportunity for the parties to be heard by inviting briefing on the issues. Although giving notice prior to a sua sponte action by a circuit court under Wis. Stat. § 806.07 is preferable, Larry does not argue that she was prejudiced by the late notice. [13] Furthermore, she did submit a letter brief objecting to vacating the default judgment, as well as a more complete reply brief. The court considered her arguments and then issued a written opinion addressing them. Under these circumstances, the circuit court permitted Larry an opportunity to be heard. ¶ 28 In vacating the default judgment, the circuit court related that all the officers were accused of substantially the same conduct under the complaint. The court explained that given the summary judgment materials submitted in regard to Harris's motion for summary judgment, it was clear that Larry's rights had not been violated by the officers' conduct. The court opined that its decision to vacate the default judgment was based on equity, as it further explained,  no officer could be held liable under the Complaint according to the Court's findings; as such, the interests of justice required the Court to vacate the default. (Emphasis added.) ¶ 29 We see no erroneous exercise of discretion. The court had the power to act sua sponte under Wis. Stat. § 806.07, and it thoroughly explained the legal and equitable bases for its decision to vacate the default judgment. In addition, Larry was given an opportunity to be heard and the written decision of the circuit court shows it carefully considered her arguments. Accordingly, the circuit court did not erroneously exercise its discretion in sua sponte vacating the default judgment against Rutherford.