Court Opinion

ID: 8203907
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:50:02.849746+00
Date Added: 2024-06-11T16:41:04.837725
License: Public Domain

SHIRLEY S. ABRAHAMSON, C.J.
¶ 73. {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 *569same 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:
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;
*570NOW, 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 Order and was dismissed with prejudice. Under this interpretation of the Order, AEGIS loses and Arby *571is 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 that as a "claim" it fits within paragraph 2 of the federal Order.5
*572¶ 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 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 *573the 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 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. *574Rather, 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 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 determine *575from 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.

 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.").

 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.

 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.

 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.

 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 he 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.

 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.").

 Arby Constr., 333 Wis. 2d 184, ¶ 30.

 An additional possibility is that the parties do not want to resort to extrinsic materials relating to the settlement, which has been kept confidential.

 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.

 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. Cfi majority op., ¶ 37.
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 plead*575ing. 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.

 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., f 38, 67.