Court Opinion

ID: 9713949
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:27:18.960455+00
Date Added: 2024-06-11T18:23:22.064799
License: Public Domain

DYKMAN, J.
¶ 1. Dawn and John Sukala (the Sukalas) appeal from an order denying them relief under Wis. Stat. § 806.07(l)(h) (2001-02).1 They assert that the trial court erroneously exercised its discretion when it found that a change in case law did not justify opening the judgment. We agree and reverse.
FACTS
¶ 2. Because our review is limited to the trial court's denial of relief under Wis. Stat. § 806.07(l)(h), we need not consider the merits of the underlying insurance claims in this case. We set forth only those facts relevant to the § 806.07(l)(h) motion, which focuses primarily on the procedural history of this case and supreme court decisions rendered after the trial *473court entered judgment. For an explanation of the facts of the underlying insurance claims see Sukala v. Heritage Mutual Insurance Co., 2000 WI App 266, 240 Wis. 2d 65, 622 N.W.2d 457 (Sukala I).
¶ 3. The Sukalas sued respondents to recover under automobile insurance policies with underinsured motorist (UIM) coverage. The UIM coverage contained reducing clauses. On April 14, 1999, the trial court entered an order and judgment in favor of the insurers. The Sukalas appealed, raising two issues: (1) whether Heritage Mutual Insurance Company (Heritage) complied -with the notification requirements in Wis. Stat. § 631.36(5); and (2) whether the statute permitting reducing clauses, Wis. Stat. § 632.32(5)(i), was constitutional. After the parties filed their briefs, the supreme court decided Dowhower v. West Bend Mutual Insurance Co., 2000 WI 73, 236 Wis. 2d 113, 613 N.W.2d 557. There, the supreme court held that § 632.32(5)(i) was constitutional and that:
an insurer may reduce payments made pursuant to a UIM policy by amounts received from other legally responsible persons or organizations, provided that the policy clearly sets forth that the insured is purchasing a fixed level of UIM recovery that will be arrived at by combining payments made from all sources.
Id., ¶ 33. We allowed the parties in Sukala I to address the issue of policy ambiguity at oral argument. We concluded that Dowhower disposed of the Sukalas' constitutionality claims. We held that the policy was unambiguous. Accordingly, we affirmed the trial court's decision. The supreme court denied the Sukalas' petition for review on April 5, 2001.
¶ 4. While we were considering Sukala I, Badger Mutual Insurance Co. v. Schmitz was also being liti*474gated. Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, 255 Wis. 2d 61, 647 N.W.2d 223. Schmitz raised the issue of whether a UIM reducing clause was unenforceable because it rendered UIM coverage ambiguous or illusory. The trial court held that the reducing clauses were unenforceable because the policy language did not clearly set forth the insurer's right to reduce liability. On appeal, we relied on our decision in Sukala I and held that the policy was enforceable because the reducing clause was unambiguous. Accordingly, we reversed the trial court's order.
¶ 5. The supreme court granted a petition for review in Schmitz on October 23, 2001. It reversed on July 10, 2002, concluding that a reviewing court must examine "an unambiguous reducing clause in the context of the entire policy to determine whether the coverage provided is understandable and clear. If the coverage provided is misleading and unclear, the policy is ambiguous, or worse, and the clause reducing UIM coverage is not enforceable." Schmitz, 255 Wis. 2d 61, ¶ 49. In reaching this conclusion, the supreme court addressed Sukala I, where we concluded:
[T]hat under Dowhower and the declared public policy of the legislature in Wis. Stat. § 632.32(5)(i), UIM reducing clauses complying with § 632.32(5) (i) cannot render UIM coverage "illusory." Once we have concluded that the UIM provisions of a policy are unambiguous, as we have here, then our inquiry is at an end.
Sukala I, 240 Wis. 2d 65, ¶ 20. The supreme court considered this reasoning ambiguous because
the Sukala court shifted terms, moving from the reducing clause to "the UIM provisions" of the policy, although the two could easily be read as one and the same. A policy in which all "the UIM provisions" are *475unambiguous is different from a policy in which only the reducing clause is unambiguous. In any event, the concluding sentence implies that once the reducing clause is found to be unambiguous, the inquiry is at an end. That is incorrect because Dowhower contemplates consideration of the entire policy.
Schmitz, 255 Wis. 2d 61, ¶ 42 (citations omitted).
¶ 6. In this case, Sukala II, the trial court held a hearing concerning the developments in case law since it entered a judgment validating the reducing clauses in the Sukalas' policies. In its oral decision, the court compared the facts here to those in Mullen v. Coolong, 153 Wis. 2d 401, 406, 451 N.W.2d 412 (1990) (Mullen II) and reasoned that the inequity in Mullen II derived from contrary constructions of the same policy. It also recognized that the Sukalas had signed a release for Western National Mutual Insurance Company (Western) and a stipulated dismissal for Heritage. It noted that seven months passed between the time the supreme court denied review in Sukala I and granted review in Schmitz. Finally, the trial court reasoned that the supreme court would have explicitly overruled Sukala I if its result was incorrect. The court explained,
[I]t becomes very difficult for me to say that the judgment ought to be reopened and find some extraordinary circumstance, other than the fact that there's a new precedent in the Court of Appeals. And I think that for me to reopen simply on the ground that there's a new precedent... or new language interpreting the precedent is inappropriate.
The trial court concluded that no extraordinary circumstances justified relief and denied the Sukalas' Wis. Stat. § 806.07(l)(h) motion. The Sukalas appeal,
*476STANDARD OF REVIEW
¶ 7. Whether to grant relief from a judgment under Wis. Stat. § 806.07(l)(h) lies within the discretion of the trial court. Mullen, 153 Wis. 2d at 406. We will reverse only if the trial court erroneously exercised its discretion. Id. "The term 'discretion' contemplates a process of reasoning which depends on facts that are in the record or reasonably derived by inference from the record and yields a conclusion based on logic and founded on proper legal standards." Id. A trial court erroneously exercises its discretion when it bases a decision on an error of law. State v. Brunton, 203 Wis. 2d 195, 202, 552 N.W.2d 452 (Ct. App. 1996).
DISCUSSION
¶ 8. Wisconsin Stat. § 806.07 authorizes the court to relieve a party from a judgment, order, or stipulation in certain circumstances. Paragraph 806.07(1)(h) is a catch-all provision that permits relief for any "reasons justifying relief from the operation of the judgment." It "gives the trial court broad discretionary authority and invokes the pure equity power of the court." Mullen II, 153 Wis. 2d at 407. Courts construe this statute "to achieve a balance between the competing values of finality and fairness in the resolution of disputes." Id.
¶ 9. "There is no simple rule to guide the court in deciding whether or not to sunburst or how to sunburst a decision."2 Harmann v. Hadley, 128 Wis. 2d 371, 379, *477382 N.W.2d 673 (1986). To start, we turn to Mullen II for some guidance on when relief under Wis. Stat. § 806.07(l)(h) is appropriate. In Mullen II, the supreme court denied Mullen's petition for review and then "accepted certification of [Nicholson v. Home Ins. Co.] which posed the identical question of law raised by Mullen in her petition for review." Mullin II at 404. In Nicholson, the court specifically overruled Mullen I. Id. Mullen, apparently unaware that Nicholson was pending, settled her claim and stipulated to dismissing the action. Id. After Nicholson was released, Mullen moved for relief from the stipulated dismissal order and reentry of judgment pursuant to § 806.07. Id. The supreme court affirmed the trial court's decision to grant relief because Mullen was "a victim of circumstance." Id. at 408. It reasoned that it "reached the precise result [in Nicholson that] Mullen advocated in her petition for review in Mullen I." Id. It concluded that "[u]nder these unique facts, the result reached by the trial court [was] not an abuse of discretion." Id.
¶ 10. Since then, the court has clarified its ruling in Mullen II:
[T]his court did not promulgate a two-part test under which a plaintiff must show that this court denied review of an issue at the same time an identical issue was before this court in another case. Mullen II merely set forth one example of an appropriate exercise of discretion and did not, in any way, limit the circuit court's authority to grant relief pursuant to sec. 806.07, Stats.
*478Schwochert v. American Family Mut. Ins. Co., 172 Wis. 2d 628, 634, 494 N.W.2d 201 (1993) (citations omitted).
¶ 11. The respondents correctly assert that the facts of this case are not the same as those in Mullen II. They distinguish Mullen II because the petitions for review in Mullen I and Nicholson were contemporaneously pending before the supreme court and posed identical issues. They note that seven months passed between the supreme court's denial of the Sukalas' petition for review and the time it granted review in Schmitz. They argue that Schmitz did not present the same arguments as Sukala I. They also contend that the Sukalas knew that Schmitz was pending before the supreme court when they executed their releases. The respondents urge us to consider the fact of this case to be more analogous to Schwochert v. American Family Mutual Insurance Co., 166 Wis. 2d 97, 479 N.W.2d 190 (Ct. App. 1991), aff'd, 172 Wis. 2d 628, 494 N.W.2d 201 (1993), and Brown v. Mosser Lee Co., 164 Wis. 2d 612, 476 N.W.2d 294 (Ct. App. 1991), where we denied relief under Wis. Stat. § 806.07(l)(h).
¶ 12. While the facts here are not exactly the same as those in Mullen II, the supreme court has clarified that such similitude is not necessary for relief to be warranted under Wis. Stat. § 806.07(1)(h). Schwochert, 172 Wis. 2d at 634. Like Mullen, the Sukalas were victims of circumstance. The inequity that occurred in Mullen II occurred here: The supreme court granted review in Schmitz seven months after denying review of the same issue in Sukala I. Such a time frame is close enough to the scenario in Mullen II. Moreover, the supreme court overruled Sukala I in Schmitz, albeit implicitly. See Dowhower v. Marquez, 2004 WI App 3, ¶ 20, 268 Wis. 2d 823, 674 N.W.2d 906 *479(Sukala I overruled by Schmitz). Regardless, relief under § 806.07(l)(h) is not contingent on the supreme court overruling the case in which movant's judgment was rendered. The crux of our inquiry is whether fairness mandates opening the judgment, despite the compelling justifications for protecting the finality of the judgment. Those facts are present here, and bring the Sukalas within the Mullen II exception to the finality of judgments. Accordingly, we conclude that the trial court erroneously exercised its discretion by denying the Sukalas' motion.
¶ 13. Finally, Western contends that Wis. Stat. § 806.07(1)(h) does not authorize opening the release the Sukalas executed regarding their claims against them. It asserts that § 806.07(1) permits a court to relieve a party from a "judgment, order or stipulation," but not from a release of claims. It argues that a release is an enforceable contract between the parties, citing Continental Casualty Co. v. Wisconsin Patients Compensation Fund, 164 Wis. 2d 110, 117, 473 N.W.2d 584 (Ct. App. 1991). It also argues that the Sukalas must return the consideration, $75,999.82, that Western paid to them before the agreement would be voided. The Sukalas assert that Western waived this issue by not raising it in the trial court.
¶ 14. After reviewing the transcript of the trial court hearing, we conclude that Western has not waived its argument that Wis. Stat. § 806.07(1)(h) does not provide for relief from a release. However, we are not persuaded by this argument. We treat releases and stipulations as contracts and construe them to give effect to the parties' intentions. Compare Gielow v. Napiorkowski, 2003 WI App 249, 268 Wis. 2d 673, 673 N.W.2d 351, review denied, 2004 WI 20, 269 Wis. 2d 200, *480675 N.W.2d 806 (Wis. Feb. 24, 2004) (No. 03-0050) with State v. Peppertree Resort Villas, Inc., 2002 WI App 207, ¶ 13, 257 Wis. 2d 421, 651 N.W.2d 345. Section 806.07(1) authorizes the court to relieve a party "from a judgment, order or stipulation." We can ascertain no valid justification for protecting a release from being opened while stipulations are subject to equitable relief. Both methods are commonly used to terminate litigation. Therefore, for the purposes of a motion under § 806.07(1), we consider a release and a stipulation to dismiss a claim one and the same. We need not consider the effect of the nearly $76,000 Western has paid the Mullins until they recover less than that amount from Western.
By the Court. — Order reversed.

 All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

 "Sunbursting" is the "technique known as prospective overruling... to soften or limit the impact of a newly an*477nounced rule. State v. Picotte, 2003 WI 42, 43, 261 Wis. 2d 249, 661 N.W.2d 381. The term derives from Great Northern Railway Co. v. Sunburst Oil & Refining Co., 287 U.S. 358 (1932), where the court limited its decision to future conduct.