Inequality by Default: The One-Sided Nature of Wisconsin’s Default Judgment Rules
Under Section 801.09(2) of the Wisconsin Statutes, a defendant generally must serve an answer within 45 days from the date he or she has been personally served, though in certain instances the deadline is 20 days. Failure to serve an answer within this period can lead to a default judgment in favor of the plaintiff.[i]
Although the decision to enter a default judgment "is within the sound discretion of the circuit court,"[ii]in reality circuit courts will usually deny a motion for default judgment only where there is a sufficient showing under one of the grounds set forth in § 806.07(1) for a preemptive denial (e.g., excusable neglect, fraud, misconduct, etc.), the nonmoving party demonstrates that it has a meritorious defense to the underlying action, and the circuit court would likely be required to reopen the case if the party in default subsequently brought a motion to vacate.[iii] Outside of these circumstances, motions for default giving the plaintiff judgment according to the pleadings are nearly always granted where § 806.02(1) is satisfied.
The extent to which Wisconsin's default rules are out of sync with other states, many of which have implemented safe harbor provisions, or the federal courts, which are often much less strict when it comes to default, goes beyond the scope of this article, though it is certainly a serious topic for another. Rather, the focus of this article is the inequity of a remedy, default, which is available to plaintiffs, and, for no apparent reason, is foreclosed to all others who assert claims.
A default judgment is a big deal and brings serious consequences for the party in default.[iv] If default is granted, the defendant loses the case and, because the decision is a discretionary determination for the circuit court, the prospects on appeal are not promising.[v]
However, despite these admittedly serious consequences, the Wisconsin Court of Appeals has held that a default judgment may not be sought by defendants, only plaintiffs. In Pollack v. Calimag,[vi] the defendant filed a counterclaim and did not receive a response for three months.[vii] The defendant then moved for a default judgment on the counterclaim.[viii] The circuit court denied the motion and the court of appeals affirmed, holding, in a decision that is probably correct based on the language of § 806.02, that only plaintiffs may move for default. As the court observed, the statute for counterclaims, § 802.07, makes no such provision for defendants.[ix] That is, default is a remedy for plaintiffs alone. In so holding, the Wisconsin Court of Appeals stated, "[w]e make no comment on the logic of a rule limiting default judgment to a plaintiff."[x]
In fact, there is no logic to such a rule. When a defendant asserts a counterclaim, he or she is in that respect a plaintiff in all but name.[xi] In circumstances where both plaintiff and defendant have viable claims against one another, the only distinction between claim and counterclaim is that the defendant is not the first one to sue. For no logical reason, the current default rules place a premium on being a plaintiff, because the remedy of default is not available to defendants who assert counterclaims.[xii]
Although it is still an open question, the same result likely holds true for cross-claimants. As with the counterclaim discussed in Pollack, with respect to cross-claims, there is no language in § 806.02 allowing cross-claimants to move for default, and the statute for counterclaims and cross-claims, § 802.07, makes no provision for default in either scenario. In fact, in an unpublished decision, the Court of Appeals has held that cross-claimants cannot move for default. In Bako v. Leader Nat'l Ins. Co.,[xiii] the Wisconsin Court of Appeals emphasized that the language of § 806.02 does not allow cross-claimants or counterclaimants to move for default because it states that only a plaintiff may move for default.[xiv] The Court additionally relied on the Legislature's silence following the Pollack decision as an implicit confirmation of this conclusion.[xv] However, as with counterclaims, there is simply no reason to deprive a party asserting a cross-claim of the remedy of default. A cross-claimant, like a counterclaimant, is a plaintiff in all but name.
Our adversarial system functions properly only when plaintiffs and defendants are treated equally.[xvi] Under the current default judgment rules, there is no equality of treatment. The following suggested revisions to § 806.02 would help level the playing field for all types of claimants, be they plaintiffs, counterclaimants, or cross-claimants. Note that additions are shown by underscoring and deletions by strikethrough.
Default judgment. (1) A default judgment may be rendered as provided in subs. (1) to (4) if no issue of law or fact has been joined and if the time for joining issue has expired or if the time periods set forth in Wis. Stat. § 801.09 have expired with respect to a party's failure to respond to counterclaims or cross-claims, treating the counterclaims or cross-claims as if they were a new summons and complaint served on the party in receipt. Any plaintiff or defendant appearing in an action shall be entitled to notice of motion for judgment.
(2) After the filing
the complaint of a claim, whether in a complaint, cross-claim, or counterclaim,and proof of service of the summons on one or more of the parties in receipt of such claim defendants and an affidavit that the defendant party in receipt is in default for failure to join issue, the plaintiff claimant may move for judgment according to the demand of the complaint, cross-claim, or counterclaim. If the amount of money sought was excluded from the demand for judgment, as required under s. 802.02 (1m), the court shall require the plaintiff claimant to specify the amount of money claimed and provide that information to the court and to the other parties prior to the court rendering judgment. If proof of any fact is necessary for the court to give judgment, the court shall receive the proof.
(5) A default judgment may be rendered against any defendant who has appeared in the action, or against any party on whom counterclaims or cross-claims have been served, but who fails to appear at trial. If proof of any fact is necessary for the court to render judgment, the court shall receive the proof.
The need to revise Wisconsin's default rules is apparent. There is no logic to limiting the benefits of default to plaintiffs alone. Allowing parties who assert counterclaims or cross-claims, and are therefore plaintiffs in all but name, to move for a default judgment would level the playing field as required for Wisconsin's adversarial syste
[i] Wis. Stat. § 806.02(1) ("A default judgment may be rendered . . . if no issue of law or fact has been joined and if the time for joining issue has expired.").
[ii] Shirk v. Bowling, Inc., 2001 WI 36, ¶ 15, 242 Wis. 2d 153, 624 N.W.2d 375
[iii] Id., ¶¶ 17-19.
[iv] Meier v. Champ's Sport Bar & Grill, Inc., 2001 WI 20, ¶ 44, 241 Wis. 2d 605, 623 N.W.2d 94 (acknowledging the "harsh consequences" that accompany a default judgment); Keene v. Sippel, 2007 WI App 261, ¶¶ 14-19, 306 Wis. 2d 643, 743 N.W.2d 838 (recognizing that a default judgment is a "serious sanction") (citing Estate of Otto v. Physicians Ins. Co. of Wis., 2007 WI App 192, ¶ 15, 305 Wis. 2d 198, 738 N.W.2d 599).
[v] See, e.g., Rogers v. Fate, 113 Wis. 364, 366, 89 N.W. 186 (1902) (noting that an appeal from a default judgment must "be resolved upon the rule of deference to the superior opportunity of the circuit court to view and fully understand the situation, and consequent controlling effect of the exercise of discretion by that court").
[vi] 157 Wis. 2d 222, 458 N.W.2d 591 (Ct. App. 1990).
[vii] Id. at 229.
[ix] Pollack, 157 Wis. 2d at 235.
[xi] Accounting Data, Inc. v. McMurtrie, 78 Wis. 2d 89, 92, 253 N.W.2d 534 (1977).
[xii] Pollack, 157 Wis. 2d at 235; see also Keene v. Sippel, 2007 WI App 261, ¶¶ 16-18, 306 Wis. 2d 643, 743 N.W.2d 838 (revisiting the issue in Pollack and again holding that the default judgment statute does not allow counterclaimants to move for default).
[xiii] unpublished slip. op., No. 96-3687 (Wis. Ct. App. Sept. 1, 1998).
[xvi] Caplin & Drysdale v. United States, 491 U.S. 617, 650 (1989) (noting that an "equality of forces [is] necessary for the adversarial system to perform at its best").