Defendant cannot move for default judgment on a counterclaim when plaintiff fails to reply.

• Date: 03 December 2007
• Author: Pribek, Jane

Byline: Jane Pribek

A defendant files an untimely answer and counterclaim. The court grants default judgment against him, but does not strike the answer. Since the plaintiff has failed to reply to the counterclaim, can defendant seek default judgment on his counterclaim?

Manitowoc County Circuit Court Judge Jerome L. Fox said no, and the Wisconsin Court of Appeals agreed with him on Nov. 14 in Keene v. Sippel, No. 2006AP2580.

Danny and Maria Keene filed a lawsuit against Brian Sippel, a carpenter, alleging improper work in building their home. Sippel filed his answer and counterclaim 58 days after he was served. He additionally filed a motion for enlargement of time, which the court denied after finding no excusable neglect. The court then granted default judgment in favor of the Keenes. A few weeks later, Sippel sought default judgment on his counterclaim on the ground that his answer had not been stricken. The court denied that motion.

The District IV appellate court, in an opinion written by Judge Daniel Anderson, observed that the parties and the trial court did not have the benefit of additional guidance on the issue of untimely service as rendered in Estate of Otto v. Physicians Ins. Co. of Wis., 2007 WI App 192, because that decision hadn't been issued until July 24, 2007. In that case, Physicians Insurance argued that a circuit court must consider the interests of justice when deciding whether to grant a motion to enlarge and must find prejudice to the opposing party in order to enter a default judgment. The appellate court disagreed, holding that prejudice need not be considered absent a finding of excusable neglect.

Distinguishing from Spit Rock

The court then held that the circuit court in this case properly distinguished the leading case from the Wisconsin Supreme Court on this issue, Split Rock Hardwoods Inc. v. Lumber Liquidators Inc., 2002 WI 66, 253 Wis. 2d 238, 646 N.W.2d 19. Unlike this case, in Split Rock, untimely service was not a factor, but rather, whether default judgment was a proper sanction for untimely filing under sec. 801.14(4).

Anderson wrote, [T]hough Split Rock teaches that a circuit court is required to make a prejudice consideration when determining whether to grant default for untimely filing,

Estate of Otto explains that it need not consider prejudice or the interests of justice when determining whether to grant default for untimely service, absent excusable neglect. ...

We infer from the Supreme Court's...