WI Supreme Court rules defendant must show proof in seeking to vacate default judgement.

Byline: David Ziemer

When a defendant seeks to vacate a default judgment, pursuant to sec. 806.07, claiming improper service of process, the burden of proof is on the defendant.

In so holding, the Wisconsin Supreme Court reversed a published decision of the court of appeals, Richards v. First Union Securities, Inc., 2005 WI App 164, 284 Wis.2d 530, 702 N.W.2d 45, and also reversed the appeals court's holding that a foreign corporation's branch manager was not a "managing agent" for purposes of accepting service.

In July 2002, Gary Richards filed an action in Waukesha County Circuit Court against First Union Securities, Inc., to recover investment losses as the result of alleged violations of the antifraud sections of the Wisconsin Uniform Securities Law.

The next day Richards' process server attempted to serve a copy of the summons and complaint on the defendant by serving Kim Wisniewski (Wisniewski), the operations manager of First Union's Brookfield branch. According to the process server's affidavit, Wisniewski was the person identified as authorized to accept service.

In September, First Union informed Richards that he was required to arbitrate the dispute. Richards consented to stay the court case in favor of arbitration on the condition that First Union initiate the arbitration and pay the filing fee.

However, First Union neither paid the fee nor filed an answer to the complaint. In November, default judgment was granted to Richards.

When First Union failed to pay, Richards began garnishment proceedings. First Union then filed an answer to the garnishment, and a motion to reopen the default judgment.

First Union submitted affidavits from both Wisniewski and Ronald McGrath, the branch manager of its Brookfield office. Both stated they were not an officer, director, or managing agent of First Union.

McGrath acknowledged that he was the person in charge of the Brookfield branch office, but claimed that there were no officers, directors, or managing agents of First Union anywhere in Wisconsin, and thus, no one authorized to accept service in the state, except its registered agent.

He further stated that First Union was a foreign corporation, with CSC-lawyers Incorporating Service as its registered agent.

Circuit Court Judge Robert G. Mawdsley denied First Union's motion, concluding that defects in personal service were waived.

First Union appealed, and a divided court of appeals reversed, holding that service was not waived, and that...