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Date: 04-05-2007
Case Number: 2005AP1407
Judge: SHIRLEY S. ABRAHAMSON, C.J.
Court: Supreme Court of Wisconsin on appeal from the Circuit Court of Waukesha County
Plaintiff's Attorney:
Ed Robinson and Cannon & Dunphy, S.C., Brookfield, and oral argument by Brett A. Eckstein
Defendant's Attorney:
For the defendants-third-party plaintiffs-appellants there were briefs by Mike Van Sicklen, Naikang Tsao, and Foley & Lardner LLP, Madison; Steven P. Sager, James Samuelsen, and Sager, Colwin, Samuelsen & Associates, S.C., Fond du Lac, and oral argument by Michael B. Van Sicklen.
For the third-party defendants-respondents there was a brief by William J. Katt, Mark D. Malloy, and Leib & Katt, S.C., Milwaukee, and oral argument by William J. Katt.
An amicus curiae brief was filed by Linda V. Meagher and Habush Habush & Rottier, S.C., Milwaukee, on behalf of the Wisconsin Academy of Trial Lawyers.
Description:
1 SHIRLEY S. ABRAHAMSON, C.J. This case is before the court on certification by the court of appeals, pursuant to Wis. Stat. § (Rule) 809.61 (2003-04).[1] The circuit court for Waukesha County, Mark S. Gempeler, Judge, granted the motion of the third-party defendants, Albertson's, Inc. and Osco Drug, Inc., (collectively referred to as Osco Drug),[2] to dismiss the third-party complaint brought by the third-party plaintiffs, Physicians Insurance Company of Wisconsin, Inc., Medical College of Wisconsin Affiliated Hospitals, Inc., and Sheila Galbraith, M.D. (collectively referred to as Dr. Galbraith).
2 Dr. Galbraith's third party complaint sought contribution or indemnity from Osco Drug if Dr. Galbraith were found liable in the underlying medical malpractice lawsuit brought by the Estate of Frank P. Rille by Susan Rille, its Personal representative, and Susan Rille (collectively referred to as Rille) against Dr. Galbraith and Osco Drug.[3]
3 The circuit court granted Osco Drug's motion to dismiss Dr. Galbraith's third party complaint on the basis of a prior proceeding in the underlying medical malpractice lawsuit. Osco Drug had petitioned the circuit court in the underlying medical malpractice lawsuit for summary judgment when no party in response to the scheduling order submitted the names of expert witnesses or reports critical of the conduct of Osco Drug.
4 Rille did not oppose Osco Drug's motion for summary judgment. Dr. Galbraith did not oppose the motion for summary judgment as it related to Rille's underlying medical malpractice lawsuit, but Dr. Galbraith filed a brief and affidavits and appeared at the hearing on the motion. Dr. Galbraith attempted to preserve her contribution claim against Osco Drug, asking the circuit court to rule that the summary judgment was not on the merits and would not affect her rights to contribution or indemnity.
5 The circuit court granted Osco Drug's motion for summary judgment on the merits. The parties vigorously debated the wording of the summary judgment order relating to Dr. Galbraith's rights against Osco Drug. The circuit court adopted Dr. Galbraith's phrasing of the summary judgment order, which stated that "this order is no way intended to affect the rights of other parties to pursue claims under appropriate statutory and/or case law."
6 After summary judgment was granted (with the language quoted above) and after further discovery proceedings, Dr. Galbraith filed a third-party complaint against Osco Drug for contribution, which included allegations of Osco Drug's negligence that were substantially the same as those contained in Rille's complaint. Osco Drug moved to dismiss the third-party complaint against it on the ground of issue preclusion, arguing that Osco Drug's liability was preclusively determined in the earlier summary judgment order. The circuit court granted Osco Drug's motion to dismiss, and Dr. Galbraith appealed.
7 The issue presented is whether the circuit court erred in holding that issue preclusion barred the third-party claim of Dr. Galbraith for contribution against Osco Drug.
8 Addressing this issue requires the court to answer two questions: Was the issue of Osco Drug's negligence actually litigated and determined in the summary judgment motion so that the doctrine of issue preclusion applies? If the doctrine of issue preclusion applies, did the circuit court erroneously exercise its discretion when it applied issue preclusion in the present case?
9 For the reasons set forth, we hold that the issue of Osco Drug's liability was actually litigated and determined by summary judgment and that the circuit court did not preserve Dr. Galbraith's claim for contribution in its order on summary judgment. We further hold that the circuit court did not erroneously exercise its discretion when it ruled that application of issue preclusion was fundamentally fair. To preserve her contribution claim against Osco Drug successfully against a challenge on the ground of issue preclusion, Dr. Galbraith should have appeared and objected on the merits to Osco Drug's motion for summary judgment, thereby ensuring that there would be no possibility of inconsistent fact-finding on any issue central to Rille's claim and her own claim. Filing a brief and arguing that her claim for contribution should be preserved for a later date was not adequate, without any justification, to avoid issue preclusion under Precision Erecting, Inc. v. M&I Marshall & Ilsley Bank, 224 Wis. 2d 288, 592 N.W.2d 5 (1998).
10 Accordingly, we affirm the order of the circuit court dismissing Dr. Galbraith's third-party complaint for contribution against Osco Drug.
I
11 Although the parties disagree about the proper legal inferences and legal conclusions to draw from the facts, the facts relevant to this appeal are not in dispute.
12 This appeal stems from a medical malpractice action. On March 10, 2003, Frank Rille filed a medical malpractice action against Dr. Galbraith and Osco Drug. An amended complaint was filed on August 1, 2003, following the death of Frank Rille, substituting as plaintiffs the Estate of Frank P. Rille, by its personal representative Susan Rille, and Susan Rille, in her personal capacity.
13 The medical malpractice complaint alleges that while treating Frank Rille's psoriasis condition, Dr. Sheila Galbraith issued a prescription for the drug methotrexate in a dosage higher than Galbraith's supervising physician instructed. The medication was supposed to be prescribed at the rate of 2.5 mg administered three times a week (total dosage of 7.5 mg per week). Instead the prescription, as written, directed the patient to take 7.5 mg per day (total dosage of 52.5 mg per week). An Osco Drug pharmacy filled the prescription as written, without questioning the dosage. Frank Rille took the drug as prescribed for several days. He became severely ill and required extended medical care.
14 Dr. Galbraith did not initially file a claim in Rille's action against her co-defendant, Osco Drug, and need not have done so. Contribution claims may, however, be brought in the original tort action.[4] "To facilitate efficiency and eliminate the necessity of additional subsequent litigation, this court has approved the practice of allowing the contribution action to be considered in the same proceeding involving the underlying damage claim despite the contingent nature of this cross action."[5]
15 Contribution claims are not mandatory in the initial tort action.[6] "While claims for contribution are commonly pled in the underlying personal injury action, there is no requirement that they be pled at that time."[7] A party instead may wait until after he or she is adjudged liable before filing a contribution claim.[8]
16 Nevertheless, in her answer to both the initial complaint and the amended complaint, Dr. Galbraith references her contribution claim against Osco Drug. Specifically, in the "wherefore" clause of her answer, Dr. Galbraith asserted the following:
In the event this defendant is found jointly liable with any other defendant, then, and in that event, this defendant will be entitled to contribution and/or indemnity according to the law.
17 Dr. Galbraith's contribution claim was thus well known to all parties and the circuit court.
18 Under the circuit court's original scheduling order, Rille was required to disclose experts by August 1, 2003, and the defendants were required to disclose their experts by November 1, 2003.
19 On December 1, 2003, Osco Drug filed a motion for summary judgment. It alleged that no party has presented any expert witness or report establishing an inference of Osco Drug's negligence or a causal connection between any action or inaction of Osco Drug and the damages sought.[9] Wisconsin courts have consistently maintained that medical malpractice negligence claims such as Rille's must be supported by expert testimony.
20 Rille did not oppose the motion for summary judgment. At the hearing, counsel for Rille explained:
We do not oppose Osco's motion for summary judgment based, in part, on the testimony that has come out from Dr. Galbraith at her deposition, number one. Number two, as a matter of strategy obviously the Court is aware of the competency and capabilities and trial prowess of both counsel seated here.
We have a clear claim in this case against Dr. Galbraith, the resident, who admitted that she wrote out an incorrect prescription; that the prescription was filled exactly as she wrote it out. Our client took it as written out, as prescribed, and that led to why we are here today. So we, for that reason, have decided not to pursue a claim against Osco.
They have moved for summary judgment. We do not oppose that motion at this time, not because we couldn't hypothetically go out and try to find some expert. We have just decided not to do that.
21 Dr. Galbraith received notice of the summary judgment motion. She did not oppose the motion. She did, however, file a brief and affidavits in response to Osco Drug's summary judgment motion. Dr. Galbraith explained her intention not to oppose Osco Drug's motion for summary judgment. She stated that the summary judgment hearing was not the right time for her to pursue a contribution claim. She concluded that she could wait to pursue her contribution claim: "So I am able to kind of sit back, if you will, and see what [the plaintiff] decides to do. . . . It's really that simple, and I don't think there is anything more to it than that. We have the right to pursue this if we choose to. We may or may not take discovery in this case about Osco."[10]
22 Dr. Galbraith's brief requested that, "in fairness to [the defendants]," the circuit court on the summary judgment motion should "specifically reference: 1. That such order is not determinative of any claims of those defendants, Physicians Insurance Company of Wisconsin, Inc., Medical College of Wisconsin Affiliated Hospitals, Inc. and Sheila Galbraith, M.D., and 2. That such claims are preserved."
23 The circuit court heard arguments on Osco Drug's motion for summary judgment on February 19, 2004. The regularly assigned judge, Hon. Mark S. Gempeler, was unavailable that day, so Reserve Judge John Fiorenza presided over the hearing.
24 Significant discussion ensued at the hearing about the impact of a summary judgment in favor of Osco Drug on Dr. Galbraith's contribution claim. At the hearing, Dr. Galbraith reiterated that even though she was not opposing the motion, she wanted to reserve the right to pursue a claim for contribution against Osco Drug. Dr. Galbraith requested that summary judgment be granted "without prejudice."
25 Osco Drug's counsel predicted at the hearing that if summary judgment were granted and Dr. Galbraith brought a contribution claim against Osco Drug, the claim would be challenged under the doctrine of issue preclusion, citing Precision Erecting v. M & I Marshall & Ilsley Bank, G.A.P., Inc., 224 Wis. 2d 288, 592 N.W.2d 5 (Ct. App. 1998), and a court would bar the claim.
26 The circuit court (Judge Fiorenza) granted summary judgment in favor of Osco Drug on the merits and dismissed Rille's claims against Osco Drug with prejudice. During the hearing, the circuit court explained that its decision was not "foreclosing whatever arguments [the parties] make in the future and whatever potential claims that are out there against anyone . . . ." The circuit court stated that the validity of any action for contribution was not before it and that the validity of any action for contribution would have to be determined according to the statutes and case law when a contribution action was filed. The circuit court explained its position as follows:
The case here, the summary judgment motion is very clear and its deals with an issue that is in the case, and that is the question of negligence claimed by the plaintiff against Osco. There is [sic] no other claims against Osco in the case. There are no formalized claims against Osco in this case and, therefore, if any party has another claim for contribution, or what have you, whatever claim they may have but has not been brought forth in this case the Court can't look into the future and say, well, there's possible claims out there and so I shouldn't rule on the case that's before me . . . .
If someone would bring an action for contribution against Osco, that would have to be determined if the statute in question would allow that, if the case law would allow that. . . . I have not considered these. Absolutely have not considered these facts because they're not before me . . . . I cannot restrict Osco's position of saying you should have brought it, and that certainly is their right to object at that time to any further contribution action; nor can I at this time tell [Dr. Galbraith] that you can't bring a contribution action. That issue just isn't before me at this time and before the Court, and therefore I actually have no authority to rule on such a matter that is not before me in this decision.
27 Osco Drug and Galbraith disagreed about the language that should be incorporated in the circuit court order granting Osco Drug summary judgment to reflect the decision of the circuit court. Osco Drug submitted a proposed order to Judge Gempeler, who had resumed responsibility over the case, declaring only the dismissal with prejudice of Rille's claims against Osco Drug.
28 Dr. Galbraith submitted an alternative proposed order, which added the following words: "this order is no way intended to affect the rights of other parties to pursue claims under appropriate statutory and/or case law." Dr. Galbraith explained that, in her opinion, this language was more consistent with the decision of Judge Fiorenza.
29 Osco Drug strenuously opposed Dr. Galbraith's version of the proposed order. Osco Drug wrote the circuit court insisting that Judge Fiorenza did not carve out and preserve Dr. Galbraith's contribution claim but merely refused to rule on issue preclusion. The letter stated:
The only argument at the motion was whether the dismissal should be on the merits and with prejudice as it relates to Osco, Inc. Judge Fiorenza gave a very clear decision, and in fact I have ordered a copy of that transcript, because I suspected that [Dr. Galbraith's counsel] would attempt to do something exactly like he has done [with the proposed order]. He is still trying to preserve a claim that we do not believe that he has. Judge Fiorenza made it very clear that he could not make an anticipatory ruling and that the only motion before him was Osco's motion for summary judgment. Summary judgment on that motion was clearly granted to Osco and it was granted on the merits and with prejudice. . . . Please disregard [Dr. Galbraith's] order and sign the order that we have previously submitted.
30 In reply, Dr. Galbraith wrote the circuit court challenging Osco Drug's assertions, stating in relevant part:
[Osco, Inc.'s counsel's] comments and implications I believe are . . . inappropriate.
I respectfully suggest that perhaps Judge Fiorenza, who heard the entire argument, might want to sign the order. Regardless of who signs the order, I certainly concur with the review of the transcript prior to the order being signed, especially the last several minutes of the hearing when the Judge made his decision.
31 The circuit court (Judge Gempeler) signed Dr. Galbraith's (not Osco Drug's) proposed order on March 8, 2004.
32 The circuit court subsequently entered an order on September 30, 2004 that amended the original scheduling order. Rille was to name experts and file expert reports by November 6, 2004.[11] The parties were given until December 1, 2004, to make any amendments to the pleadings, including adding parties. Dr. Galbraith was to name experts and file expert reports by February 1, 2005.
33 Dr. Galbraith proceeded to conduct discovery against Osco Drug, including taking depositions of Osco Drug employees in Phoenix, AZ. Dr. Galbraith also secured experts to testify about Osco Drug's negligence in filling Frank Rille's prescription as written.
34 In November 2004, Dr. Galbraith filed a third-party complaint against Osco Drug seeking contribution and/or indemnity. Dr. Galbraith also named experts and provided expert reports allegedly establishing the negligent conduct of Osco Drug pharmacists.
35 In January 2005, Osco Drug filed a motion to dismiss Dr. Galbraith's third-party complaint against it on the ground of issue preclusion. After a hearing on the matter, on April 15, 2005, the circuit court (Judge Gempeler) granted Osco Drug's motion to dismiss, holding that issue preclusion barred Dr. Galbraith's re-litigating Osco Drug's negligence. Dr. Galbraith sought reconsideration of the decision, which was denied. Dr. Galbraith then appealed the order dismissing her third-party complaint to the court of appeals, and the court of appeals certified the case.[12]
II
36 To determine whether the doctrine of issue preclusion bars Dr. Gallagher's third party complaint against Osco Drug, we apply a two-step analysis described in the case law: (1) whether issue preclusion can, as a matter of law, be applied, and if so, (2) whether the application of issue preclusion would be fundamentally fair.
37 In the first step, a circuit court must determine whether the issue or fact was actually litigated and determined in the prior proceeding by a valid judgment in a previous action and whether the determination was essential to the judgment.[13] The determination under the first step is a question of law, which this court decides on appeal independently of the circuit court but benefiting from its analysis.[14] Issue preclusion can be applied only if this first step is satisfied.
38 In the second step, a circuit court must determine whether applying issue preclusion comports with principles of fundamental fairness.[15] A circuit court's ultimate decision on fundamental fairness is an exercise of discretion and is reviewed as such.[16] The case law has set forth five factors, which are not exclusive or dispositive, to aid a circuit court in determining whether application of issue preclusion is fundamentally fair. Several of these factors present questions of law.[17] Others are within the circuit court's discretion.[18]
39 We will affirm a circuit court's exercise of discretion if the circuit court applies the proper standard of law and, using a demonstrated rational process, reaches a conclusion that a reasonable court could reach.[19] If a circuit court exercises its discretion upon an error of law, the circuit court has erroneously exercised its discretion.[20] In sum, we review the circuit court's final decision on whether to apply the doctrine of issue preclusion under the exercise of discretion standard, deciding the questions of law embedded in the exercise of discretion independently, benefiting from the analysis of the circuit court.
III
40 We address the first step in the analysis of issue preclusion, that is, whether the issue of Osco Drug's negligence was actually litigated and determined in the summary judgment proceeding by a valid judgment and whether the determination of the issue was essential to the prior judgment.
41 Ordinarily issue preclusion arises in a subsequent lawsuit. Dr. Galbraith's contribution claim is brought within the four corners of the same lawsuit. The court of appeals has clearly held that the doctrine of issue preclusion applies when one party seeks to bar another from relitigating a prior adjudication in the same lawsuit.[21]
42 The parties disagree whether the issue of Osco Drug's negligence was actually litigated and determined when the circuit court granted Osco Drug's motion for summary judgment.
43 Dr. Galbraith insists that because Rille did not oppose Osco Drug's motion for summary judgment, the summary judgment was in effect a voluntary stipulated dismissal of Osco Drug from Rille's lawsuit. Dr. Galbraith also argues that Osco Drug was dismissed from the case on a procedural technicality, that is, on the ground that Rille failed to secure the expert testimony necessary to prove the negligence claim.[22] Dr. Galbraith further argues that the summary judgment can be characterized as a default judgment, sanctioning Rille's failure to prosecute the case by failing to secure an expert witness to support the claim that Osco Drug was negligent.
44 According to Dr. Galbraith, whether the circuit court's actions are viewed as a stipulated dismissal, as a summary judgment on a procedural technicality, or as a default judgment, the issue of Osco Drug's negligence was not actually litigated and determined.
45 Osco Drug and Rille disagree with Dr. Galbraith's characterization of the circuit court's order. They emphasize that the summary judgment motion was argued and granted as a summary judgment motion. Osco Drug moved for summary judgment under Wis. Stat. § 802.08, arguing in its briefs and at the hearing that there was no triable issue of fact regarding Osco Drug's negligence. Dr. Galbraith responded, treating the relief Osco Drug requested as summary judgment.
46 The circuit court also treated Osco Drug's motion as a motion for summary judgment and analyzed the arguments and law accordingly. Summary judgment was granted on the ground that no party demonstrated that a genuine issue of material fact remained in dispute. Neither Rille nor Dr. Galbraith was able to demonstrate a triable issue of fact regarding Osco Drug's negligence, irrespective of the form that the proof must take. Thus, in granting Osco Drug's motion for summary judgment, the circuit court determined that there were no material facts in dispute on the issue of Osco Drug's negligence and that, as a matter of law, Osco Drug was not liable for Rille's injuries. The circuit court had no need to delineate any facts, because the only relevant fact was that there were no facts in dispute as to Osco Drug's liability. It is the absence of facts that provides the basis for the summary judgment.
47 The circuit court left no room for confusion as to what it was doing. It emphasized at the hearing that "with respect to this case I am granting the motion for summary judgment, and it's on the merits for this case. No question about that."
48 We are not persuaded by Dr. Galbraith's arguments that the summary judgment was really a different decision in disguise. The parties and the circuit court treated the motion as a motion for summary judgment. We see no reason to analyze the circuit court's decision as anything other than a summary judgment.[23] The court has previously recognized that "[a] summary judgment in favor of the defendant is sufficient to meet the requirement of a conclusive and final judgment."[24] We see no reason to depart from this well-established precedent.
49 Dr. Galbraith, however, raises another argument why issue preclusion cannot be applied to her contribution claim. Dr. Galbraith insists that the circuit court specifically "reserved" her right to bring a contribution claim and contends that an issue on which a claim is "reserved" is not actually litigated and determined.
50 Dr. Galbraith does not cite to or rely on any Wisconsin authority to support her contention that the circuit court can "reserve" a party's claims when the reservation might result in inconsistent findings. Indeed, the court of appeals in Precision Erecting implicitly foreclosed reserving a party's claim for contribution under the circumstances of that case, declaring: "A court cannot adjudge the facts to be one way with regard to some parties to a multiparty claim and adjudge the same factual dispute another way as to other parties in the same action. That would be absurd. There can be only one finding of each historical fact per case. That the facts might be determined as a result of summary judgment is not material."[25]
51 In any event, we are not persuaded that the circuit court "reserved" Dr. Galbraith's contribution claim against Osco Drug. Indeed, Dr. Galbraith's brief concedes, as it must, that the very language of the summary judgment order that it drafted relating to future claims "is not a model of clarity in . . . regard" to preserving her contribution claim.[26] Our review of the record on Osco Drug's summary judgment motion reveals that the circuit court was not "reserving" Dr. Galbraith's claim, despite Dr. Galbraith's request, but in fact was reserving judgment on the viability of any contribution claim Dr. Galbraith might file after summary judgment was granted until the claim for contribution was actually filed and challenged.
52 Evident from the transcript is the circuit court's concern that it did not have the power to make an anticipatory ruling on a possible contribution claim. For instance, the circuit court announced: "I am sure that counsel is well aware, that the Court can only rule upon matters that are before it and not on anticipatory matters maybe in the future, potential claims, cause of action."
53 Later, the circuit court similarly stated:
[T]he Court can't look into the future and say, well, there's possible claims out there and so I shouldn't rule on the case that's before me or the question that's before me. I can't do that. I can't judge potential claims that might be out there but not pleaded that may arise in the future, nor can I in this case prohibit any party from bringing any other action that they wish to bring against another party.
54 The circuit court clearly avoided ruling on the effect of the summary judgment on Dr. Galbraith's contribution claim, stating that "[i]f someone would bring an action for contribution against Osco, that would have to be determined if the statute in question would allow that, if the case law would allow that." The circuit court announced:
I cannot preclude any party from starting a contribution action and I cannot bar a party from starting a contribution action because I don't have all the facts before me on that. I cannot restrict Osco's position of saying you should have brought it, and that certainly is their right to object at that time to any further contribution action; nor can I at this time tell [Dr. Galbraith] that you can't bring a contribution action. That issue just isn't before me at this time and before the Court, and therefore I actually have no authority to rule on such a matter that is not before me in this decision.
55 The transcript shows that the circuit court did not intend to "preserve" or "reserve" or "carve out" Dr. Galbraith's right to bring a contribution claim free from a challenge on the ground of issue preclusion, although Dr. Galbraith requested such a carve-out. Instead, the circuit court refrained from deciding the effect of the summary judgment on any contribution claim Dr. Galbraith might file until the contribution claim was actually before the circuit court. The impact of summary judgment on Dr. Galbraith's contribution claim, the circuit court made clear, was to be litigated at a later point.
56 The order granting Osco Drug's motion for summary judgment and dismissing Rille's claim against Osco Drug can be similarly understood as adopting the circuit court's "wait and see" position. The order, memorializing the circuit court's discussion at the hearing, did not bar the parties from bringing their respective claims and raising their respective defenses. The order states that "this order is no way intended to affect the rights of other parties to pursue claims under appropriate statutory and/or case law." This language allows the parties to pursue their claims, but does not mention - - let alone guarantee - - that the doctrine of issue preclusion will not apply. Under the order, if Dr. Galbraith filed her third-party complaint against Osco Drug seeking contribution, Osco Drug could raise the doctrine of issue preclusion.
57 One might ask why the circuit court avoided ruling at the summary judgment hearing whether Dr. Galbraith's contribution claim was barred by the doctrine of issue preclusion. Arguably, the circuit court could have, on argument of the parties, answered the first step of the inquiry, a question of law, at the summary judgment motion hearing, but without anything more in the record might not have been able to address the second step of the inquiry, an exercise of discretion, at that stage of the proceeding.
58 For the reasons set forth, we conclude as a matter of law that the issue of Osco Drug's negligence was actually litigated and determined in the summary judgment proceeding by a valid judgment and that the determination was essential to the judgment.
59 Having decided that issue preclusion applies as a matter of law to this third-party complaint for contribution, we next determine whether the circuit court erroneously exercised its discretion when it applied issue preclusion to bar Dr. Galbraith from litigating Osco Drug's negligence in her claim for contribution.
IV
60 The circuit court, as we have explained, may permit or deny the application of the doctrine of issue preclusion on the basis of fundamental fairness. This discretionary decision is "bottomed in guarantees of due process which require that a person must have had a fair opportunity procedurally, substantively and evidentially to pursue the claim before a second litigation will be precluded."[27]
61 A circuit court generally examines five factors in determining whether the application of issue preclusion satisfies notions of fundamental fairness. The factors to be considered in determining whether to apply issue preclusion are as follows:
1) Could the party against whom preclusion is sought have obtained review of the judgment as a matter of law;
2) Is the question one of law that involves two distinct claims or intervening contextual shifts in the law;
3) Do significant differences in the quality or extensiveness of proceedings between the two courts warrant relitigation of the issue;
4) Have the burdens of persuasion shifted such that the party seeking preclusion had a lower burden of persuasion in the first trial than in the second; and
5) Are matters of public policy and individual circumstances involved that would render the application of collateral estoppel to be fundamentally unfair, including inadequate opportunity or incentive to obtain a full and fair adjudication in the initial action?[28]
62 The weight to be given to each of these factors involves a circuit court's exercise of discretion.[29] Factors 1, 2, and 4 of the analysis present questions of law. Factors 3 and 5 generally fall within the circuit court's exercise of discretion.
63 These enumerated factors are illustrative; they are not exclusive or dispositive. The "most important factor to be considered is fairness to the party against whom preclusion is asserted, and this fairness determination should be made on a case-by-case basis."[30] The final decision whether the doctrine of issue preclusion should be applied rests on the circuit court's sense of justice and equity.
64 Before we apply the five factors to the instant case, we examine Precision Erecting v. M & I Marshall & Ilsley Bank, G.A.P., Inc., 224 Wis. 2d 288, 592 N.W.2d 5 (Ct. App. 1998), a case substantially similar to the case at bar. Applying the five factors, Precision Erecting upheld the circuit court's exercise of discretion in precluding a party-defendant from re-litigating an issue decided on summary judgment against a co-defendant. Precision Erecting is a seminal case discussing a party-defendant's obligations on a motion for summary judgment to avoid issue preclusion and the circuit court's exercise of its discretion in applying issue preclusion.
65 The parties in the present case focused on Precision Erecting in the summary judgment proceedings and in the proceedings to dismiss the third-party complaint, and on appeal focus on the application of Precision Erecting to the present case.
A
66 Precision Erecting filed suit against AFW Foundry for payment of overdue bills. AFW responded by filing a third-party complaint against Antonic & Associates, Nambe Mills, Inc., and twenty-one other third party defendants.[31]
67 The facts in Precision Erecting were, for purposes of issue preclusion, undisputed. AFW Foundry contracted with Antonic to coordinate an improvement project. As part of this project, Antonic purchased a piece of equipment from Nambe, making only a $7,000 down payment on the $70,000 purchase price. Antonic was also derelict in paying subcontractors and suppliers, one of which was Precision Electric.
68 In its third party complaint, AFW alleged that Antonic was not its agent, but rather was a general contractor, and that AFW's liability was limited to the amount it owed Antonic - - an amount far less than the $365,000 the third-party defendants claimed was due.
69 Both Antonic and Nambe filed answers to the third-party complaint, alleging that Antonic was an agent, not a general contractor.
70 AFW then moved for summary judgment against all of the third-party defendants, requesting a judgment affixing its liability as the amount it owed under the contract to Antonic. Antonic did not oppose AFW's motion for summary judgment and submitted a letter to that effect. Nambe did not respond to the summary judgment motion at all. The circuit court granted summary judgment, declaring that Antonic was a general contractor and directing that the third party defendants be paid pro rata from the amount AWF owed Antonic. The circuit court ordered judgment in favor of Nambe for $11,340, an amount equivalent to 18% of Nambe's claim.
71 Nambe appealed from this judgment, arguing that Antonic was an agent of AFW rather than a general contractor. Antonic contended that the doctrine of issue preclusion barred Nambe's appeal, that is, that Antonic's status as general contractor was established by the summary judgment. The court of appeals agreed with Antonic.
72 The Precision Erecting court declared that in the interests of fundamental fairness and finality, "[i]f a litigant who is not the subject of the motion for summary judgment nonetheless has reason to dispute the facts supporting the motion, it is that litigant's duty to appear and object to the motion."[32] The litigant "should have asserted itself at the summary judgment stage if it felt material facts regarding [the other party's liability] were in dispute."[33] The very fact that a party moves for a summary judgment alerts the other parties that someone is alleging that there are no facts in dispute.[34]
73 In other words, under Precision Erecting, in the interest of fundamental fairness a circuit court may apply issue preclusion unless a litigant "appears and objects" on the merits to a motion for summary judgment, informing the circuit court of any disputed material facts.[35] If a litigant does not appear and object and summary judgment of dismissal is granted, a circuit court may in the exercise of discretion conclude that the facts underlying the summary judgment are binding on all parties to the suit as a matter of issue preclusion.[36] To allow a litigant to take a "wait and see" position detracts from finality of judgments and paves the way for inconsistent decisions on the same set of facts.[37]
74 Dr. Galbraith argues that she did all that was required by Precision Erecting to avoid the doctrine of issue preclusion from applying to her. We disagree with her position.
75 True, Dr. Galbraith, unlike Nambe in Precision Erecting, did appear at the hearing on the motion for summary judgment. She asked the circuit court to reserve her contribution claim. She could have, however, objected to or challenged Osco Drug's motion for summary judgment on the merits. She did not. Dr. Galbraith could have secured her own expert witnesses and filed expert reports establishing Osco Drug's negligence. She did not. Dr. Galbraith could have demonstrated a triable issue of material fact, proving to the circuit court that summary judgment in favor of Osco Drug was not appropriate as a matter of law. She did not. Dr. Galbraith could have moved for a continuance pursuant to Wis. Stat. § 802.08(4) to gain more time to conduct depositions or obtain affidavits necessary to challenge a motion for summary judgment on the merits. She did not. She took none of these steps and offers no explanation for her failure to do so other than that she is not required to file a third-party complaint for contribution in the original tort action.
76 Instead Dr. Galbraith merely asked that any dismissal of Osco Drug be without prejudice to her claim against Osco Drug. Although Dr. Galbraith thus opposed the summary judgment motion, it is not the legal opposition envisioned by Precision Erecting. The litigation envisioned by Precision Erecting under the circumstances of the present case was litigation on the merits of the issue, litigation that would foster judicial efficiency and finality, ensure the stability of judgments, and guard against inconsistent decisions on the same set of facts.
77 We therefore conclude that Precision Erecting teaches that the doctrine of issue preclusion may be applied against Dr. Galbraith's third-party complaint. We must now determine whether in applying the five factors of fundamental fairness the circuit court properly exercised its discretion in barring Dr. Galbraith from re-litigating the issue of Osco Drug's liability in her contribution claim against Osco Drug.
B
78 Neither the transcript of the hearing on Osco Drug's motion to dismiss Dr. Galbraith's third-party complaint on the ground of issue preclusion nor the order of dismissal includes a statement by the circuit court carefully analyzing each of the five factors of fundamental fairness. Nevertheless, the transcript of the hearing demonstrates that the circuit court heard lengthy arguments from all the parties, including Rille, and had read the briefs explicating Precision Erecting and its application to the present case. The transcript of the exchanges among the lawyers and the circuit court evidences that all the participants were very familiar with Precision Erecting and the issues raised and decided therein and the need for the circuit court to balance the competing interests.
79 The circuit court carefully followed counsels' arguments, commenting on them as the hearing proceeded. The circuit court concluded that Precision Erecting is on all fours with this case and that it would apply Precision Erecting in this case. The circuit court concluded that "all five of the factors that are recited in Precision Erecting as borrowed from . . . Crozier . . . are applicable here."
80 Dr. Galbraith urges this court to overrule the circuit court, insisting that application of issue preclusion in her case is fundamentally unfair. She asserts that she did not sit back while Osco Drug moved for summary judgment and that the text of the summary judgment order for summary judgment protects her contribution claim.
81 In contrast, Osco Drug and Rille argue that the circuit court did not erroneously exercise its discretion and that it was fundamentally fair for the circuit court to apply issue preclusion in the current case. They claim that Dr. Galbraith was aware of and debated the impact of the Precision Erecting case on her contribution claim at the summary judgment hearing, that Osco Drug asserted issue preclusion at the summary judgment hearing, and that Dr. Galbraith strategically chose not to oppose Osco Drug's motion for summary judgment on the merits when she had the opportunity. The only fair result under these circumstances, they say, is to make Dr. Galbraith shoulder the burden of her strategy.
82 All the facts were known to the circuit court. Our role in reviewing the circuit court's decision is limited. When reviewing a circuit court's exercise of discretion, this court cannot substitute its own judgment for that of the circuit court and determine for itself whether issue preclusion was fundamentally fair under the circumstances. Rather, this court limits its review to determining whether the circuit court erroneously exercised its discretion. The final decision on the application of issue preclusion rests on the circuit court's sense of justice and equity.
83 Keeping this standard of review in mind, we examine the five factors used to determine whether the application of issue preclusion is fundamentally fair.
84 Under the first factor, the parties debate whether Dr. Galbraith could have obtained appellate review of the summary judgment.
85 Dr. Galbraith argues that she could not have appealed the order granting Osco Drug's motion for summary judgment and dismissing Osco Drug from Rille's action because she got the relief she had requested, that is, the order she proposed was adopted, and it stated that the decision would not affect her contribution claim. But Dr. Galbraith had requested that the motion for summary judgment be granted "without prejudice" and the circuit court entered the motion "with prejudice." Although the circuit court adopted Dr. Galbraith's proposed order, the language in the order relating to future claims was broad and, as Dr. Galbraith concedes, was not a model of clarity. The order could be understood as simply memorializing the circuit court's declaration at the hearing that the circuit court would not rule on the impact of its decision until a claim for contribution was actually filed and challenged.
86 Osco Drug contends that Dr. Galbraith was aggrieved by the dismissal of Rille's negligence claim against Osco Drug and had the right to appeal. A party can appeal the dismissal of a co-defendant from a lawsuit, even when no third-party complaint has been filed, since "[t]he dismissal of the co-defendants adversely affects a substantial interest."[38]
87 The parties discussed this first factor at the hearing on the motion to dismiss, and the circuit court concluded that Dr. Galbraith had waived her right to appeal. We need not decide this question of law to determine whether the circuit court erroneously exercised its discretion in applying the doctrine of issue preclusion in the present case.
88 The second factor examines whether the claims are distinct or whether there was an intervening contextual shift in the law. Dr. Galbraith argues that her contribution claim is a distinct claim because it is a contingent claim and is not triggered until after she is adjudged liable. Dr. Galbraith's argument is not persuasive. Although Dr. Galbraith's contribution claim is a "separate and distinct" claim, it is interwoven with a finding of Osco Drug's negligence in Rille's underlying tort suit. The issue of Osco Drug's negligence was the same in both the summary judgment proceeding and the motion to dismiss proceeding. A finding of Osco Drug's negligence is necessary for Dr. Galbraith to succeed on any contribution claim. There was no shift in negligence law between the summary judgment decision and the dismissal of the third party complaint. This factor weighs in Osco Drug's favor.
89 The third factor examines the difference between the nature and extensiveness of the proceedings in the court that granted summary judgment and in the court that dismissed the third party complaint. This factor is meant to protect parties from issue preclusion when the proceedings in the second action differ in quality and extensiveness from the first proceedings.
90 Dr. Galbraith attempts to argue that issue preclusion should not apply because Rille failed to prosecute the claim and Osco Drug's motion for summary judgment went unchallenged. She argues she should have an opportunity to litigate Osco Drug's negligence fully. This argument misses the mark.
91 This factor does not explore how well the parties litigated in the first proceeding or the extent of their efforts. This factor examines the procedural aspects of the first proceeding, such as the ability to conduct discovery and introduce evidence, the availability of counsel, and the relative burdens of proof.[39] Here, the two proceedings, the summary judgment and the dismissal of the third-party complaint, were substantially identical proceedings involving the same civil action before the same circuit court. Dr. Galbraith had the opportunity to conduct discovery and introduce evidence in the summary judgment hearing. This factor favors Osco Drug.
92 We agree with the parties that the fourth factor has no bearing on this case. The burden on the contribution claim remained with Dr. Galbraith at all times: "The party asserting the right of contribution has the burden of alleging and proving these necessary conditions."[40]
93 The fifth factor requires the circuit court, in its discretion, to determine whether matters of public policy and individual circumstances render the application of issue preclusion fundamentally unfair.[41]
94 The circuit court must weigh competing interests under this step of the fundamental fairness analysis. The interests of the party facing issue preclusion are important, including whether the party to be precluded was afforded full due process rights to litigate the issue in the previous proceeding. The circuit court must also consider, however, the expense and inconvenience to the other parties who may have to relitigate an issue, the burden on judicial resources, and the interest in finality of judgments. In short, in deciding whether to apply issue preclusion, a circuit court must "balance competing goals of judicial efficiency and finality, protection against repetitious or harassing litigation, and the right to litigate one's claims."[42]
95 Some may consider this case a close one on the fifth factor, fundamental fairness. After all, Dr. Galbraith attempted to preserve her ability to bring a contribution claim against Osco Drug. She did not completely "sit on [her] hands" and do absolutely nothing, inaction condemned by Precision Erecting.[43] Furthermore, inasmuch as the circuit court's summary judgment order adopted Dr. Galbraith's language, over Osco Drug's strenuous objection, Dr. Galbraith could have thought she had "won," that is, that she could bring her contribution claim free from the preclusive effect of Osco Drug's summary judgment. Dr. Galbraith is, in effect, claiming that she was misled by the circuit court's actions in granting Osco Drug's motion for summary judgment incorporating her language in the order for summary judgment. Dr. Galbraith also relies on an amended scheduling order the circuit court entered (by stipulation of Rille and Dr. Galbraith), providing time in which Dr. Galbraith could pursue discovery, name experts, and add parties. Dr. Galbraith contends that this scheduling order was a "green light" from the circuit court to pursue her contribution claim against Osco Drug.
96 The circuit court did not find Dr. Galbraith's characterization of the events persuasive, although it considered the expectations of Dr. Galbraith and her argument that she attempted to reserve her rights in the summary judgment proceeding. The circuit court stated that "in fairness, there was discussion [in the summary judgment motion proceedings] about reserving abilities, and even Judge Fiorenza acknowledged there may be a question at a later date."
97 The circuit court knew that Dr. Galbraith was a party to the action and received notice of the pending motion for summary judgment; that Dr. Galbraith had the opportunity to challenge Osco Drug's motion for summary judgment on the merits; that Dr. Galbraith participated in the hearing, knowing that Osco Drug would claim issue preclusion in response to her contribution claim; that the circuit court was withholding decision on issue preclusion; and that the amended scheduling order could not have meant that if Dr. Galbraith filed a third-party complaint the new party would have no right to object, including on issue preclusion grounds. The circuit court concluded that Dr. Galbraith was afforded her due process rights, made a strategic decision not to pursue discovery and the contribution claim at the summary judgment stage, and took her chances on losing on the doctrine of issue preclusion.
98 Moreover, it is not just Dr. Galbraith's interests the circuit court had to consider. The circuit court had to consider the effect of issue preclusion on the other parties to the litigation.
99 If the summary judgment does not have preclusive effect, then the summary judgment may prove to be but a "hollow victory" for Osco Drug. Osco Drug will have to defend itself against the third-party complaint, may be found negligent, and may be held liable for contribution. Osco Drug will have to re-litigate the same issues already decided in its favor in the summary judgment.
100 Furthermore, if the summary judgment does not have preclusive effect, Rille's claim against Dr. Galbraith might be adversely affected. Rille (and the Wisconsin Academy of Trial Lawyers in its nonparty brief) argue that Rille might be harmed if Dr. Galbraith is permitted to relitigate Osco Drug's negligence: a jury might find in a special verdict in Rille's lawsuit that Osco Drug was liable for Rille's injuries, but, because of the earlier summary judgment, Rille would not be able to recover from Osco Drug and might recover only partial damages from Dr. Galbraith.[44]
101 Additionally, if Dr. Galbraith is not precluded from litigating her contribution claim, gamesmanship by the parties and abuse of the system might be encouraged. The nonparty brief of the Wisconsin Academy of Trial Lawyers details how defendants in multi-defendant cases may use a holding of no issue preclusion under the facts of the present case to engage in gamesmanship and work together to avoid liability in similar multiple party lawsuits. As the Precision Erecting court explained, "[t]o not apply issue preclusion in this case would encourage parties . . . to sit on their hands and wait to see what happens instead of opposing summary judgment on an issue crucial to their claims. Then, if other parties who put forth the effort to oppose fail, the waiting parties are allowed a second kick at the cat."[45]
102 Considering all the factors raised at the hearing, the circuit court concluded that the equities favor the application of issue preclusion. This conclusion was a reasonable one.
103 Some judges may have reached a different conclusion about fundamental fairness under the peculiar facts of the present case were they to have decided this issue in the first instance. But what other judges may have done in the first instance is irrelevant. What matters is that the circuit court reached a reasonable result. We therefore uphold the circuit court's exercise of discretion in determining that the application of issue preclusion in the present case was fundamentally fair. The circuit court's conclusion was one that a reasonable court could reach on this record.
104 In sum, for the reasons set forth, we hold that the issue of Osco Drug's liability was actually litigated and determined by summary judgment and that the circuit court did not reserve Dr. Galbraith's claim for contribution in its order on summary judgment. We further hold that the circuit court did not erroneously exercise its discretion when it ruled that application of issue preclusion was fundamentally fair. To preserve her contribution claim against Osco Drug successfully against a challenge on the ground of issue preclusion, Dr. Galbraith should have appeared and objected on the merits to Osco Drug's motion for summary judgment, thereby ensuring that there would be no possibility of inconsistent fact-finding on any issue central to Rille's claim and her own claim. Filing a brief and arguing that her claim for contribution should be preserved for a later date was not adequate, without any justification for her position, to avoid issue preclusion under Precision Erecting.
105 Accordingly, we affirm the order of the circuit court dismissing Dr. Galbraith's third-party complaint seeking contribution from Osco Drug.
* * *
Outcome: ¶105 Accordingly, we affirm the order of the circuit court dismissing Dr. Galbraith's third-party complaint seeking contribution from Osco Drug.
Plaintiff's Experts: Unknown
Defendant's Experts: Unknown
Comments: None