Alliance Laundry v. Stroh Die Casting

• Decision Date: 19 November 2008
• Docket Number: No. 2007AP2857.,2007AP2857.
• Citation: 2008 WI App 180,763 N.W.2d 167
• Parties: ALLIANCE LAUNDRY SYSTEMS LLC, Plaintiff-Appellant, v. STROH DIE CASTING CO., INC., Defendant-Respondent.
• Court: Wisconsin Court of Appeals

763 N.W.2d 167

2008 WI App 180

ALLIANCE LAUNDRY SYSTEMS LLC, Plaintiff-Appellant, v. STROH DIE CASTING CO., INC., Defendant-Respondent.

No. 2007AP2857.

Court of Appeals of Wisconsin.

Submitted on Briefs August 28, 2008.

Opinion Filed November 19, 2008.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Richard J. Lewandowski and Anthony J. Sievert of Whyte Hirschboeck Dudek, S.C., of Madison.

On behalf of the defendant-respondent, the cause was submitted on the brief of Douglas M. Poland and Rebecca Kathryn Mason of Godfrey & Kahn, S.C., of Madison.

Before BROWN, C.J., ANDERSON, P.J., and SNYDER, J.

¶ 1 BROWN, C.J

WISCONSIN STAT. § 802.06(2)(b) (2005-06)¹ allows the circuit court to convert a defendant's motion to dismiss for failure to state a claim into a summary judgment motion. Here, the circuit court did convert the motion into a summary judgment motion even though the defendant, Stroh Die Casting Co., Inc., had not filed an answer. The plaintiff, Alliance Laundry Systems LLC, claims that such conversion ran afoul of WIS. STAT. § 802.08, which requires that the pleadings be complete before a court can review a summary judgment motion. City of LaCrosse v. Jiracek Cos., Inc., 108 Wis.2d 684, 690, 324 N.W.2d 440 (Ct.App.1982). So, the first issue is whether § 802.06(2)(b) serves as an exception to the summary judgment procedure laid out in § 802.08. We conclude that it is an exception and the court may convert a motion to dismiss into summary judgment before an answer is filed. We also hold that Alliance had the appropriate notice even though the court alerted Alliance that it "might" convert the case into a summary judgment rather than saying that it "would" do so. Nonetheless, we also hold that there exists a genuine issue of material fact as to the parties' intent. Consequently, we affirm the circuit court's conversion to summary judgment, reverse the grant of summary judgment and remand this case to allow Stroh to answer Alliance's complaint.

Background

¶ 2 In 1999, Alliance contracted with Stroh to manufacture die cast rack gears for use in its commercial laundry system. Alliance needed a manufacturer for the die cast part its engineers had designed. Stroh provided Alliance with a quotation that July to "[a]dapt the casting die to run in Stroh equipment." And a month later, Alliance sent Stroh a purchase order authorizing Stroh to produce 55,000 rack gears according to the attached engineering drawing. The drawing identified the manufacturing specifications for the rack gears, including specific materials and technical performance specifications. Both the quotation and the purchase order included general terms, conditions, and warranties. Stroh began manufacturing the rack gears for Alliance that year, as early as January 1999, and continued to do so until 2005.

¶ 3 Much of Stroh's quotation is blank, with those sections that are filled out focusing on tooling. Notations near the top of the quotation reference the project number, part number, and other codes that Stroh uses. The bottom has separate sections for "Tooling" and "Castings." The tooling section lists the casting modification work and the price. The castings section is blank; it does not list a quantity or price for individual rack gears. Also, the "Exceptions and Remarks" section of the quotation specifically provides, "[t]his proposal includes the cost to modify the casting die only."

¶ 4 The back of the quotation provided Stroh's warranties and disclosures. It disclaimed all implied warranties, required a thirty day notice of defects, limited Stroh's liability to repair, replacement, or credit for their return and imposed other specific requirements upon customers making warranty claims.

¶ 5 The purchase order primarily provides details for the "Rack." In the main section of the purchase order, the form lists the particular item, quantity, units, part number, and price, and when Alliance wants each shipment to take place. The purchase order states that changes to tooling must have prior approval by Alliance. The front and back of the purchase order also provided terms and conditions, including one that objected to any "different or additional terms or conditions in [the] acceptance of [the purchase order]."

¶ 6 Like Stroh's quotation, the back of the purchase order provided Alliance's warranties, among other terms and conditions. The warranty section required Stroh to warrant that the parts were "free from defects in workmanship, materials, and design and to be in accordance with Buyer's specifications, drawings, and/or samples in all respects." It also provided that Stroh "shall be liable and save Buyer harmless from any loss, damage, or expense whatsoever that Buyer may suffer from breach of any of these warranties."

¶ 7 About eight years later, on August 6, 2007, Alliance filed this action against Stroh, claiming that Stroh failed "to manufacture on a consistent basis, a defect-free ... `rack gear,'" and an "unacceptably high number of rack gears have failed in use" causing Alliance to incur substantial warranty repair expenses, significant additional costs over the ensuing five years, and other damages. Alliance claimed these costs were a result of Stroh's breach of contractual warranties, created by the purchase order, or breach of the implied warranties of merchantability or fitness for a particular purpose. Alliance also alleged that it gave Stroh "repeated notice of the defects and associated problems with the rack gear."

¶ 8 Stroh responded with a motion to dismiss for failure to state a claim and attached a memorandum, an affidavit that introduced the quotation as an exhibit.² The affidavit only introduced the quotation; it did not provide any additional facts about the quotation or Stroh and Alliance's transactions. Stroh did, however, assert that the quotation is the governing contract for the actual rack gears, and that, under the U.C.C., the different or additional terms in the purchase order do not modify the quotation. Stroh did not file an answer.

¶ 9 The circuit court, in its notice of hearing on October 26, 2007, alerted the parties that it might convert Stroh's motion to dismiss into one for summary judgment. Except Alliance's memorandum in opposition and Stroh's reply, neither party filed anything before the hearing in response to this notice.

¶ 10 At the hearing on November 16, 2007, the circuit court granted Stroh's motion to dismiss, and in the alternative granted summary judgment for Stroh. After the court's ruling, Alliance requested permission to amend its complaint, and the court denied the request. The court ordered its final judgment for Stroh on November 21, 2007. Alliance appeals, asserting that judgment was premature.

Procedural Issue

¶ 11 In this case, the trial court granted summary judgment for Stroh even though the pleadings were incomplete. The only pleading before the court was Alliance's complaint. The court also had Alliance's purchase order and engineering drawing, Stroh's motion to dismiss and attached affidavit and quotation, and the parties' memorandums. Because Stroh has not filed an answer to complete the pleadings, we must first determine if this court can properly review a summary judgment motion.

¶ 12 In summary judgment procedure, the court examines the complaint to determine if it sets forth a claim for relief, and if it does, the court examines the answer to determine if it joins issue, and if it does, it further proceeds to determine the summary judgment on the merits. Hydrite Chem. Co. v. Aetna Cas. & Sur. Co., 220 Wis.2d 26, 31-32, 582 N.W.2d 423 (Ct.App.1998). To proceed through this process, the pleadings must be complete; otherwise, the court cannot review a motion for summary judgment. See Jiracek Cos., Inc., 108 Wis.2d at 690, 324 N.W.2d 440. And, important to this case, a motion is not a responsive pleading. See WIS. STAT. § 802.01(1); La Batt v. Twomey, 513 F.2d 641, 651 (7th Cir.1975). The court disposes of a summary judgment motion by examining the pleadings, depositions, answers to interrogatories, admissions on file, together with affidavits to determine if they establish that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Nierengarten v. Lutheran Soc. Servs., 219 Wis.2d 686, 695, 580 N.W.2d 320 (1998).

¶ 13 The procedure for a motion to dismiss for failure to state a claim is different. A motion to dismiss is a pre-answer motion. WIS. STAT. § 802.06(1). Accordingly, § 802.06(1) extends the time limit for the defendant to file an answer until after the court denies its motion. The court disposes of a motion to dismiss by examining the complaint to determine if the facts alleged, if proven, would constitute a claim for relief. Tower Special Facilities, Inc. v. Investment Club, Inc., 104 Wis.2d 221, 226, 311 N.W.2d 225 (Ct. App.1981).

¶ 14 When the defendant attaches affidavits or other matters outside the pleadings to its motion to dismiss and the court, in its discretion, considers these outside matters, the court must convert the defendant's motion into one for summary judgment. WIS. STAT. § 802.06(2)(b). This procedure is patterned after the FED. R. CIV.P. 12(d), so we look to federal cases and commentary for guidance. See Lambrecht v. Estate of Kaczmarczyk, 2001 WI 25, ¶ 2 n. 2, 241 Wis.2d 804, 623 N.W.2d 751. Historically, federal courts would consider matters outside the pleadings on a 12(b)(6) motion to dismiss, or the earlier "speaking" motion and demurrer, when those matters showed that there was no genuine issue of material fact and one party was entitled to judgment as a matter of law.

¶ 15 The "speaking" motion and demurrer, which at least in part spurred the creation of FED.R.CIV.P. 12(b)(6) and 12(d), followed this procedure in theory; however, its rules and limitations were undefined. Advisory Committee Note, FED. R.CIV.P. 12(b)(6) (1946)....