Badger Cab Co., Inc. v. Soule

• Decision Date: 29 October 1992
• Docket Number: No. 90-2212,90-2212
• Citation: 171 Wis.2d 754,492 N.W.2d 375
• Parties: BADGER CAB COMPANY, INC., and Tom Melms, Counter Claimants-Respondents-Cross Appellants, v. Theodore N. SOULE, Bruce Algozin, Arrick Beher, William Black, David Jensen, Kim Jeanine Kreiger, James Cole, Richard Bolton and Haight and Hofeldt, Counter Defendants- Appellants- Cross Respondents.
• Court: Wisconsin Court of Appeals

Page 375

492 N.W.2d 375

171 Wis.2d 754

BADGER CAB COMPANY, INC., and Tom Melms, Counter Claimants-Respondents-Cross Appellants, v. Theodore N. SOULE, Bruce Algozin, Arrick Beher, William Black, David Jensen, Kim Jeanine Kreiger, James Cole, Richard Bolton and Haight and Hofeldt, Counter Defendants- Appellants- Cross Respondents.

No. 90-2212.

Court of Appeals of Wisconsin.

Submitted on Briefs Jan. 1, 1992.

Opinion Released Oct. 29, 1992.

Opinion Filed Oct. 29, 1992.

For the counter defendants-appellants-cross respondents the cause was submitted on the briefs of Timothy J. Casper, Coyne, Niess, Schultz & Becker, S.C., Madison.

For the counter claimants-respondents-cross appellants the cause was submitted on the briefs of Simon M. Karter, Wendel & Center, Madison.

Before EICH, C.J., and DYKMAN and SUNDBY, JJ.

DYKMAN, Judge.

We granted a petition for leave to appeal from an order denying the appellants' motion to dismiss three of the respondents' five counterclaims, or, in the alternative, to stay discovery and trial of the counterclaims pending the resolution of the principal action. Respondents cross-appeal from the trial court's decision to withhold a ruling on the remaining counterclaims because they were premature.

We conclude that the respondents may not bring their claims against opposing counsel until after the principal lawsuit is terminated because of the negative impact such claims would have upon attorney-client relationships. Consequently, we direct the trial court to dismiss all counterclaims against opposing counsel. We also conclude that three of the counterclaims state a claim against the remaining appellants while the other two counterclaims are premature. Therefore, we affirm in part and reverse in part.

I. BACKGROUND

When this action commenced on September 30, 1988, appellants Soule, Algozin, Beher, Black, Jensen, and Kreiger were taxicab operators and lessees (hereinafter, "the drivers") for the respondent Badger Cab Company, Inc. ¹ Appellants Cole and Bolton, who were associated with the law firm Haight & Hofeldt, were their attorneys. The drivers filed their first amended complaint on October 18, 1988, and a second amended complaint on January 9, 1989. The second amended complaint included the following allegations: (1) that the drivers were "dealers" under the Wisconsin Fair Dealership Law, ch. 135, Stats.; (2) that the company had violated various provisions of ch. 135 in terminating Jensen and in failing to provide ninety-days' prior written notice of increased lease charges; and (3) that the company had conspired with the city of Madison to set cab fares in violation of sec. 133.03, Stats., and 15 U.S.C. § 1.

The second amended complaint was followed by a series of motions which are still pending. The company moved to strike the second amended complaint because it was filed without the trial court's leave or the company's written consent, contrary to sec. 802.09, Stats. In response, the drivers sought leave to file the second amended complaint. The company also filed motions to compel discovery, or, alternatively, to find both amended complaints frivolous within the meaning of sec. 802.05, Stats., and the first amended complaint frivolous within sec. 814.025, Stats.

Finally, on March 30, 1989, the company filed its amended answer and counterclaim which is the subject of this appeal. The counterclaim joined Tom Melms, the company's president and sole shareholder, as a counterclaimant, and Attorneys Cole and Bolton and the firm Haight & Hofeldt as impleaded counterclaim defendants along with the drivers. It alleges five separate causes of action against the counterclaim defendants: (1) that they combined for the purpose of wilfully or maliciously injuring Melms in his business, contrary to sec. 134.01, Stats.; (2) that they intentionally sought to interfere with the contractual relations between the company and Melms; (3) that they engaged in a civil conspiracy to interfere with such contractual relations; (4) that they abused legal process; and (5) that they engaged in a civil conspiracy to abuse legal process.

In addition to the facts set out above, the counterclaimants make a number of claims. First, they assert that several of the drivers had harbored resentment for Melms and desired to remove him as president and owner. They allege that several drivers made statements to newspaper reporters that they expected their lawsuit to bankrupt Melms and/or the company. In addition, one driver allegedly stated that the purpose of the suit was to "make Melms go away."

With respect to the second amended complaint, the counterclaimants assert the following: (1) that the company did not receive notice or a copy of the complaint until January 19, 1989, when the drivers provided responses to interrogatories concerning the first amended complaint; (2) that the drivers used the complaint to avoid answering interrogatories or questions at depositions related to the first amended complaint; (3) that the complaint is factually deficient; and (4) that by naming the city of Madison as a party to the antitrust claim, the complaint improperly challenges the company's continued representation by its attorney, a member of the Madison City Council.

The appellants moved the trial court to dismiss the counterclaims, or, in the alternative, to hold the counterclaims in abeyance until after their claims had been litigated. The trial court denied the motion to dismiss the tortious interference with contractual relations, conspiracy to tortiously interfere with contractual relations, and the sec. 134.01, Stats., counterclaims. The trial court withheld a ruling on the abuse of process and conspiracy to abuse process counterclaims, reasoning that they were premature. The court also denied the motion to bifurcate the trial.

The appellants appeal from the denial of their motions. The counterclaimants cross-appeal from the ruling that the abuse of process counterclaims were premature.

II. STANDARD OF REVIEW

Whether a complaint states a claim is a question of law which we review without deference to the trial court. Williams v. Security Sav. & Loan Ass'n, 120 Wis.2d 480, 482, 355 N.W.2d 370, 372 (Ct.App.1984).

III. JOINDER OF OPPOSING COUNSEL AS PARTIES

The appellants contend that as a matter of law, defendants should be precluded from counterclaiming against plaintiffs' counsel for the prosecution of a lawsuit in the underlying lawsuit. We agree for the policy reasons outlined below.

Allowing counterclaims against opposing counsel could create a conflict of interest which would require a substitution of counsel. Babb v. Superior Court of Sonoma County, 3 Cal.3d 841, 92 Cal.Rptr. 179, 182, 479 P.2d 379, 382 (1971); Lyddon v. Shaw, 56 Ill.App.3d 815, 14 Ill.Dec. 489, 492, 372 N.E.2d 685, 688 (1978). This has occurred in the case at bar as the drivers' attorneys recused themselves and sought their own counsel to defend the counterclaims. We are concerned that such counterclaims could become potent "dilatory and harassing devices" which could "deter poor plaintiffs from asserting bona fide claims" due to the additional risk and expense. Babb, 92 Cal.Rptr. at 182-83, 479 P.2d at 382-83.

We are also seriously concerned about the negative effect of these counterclaims on the attorney-client privilege and work product immunity, both critical to effective advocacy. The company and Melms, the respondents, argue that sec. 901.04(1), Stats., under which preliminary questions, including the existence of a privilege, are determined by the trial judge, sufficiently protects the attorney-client privilege. Work product is similarly shielded by a motion for a protective order under sec. 804.01(3), Stats. While these safeguards exist, resorting to them could significantly delay the discovery process and the resolution of the principal action. See Realco Services, Inc. v. Holt, 479 F.Supp. 880, 886 (E.D.Pa.1979). We view such delays as undesirable, especially when they could be avoided by simply requiring the claims against opposing counsel to be brought after termination of the principal lawsuit.

Other factors which influence our decision include the potential for jury confusion as a result of trying the principal action and counterclaims simultaneously, and the infringement of a party's right to choose counsel which is guaranteed by article I, section 21(2) of the Wisconsin Constitution.

Finally, we note that requiring defendants to bring claims against opposing counsel after termination of the underlying action neither prejudices defendants nor deprives them of their rights. ² The respondents argue that article I, section 9 of the Wisconsin Constitution, which entitles a person to a prompt remedy in the law for injuries, requires that their claims be tried in the same suit. We disagree. The respondents are not completely without remedy for their injuries for the duration of the drivers' underlying action. Sections 802.05 and 814.025, Stats., allow recovery of costs and reasonable attorney fees for the types of conduct alleged by the respondents. Furthermore, the interests discussed above outweigh the respondents' interest in promptly obtaining the complete remedy which they seek.

While we conclude that defendants may not join opposing counsel in their counterclaims, we disagree with appellants that the counterclaims must be dismissed altogether. The counterclaims must be dismissed only as to Attorneys Cole and Bolton and the firm Haight & Hofeldt. We now address the appellants' other arguments for dismissal to the extent that they relate to the appellant drivers.

IV. RIGHT TO PETITION

Appellants offer two arguments for dismissal of the counterclaims which relate to their first amendment right to petition the government. Relying on Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 103 S.Ct. 2161, 76 L.Ed.2d 277 (1983), appellants first argue that the right to petition protects them from...