Heinz Plastic Mold v. Continental Tool

• Decision Date: 07 June 1983
• Docket Number: No. 82-1210.,82-1210.
• Citation: 337 N.W.2d 189,114 Wis.2d 54
• Court: Wisconsin Court of Appeals
• Parties: HEINZ PLASTIC MOLD COMPANY, Heinz Lueders and Ruth Lueders, Plaintiffs-Appellants, v. CONTINENTAL TOOL CORPORATION, Andre Netz, and A. & W. Mold Corporation, Defendants-Respondents.

114 Wis.2d 54

337 N.W.2d 189

HEINZ PLASTIC MOLD COMPANY, Heinz Lueders and Ruth Lueders, Plaintiffs-Appellants, v. CONTINENTAL TOOL CORPORATION, Andre Netz, and A. & W. Mold Corporation, Defendants-Respondents.

No. 82-1210.

Court of Appeals of Wisconsin.

Submitted on briefs May 18, 1983.

Decided June 7, 1983.

For the plaintiffs-appellants the cause was submitted on the briefs of Laurence J. Schroepfer and Brazeau, Potter, Wefel & Nettesheim of Wisconsin Rapids, and Robert Handelsman and Emil Shafran and Robbins, Coe, Rubinstein & Shafran, Ltd. of Chicago, IL.

For the defendants-respondents the cause was submitted on the brief of Charles A. Pollex and Hollman & Pollex of Friendship, and Paul W. Grauer and Paul W. Grauer & Associates of Schaumburg, IL.

Before Gartzke, P.J., Dykman, J. and W.L. Jackman, Reserve Judge.

W.L. JACKMAN, Reserve Judge.

Plaintiffs Heinz Plastic Mold Co. and Heinz and Ruth Lueders appeal from an order dismissing their amended complaint against Continental Tool, Andre Netz and A. & W. Mold Corp. The issues are whether the claims asserted in the Wisconsin action are barred because they were compulsory counterclaims in a federal court action which has proceeded to judgment and whether the claims are otherwise barred by res judicata and collateral estoppel. Because the claims asserted in the Wisconsin action were not compulsory counterclaims in the federal action and are not barred by res judicata and collateral estoppel, we reverse.

Plaintiffs commenced this action February 7, 1979 in Adams County, Wisconsin. The amended complaint asserted eight separate claims for relief. Defendants moved to dismiss on grounds that the Wisconsin claims were barred because they were compulsory counterclaims under Fed. R. Civ. P. 13 (a) in an action brought by Netz in federal district court in Illinois which had been dismissed on the merits pursuant to a stipulation. The motion to dismiss also asserted that, notwithstanding Fed. R. Civ. P. 13 (a), the Wisconsin action was barred by res judicata and collateral estoppel, and that the amended complaint failed to state a claim for which relief could be granted as against A. & W. Mold. The trial court concluded that the plaintiffs' demands were compulsory counterclaims barred by the dismissal order in the federal district court action and that the claims were barred on the basis of res judicata and collateral estoppel. The court therefore dismissed the claims. Plaintiffs appealed.

The motion to dismiss is treated as one for summary judgment and disposed of as provided in sec. 802.08, Stats., because the motion asserts defenses under sec. 802.06(2) (f) and (h) and matters outside the pleadings were presented to and not excluded by the trial court in considering the motion. Sec. 802.06 (2).¹ When reviewing the trial court's decision to grant summary judgment, we apply the same analysis as the trial court. Board of Regents v. Mussallem, 94 Wis. 2d 657, 674, 289 N.W.2d 801, 809 (1980). In ruling on a motion for summary judgment, a court examines the pleadings to determine whether a claim has been stated and whether a material factual issue is presented. If a claim is stated and a factual issue exists, the court examines the moving party's proof to determine whether a prima facie case for summary judgment is stated. To make a prima facie case for summary judgment, a moving defendant must show a defense which defeats the plaintiff's claims. Grams v. Boss, 97 Wis. 2d 332, 338, 294 N.W.2d 473, 476-77 (1980).

Plaintiffs do not contest the dismissal of the amended complaint as to Netz, or dismissal of all but the first, second, fourth and fifth claims in the complaint. We examine the remaining claims under the summary judgment methodology outlined in Grams, supra.

The amended complaint asserts that in 1978 Heinz Lueders, Heinz Plastic and Netz entered a business venture which organized Continental Tool. Heinz Lueders advanced $9,500 as a capital contribution and Netz contributed $500. August 15, 1978 Continental began to manufacture plastic injection molds. In late 1978 or early 1979 the business relationship was severed when Netz abandoned his involvement in Continental. At the same time, Netz and others began a new corporation, A. & W. Mold. A. & W. Mold began business on the same site and with the same equipment Continental Tool had used.

We summarize the first, second, fourth and fifth claims against Continental Tool and A. & W. Mold as follows: The first claim is by Heinz Plastic against Continental Tool for breach of an agreement by which Continental leased certain machinery and equipment from Heinz Plastic. The second claim is by Heinz Plastic against Continental for damage to the leased machinery and equipment. The fourth claim is by Heinz Lueders against Continental for breach of an agreement by which Continental agreed to pay Heinz Lueders $300 per week for consulting services. The fifth claim is by Heinz Lueders against A. & W. for Netz's breaches of his fiduciary duties to Continental and Heinz Lueders, by diverting confidential information, business opportunities and customers from Continental to A. & W.

Federal R. Civ. P. 13 (a), provides in relevant part that:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

Defendants contend that the four remaining claims in the Wisconsin action were compulsory counterclaims in the federal action under Fed. R. Civ. P. 13 (a) and that all compulsory counterclaims in an action which has proceeded to judgment are barred by the judgment. We reach the latter issue only if the Wisconsin claims were compulsory counterclaims in the federal action.

1. Claims Against Continental Tool

Applying the Grams analysis to the three claims asserted against Continental (first, second and fourth claims), it is undisputed that each asserts a claim for which relief can be granted. We next examine whether defendants state a prima facie case for summary judgment, that is, whether they have asserted defenses to the claims. The defense asserted is that the claims are barred because they were compulsory counterclaims in the Illinois federal court action.

The named plaintiffs in the Wisconsin action are Heinz and Ruth Lueders, husband and wife, and Heinz Plastic Mold. The named defendants are Andre Netz, Continental Tool and A. & W. Mold. According to the amended complaint, Netz is an officer of both Continental Tool and A. & W. Mold. Netz was the named plaintiff in the federal court action and defendants were Heinz Lueders and Heinz Plastic. Heinz Lueders, Heinz Plastic and Continental Tool were "counter-plaintiffs" in the federal court action, naming Netz as the "counter-defendant." A. & W. Mold was not named as a party in the federal court action.

Federal R. Civ. P. 13(a) requires a party to state as a counterclaim any claim the party has against "any opposing party," if it arises out of the same transaction or occurrence. Plaintiffs do not dispute that the claims asserted in the Wisconsin action arise out of the same transaction or occurrence that is the subject matter of the federal court action. However, they assert that Continental Tool and A. & W. were not "opposing parties" in the federal court action.

The plaintiffs in the Wisconsin action, Heinz Plastic on the first and second claims, and Heinz Lueders on the fourth claim were co-counter-plaintiffs with Continental Tool in the federal court action. The claims asserted in the Wisconsin action could therefore have been asserted in the federal court action as cross-claims against a coparty under Fed. R. Civ. P. 13(g).

Cross-claims against a co-party under Fed. R. Civ. P. 13 (g), however, are permissive and not mandatory. Hall v. General Motors Corp., 647 F.2d 175, 184 (D.C. Cir. 1980); Augustin v. Mughal, 521 F.2d 1215, 1216 (8th Cir. 1975). The claims...