Hlavinka v. Blunt, Ellis & Loewi, Inc.

• Decision Date: 01 December 1992
• Docket Number: No. 91-2085,91-2085
• Citation: 497 N.W.2d 756,174 Wis.2d 381
• Parties: Ronald P. HLAVINKA, Plaintiff-Appellant-Cross Respondent, d v. BLUNT, ELLIS & LOEWI, INC., John Fromm and Peter Pfeffer, Defendants-Respondents-Cross Appellants. . Oral Argument
• Court: Wisconsin Court of Appeals

Page 756

497 N.W.2d 756

174 Wis.2d 381

Ronald P. HLAVINKA, Plaintiff-Appellant-Cross Respondent,^d v. BLUNT, ELLIS & LOEWI, INC., John Fromm and Peter Pfeffer,

Defendants-Respondents-Cross Appellants.

No. 91-2085.

Court of Appeals of Wisconsin.

Oral Argument Dec. 1, 1992.

Opinion Released Feb. 2, 1993.

Opinion Filed Feb. 2, 1993.

On behalf of the plaintiff-appellant-cross-respondent, the cause was submitted on the briefs of Paul R. Erickson and Scott M. Benson of Gutglass, Erickson & Bonville, S.C., of Milwaukee. Oral argument by Colleen Fleming.

On behalf of the defendants-respondents-cross-appellants, the cause was submitted on the briefs of Thomas P. Ward of McBride, Baker & Coles of Chicago and David L. Uelmen of Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C., of Milwaukee. Oral argument by Thomas P. Ward.

Before WEDEMEYER, P.J., and FINE and SCHUDSON, JJ.

FINE, Judge.

Ronald P. Hlavinka brought this action against Blunt, Ellis & Loewi, John Fromm, and Peter Pfeffer, seeking compensatory and punitive damages for losses Hlavinka sustained in trading silver futures. His amended complaint asserted negligence and breach-of-contract claims. The trial court dismissed the action because, as recited in the order of dismissal, Hlavinka "failed to meet his burden of advancing this case for trial." Hlavinka appeals. Blunt, Ellis & Loewi, Fromm and Pfeffer cross-appeal from an earlier order by the trial court denying their motion for summary judgment. We reverse both the order dismissing the action for lack of prosecution and the order denying the defendants' motion for summary judgment.

I.

Fromm and Pfeffer are employees of Blunt, Ellis & Loewi. Blunt, Ellis & Loewi is a commodity futures commission merchant through which Hlavinka traded the silver futures at issue on this appeal: a silver contract purchased by Hlavinka on February 18, 1983, and a silver contract purchased for his account by Hlavinka's wife, Mary Hlavinka, on February 23, 1983. The silver futures' market declined sharply and Hlavinka lost $35,184.60 by the time he was able to sell the contracts several days later on March 1 and 2, 1983. ¹

Claiming that his losses were the defendants' fault, Hlavinka brought a reparations action before the Commodity Futures Trading Commission against Blunt, Ellis & Loewi, Fromm, and Pfeffer under the anti-fraud provision of the Commodity Exchange Act. ² The main thrust of Hlavinka's pro se complaint was that Fromm, a commodities broker with Blunt, Ellis & Loewi, and the person through whom Hlavinka had purchased the silver contracts, did not properly advise him that, under certain market conditions, the normal fifty-cent limit in the permitted one-day decline in the price of silver would be expanded to either seventy-five cents or one dollar. This information was important, Hlavinka contended, because trading in the metal would, in effect, be suspended if the price dropped to its limit, and traders would be unable to liquidate their positions. More specifically, Hlavinka's complaint before the Commission alleged the following instances of Blunt, Ellis & Loewi's "[m]ismanagement of [Hlavinka's commodity-trading] [a]ccount":

Fromm did not tell him the expanded limit was in effect on February 24, 1983;

Fromm did not arrange for Hlavinka to sell the contracts "even at a discount" because, unlike a customer whose contracts Blunt, Ellis & Loewi did sell, Hlavinka had enough money with the firm to cover his losses so that Blunt, Ellis & Loewi had "no worry" about being stuck with the loss;

Pfeffer, who was in charge of the commodities division at Blunt, Ellis & Loewi, failed to properly supervise the firm's commodity-trading activities;

a television quote-screen in Fromm's office from which Hlavinka alleged he could have obtained essential "moment to moment facts" on market conditions was deliberately kept non-functioning because, as he alleged Fromm told him, "[i]t's too expensive to operate."

A hearing before a Commodity Futures Trading Commission administrative law judge was held on Hlavinka's complaint. In the opening paragraphs of his written submission, Hlavinka characterized the defendants' alleged fraud as follows:

Blunt, Ellis & Loewi, John Fromm and Peter Pfeffer's gross negligence in the performance of their duties as licensed commodity brokers, caused me great financial harm. They have caused this harm to linger on for 3 1/2 years because of their untruthfulness.

The respondents [sic ] failure to use a degree of care and caution that their professional calling requires caused me injury.

They failed to furnish me with correct trading information on February 23, 1983. Had I been informed that on February 24, 1983, the limit would be expanded to .75 cents my wife would never have purchased a silver contract upon the advice of John Fromm and his charts on February 23, 1983.

They failed to furnish me with correct trading information on February 24, 1983. Had I been informed that the limit was expanded to .75 cents, I would have sold the silver contracts.

The respondents gave me FALSE information on February 25, 1983, in an attempt to conceal their negligence in the performance of their duties as licensed commodity brokers.

(Spacing and uppercase as in original.) He also argued that Blunt, Ellis & Loewi should have told him of an alternate, albeit costly, method of liquidating a commodities position about which Hlavinka apparently first learned during the trial-type hearing before the administrative law judge.

On October 22, 1986, the administrative law judge issued the Commission's initial decision, Hlavinka v. Blunt, Ellis & Loewi, Inc., Comm.Fut.L.Rep. (CCH) p 23,324 (1986), which was subsequently affirmed by the Commission without opinion, Hlavinka v. Blunt, Ellis & Loewi, Inc., Comm.Fut.L.Rep. (CCH) p 23,906 (1987). The decision found as fact that:

Hlavinka would not have been "deterred from entering the [commodity futures] market" had he known that the price-drop limit would be expanded under certain conditions;

Hlavinka was informed of the expansion of the price-drop limit in silver on February 25, 1983, which was "the day it occurred";

an order by Hlavinka to sell a silver contract was transmitted to Blunt, Ellis & Loewi by Hlavinka at a time when trading had already been suspended for the day, and, therefore, neither Blunt, Ellis & Loewi nor Fromm or Pfeffer were "responsible for its non-execution";

Hlavinka would not have used the alternate and costly method of liquidating his contracts since, "[i]t is evident that [Hlavinka] was not determined to close his positions at all costs, as he now maintains"; ³Hlavinka did not establish any connection between the non-working television monitor in the Blunt, Ellis & Loewi office and his losses.

The Commission thus found that there was no causal connection between any acts of the defendants, as alleged by Hlavinka, and Hlavinka's losses.

Hlavinka appealed the Commission's decision to the United States Court of Appeals for the Seventh Circuit, which, on February 6, 1989, affirmed. ⁴ Hlavinka v. Commodity Futures Trading Comm'n, 867 F.2d 1029 (7th Cir.1989), cert. denied, 498 U.S. 813, 111 S.Ct. 51, 112 L.Ed.2d 27 (1990). On February 22, 1989, Hlavinka commenced the present action, alleging negligence and breach of contract. Subsequently, the defendants simultaneously filed in the circuit court a motion to dismiss and, in the United States District Court for the Eastern District of Wisconsin, a petition to permanently enjoin Hlavinka's state-court action. ⁵ The defendants argued that Hlavinka's state-court complaint was barred by the principles of res judicata and collateral estoppel. On the defendants' motion, the circuit court stayed the state proceedings pending resolution of the matter in federal court.

Ultimately, both the United States district court and the United States court of appeals declined to enjoin Hlavinka from pursuing his state-court action for negligence and breach of contract. Blunt, Ellis & Loewi, Inc. v. Hlavinka, 711 F.Supp. 950, 952 (E.D.Wis.1989), aff'd, 896 F.2d 240, 241 (7th Cir.1990). On May 13, 1990, Hlavinka filed an amended complaint in this action.

Blunt, Ellis & Loewi, Fromm, and Pfeffer filed a motion for summary judgment seeking dismissal of Hlavinka's amended complaint. They asserted that the doctrine of collateral estoppel prevented Hlavinka from relitigating the same facts on which he lost in the reparations proceeding before the Commodity Futures Trading Commission. On January 3, 1991, the trial court denied the defendants' motion. Five months later, on June 5, 1991, the trial court dismissed Hlavinka's action for his failure to prosecute the case.

II.

A. Dismissal for failure to prosecute.

A trial court's dismissal of a civil litigant's action for either the violation of a court order or for failure to prosecute is a matter that is, appropriately, largely left within the trial court's discretion. See Johnson v. Allis Chalmers Corp., 162 Wis.2d 261, 273, 470 N.W.2d 859, 863 (1991). "Exercise of discretion," however, is not license for mere "unfettered decision-making." Hartung v. Hartung, 102 Wis.2d 58, 66, 306 N.W.2d 16, 20 (1981). Rather, an appropriate exercise of discretion requires the application of correct legal principles to the facts of record. Hedtcke v. Sentry Ins. Co., 109 Wis.2d 461, 471, 326 N.W.2d 727, 732 (1982). As a reviewing tribunal, we must determine whether the facts and law support the trial court's action. Ibid.

After significant delays resulting from the defendants' excursion into federal court in their unsuccessful attempt to invoke the Anti-Injunction Act, 28 U.S.C. § 2283, to enjoin Hlavinka's state-court action, the trial court issued a scheduling order pursuant to Rules 802.10(3)(b) and 802.11, Stats., on October 16, 1990. The order set February 11, 1991, as the date for trial. On February 7, 1991, Hlavinka's attorney filed a motion to withdraw as c...