Industrial Roofing v. Marquardt

Decision Date08 February 2007
Docket NumberNo. 2005AP189.,2005AP189.
Citation726 N.W.2d 898,2007 WI 19
PartiesINDUSTRIAL ROOFING SERVICES, INC. and Keith Dippel, Plaintiffs-Appellants-Petitioners, v. Randy J. MARQUARDT, Dale M. Marquardt, Bradley L. Engnath, Jeffrey P. Sampson and Roofing Design & Solutions, Inc., Defendants-Respondents, Steven W. Schoen and John G. Dorrer, Defendants.
CourtWisconsin Supreme Court

For the plaintiffs-appellants-petitioners there were briefs by Robert F. Johnson, Jane C. Schlicht, Paul D. Cranley, and Cook & Franke S.C., Milwaukee, and oral argument by Robert F. Johnson.

For the defendants-respondents there was a brief by Shepard A. Davis and Burton & Davis, LLP, Milwaukee, and oral argument by Shepard A. Davis.


Industrial Roofing Services, Inc. and Keith Dippel (collectively "Industrial") seek review of an unpublished court of appeals decision affirming a circuit court ordered sanction dismissing with prejudice Industrial's complaint against defendants Randy Marquardt, Dale Marquardt, Bradley Engnath, Jeffrey Sampson, and Roofing Design & Solutions, Inc. (collectively, "Marquardt").1 Industrial contends that the circuit court erroneously exercised its discretion because, first, the attorney conduct underlying the dismissal was not egregious; second, that conduct should not be imputed to Industrial because Industrial was not at fault for its attorney's conduct; and third, the court based its decision on a mistake of fact.

¶ 2 We determine that the circuit court did not erroneously exercise its discretion in entering an order of dismissal with prejudice. The court's conclusion that the conduct was egregious is one that a reasonable judge could reach. While we acknowledge that it is an erroneous exercise of discretion for a circuit court to impose the sanction of dismissal with prejudice when the client is blameless, the court in this case considered Industrial's conduct in imposing the sanction and found that Industrial was not blameless. Finally, we determine that the circuit court's decision was not based on a mistake of fact. Although we depart from some of its rationale, we affirm the court of appeals.


¶ 3 This is a case about the sanction of dismissal with prejudice. Cases involving sanctions are often fact intensive. Additional facts will be discussed later in the opinion, supplementing the facts set forth here.

¶ 4 Keith Dippel founded and owns Industrial Roofing, which provides consulting services for roofing applications. Between July 2002 and January 2003 several employees (including the five Marquardt defendants) resigned from Industrial and established Roofing Design & Solutions, Inc., which provides similar consulting services. Other employees resigned and joined other roofing companies.

¶ 5 Industrial filed a complaint in the circuit court on June 19, 2003, against twelve defendants, asserting eight causes of action. The complaint alleges that the defendants used Industrial's information to set up a competing business in violation of Wisconsin law and their contractual duties and obligations to Industrial. Generally, without identifying individual Marquardt defendants, the complaint alleges that "individual defendants" breached oral employment contracts, breached the duty of good faith under those contracts, misappropriated Industrial's trade secrets and property, and intentionally interfered with Industrial's business relationships and contacts.2

¶ 6 The Marquardt defendants were represented by a single law firm. They denied the allegations of the complaint and asserted as an affirmative defense that the allegations were frivolous, "without basis in law or fact," and subject to statutory sanctions. Between August 28 and September 19, 2003, Marquardt and other defendants served written discovery on Industrial, including requests for document production, interrogatories, and requests for admission. Realizing a potential for conflicts of interest in representing multiple defendants, the Marquardt attorney submitted interrogatories and requested documents regarding what allegations in the complaint applied to which Marquardt defendants.

¶ 7 On October 22, 2003, Industrial responded to each of Marquardt's requests for documents by objecting to the extent that the requests called for production of confidential information, and by stating that "responsive documents will be provided to the extent they exist." No documents were attached, and no time or place was given for an inspection of any documents.

¶ 8 Several defendants (though none of the Marquardt defendants) filed motions to dismiss for lack of personal jurisdiction. The circuit court scheduled a hearing for October 27, 2003, to hear those motions. Dippel attended the hearing. However, the hearing could not go forward because his attorney, Thomas Van Beckum (also Industrial's attorney), failed to serve on the opposing attorneys any responses to the motions. At the scheduled motion hearing, the court expressed disappointment that very little could be accomplished due to Industrial's failure to serve its response in a timely fashion. Industrial's attorney apologized to the Court for "wast[ing] quite a few people's time."

¶ 9 An attorney who filed a motion to dismiss asked the court to decide the motion only upon the papers timely filed, explaining that the response had been due at the beginning of September, and that he had written Industrial's attorney to let him know the response was overdue. The court responded that "[t]here are different sanctions that the Court can impose under the circumstances too for violations of the rules. So at this point I'm going to leave that for next time." Accordingly, the court rescheduled the hearing on the motions to dismiss to November 17, 2003.

¶ 10 Marquardt's attorney then advised the court that he had served interrogatories which exceeded the number allowed in the local court rule. He requested approval to go beyond the local limit, and argued that doing so was justified by the vagueness of the allegations, and the multiple counts and multiple defendants he represented. The court suggested that the attorneys should work together to resolve the issue regarding the number of interrogatories.

¶ 11 Following the October 27 hearing, Marquardt's attorney repeatedly attempted to call Industrial's attorney to discuss the number of interrogatories. None of his telephone calls was returned. In an effort to contact him, Marquardt's attorney also sent Industrial's attorney letters and faxes. He received no responses.

¶ 12 At the November 17 hearing, which Dippel attended, Industrial's attorney stated that his office was responsible for the mistake from the last hearing and that he, rather than his client, should pay any sanction. The circuit court responded by ordering a sanction of attorney's fees for failure to reply, failure to copy the other side, and for wasting a court hearing date. The court imposed the sanction against the plaintiff but allowed that plaintiff's counsel could pay: ". . . the Court would order that the attorneys fees for the appearance time would be a sanction to be paid for by the plaintiff. If plaintiff's counsel wants to do that, it's fine."

¶ 13 After denying the motions to dismiss, the court issued a scheduling order which required that by March 30, 2004, Industrial produce a witness list, including expert witnesses, and an itemized list of special damages. Anticipating that the parties would be filing dispositive motions, the court deferred scheduling the trial until after the motions were heard.

¶ 14 As of February 19, 2004, Marquardt had received none of the requested discovery. On that date Industrial filed a motion for a protective order regarding Marquardt's interrogatories and requests for admission. Notwithstanding its motion for a protective order, Industrial submitted a response to Marquardt's requests for admission with a blanket denial.

¶ 15 The Clark defendants filed a motion to compel Industrial to answer discovery because they too had received a response to their request for document production indicating that the "documents will be provided." None had been received. In addition, Industrial's answers to Clark's interrogatories were unspecific and merely reiterated statements from the complaint. The hearing on that motion was set for February 23, 2004. However, immediately before the scheduled hearing Industrial's attorney provided responses to Clark's request to admit, submitted answers and supplemental answers to interrogatories, and in the hallway outside of the courtroom advised Clark's attorney that he would provide the documents requested by all of the defendants later that week.

¶ 16 When the case was called, Clark's attorney complained about receiving the discovery in such a tardy fashion: "The discovery requests were served back in August and here we are in, you know, mid February, end of February, and we're still, you know, just this morning receiving amended responses . . . ."

¶ 17 He asked the court to consider imposing sanctions for what he thought to be another useless motion hearing. Specifically he requested that the court consider assessing attorney's fees and expenses for filing the motion and deeming certain matters to be admitted because of the late response. He also advised the court that "not once did I receive a return phone call from Industrial's attorney in response to my letters and phone calls to him."

¶ 18 The Court inquired if any of the other defendants were having difficulties or missing discovery. Marquardt's attorney responded that he too had been "frustrated in the lack of communication with plaintiff's counsel." He continued: "As I sit here months and months after this case was initiated, I have no idea what the allegations against any of my clients really are. . . . I have no idea why the allegations even exist."3

¶ 19 Marquardt's attorney advised the court that h...

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