Johnson v. Cintas Corp. No. 2

• Court: Wisconsin Supreme Court
• Writing for the Court: ANNETTE KINGSLAND ZIEGLER
• Citation: Johnson v. Cintas Corp. No. 2, 339 Wis.2d 493, 811 N.W.2d 756, 2012 WI 31 (Wis. 2012)
• Decision Date: 27 March 2012
• Docket Number: No. 2009AP2549.,2009AP2549.
• Parties: Robert JOHNSON, Plaintiff–Respondent–Petitioner, v. CINTAS CORPORATION NO. 2, Defendant–Appellant,United Healthcare, Defendant.

2012 WI 31

339 Wis.2d 493

811 N.W.2d 756

Robert JOHNSON, Plaintiff–Respondent–Petitioner,

v.CINTAS CORPORATION NO. 2, Defendant–Appellant,United Healthcare, Defendant.

No. 2009AP2549.

Supreme Court of Wisconsin.

Argued Dec. 1, 2011.Decided March 27, 2012.

For the plaintiff-respondent-petitioner there were briefs by Robert I. DuMez, John V. O'Connor, and O'Connor, DuMez, Alia, & McTernan, S.C., Kenosha, and oral argument by John V. O'Connor.

For the defendant-appellant there was a brief filed by Terry E. Johnson, Ahndrea R. Van Den Elzen, and Peterson, Johnson, & Murray, S.C., Milwaukee, and oral argument by Terry E. Johnson.

ANNETTE KINGSLAND ZIEGLER, J.

[339 Wis.2d 498] ¶ 1 This is a review of a published decision of the court of appeals, Johnson v. Cintas Corp. No. 2, 2011 WI App 5, 331 Wis.2d 51, 794 N.W.2d 475, that reversed a default judgment entered by the Kenosha County Circuit Court ¹ in favor of Robert Johnson (Johnson) and against Cintas Corporation No. 2 (Cintas No. 2). Because Johnson's summons and complaint did not name Cintas No. 2 as a defendant and instead named Cintas Corporation (Cintas), the parent corporation of Cintas No. 2, the court of appeals concluded that the circuit court lacked personal jurisdiction over Cintas No. 2, and therefore, the default judgment is void. Accordingly, the court of appeals reversed the default judgment and remanded the cause to the circuit court for further proceedings.

¶ 2 On appeal to this court, Johnson argues that the circuit court had personal jurisdiction over Cintas No. 2 because, despite not being named in the summons and complaint, Cintas No. 2 was served with the summons and complaint and was not prejudiced by Johnson's error. Alternatively, Johnson contends that his pleadings ought to be construed as only technically defective on the grounds that Cintas No. 2 held itself out as Cintas.

¶ 3 We disagree with Johnson on both counts and therefore affirm.

[339 Wis.2d 499] ¶ 4 We conclude that service in this case was fundamentally defective because Johnson failed to name Cintas No. 2 as a defendant in his summons and complaint, contrary to Wis. Stat. §§ 801.02(1) and 801.09(1). Therefore, the circuit court lacked personal jurisdiction over Cintas No. 2, regardless of whether or not the defect prejudiced Cintas No. 2 and regardless of the manner in which Cintas No. 2 held itself out to the public or to Johnson specifically. Because the circuit court lacked personal jurisdiction over Cintas No. 2, the default judgment entered against Cintas No. 2 is void.

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

¶ 5 On April 12, 2007, Johnson filed a summons and complaint against Cintas; United Healthcare; Marvin Crandall (Crandall); and XYZ Corporation, a fictitious name designating Crandall's automobile liability insurer.² According to his complaint, Johnson was an employee of Cintas and was required to use his personal vehicle in the course of his employment. As a result, Johnson alleged, he had automobile liability insurance coverage through Cintas.

¶ 6 In his complaint, Johnson alleged that on July 2, 2006, he was riding as a passenger in his own vehicle driven by Crandall with Johnson's permission when Crandall negligently operated the vehicle, causing it to collide with another vehicle. Johnson alleged that as a result of the accident, he was permanently injured, experienced pain and suffering, incurred past and future medical expenses, and had a loss of earning capacity.

¶ 7 In addition, Johnson claimed that both he and Crandall qualified as insureds under Cintas's automobile liability insurance coverage and consequently were entitled to benefits payable by Cintas. Cintas's refusal to pay any benefits, according to Johnson, constituted a breach of contract and bad faith.

¶ 8 On April 19, 2007, Johnson served his summons and complaint upon the registered agent for Cintas No. 2, a wholly owned subsidiary of the named defendant, Cintas. Unlike Cintas No. 2, Cintas is neither registered nor licensed to do business in Wisconsin and does not have a registered agent for service of process in Wisconsin. Cintas is a foreign public corporation, incorporated under the laws of Washington with a principal place of business in Ohio.

¶ 9 Neither Cintas nor Cintas No. 2 answered Johnson's complaint. Accordingly, Johnson's counsel filed an affidavit of no answer, and on June 15, 2007, Johnson moved for default judgment against Cintas. Like his summons and complaint, Johnson's motion for default judgment was served upon the registered agent for Cintas No. 2, not Cintas.

¶ 10 On July 2, 2007, Cintas, through its counsel in Illinois,³ filed an emergency motion to dismiss Johnson's motion for default judgment on the grounds that the circuit court lacked personal jurisdiction over Cintas. Cintas's motion explained that Johnson's employer was actually Cintas No. 2, not Cintas as Johnson had alleged in his complaint. Cintas attached to its motion various corporate records from the Wisconsin Department of Financial Institutions (DFI), showing that Cintas is not a registered corporation in Wisconsin. By contrast, the DFI records reveal that Cintas No. 2, incorporated under the laws of Nevada with a principal place of business in Ohio, is a registered corporation in Wisconsin, as of June 1, 2000. Because Johnson failed to serve his summons and complaint upon Cintas, Cintas argued that the circuit court lacked personal jurisdiction over Cintas and consequently could not enter default judgment against Cintas.

¶ 11 Alternatively, assuming the circuit court found that Cintas was properly served, Cintas maintained that default judgment would still be inappropriate because Cintas's failure to answer was unintentional and because Cintas had a valid defense to Johnson's claims. Specifically, Cintas alleged that the accident that injured Johnson was a result of both Johnson and Crandall being intoxicated.

¶ 12 Three days later, on July 5, 2007, Johnson filed a letter with the circuit court, acknowledging receipt of Cintas's emergency motion to dismiss Johnson's motion for default judgment and expressing his intention to amend his summons and complaint by changing the named defendant from Cintas to Cintas No. 2. Furthermore, relying on this court's decision in Hoesley v. La Crosse VFW Chapter, 46 Wis.2d 501, 175 N.W.2d 214 (1970), Johnson submitted that default judgment should still be entered against Cintas No. 2 because Cintas No. 2 was the entity served.

¶ 13 On July 6, 2007, the circuit court held a hearing on Johnson's motion for default judgment, at which only counsel for Johnson and counsel for Cintas were present. Johnson moved to orally amend his summons and complaint to name Cintas No. 2 as the correct defendant. The circuit court granted Johnson's motion to amend and then immediately granted default judgment in favor of Johnson and against Cintas No. 2. The circuit court denied that Cintas No. 2 was entitled to notice of the amended summons and complaint. The court reasoned that the amendment did not have the effect of bringing in Cintas No. 2 as a new party since Cintas No. 2 was the entity served with the original summons and complaint.

¶ 14 On July 20, 2007, Cintas No. 2 filed an answer to both Johnson's complaint and amended complaint and moved to intervene and to set aside the default judgment. That same date, by letter, the circuit court responded to Cintas No. 2, advising Cintas No. 2 that it need not intervene because the court already determined that it was a party to the action. The circuit court further stated that it would not accept the filing of Cintas No. 2's answer because default judgment had already been entered. Still, the court indicated that it would be willing to consider a motion for relief from the judgment under Wis. Stat. § 806.07.

¶ 15 Cintas No. 2 heeded the circuit court's suggestion and moved to vacate the default judgment under Wis. Stat. § 806.07. Specifically, Cintas No. 2 argued that it was entitled to relief from the default judgment on the grounds that Cintas No. 2's failure to answer was due to excusable neglect, see § 806.07(1)(a); the judgment was void for lack of personal jurisdiction, see § 806.07(1)(d); or, alternatively, notions of fairness and justice weigh in favor of granting relief, see § 806.07(1)(h).

¶ 16 On September 11, 2007, the circuit court held a hearing on Cintas No. 2's motion to vacate the default judgment and granted the motion, finding that Cintas No. 2's failure to answer was due to mistake or excusable neglect under Wis. Stat. § 806.07(1)(a).

¶ 17 Nearly a year later, on August 19, 2008, Johnson filed a motion for reconsideration of the circuit court's order vacating the default judgment. ⁴ According to Johnson, subsequent discovery had revealed that Cintas No. 2 held itself out as Cintas. Thus, Johnson asserted, Cintas No. 2 was not actually misled by Johnson's pleadings; rather, Cintas No. 2 misled Johnson into referring to his employer as Cintas. As examples, Johnson averred that both his offer of employment and employment agreement were prepared by Cintas and that his paycheck was administered by Cintas. In addition, Johnson submitted an affidavit by Kenneth Uva, the Vice President and Representation Services Advisor of Cintas No. 2's registered agent, explaining that the registered agent immediately forwarded Johnson's summons and complaint to Cintas No. 2, per Cintas's instructions. Such evidence, Johnson asserted, demonstrates that Cintas No. 2's failure to timely answer was not excusable.

¶ 18 The circuit court agreed with Johnson. Accordingly, on February 10, 2009, the circuit court issued a written decision granting Johnson's motion to reconsider the court's order vacating the default judgment. The court determined that the facts in this case are akin to those in Hoesley, 46 Wis.2d 501, 175 N.W.2d 214, in which the correct defendant was served despite being misnamed in the summons and...