Manitowoc Western Co. v. Montonen
| Decision Date | 10 January 2002 |
| Docket Number | 00-0420 |
| Parties | Manitowoc Western Company, Inc., Plaintiff-Respondent-Cross-Appellant, v. Allan Montonen, Defendant-Third-Party Plaintiff-Appellant- Cross-Respondent-Petitioner, v. Manitex, Inc., The Manitowoc Company, Inc., Fred Butler, Robert R. Friedl, and Does 1 through 20, inclusive, Third-Party Defendants-Respondents- Cross-Appellants. CaseSupreme Court of Wisconsin Opinion Filed: |
| Court | Wisconsin Supreme Court |
Reported at: 244 Wis. 2d 285, 628 N.W.2d 438 (Ct. App. 2001-Unpublished)
Source of Appeal:
Court: Circuit
County: Manitowoc
Justices:
Concurred:
Dissented:
Not Participating:
Attorneys: For the defendant-third-party plaintiff-appellant-cross respondent-petitioner there were briefs by John J. Prentice, Andrew T. Phillips and Prentice & Phillips, Milwaukee, and oral argument by Andrew T. Phillips.
For plaintiff-respondent-cross-appellant and third-party defendants-respondents-cross-appellants there was a brief by Richard C. Ninneman, Brian D. Winters and Quarles & Brady LLP, Milwaukee, and oral argument by Richard C. Ninneman.
REVIEW of a decision of the Court of Appeals. Affirmed.
1. ANN WALSH BRADLEY, J.
The petitioner, Allan Montonen, seeks review of an unpublished court of appeals decision affirming a circuit court grant of summary judgment in favor of the respondent, Manitowoc Western Company.1 Montonen asserts that this court should extend the fraud exception to the transient rule of personal jurisdiction in order to prohibit service of a lawsuit on a person who comes to Wisconsin for settlement negotiations. Because we conclude that the public policies at stake are best served by the fraud exception as it presently stands, we decline to extend the exception as Montonen asks. Accordingly, we affirm the court of appeals.
2. The pleadings and affidavits set forth the following facts. Manitowoc Western Company is a Wisconsin corporation that employed Montonen, a California resident, in its Benicia, California facility. In October 1994, Manitowoc Western sent a letter to Montonen outlining proposed terms for Manitowoc Western's sale of its Benicia Boom Truck Crane Dealership to Montonen. Manitowoc Western believed the letter to be a non-binding general expression of intent, but Montonen maintained that the letter was a binding and enforceable agreement.
3. Although the parties dispute many of the details surrounding events subsequent to the signing of the October letter, the following three facts are undisputed. First, Montonen came to Wisconsin with his attorney on April 30, 1996, to meet with representatives of Manitowoc Western to discuss their disagreement over the letter. Second, Manitowoc Western filed this lawsuit against Montonen in Wisconsin earlier that day. Third, Manitowoc Western served Montonen with process at the end of the meeting.
4. Montonen moved to set aside the service of process and asked the circuit court to declare that it lacked jurisdiction over his person. He argued that Manitowoc Western engaged in fraud and deceit by tricking or enticing him to come to Wisconsin for settlement negotiations, then subsequently serving him with process. The circuit court denied Montonen's motion and eventually granted summary judgment in favor of Manitowoc Western.
5. In the court of appeals, Montonen argued that the court should adopt a rule forbidding service of process on a person who comes to Wisconsin for settlement discussions. The court of appeals acknowledged that some jurisdictions follow the rule Montonen proposed. However, the court explained, such a rule would represent a "wholesale change in the law of personal jurisdiction" in Wisconsin. Whether such a change was warranted, the court concluded, was for this court to decide. Accordingly, the court of appeals declined to adopt Montonen's rule and affirmed the circuit court.
6. Montonen renews his request in this court. He asks that we expand or interpret broadly the fraud exception to the transient rule of personal jurisdiction to prohibit service of a lawsuit on a person who comes to Wisconsin for settlement negotiations. Whether to expand the fraud exception to the transient rule of personal jurisdiction presents a question of law subject to independent appellate review. See P.C. v. C.C., 161 Wis.2d 277, 299, 468 N.W.2d190 (1991).
7. In addressing the question before us, we briefly summarize the law of personal jurisdiction relevant to this case, then turn to examine the expanded versions of the fraud exception that Montonen advances. After examining these rules in light of the public policies at stake, we reject the proffered rules as unnecessary to effectuate these policies and conclude that Montonen has provided no compelling reason to extend the fraud exception as he requests. Instead, we reaffirm the fraud exception in its current form.
8. We begin with a brief recitation of the relevant law of personal jurisdiction. Under Wisconsin's long-arm statute, a court has jurisdiction over an individual who is a natural person served with process while voluntarily present within this state. Wis.Stat.801.05(1)(a) (1995-96)2; see also Oxmans' Erwin Meat Co. v. Blacketer, 86 Wis.2d 683, 687, 273 N.W.2d 285 (1979) (discussing the statute).3 Physical presence is, in fact, the traditional basis of personal jurisdiction. Burnham v. Superior Court, 495 U.S. 604, 612 (1990); Oxmans' Erwin, 86 Wis.2d at 687. Personal jurisdiction based only on physical presence within a state at the time of service has been referred to alternatively as "transient jurisdiction" or the "transient rule" of personal jurisdiction. Burnham, 495 U.S. at 629 n.1 (Brennan, J., concurring); Oxmans' Erwin, 86 Wis.2d at 687 nn.2-3.
9. Of course, courts may achieve personal jurisdiction over an individual on a basis other than physical presence within the state at the time of service. See, e.g., Schlosser v. Allis-Chalmers Corp., 86 Wis.2d 226, 241, 271 N.W.2d 879 (1978) (citing International Shoe Co. v. Washington, 326 U.S. 310 (1945)). In this case, however, we address personal jurisdiction and service only under the transient rule.
10. The transient rule is not without exception. Where an individual is brought within a jurisdiction by fraud or trickery, service will be set aside upon the proper showing.
If a person is induced by false representations to come within the jurisdiction of a court for the purpose of obtaining service of process upon him...it is an abuse of legal process, and, the fraud being shown, the court will, on motion, set aside the service.
Townsend v. Smith, 47 Wis. 623, 626, 3 N.W. 439 (1879); see also Saveland v. Connors, 121 Wis. 28, 31, 98 N.W. 933 (1904).
11. Montonen has consistently and forthrightly acknowledged that his position represents an expansion of the fraud exception to the transient rule. He concedes that he is unable to show actual fraudulent intent and thus does not fall within the fraud exception as it stands under Townsend and Saveland. Rather, he emphasizes the vintage of the two cases and asserts that it is time for the exception to expand and evolve.
12. Citing cases from other jurisdictions, Montonen asks that we extend the fraud exception by adopting a flat prohibition on service under the transient rule during settlement negotiations. In support of this rule, Montonen relies primarily on E/M Lubricants, Inc. v. Microfral, 91 F.R.D. 235 (N.D. Ill. 1981), and KMart Corp. v. Gen-Star Indus. Co., 110 F.R.D. 310 (E.D. Mich. 1986).
13. The federal district court in E/M Lubricants, 91 F.R.D. at 238, determined that the fraud exception should be extended to cover cases where a defendant "reasonably relies on plaintiff's agreement to discuss settlement and where, later, plaintiff, without notice to defendant, decides to sue." In such cases, the court explained, the duty is on the plaintiff to either (1) communicate to the defendant before the defendant enters the jurisdiction that pre-suit negotiations are no longer feasible or that the plaintiff has chosen a legal remedy, or (2) forego service on the defendant if the defendant is in the jurisdiction for the exclusive purpose of discussing settlement. Id.
14. Likewise, in KMart, 110 F.R.D. at 313, the district court concluded that service was prohibited during settlement talks unless the plaintiff either (1) warns the defendant before entering the jurisdiction that it may be subject to service, or (2) gives the defendant an opportunity to leave the jurisdiction after settlement talks fail. The court in KMart characterized its standard as a "bright-line" rule that would eliminate "a determination of whether the plaintiff intended to file a complaint at the time the parties were arranging the settlement meeting." Id.
15. As an alternative, Montonen asserts that this court could expand the fraud exception to require the quashing of service when a plaintiff invites a defendant into Wisconsin for purposes of settlement talks and fails to inform the defendant of the possibility of service. Among other cases, he cites to Coyne v. Grupo Indus. Trieme, 105 F.R.D. 627 (D.D.C. 1985), and Henkel Corp. v. Degremont, 136 F.R.D. 88 (E.D. Pa. 1991), in support of this rule.
16. In Coyne, the district court applied the fraud exception and recognized a presumption of fraud, given certain facts. In essence, the court adopted an "invitation rule" that establishes an evidentiary presumption of fraud when a plaintiff invites a defendant into the plaintiff's jurisdiction to discuss settlement and then effects service. Coyne, 105 F.R.D. at 630.
17. Similarly, the district court in Henkel, relying on Coyne, concluded that service should be quashed "whenever a defendant enters a jurisdiction for settlement talks at the plaintiff's suggestion and the plaintiff has not clearly and unequivocally informed the...
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