Owen v. Wangerin

• Decision Date: 05 March 1993
• Docket Number: No. 92-1171,92-1171
• Citation: 985 F.2d 312
• Parties: Marian Hutter OWEN, Plaintiff-Appellant, v. Herbert WANGERIN, Mary Wangerin, Dave Thompson, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 312

985 F.2d 312

Marian Hutter OWEN, Plaintiff-Appellant, v. Herbert WANGERIN, Mary Wangerin, Dave Thompson, et al Defendants-Appellees.

No. 92-1171.

United States Court of Appeals Seventh Circuit.

Argued Sept. 24, 1992.

Decided Jan. 29, 1993.

Rehearing and Rehearing En Banc Denied March 5, 1993.

Aram A. Hartunian (argued), Steven P. Schneck, Hartunian & Associates, Chicago, IL, for Marian Hutter Owen.

Herbert Wangerin, pro se.

Mary Wangerin, pro se.

Irving D. Gaines (argued), Daniel J. Mages, Milwaukee, WI, for Dave Thompson, Judy Thompson, Emily Stewart Beaver, William Hayes, Mary Hayes, Richard Byrne, Mimi Byrne, Roberta Robinson and Donald Schuenke.

Richard A. Howarth, Jr., Elkhorn, WI, for John J. Pilger.

Richard A. Howarth, Jr., pro se.

Patrick A. Dewane, Jr., Dewane, Dewane & Kummer, Manitowoc, WI, for Kenneth J. Brey, Jr.

James P. O'Neill, O'Neill, Schimmel, Quirk & Carroll, Milwaukee, WI, for Anthony L. Schlise.

James L. Adashek, Milwaukee, WI, for Marine Trust Co., N.A., as Trustee for the Estate of Emily Stewart Beaver.

Marie A. Stanton, John A. Kramer (argued), Grzeca & Stanton, Green Bay, WI, for Shores Condominium Ass'n.

Before CUDAHY and RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

The plaintiff in this diversity suit is appealing the district court's grant of summary judgment on her claims of fraud and mistake in which she requested that two land conveyances be declared void or in the alternative be reformed. She also appeals the district court's disqualification of her lawyer and the dismissal of her breach of contract claim. These claims arose from two land transactions in which John A. Hutter, Jr. (Hutter) sold land in his capacity as trustee for the Hutter Northern Trust (the Trust). ¹ We exercise jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1291.

I.

Hutter, who had been a practicing attorney since 1924, entered into negotiations to sell a parcel of land owned by the Trust with Defendants Douglas Haag and Anthony Schlise, who were partners in a venture that wanted to develop a condominium complex. Hutter met with Haag in 1976 to discuss the sale. During this meeting, Hutter and Haag walked a distance of approximately 500 feet along the shore and then reached an oral agreement for the purchase of the property. The sale was conditional on obtaining a use permit from the Door County Planning Department to construct multi-family condominium units on the property. During the zoning proceedings, the property was described as "500 feet along the shore." In October 1977, a deed was prepared that described the property as the "Northerly 500 feet" [of Government Lot 2, etc.] instead of "500 feet along the shore". Hutter, who chose to represent himself, signed this deed. Because the shoreline ran on a diagonal, the description in the deed comprised substantially more land than the 500 feet along the shore; it conveyed more than 600 feet along the shore.

The property directly south of the parcel agreed upon by Hutter and Haag contained several buildings that were part of a resort known as Chateau Hutter. This property and the buildings were owned by the trust. The south line of the parcel described in the 1977 deed ran through a building in Chateau Hutter that was used as a dining hall.

The second conveyance of land took place in 1984. Defendants Herbert and Mary Wangerin are individual owners of a condominium that rests on part of the property conveyed in 1977. They met with Hutter and told him they desired to purchase a small parcel of land. The Wangerins and Hutter signed a handwritten agreement that contained a sketch depicting a small triangle of land, 152 feet X 130 feet X 80 feet.

In 1984, Hutter received in the mail a deed conveying a 1.24 acre parcel of property to the Chateau Villas Joint Venture which then consisted of Schlise, John Kobussen, Ted Haag and Sandra Radtke. Hutter executed this deed and returned it. Hutter did not read the deed or attempt to have it read to him before he signed it. Apparently, Hutter thought the deed conveyed only the small triangle of property he discussed with the Wangerins. He also thought that the grantee named on the deed was the Wangerins.

In 1984, defendants Schlise and Haag agreed with co-owners of the Hutter real estate, Jeffrey Check and Robert Hippert, that the dining hall on Chateau Hutter should be destroyed. After this building was destroyed, Hutter became aware that he had actually sold part of the land that included the hall and brought this suit to recover the same.

The amended complaint in this diversity suit contained seven counts. Owen is appealing only Counts I, IV and VII. Count I alleges fraud and seeks rescission and damages. Count IV asserts mutual mistake and seeks reformation. Count VII asserts a claim for breach of contract and seeks damages and an accounting.

During the proceedings, the court held a hearing on the defendants' motion to disqualify Albert H. Beaver (Beaver) from representing plaintiff. The court granted the motion on the ground that Beaver owed defendant Schlise approximately $80,000. The district court concluded that although Owen had consented to Mr. Beaver's representation despite this conflict, Beaver had not made an "independent reasonable judgment that the representation will not be adversely affected on account of competing personal interests with one or more of the defendants in this case." Following this order, Owen filed a motion for reconsideration, repeating that she voluntarily consented to representation by Beaver. This motion was denied. Owen then filed a supplemental motion for reconsideration, pointing out that Schlise had executed a general release. After an evidentiary hearing, the district court denied this motion on the basis that the release was invalid. Owen then filed a second supplemental motion for reconsideration informing the court that Beaver's condominium unit had been sold and the buyer had executed an indemnity against the claim of Schlise. As additional evidence in support of her second supplemental motion for reconsideration, Owen presented a judgment where Judge S. Dean Pies for the Circuit Court of Door County had rendered findings on Schlise's petition to have the general release declared invalid. Judge Pies had found that the general release was valid and released Beaver from liability to Schlise on claims made in his court. The district court denied the second supplemental motion after an evidentiary hearing on the grounds that the judgment by Judge Pies was not res judicata in plaintiff's case.

After extensive discovery, the district court granted the defendants' motion for summary judgment on all counts except Count VII. In his October 30, 1991 Order, Judge Stadtmueller indicated to Owen that she should notify the court if she wished to proceed on Count VII by November 20, 1991.

On November 12, 1991 Owen filed a Motion for Relief From Decision, in which, among other things, she requested that the Court "enter a scheduling order for the completion of discovery". On December 19, the district court dismissed Count VII for lack of prosecution pursuant to its October 30th order. Owen now appeals the grant of summary judgment, the dismissal, and the disqualification of her attorney. For the reasons that follow, we affirm in part and reverse in part.

II.

A) The Fraud Claims

The district court concluded that the claim of fraud on the 1977 deed was barred by the statute of limitations. For suits alleging common law fraud, the Wisconsin statute of limitations allows six years from the moment the cause of action accrues. A cause of action is deemed to accrue when the aggrieved party discovers the fraud. Wis.Stat. § 893.93(1)(b). Courts have embellished the statute with the rule that a party is deemed to have discovered the fraud when he finds out enough to cause a reasonable man to make sufficient inquiries to discover the fraud. O'Dell v. Burnham, 61 Wis. 562, 21 N.W. 635, 639 (1884); Milwaukee Western Bank v. Lienemann, 15 Wis.2d 61, 65, 112 N.W.2d 190, 192 (1961).

The district court concluded that because Hutter had actual notice of the legal description in the deed, he had sufficient information so that diligent inquiry would have led him to discover the fraud at that time. The district court concluded that the statute of limitations on fraud began to run when Hutter signed the deed; therefore, it granted summary judgment on the fraud claim. In reviewing a grant of summary judgment, we review the entire record and inferences drawn from it in a light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 993, 8 L.Ed.2d 176 (1962).

Owen argues that the statute of limitations can never commence running at the time of the fraud. She points out that for an action in fraud to accrue in the first place, the victim must be diligent to the extent that his reliance is reasonable. Kiefer v. Fred Howe Motors, Inc., 39 Wis.2d 20, 29, 158 N.W.2d 288, 292-93 (1968). Jacobsen v. Whitely, 138 Wis. 434, 437, 120 N.W. 285, 286 (1909); Bank of Sun Prairie v. Esser, 151 Wis.2d 11, 442 N.W.2d 560 (Ct.App.1989); Marine Bank, Nat'l Ass'n v. Meat Counter, Inc., 826 F.2d 1577 (7th Cir.1987). Then Owen notes that the same test determines when the period of limitations starts running: the moment when the facts known by a reasonable man would have prompted him to discover the fraud. O'Dell v. Burnham, 61 Wis. 562, 21 N.W. 635, 639 (1884); Koehler v. Haechler, 27 Wis.2d 275, 133 N.W.2d 730, 732 (1965); Milwaukee Western Bank v. Lienemann, 15 Wis.2d 61, 65, 112 N.W.2d 190, 192 (1961). Owen concludes that a fraud victim could not be negligent enough in her reliance to start the statute of limitations running and still state a claim for fraud. She reaches this conclusion because if a victim is sufficiently negligent to start the statute running, she could not also be...