Stein v. Illinois State Assistance Com'n

• Decision Date: 23 May 1995
• Docket Number: No. 94-1840,94-1840
• Citation: 194 Wis.2d 775,535 N.W.2d 101
• Parties: , 101 Ed. Law Rep. 1125 Marc D. STEIN, Plaintiff-Respondent, v. ILLINOIS STATE ASSISTANCE COMMISSION, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 101

535 N.W.2d 101

194 Wis.2d 775, 101 Ed. Law Rep. 1125

Marc D. STEIN, Plaintiff-Respondent, v. ILLINOIS STATE ASSISTANCE COMMISSION, Defendant-Appellant.

No. 94-1840.

Court of Appeals of Wisconsin.

Submitted on Briefs April 4, 1995.

Opinion Released May 23, 1995.

Opinion Filed May 23, 1995.

For the defendant-appellant the cause was submitted on the briefs of Brian W. McGrath and Michael B. Brennan of Foley & Lardner, Milwaukee.

For the plaintiff-respondent the cause was submitted on the briefs of Daniel W. Stevens of Esser, Dieterich & Stevens, Menomonee Falls.

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

WEDEMEYER, Presiding Judge.

The Illinois State Assistance Commission (ISAC) appeals from an order denying its motion to set aside a default judgment. ISAC raises three contentions: (1) that the trial court entered a judgment in violation of §§ 806.01 and 806.02, STATS., which voids the judgment; (2) that the trial court erred in awarding $25,000 in punitive damages because Marc D. Stein requested only $10,000 in compensatory damages; and (3) that the default judgment should not have been entered because Stein did not prove personal jurisdiction over ISAC. Because the judgment was entered in violation of §§ 806.01 and 806.02, it is void and must be set aside. Therefore, we reverse that portion of the order denying ISAC's motion to set aside the judgment and remand to the trial court with instructions to grant ISAC's motion to set aside the judgment; we further instruct the trial court to conduct proceedings consistent with this opinion. ¹ Because § 806.01(1)(c), STATS., limits relief to that which is demanded, we instruct the trial court to limit relief accordingly, if relief is granted on remand. Because the trial court did not err in finding that personal jurisdiction was satisfactorily established, we affirm that portion of the order.

I. BACKGROUND

During the 1960's and 1970's, ISAC loaned Stein money through a guaranteed student loan program. In approximately 1986, a dispute arose as to whether Stein had satisfied the loan obligation. ISAC claimed that the loan was in default. ISAC initiated collection procedures, communicated with Stein, and continued attempting to collect the debt. Stein, on the other hand, claimed that he had repaid the loan in full. In December 1989, Stein received a letter threatening legal action if the loan was not repaid. He obtained a copy of his credit reports and discovered that the original sum claimed due was listed three different times at three different addresses where he had lived. The amount due on the credit report was listed at more than three times the original amount of $3,902.

In August 1990, Stein commenced a lawsuit against ISAC alleging violations of § 427.104(1)(c), STATS. Chapter 427, STATS., governs prohibited practices in "Consumer Transactions--Debt Collection." Section 427.104(1)(c) provides: "[A debt collector shall not d]isclose or threaten to disclose information adversely affecting the customer's reputation for credit worthiness with knowledge or reason to know that the information is false." Specifically, Stein alleged that ISAC's actions destroyed his credit worthiness. The complaint did not seek a specified amount of damages.

ISAC was served on August 17, 1993. An exchange of correspondence during the months of September and October 1993, between ISAC's general counsel, Josh Hershman, and Stein's counsel, Daniel Stevens, produced no results. On November 10, 1993, Stein's counsel filed a motion seeking a default judgment, together with an affidavit, averring that twenty days had expired since commencement of the suit and no response had been received from ISAC. On December 8, 1993, the trial court, pursuant to local rule, placed the case on the dismissal calendar. The notice was sent only to Stein's counsel. Stein's counsel, in turn, obtained a motion date of December 20, 1993, for default judgment. No notice was sent to ISAC's counsel. Stein's motion papers sought $10,000 in compensatory damages.

On December 20, 1993, only Stein and his counsel appeared at the motion hearing. The trial court granted default judgment and then took testimony to determine the amount of damages. Stein's counsel informed the trial court that he had correspondence with ISAC's general counsel and provided the trial court with a copy of the correspondence. After hearing Stein's testimony, the trial court granted him $10,000 in compensatory damages and $25,000 in punitive damages. On January 4, 1994, Stein's counsel notified ISAC of the judgment. ISAC immediately retained Wisconsin counsel and moved both to set aside the default judgment and to enlarge the time to answer the complaint. ISAC based its motion on Hershman's mistaken belief that he and Stein were engaged in settlement negotiations and further prosecution of the action would be tolled until the negotiations were completed. ISAC also claimed that Stein failed to prove personal jurisdiction. The trial court, after considering briefs on the issues, denied the motion. ISAC now appeals.

II. DISCUSSION

A. Sections 806.01 and 806.02, STATS.

ISAC's main contention on appeal is that the judgment entered by the trial court violated §§ 806.01(1)(c) and 806.02(2), STATS., and, therefore, is void. In applying these statutes to the facts before us, we note that there is no dispute of procedural facts and, thus, we deem the questions to be ones of law reviewed de novo. See Kania v. Airborne Freight Corp., 99 Wis.2d 746, 758-59, 300 N.W.2d 63, 68 (1981).

In construing a statute, the entire section and related sections are to be considered in its construction or interpretation. Kerkvliet v. Kerkvliet, 166 Wis.2d 930, 939, 480 N.W.2d 823, 827 (Ct.App.1992). Furthermore, a statute should be construed to give effect to its leading idea and the entire statute should be brought into harmony with the statute's purpose. Pella Farmers Mut. Ins. Co. v. Hartland Richmond Town Ins. Co., 26 Wis.2d 29, 41, 132 N.W.2d 225, 230-31 (1965).

In his complaint, Stein did not specify a dollar amount that he was seeking. Rather, he sought only "compensatory damages." When ISAC failed to file a responsive pleading within twenty days, Stein, through his counsel, sought a default judgment and filed an affidavit seeking $10,000 in compensatory damages. Nothing in the record demonstrates that ISAC received any notice of the precise amount of the compensatory damage claim. This occurred in spite of the fact that Stein's counsel had dealt directly with ISAC's general counsel and knew how he could be reached. Stein acknowledged in his brief that "no amount of money was demanded" in his complaint in accord with § 802.02(1m), STATS., but he chose to ignore the additional language contained in § 806.02(2), STATS., which requires a plaintiff "to specify the amount of money claimed and provide that information to the court and to the other parties prior to the court rendering judgment." (Emphasis added.)

We deem the language of this statute to be plain, clear, and concise in meaning. Stein was obligated to inform the trial court of the additional specific sum of damages he sought and to provide to the other parties involved in this claim this same information before the trial court could enter judgment for the prayed amount. To interpret the statute any other way would be tantamount to eliminating from the statute the language "shall require the plaintiff to ... provide that information ... to the other parties prior to the court rendering judgment." Statutes should not be construed to fly in the face of common sense. State v. Clausen, 105 Wis.2d 231, 245-46, 313 N.W.2d 819, 826 (1982). In the instant case, common sense dictates that Stein should have provided the specific damages information to ISAC prior to the default hearing.

We conclude that the judgment entered is void for another fundamental reason. Section 802.02(6), STATS., enunciates that "[a]ll pleadings shall be so construed as to do substantial justice." Pleadings serve to notify the opposing party of the pleading party's position in the case and to frame the issues to be resolved. Hansher v. Kaishian, 79 Wis.2d 374, 385, 255 N.W.2d 564, 570 (1977). Section 801.14(1), STATS., provides that "[n]o service need be made on parties in default for failure to appear except that pleadings asserting new or additional claims for relief against them shall be served upon them in the manner provided for service of summons in s. 801.11." Here the original complaint did not inform ISAC of its position on damages. The affidavit filed by Stein, with the motion for default, contained Stein's formal allegation with respect to damages. In the context of this particular case, where the opposing party and its attorney were known, the affidavit of Stein became an assertion for the first time of a claim for specific relief and constituted an additional part of the complaint. We therefore conclude that the affidavit asserting specific damages is part and parcel of the pleadings which ought to have been served on ISAC pursuant to the calls of §§ 801.11 and 801.14, STATS. In the absence of compliance with those statutes the judgment is void and, therefore, must be set aside.

We next consider the application of § 806.01(1)(c), STATS. ² Section 806.01(1)(c), the judgment statute, in straightforward, plain terms states that "if there is no answer, the relief granted to the plaintiff shall not exceed that demanded in the complaint." It is uncontroverted that Stein's original complaint contained no claim for damages in a specific amount. He filed a supplementary affidavit which, by its clear terms, demanded compensatory damages of $10,000. No other relief was sought by way of the pleadings.

ISAC cites Klaus v. Vander Heyden, 106 Wis.2d 353, 316 N.W.2d 664 (1982), for the following:

Although the...