Tadpo Inv. Club Ltd. v. Blunt Ellis & Loewi Inc.
| Decision Date | 25 April 1986 |
| Citation | 393 N.W.2d 797,131 Wis.2d 589 |
| Parties | NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. TADPO INVESTMENT CLUB, Ltd., a Wisconsin corporation, ROBERT J. TADYCH and GLADYS M. TADYCH, Plaintiffs-Appellants, v. BLUNT ELLIS & LOEWI INCORPORATED, a Delaware corporation, Defendant-Respondent. 84-2497. |
| Court | Wisconsin Court of Appeals |
Appeal from a judgment and an order of the circuit court for Milwaukee county: Ralph Adam Fine, Judge.
Before MOSER, P.J., WEDEMEYER and SULLIVAN, JJ.
Tadpo Investment Club, Ltd., Robert J. Tadych, and Gladys M. Tadych (collectively, Tadpo) appeal the summary judgment granted in Case No. 84-2497 and the order in Case No. 85-1805 denying Tadpo's motion to vacate the summary judgment. Because there are no issues of material fact and because Blunt Ellis & Loewi, Inc. (Blunt Ellis), is entitled to judgment as a matter of law, we affirm the judgment. Because Tadpo has not satisfied the requirements for vacating a judgment under sec. 806.07(1), Stats., we affirm the order.
In 1974, four people including appellants Robert J. Tadych and Gladys M. Tadych (Robert and Gladys) formed the Tadpo Investment Club (the Club), the predecessor to appellant Tadpo Investment Club, Ltd. Gladys's husband Albert R. Tadych (Albert) acted as the Club's attorney and agent. In early 1974, on behalf of the Club's individual members, Albert purchased 8800 First Wisconsin Mortgage Trust Certificates of Beneficial Interest on margin from Blunt Ellis. The trust later became Novus Property Co. (Novus), and the certificates were reissued as 8800 shares of Novus stock.
Late in 1974, Gladys and another club member, John Tadych (John), gave Blunt Ellis a promissory note for approximately $42,000, the amount of principal the Club then owed on its margin account. The note was secured by a mortgage on John's house and by pledging a security interest in the Novus stock to Blunt Ellis.
Club members made no payments on the promissory note after 1976. Blunt Ellis made several demands for payment, but the Club did not cure its default. By the end of 1982, the amount of principal and interest due on the note was approximately $80,000.
In early 1983, Blunt Ellis made a final demand for payment in full, notifying the Club members that the Novus shares would be sold to satisfy the debt if payment was not received by a certain date. Because the Club members still did not pay, Blunt Ellis sold 6900 shares of Novus stock to satisfy the note and mortgage and thus liquidated the Club's margin account. Blunt Ellis then brought an interpleader action to determine the rights of Albert and the individual Club members to the remaining 1900 shares. Only John answered, disclaiming any interest in the remaining shares. John was dismissed from the action, and a default judgment was entered against Albert and the other Club members in late 1983. Blunt Ellis delivered the 1900 shares to the court and was thereby 'forever released and discharged from all liability to [the Club members] on account of the matters at issue' in the interpleader action.
Tadpo then brought this action, which Gladys and Robert later joined. The amended complaint apparently requests an accounting and damages for fraud arising out of the Club's 1974 trust certificate purchase and Blunt Ellis's 1983 sale of Novus stock. The circuit court granted summary judgment to Blunt Ellis, and the judgment was entered.
Subsequently, Tadpo moved the court to vacate the judgment. The court denied the motion orally but did not enter a written order. Tadpo filed its appeal from the judgment and, after a written order was entered several months later, filed its appeal from the order. On our own motion, we have consolidated the cases on appeal.
Section 802.08(2), Stats., provides that summary judgment is proper if the parties' pleadings and affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In reviewing a trial court's decision on a motion for summary judgment, this court must apply the standards set forth in sec. 802.08 in the same manner as the trial court. Rach v. Kleiber, 123 Wis. 2d 473, 478, 367 N.W.2d 824, 827 (Ct. App. 1985). We therefore apply the following analysis:
The court must initially examine the pleadings to determine whether a claim has been stated and whether a material issue of fact is presented. If the complaint states a claim and the pleadings show the existence of factual issues, the court examines the moving party's . . . affidavits or other proof to determine whether the moving party has made a prima facie case for summary judgment under sec. 802.08(2) . . .. If the moving party has made a prima facie case for summary judgment, the court must examine the affidavits and other proof of the opposing party . . . to determine whether there exists [sic] disputed material facts, or undisputed material facts from which reasonable alternative inferences may be drawn, sufficient to entitle the opposing party to a trial.
Grams v. Boss, 97 Wis. 2d 332, 338, 294 N.W.2d 473, 476-77 (1980), quoted in Driver v. Driver, 119 Wis. 2d 65, 69, 349 N.W.2d 97, 100 (Ct. App. 1984).
Thus, our first inquiry is whether Tadpo's amended complaint states a claim on which relief may be granted. Collins v. Eli Lilly Co., 116 Wis. 2d 166, 203, 342 N.W.2d 37, 55, cert. denied sub nom. E.R. Squibb & Sons, Inc. v. Collins, 105 S. Ct. 107 (1984). We next determine whether Blunt Ellis, as a defendant moving for summary judgment, has shown a defense that defeats Tadpo's claims. See Heinz Plastic Mold Co. v. Continental Tool Corp., 114 Wis. 2d 54, 57, 337 N.W.2d 189, 191 (Ct. App. 1983). The burden would then shift to Tadpo to produce evidentiary proofs creating triable issues of fact. See Spitz v. Continental Casualty Co., 40 Wis. 2d 439, 445, 162 N.W.2d 1, 4 (1968). We turn now to the amended complaint, which seeks relief for fraud and an accounting.
The amended complaint alleges that in 1974, the Club authorized its attorney (who is never named) to purchase only Pabst Brewing Co. stock but that Blunt Ellis 'misled and ill-advised [the Club's] attorney into making certain stock purchases and entering transactions which he was not authorized to do.' If this is a fraud claim, it fails for two reasons.
First, the circumstances constituting fraud are not stated with particularity, as required by sec. 802.03(2), Stats. The complaint does not allege the nature or substance of the misrepresentations, if any, or who made them, or the maker's intent in doing so.
Second, even if this were a properly pleaded fraud claim, it is barred by the statute of limitations. A fraud action must be brought within six years after the cause of action accrues, and it accrues upon discovery of the facts constituting the fraud. Sec. 893.93(1)(b), Stats. Paragraph 8 of the complaint states that Club members learned in late 1974 that its attorney had not purchased Pabst Brewing Co. stock. Thus, any fraud action based on the circumstances of the stock purchase could not be brought later than 1980. The original complaint in this action, however, was filed in 1983. Blunt Ellis has asserted a defense based on the statute of limitations, and Tadpo has not presented any reason why the statute should not be applied to bar its fraud claim.
The amended complaint also makes the following allegations:
26. That the defendant was guilty of an illegal and devious course of conduct in an attempt to cover its previous transgressions and negligence and thereby minimize any financial losses which it might otherwise be liable for.
27. That to obtain this end, the defendant acted with intent to defraud the members of the Tadpo Investment Club, and intentionally misled and misrepresented facts to them.
If this is an attempt to plead fraud occurring after the 1974 stock purchase, it clearly fails for lack of particularity. See sec. 802.03(2), Stats.
Tadpo's complaint also requests an accounting. The default judgment in Blunt Ellis's interpleader action, affirmed by this court in Blunt Ellis & Loewi, Inc. v. Tadych, No. 84-171 slip op. (Ct. App. Nov. 5, 1984), is conclusive as to the 1900 shares of Novus stock that remained after Blunt Ellis's sale to satisfy Tadpo's debt. See Klaus v. Vander Heyden, 106 Wis. 2d 353, 357, 366, 316 N.W.2d 664, 666, 671-72 (1982) ().
Tadpo's complaint does, however, state a cause of action for an accounting regarding the 6900 shares that Blunt Ellis sold. Accordingly, we turn to Blunt Ellis's moving papers to determine whether they state a prima facie case for summary judgment. We conclude that they do.
Blunt Ellis's motion for summary judgment was accompanied by the affidavit of its attorney and officer, James Bolt. Bolt's affidavit states that Tadpo, through Albert, had opened a margin trading account and had bought the 8800 trust certificates that were later converted to the Novus stock. It states that Tadpo failed to satisfy its margin account debt and, in consideration for Blunt Ellis's forebearance in liquidating the shares held as security for the debt, entered into a promissory note with Blunt Ellis. The affidavit sets out the terms of the note, signed by John and Gladys, a copy of which is attached. A copy of the mortgage executed by John is also attached, as is a copy of the mortgage satisfaction recorded by Blunt Ellis in 1984. The affidavit also refers to several attached letters to Tadpo, written by Blunt Ellis or its attorney...
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