A recent Wisconsin Court of Appeals seems to suggest that circuit courts have broad latitude in complying with the Wisconsin Rules of Civil Procedure. First Nat’l Bank of Am. v. Hanson, No. 2015AP925 (Wis. Ct. App. July 6, 2016). While judges should construe the Rules to “secure just, speedy, and inexpensive determination[s]” in litigation, the Rules apply to and govern procedure and practice in all civil proceedings. Wis. Stat. §801.01(2).

In this case, First National Bank of America filed a foreclosure action against David and Diana Hanson in circuit court. While the foreclosure action was pending, the Hansons petitioned for personal bankruptcy. The bankruptcy proceeding necessarily stalled any other civil proceedings, including the foreclosure action, against the Hansons. After First National learned of the Hansons’ bankruptcy petition, the bank asked the circuit court to dismiss the foreclosure action “without prejudice.” See Wis. Stat. §805.04 (governing dismissals).Once the bankruptcy proceedings ended, First National sought to continue with the foreclosure. First National filed a motion in the circuit court, asking to reopen the foreclosure suit. Over the Hansons’ objection, the circuit court granted the motion and resumed the previously dismissed foreclosure action at the point where the parties had left off prior to dismissal.

The court of appeals brushed aside the Hansons’ argument that the circuit court’s actions were procedurally impermissible, stating that although First National’s “written motion was initially deficient” for failing to provide any argument for the relief it sought, that failing became “irrelevant” once the trial court “held a hearing on the motion.” Hanson, No. 2015AP925, slip op., ¶7. Though the court of appeals gave no indication that First National provided the circuit court any authority justifying the relief the bank’s motion sought, the appellate court affirmed the circuit court’s reasoning that granting the motion to reopen was the least expensive option and avoided unnecessary delay.

The degree to which the court of appeals deferred to the circuit court’s discretion is surprising. Because the Rules are contained in the Wisconsin Statutes, their interpretation “presents a question of statutory interpretation that [appellate courts] review de novo.” State v. Bausch, 2014 WI App 12, ¶4, 352 Wis. 2d 500, 842 N.W.2d 654. Moreover, “[w]hether a statute applies to the undisputed facts is a question of law that [appellate courts] review de novo.” Bank One Wis. v. Kahl, 2002 WI App 312, ¶9, 258 Wis. 2d 937, 655 N.W.2d 525 (reviewing circuit court application of rule governing dismissals).

Admittedly, the circuit court acted to “secure … [a] speedy, and inexpensive determination” of the bank’s foreclosure suit. Wis. Stat. §801.01(2). But neither section 805.04 nor any other Rule provides for a party that voluntarily dismissed a suit to resume the same suit later as if without interruption. It was First National that proposed dismissing the foreclosure action previously. The bank had other options if it anticipated wanting to continue prosecuting the foreclosure. It could, for example, have asked the circuit court to pause the foreclosure litigation until the bankruptcy proceedings were complete. Instead, the bank asked the circuit court to dismiss the foreclosure case it had initiated.

An order of dismissal ends a case, absent some provision of that order to the contrary. See Wis. Stat. §805.04. As the Wisconsin Supreme Court has explained, section 805.04, like its counterpart in the federal rules, “allows the plaintiff to withdraw his action from the court without prejudice to future litigation.” Dunn v. Fred A. Mikkelson, Inc., 88 Wis. 2d 369, 377-78, 276 N.W.2d 748 (Wis. 1979) (internal quotation marks omitted). Section 805.04 itself suggests that Dunn’s reference to “future litigation” anticipates a new lawsuit, rather than a continuation of the earlier-dismissed case, because subsection (4) expressly addresses what happens when the plaintiff files a new lawsuit to pursue the same claims.

Nor does the fact that First National requested and obtained an order dismissing the foreclosure suit “without prejudice” change the analysis. The “without prejudice” specification means that the dismissal would not prevent the bank from pursuing its foreclosure claims in another timely filed lawsuit. See Dunn, 88 Wis. 2d at 377-78; Wis. Stat. §805.04(4). It does not mean that the dismissal is any less final with respect to the action dismissed. See Clark v. Mudge, 229 Wis. 2d 44, 48, 599 N.W.2d 67 (Ct. App. 1999) (“The basic purpose of [voluntary dismissal] is to freely permit the plaintiff, with court approval, to voluntarily dismiss an action so long as no other party will be prejudiced.” (internal quotation marks omitted)).

To be sure, the court of appeals is correct that First National probably could have filed a new foreclosure action. And the court is correct that doing so would have required First National to incur additional legal expenses and filing fees. But those fees follow directly from the bank’s voluntary, strategic decision to dismiss the foreclosure action previously. The court of appeals offers no explanation why the bank should be able to evade these eminently foreseeable consequences given the standard practice that plaintiffs who voluntarily dismiss a suit and then wish to pursue the same claims anew must file a new lawsuit to do so and may well have to pay the defendant’s costs from the dismissed lawsuit, as well as their own duplicative costs. See Wis. Stat. §805.04(04).

The court of appeals’ decision in Hanson opens the door for plaintiffs to voluntarily dismiss cases at their convenience, then subsequently file a motion to reopen proceedings, so long as they can justify that doing so would be more expeditious and less expensive than filing a new complaint—which it always will be. The larger question is whether Hanson also authorizes circuit courts to depart from the text of the Rules of Civil Procedure secure in the belief that the court of appeals will afford them broad discretion to do so.

Law clerk Olivia Pietrantoni assisted in researching and writing this post.

Update: Shortly after this post, the Court of Appeals withdrew its opinion in light of a motion for reconsideration. On August 30, 2016, it issued a new opinion that is nearly identical and has no changes that affect the reasoning or substance of this post. See First Nat’l Bank of Am. v. Hanson, No. 2015AP925 (Wis. Ct. App. Aug. 30, 2016).

Find a Professional