text:
    Gregory Gottsacker and New Jersey LLC, Plaintiffs-Respondents, v. Julie A. Monnier, Paul Gottsacker and 2005 New Jersey LLC, Defendants-Appellants.

    Court of Appeals

      No. 03-0457.

      Submitted on briefs September 25, 2003.

      Decided January 14, 2004.

    2004 WI App 25
    (Also reported in 676 N.W.2d 533.)

      On behalf of the defendants-appellants, the cause was submitted on the briefs of Paul R. Erickson, of Gutglass, Erickson, Bonville, Seibel & Falkner, S.C. of Milwaukee.
    On behalf of the plaintiffs-respondents, the cause was submitted on the brief of James O. Conway, of Olsen, Klost, Gunderson & Conway of Sheboygan.
    Before Anderson, PJ., Nettesheim and Snyder, JJ.

       Petition to review granted 6-8-04.

   SNYDER, J.

¶ 1. Julie A. Monnier (Julie), Paul Gottsacker (Paul) and 2005 New Jersey LLC appeal a judgment compelling them to return commercial real estate to New Jersey LLC, and further ordering New Jersey LLC to reimburse Gregory Gottsacker (Gregory) for legal expenses. The appellants argue that the trial court erred in determining that they were precluded from transferring real estate owned by New Jersey LLC to 2005 New Jersey LLC by the conflict of interest rules under Wis. Stat. §§ 183.0402 and 184.0404 (2001-02). We disagree and affirm the decision of the trial court.

FACTS

¶ 2. Julie formed New Jersey LLC on September 4, 1998. Ten days later, New Jersey LLC purchased property located at 2005 New Jersey Avenue in the city of Sheboygan. This property is a 40,000 square-foot warehouse with a single manufacturing tenant on a year-to-year lease. A limited appraisal valued the property at $703,000 and New Jersey LLC purchased it for $510,000, with financing arranged for and guaranteed by Julie.

¶ 3. In January 1999, Gregory and Paul became members of New Jersey LLC. The Member's Agreement states in relevant part:

(2) The Members have not agreed to make any additional contributions to the Company.
(4) Julie A. Monnier shall own a 50% interest in the capital, profits and losses of Company and shall have 50% of the voting rights of Company.
(5) Paul Gottsacker and Gregory Gottsacker, collectively, shall own a 50% interest in the capital, profits and losses of Company and shall have 50% of the voting rights of Company.

¶ 4. New Jersey LLC also purchased property on Wilson Avenue in Sheboygan. The Wilson Avenue property was subsequently sold and the proceeds of that transaction were distributed as follows: fifty percent to Julie, twenty-five percent to Paul, and twenty-five percent to Gregory. After the Wilson Avenue sale, New Jersey LLC's only remaining asset was the 2005 New Jersey Avenue property (the property).

¶ 5. Relationships between the members deteriorated and in May 2000, Paul and Gregory had a falling out. Communication between them after that was almost nonexistent. Julie testified that she has had no communication with Gregory since 1998.

¶ 6. On June 7, 2001, Julie executed a Warranty Deed transferring the New Jersey LLC property to a new limited liability corporation called 2005 New Jersey LLC. The new entity consists of two members: Julie with a sixty percent ownership interest and Paul with a forty percent interest in 2005 New Jersey LLC.

¶ 7. 2005 New Jersey LLC acquired the New Jersey Avenue property for $510,000, the same price paid by New Jersey LLC in the original transaction almost three years earlier. The only documentation of the conveyance is the deed and a transfer return.

¶ 8. After the transaction, Julie sent a check for $22,000 to Gregory, which purportedly represented his twenty-five percent interest in the equity from the property previously owned by New Jersey LLC. The $22,000 payment to Gregory issued from the New Jersey LLC checking account. Gregory did not cash the check. Julie and Paul did not receive any cash payment from the transfer of the property, choosing instead to leave the equity in 2005 New Jersey LLC.

¶ 9. Gregory sued Julie, Paul and 2005 New Jersey LLC, claiming that they had engaged in an illegal transaction under Chapter 183 of the Wisconsin Statutes. The trial court agreed. Julie, Paul and 2005 New Jersey LLC appeal, asking that we reverse the decision of the trial court and dismiss Gregory's complaint. We deny their request and affirm the trial court order.

DISCUSSION

¶ 10. Gregory claims that Paul and Julie violated Chapter 183 when they implemented the transfer of the property to their new entity, 2005 New Jersey LLC. The application of a statute to a particular set of facts is a question of law. State v. Piddington, 2001 WI 24, ¶ 13, 241 Wis. 2d 754, 623 N.W.2d 528. We review questions of law independently, without deference to the trial court. State v. Moline, 229 Wis. 2d 38, 40, 598 N.W.2d 929 (Ct. App. 1999).

¶ 11. Paul, Julie, and Gregory formed New Jersey LLC as a vehicle to own investment real estate. They entered into a Member's Agreement, which expressed their intent to operate under the Wisconsin Limited Liability Company Law. In doing so, they created a legal relationship described in Wis. Stat. § 183.0102(10) and consistent with their operating agreement under § 183.0102(16). A limited liability company (LLC) is similar to a corporation in that it has a separate legal identity from those who own it. An LLC can own property, engage in business, and sue and be sued. Wis. Stat. §§ 183.0106,183.0701. Unlike a corporation, however, an LLC has members instead of shareholders. Members control the business through a manager or by voting according to their percentage of ownership. Wis. Stat. §§ 183.0401, 183.0404.

¶ 12. Gregory alleges that Paul and Julie, when voting to transfer the property from New Jersey LLC, had a material conflict of interest and derived an improper personal profit from transfer of the property. He argues that, because there was a conflict of interest, Paul and Julie were precluded from voting to transfer the property by Wis. Stat. § 183.0404(3). The trial court agreed, ruling that

the conveyance of the sole asset of New Jersey LLC to the newly created limited liability company denominated 2005 New Jersey LLC did not serve a legitimate business purpose. The sole purpose of the conveyance was to eliminate the interest of Gregory Gottsacker in the asset. Because the conveyance served no legitimate business purpose and because Julie Monnier and Paul Gottsacker both profited from the transaction, they were precluded by the conflict of interest rules under Chapter 183 Wis. Stats., from authorizing the transaction.

¶ 13. • On appeal, Paul and Julie assert that they had no conflict of interest in implementing the transfer of the property from New Jersey LLC to 2005 New Jersey LLC. A conflict of interest is a "real or seeming incompatibility between one's private interests and one's public or fiduciary duties." Black's Law Dictionary 295 (7th ed. 1999). We look to the transaction to determine whether such an incompatibility existed.

¶ 14. First, we conclude that Paul and Julie did advance their private interests by transferring the property to their new company. Paul and Julie, as 2005 New Jersey LLC, acquired the property at a price equal to that paid three years prior by New Jersey LLC. However, Julie's ownership interest in the property went from fifty percent to sixty percent, and Paul's from twenty-five percent to forty percent. Paul and Julie also furthered their goal of eliminating Gregory's interest in the property.

¶ 15. Next, we look to see if this advancement of private interest was incompatible with their duties as members of New Jersey LLC. Limited liability company member duties have been characterized as "typical fiduciary duties" pertaining to fair dealing, taking of improper personal profit, and self-dealing. Joseph W. Boucher et al., LLCs and LLPs: A Wisconsin Handbook (rev. ed. 1999) at § 1.19. Because they were fiduciaries of New Jersey LLC, Paul and Julie could not place themselves in a position antagonistic to the LLC. See Cmty. Nat'l Bank v. Med. Benefit Adm'rs, LLC, 2001 WI App 98, ¶ 11, 242 Wis. 2d 626, 626 N.W.2d 340. We conclude, however, that Paul and Julie did indeed take a position that was antagonistic to New Jersey LLC. Their transaction took the sole remaining asset from New Jersey LLC without determining the fair market value and without notice to the sole remaining LLC member, Gregory. Because this transaction pitted Paul and Julie's personal interest against their fiduciary duties to New Jersey LLC, we conclude that a conflict of interest did exist.

¶ 16. We now consider whether that conflict of interest precluded Paul and Julie from voting to transfer the property from New Jersey LLC to 2005 New Jersey LLC. Wisconsin Stat. ch. 183 states in pertinent part:

(1) Unless otherwise provided in an operating agreement or this chapter ... an affirmative vote, approval or consent as follows shall be required to decide any matter connected with the business of a limited liability company: ■
(a) If management of a limited liability company is reserved to the members, an affirmative vote, approval or consent by members whose interests in the limited liability company represent contributions to the limited liability company of more than 50% of the value ....
(3) Unless otherwise provided in an operating agreement, if any member is precluded from voting with respect to a given matter, then the value of the contribution represented by the interest in the limited liability company with respect to which the member would otherwise have been entitled to vote shall be excluded from the total contributions made to the limited liability company for purposes of determining the 50% threshold under sub. (l)(a) for that matter.

Wis. Stat. § 183.0404.

¶ 17. This section does not define when a member would be "precluded from voting with respect to a given matter" under subsection (3). Gregory would have us look to Wis. Stat. § 183.1101 for guidance. This section states that a lawsuit may be filed when members who represent more than fifty percent of the ownership interest vote to authorize it. See § 183.1101(1), Wis. Stat. § 183.0404(l)(a). The statute further states that "the vote of any member who has an interest in the outcome of the action that is adverse to the interest of the limited liability company shall be excluded." Sec. 183.1101(1). Gregory argues that because § 183.1101(1) excludes members from voting when they have an adverse interest and because § 183.0404(3) also refers to members who are precluded from voting, "it would appear to follow that members who are precluded from voting are members with a conflict of interest."

¶ 18. We have stated that courts should seek to construe statutes so that they are harmonious, construing provisions in light of the whole statute. State v. Fouse, 120 Wis. 2d 471, 477, 355 N.W.2d 366 (Ct. App. 1984). We have also held that the location of the subsection is of significance in construing a statute. Id. We discern, therefore, a stronger relationship between Wis. Stat. § 183.0404 and Wis. Stat. § 183.0402, which appear in the same subchapter, titled "Rights and Duties of Members and Managers." Wis. Stat. ch. 183, subch. IV With regard to conflicts of interest, this subsection states:

Duties of managers and members. Unless otherwise provided in an operating agreement:
(1) No member or manager shall act or fail to act in a manner that constitutes any of the following:
(a) A willful failure to deal fairly with the limited liability company or its members in connection with a matter in which the member or manager has a material conflict of interest.

Wis. Stat. § 183.0402.

¶ 19. Wisconsin Stat. § 183.0402 provides the standard to apply when determining who is "precluded from voting" under Wis. Stat. § 183.0404(3). The plain language of this subsection does not prevent a member who has a material conflict of interest from dealing with matters of the LLC. The statute does, however, prohibit that member from dealing unfairly with the LLC or its members. Because this standard appears in the same subchapter as the voting procedure, we conclude that the statutes do not prevent a member from voting when there is a material conflict of interest. We hold that a member with a conflict of interest must vote his or her ownership interest fairly, considering the interests of the LLC and the relationship with the other members.

¶ 20. In the case at hand, we turn to the undisputed facts. Paul and Julie, voting as members of New Jersey LLC, transferred the property to 2005 New Jersey LLC. Gregory, the only member without a conflict of interest, was unaware of the transfer before it occurred and did not vote on the transfer. This was the only property owned by New Jersey LLC at the time of the transaction. Paul and Julie did not market the property to third party potential buyers, they did not write an offer to purchase, they did not require a new appraisal of the property to determine a fair value, and they did not apply for a new mortgage. Paul and Julie are the only two members of 2005 New Jersey LLC, and both have increased their ownership interest in the property as a result of the transfer. Julie's interest has increased from fifty percent to sixty percent, giving her a controlling interest that she did not previously possess. These facts demonstrate unfair dealing in two respects.

¶ 21. First, the record establishes that this was not an arm's length transaction. Paul conceded as much in his testimony, stating that the transfer did not meet his own definition of an arm's length transaction: "When a buyer and a seller are not related and make an offer and acceptance." Paul's definition is on point. The term "arm's length" is defined as "not closely or intimately connected or associated." Siker v. Siker, 225 Wis. 2d 522, 533, 593 N.W.2d 830 (Ct. App. 1999) (citation omitted). We also agree that an offer and acceptance, as well as an independent appraisal, are harbingers of an arm's length transaction. Our supreme court has defined an "arm's-length transaction" as "a sale in the open market between an owner willing but not obliged to sell and a buyer willing but not obliged to buy." Flood v. Lomira Bd. of Review, 153 Wis. 2d 428, 436, 451 N.W.2d 422 (1990) (emphasis added). Because this was not a sale on the open market, nor does it carry any of the trappings of a sale made under "normal conditions," it does not meet the definition of an arm's length transaction. See id. at 437. This, combined with the personal interest served by the transfer, leads us to conclude that Paul and Julie did not deal fairly with New Jersey LLC.

¶ 22. Second, the sale of the property makes it impracticable for the New Jersey LLC to carry on with its intended business. New Jersey LLC was formed to hold the 2005 New Jersey Avenue property as a long-term investment. Wisconsin Stat. § 183.0902(1) provides grounds for judicial dissolution of an LLC, a remedy not sought in this matter, yet instructional for our analysis. The statute states that a court may order dissolution when it is established that "it is not reasonably practical to carry on the business of the limited liability company." Sec. 183.0902(1). Paul and Julie's conduct functionally dissolved the New Jersey LLC.

¶ 23. In the absence of either an operating agreement provision on dissolution procedures, a judicial dissolution, or dissociation of a member from the LLC, dissolution requires the written consent of all members. Wis. Stat. § 183.0901(2). Paul and Julie's failure to obtain Gregory's consent for the sale of the sole company asset, without which the purpose of New Jersey LLC was compromised, further establishes unfair dealing with the LLC and Gregory, contrary to Wis. Stat. § 183.0402(l)(a).

¶ 24. Because we conclude that the transaction was unlawful under Wis. Stat. §§ 183.0402(l)(a) and 183.0404(3), we do not reach the issue of whether Paul and Gregory each held a twenty-five percent ownership interest in New Jersey LLC, or whether the term "collectively" in the Member's Agreement means that both brothers must jointly vote the entire fifty percent.

REMEDY

¶ 25. Paul and Julie also challenge the remedy applied by the trial court. The trial court ordered 2005 New Jersey LLC to return the property to New Jersey LLC. Paul and Julie argue that the result will be a deadlocked LLC, where Gregory can prevent the sale of the property indefinitely. They state that the only two options are repayment of any "improper" personal profits realized by Paul and Julie, pursuant to Wis. Stat. § 183.0402(2), or judicial dissolution pursuant to Wis. Stat. § 183.0902.

¶ 26. We disagree that a return of the property-will necessarily deadlock New Jersey LLC and make it impossible to sell the property. As explained above, the transaction can be accomplished if fairness is demonstrated through an arm's length transaction. Of course, if the property is put on the market, Paul and Julie run the risk that 2005 New Jersey LLC will be outbid by a third party, but that is a "normal condition" of a real estate sale. Furthermore, the transaction was not binding because Paul and Julie had no authority to act on behalf of the New Jersey LLC in this matter:

The act of any member, including the execution in the name of the limited liability company of any instrument . .. binds the limited liability company unless the member has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the member is dealing has knowledge that the member has no authority to act in the matter.

Wis. Stat. § 183.0301(l)(b). The remedy ordered by the trial court is appropriate in light of the fact that the vote to transfer the property was not binding on New Jersey LLC.

CONCLUSION

¶ 27. Paul and Julie, though they had a conflict of interest in the transfer of the property from New Jersey LLC to 2005 New Jersey LLC, were not precluded from voting to make the transfer. They were, however, required to vote their interest fairly. Because there was no arm's length transaction, specifically no independent appraisal of the property, in a transaction that functionally dissolved New Jersey LLC, unfairness is established and the underlying vote was precluded under Wis. Stat. §§ 183.0402(l)(a) and 183.0404(3). For the reasons stated, we affirm the judgment compelling 2005 New Jersey LLC to return the property to New Jersey LLC and that New Jersey LLC reimburse Gregory for all legal expenses incurred in this litigation.

By the Court. — Judgment affirmed

       All references to the Wisconsin Statutes are to the 2001-2002 version unless otherwise noted.

       A separate issue raised in this appeal relates to the terms of the Member's Agreement, where the terms describe Gregory and Paul as holding a fifty percent interest "collectively." The dispute centers around whether each brother owned a distinct twenty-five percent interest, or whether they each owned the full fifty percent as partners. For purposes of this analysis, we use the twenty-five percent figure, which is consistent with the percentage used to distribute proceeds from the sale of the Wilson Avenue property.

       Testimony indicated that Paul felt Gregory "didn't live up to what we originally agreed to from day one" and Julie felt it was difficult to manage the New Jersey Avenue property with one member of the LLC refusing to communicate with the rest.


source: Caselaw Access Project

author: ANDERSON, PJ.

license: Public Domain

text:
    Williams Corner Investors, LLC, Plaintiff-Respondent, v. Areawide Cellular, LLC, Defendant, Alpha Communications, Inc., Defendant-Appellant.

    Court of Appeals

      No. 03-0824.

      Submitted on briefs November 6, 2003.

      Decided January 14, 2004.

    2004 WI App 27
    (Also reported in 676 N.W.2d 168.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of John K. Hughes of Gessler, Hughes, Socol, Piers, Resnick & Dym, Chicago, IL.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Thomas Van Beckum of Thomas Van Beckum Law Offices, S.C., Kenosha.
    Before Anderson, PJ., Brown and Snyder, JJ.

       Petition to review dismissed 3-3-04.

   ANDERSON, PJ.

¶ 1. Alpha Communications, Inc., (Alpha) appeals a default judgment awarding damages and costs to Williams Corner Investors, LLC, (Williams). Williams' motion for a default judgment was granted after Alpha failed to timely answer Williams' complaint which averred that Alpha had breached a sublease and/or lease assignment and had engaged in misrepresentation regarding this matter. Alpha argues that default judgment was not warranted because it established a reasonable basis for the delay, i.e., "excusable neglect," in filing its answer and because the circuit court failed to consider the interests of justice. We reject Alpha's arguments and affirm.

¶ 2. Facts. In August 2001, Areawide Cellular, LLC, entered into a written lease with Williams for retail space in Kenosha, Wisconsin. Williams claimed that Areawide Cellular assigned or sublet the lease to Alpha and orally represented to Williams that Alpha was the sub-lessee or assignee. The first rent payment for the lease with Williams was due in January 2002— payment was not made. On February 13, 2002, Alpha informed Williams that it was not interested in the space and confirmed this in writing on February 14, 2002.

¶ 3. On October 8, 2002, Williams filed a complaint against Areawide Cellular and Alpha. With respect to Alpha, Williams' complaint alleged breach of sublease or assignment, equitable estoppel and misrepresentation. The defendant informed the court that the summons and complaint were not endorsed by the process server and did not indicate the time and date of service. See Wis. Stat. § 801.10(2) (2001-02). However, the process server's affidavit of service stated that on October 15, 2002, he served the summons, complaint and request for production of documents upon Alpha "by handing copies to Male/White, 5T0", 230 Lbs., Age approximately 55, who identified himself as William A. DeGeronimo, Registered Agent of Alpha Communications, Inc. at their place of Business at 1321 Tower Road, Schaumburg, Illinois, Cook County, Illinois." In addition, DeGeronimo's own affidavit stated: "This summons and complaint in this case were served at the Alpha Communications office in mid-October, 2002."

¶ 4. Calculating from the October 15, 2002 date of service, the deadline for timely receipt of Alpha's answer would have been November 29, 2002. Wis. Stat. § 802.06(1). Alpha filed its answer on December 4, 2002. On January 7, 2003, Williams filed a motion for default judgment based on Alpha's failure to answer or otherwise file responsive pleadings in a timely manner.

¶ 5. Alpha argued that there was "excusable neglect" for its failure to timely answer. In order to support this argument, Alpha provided an affidavit from DeGeronimo. The pertinent part of the affidavit stated:

This summons and complaint in this case were served at the Alpha Communications office in mid-October, 2002. Ms. Ronda Finch, the affiant's Executive Assistance who handles matters such as this was away from the office for a few days due to a death in her family. The complaint was received during her absence. The summons and complaint were not date-stamped when they were received and later no one was able to recall the specific date when they were received.

¶ 6. In addition to the affidavit, Alpha informed the court that DeGeronimo "disputes he was served." Alpha's attorney explained:

[T]his operation is ... a retail store with counters. I don't know if this is reflected in [DeGeronimo's] affidavit, but what [DeGeronimo] believes happened is that service was put on the counter. When it's — if someone finds such a thing on the counter, they will put it on a desk of his executive assistant, who was out; and eventually when she returned, it was brought to his attention. So, he never knew what the date of service was.

¶ 7. After examining the record and hearing the evidence, the trial court found no excusable neglect. The court made several findings of fact. First, the court found that on October 15, 2002, DeGeronimo was served. Second, the court found that Alpha defaulted in answering Williams' complaint. Finally, the court determined that "the allegations, statements and averments set forth in plaintiffs complaint" were "true and correct."

¶ 8. Alpha appeals, arguing that default judgment was not warranted because it established excusable neglect having shown a reasonable basis for the delay in filing its answer and because the circuit court failed to consider the interests of justice. Finally, in its claim of erroneous exercise of discretion, Alpha asks us to consider that it responded promptly in filing its answer.

¶ 9. Law. We must accept a trial court's findings of fact unless they are clearly erroneous. Wis. Stat. § 805.17(2); see also Shawn B.N. v. State, 173 Wis. 2d 343, 358-59, 497 N.W.2d 141 (Ct. App. 1992). From our review of the record, we conclude that the trial court's findings of fact are not clearly erroneous.

¶ 10. A defendant shall serve an answer within forty-five days after the service of the complaint upon the defendant. Wis. Stat. § 802.06(1). In response to an untimely answer, a plaintiff may properly bring a motion to strike the defendant's entire answer and a motion for default judgment. Connor v. Connor, 2001 WI 49, ¶ 14, 243 Wis. 2d 279, 627 N.W.2d 182. The circuit court's decision on whether to grant a default judgment is reviewed under an erroneous exercise of discretion standard. Id., ¶ 18; see also Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 470, 326 N.W.2d 727 (1982). A court properly exercises its discretion if it examines the relevant facts, applies a proper standard of law and, using a demonstrated rational process, reaches a conclusion that a reasonable judge could reach. Loy v. Bunderson, 107 Wis. 2d 400, 414-15, 320 N.W.2d 175 (1982). We will not reverse a discretionary determination by the trial court if the record shows that discretion was in fact exercised and we can perceive a reasonable basis for the court's decision. Prahl v. Brosamle, 142 Wis. 2d 658, 667, 420 N.W.2d 372 (Ct. App. 1987).

¶ 11. A "party moving to vacate a default judgment pursuant to [Wis. Stat.] § 806.07(l)(a) must: (1) demonstrate that the judgment against him or her was obtained as a result of mistake, inadvertence, surprise or excusable neglect; and (2) demonstrate that he or she has a meritorious defense to the action." J.L. Phillips & Assocs., Inc. v. E & H Plastic Corp., 217 Wis. 2d 348, 358, 577 N.W.2d 13 (1998).

¶ 12. In determining whether to grant the dilatory party relief, the first step is to determine if there are reasonable grounds for the noncompliance with the statutory time period (excusable neglect). Hedtcke, 109 Wis. 2d at 468. Excusable neglect is that "neglect which might have been the act of a reasonably prudent person under the same circumstances." Id. (citation omitted). It is not synonymous with neglect, carelessness or inattentiveness, id., and it is not sufficient that the failure to answer in a timely manner be unintentional and in that sense a mistake or inadvertence, "since nearly any pattern of conduct resulting in default could alternatively be cast as due to mistake or inadvertence or neglect." Martin v. Griffin, 117 Wis. 2d 438, 443, 344 N.W.2d 206 (Ct. App. 1984) (citation omitted). Applying this standard, the Wisconsin Supreme Court has upheld a trial court determination that a party's failure to timely answer did not constitute excusable neglect when it was due to the failure of the client to forward the service on to the person or persons responsible for answering, id. at 443-44, and where a lawyer claimed that he was preoccupied by other legal business without stating specific incidents and a persuasive explanation, Hedtcke, 109 Wis. 2d at 473.

¶ 13. Discussion. With this precedent in mind, the record demonstrates that the circuit court properly exercised its discretion in finding that excusable neglect had not been established. On appeal, Alpha's argument for excusable neglect essentially rests on two assertions:

(1) [The process server] did not endorse the summons and complaint as required under Wisconsin Code of Civil Procedure and Alpha did not note the date that it was served because the employee who handles service was out of the office due to a death in the family. And,
(2) [The trial court] did not apply the appropriate legal standard in [its] determination. [It] based [its] decision to grant Williams Corner's motion solely on examination of whether excusable neglect had been established. [It] did not consider the interests of justice i.e. the harsh consequences of default judgment, the fact that default judgments are disfavored and that cases should be decided on the merits.

¶ 14. We address each of Alpha's arguments in order. With regard to Alpha's first argument that the court should have found excusable neglect due to the process server's failure to endorse and date the summons and complaint as required under Wis. Stat. § 801.10(2), we are not persuaded.

¶ 15. DeGeronimo conceded in his affidavit that service occurred in mid-October 2002; the process server stated in his affidavit that he served De-Geronimo on October 15, 2002, and the trial court found that Alpha was served on October 15, 2002. On appeal, Alpha makes no more than the bare assertion that excusable neglect existed because the summons and complaint were not endorsed or dated and the person "charged with handling such matters was out of the office due to a death in her family" at the time of service; therefore, "none of the officers or employees of Alpha Communications were able to recall when the complaint was actually served." In addition to conceding service in mid-October,- DeGeronimo's affidavit stated that his assistant was only out of the office a "few days." This is the only explanation given to defend Alpha's untimely answer.

¶ 16. Alpha provides no further explanation to justify the total inactivity between mid-October and December 4 — the date of Alpha's untimely answer. Alpha provides no reason as to why within the forty-five day response period from October 15 to November 29, Alpha neither moved for additional time to plead nor filed the answer or any other responsive pleading. Additionally, Alpha does not tell us why no one was assigned to fill in for the absent assistant normally charged with receiving legal process. From the record, it appears that Alpha's failure to answer in a timely manner amounted to nothing more than carelessness and inattentiveness on the part of the parties involved, and thus does not constitute excusable neglect.

¶ 17. Additionally, we are not swayed by Alpha's argument that it should have been granted leniency because it had promptly remedied its tardiness by filing an answer only five days late. Again, Hedtcke provides guidance. In Hedtcke, the defendant also argued for leniency because it had promptly remedied the problem by filing an answer only twelve days late. Hedtcke, 109 Wis. 2d at 465-66. The supreme court rejected this argument. Id. at 478. It held that while prompt remedial action after the expiration of the statutory time limit is a material factor bearing on whether relief should be granted, prompt action does not eliminate the requirement that a dilatory party demonstrate excusable neglect for its initial failure to meet the statutory deadline. Id. at 475-76.

¶ 18. Alpha's second argument is that the trial court did not apply the appropriate legal standard in its determination because it based its decision to grant Williams' motion solely on examination of whether excusable neglect had been established and did not consider the interests of justice. We do not agree.

¶ 19. The principal case on excusable neglect is Hedtcke, and it teaches that: "If the motion is made after the expiration of the specified time, an order enlarging the time for performing an act must be based on a finding of excusable neglect; when the circuit court determines that there is no excusable neglect, the motion must be denied." Id. at 468 (emphasis added.) As we understand Hedtcke, only if the court finds excusable neglect must it also consider the interests of justice before granting or denying relief. Because the court here found no excusable neglect, it did not consider interests of justice.

¶ 20. The trial court's decision to grant Williams' motion for a default judgment against Alpha due to Alpha's untimely answer was not clearly erroneous under the facts and circumstances of this case.

By the Court. — Judgment affirmed.

       This appeal does not concern the allegations against Areawide Cellular or challenge the default judgment entered against Areawide Cellular on February 7, 2003.

       Wisconsin Stat. § 801.10(2) provides:
      Endorsement. At the time of service, the person who serves a copy of the summons shall sign the summons and shall indicate thereon the time and date, place and manner of service and upon whom service was made. If the server is a sheriff or deputy sheriff, the server's official title shall be stated. Failure to make the endorsement shall not invalidate a service but the server shall not collect fees for the service.
      All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       Wisconsin Stat. § 802.06(1) provides in pertinent part: "[A] defendant shall serve an answer within 45 days after the service of the complaint upon the defendant."

       That said, we believe that there seems to be a need for clarification of the law under Hedtcke v. Sentry Insurance Co., 109 Wis. 2d 461, 326 N.W.2d 727 (1982). As the Hedtcke quote we rely on for our holding indicates, Hedtcke appears to hold that a trial court must first consider whether or not there is excusable neglect and, if there is no excusable neglect, the motion to enlarge time to file an answer must be denied. Id. at 468.
      However, in a seeming inconsistency, Hedtcke appears to say that the trial court must also consider the interests of justice:
      But the circuit court must go further than considering the causes for the neglect. The interests of justice require the circuit court to be aware of the effects of an order denying or granting relief. The circuit court must be cognizant that denial of a motion for enlargement of time to answer may result in a default judgment in favor of the plaintiff. The law views default judgments with disfavor and "prefers, whenever reasonably possible, to afford litigants a day in corut and a trial on the issues." On the other hand, the circuit court should also be aware of the party's and society's interest in prompt adjudication and "the probability that a policy which excused or tolerated a lawyer's neglect would foster delay in litigation" and lower the quality of legal representation. The circuit corut, considering these policies, must scrutinize the particular facts in the case before it and determine whether the interest[s] of justice will best he served by granting or denying a motion to enlarge the time.

        Id. at 469 (citations and footnotes omitted).
      Finally, a more recent case, Connor v. Connor, 2001 WI 49, ¶ 17, 243 Wis. 2d 279, 627 N.W.2d 182, also seems to say that the trial court must consider the interests of justice:

        A circuit court has great discretion in granting relief based on excusable neglect. In exercising this discretion, the court must consider whether the interests of justice would be served in its finding. The interests of justice require the court to be aware that a failure to find excusable neglect could result in a default judgment and that the law generally disfavors default judgments and prefers a trial on the merits. The court should also balance other competing interests of a default judgment, such as promoting prompt adjudication and encouraging quality legal representation.
      There does not seem to be a consensus among our court of appeals decisions regarding whether excusable neglect is a threshold determination or whether the trial court must consider both excusable neglect and the interests of justice.
      Given the lack of consensus, we urge the supreme court to guide our future review of trial court decisions employing the exercise of discretion on the question of whether or not to find excusable neglect.


author: SNYDER, J.

text:
    Deborah E. Wiegert and Terry S. Wiegert, Plaintiffs-Appellants, v. Jerry W. Goldberg, M.D., Defendant-Respondent.
    Court of Appeals

      No. 03-0891.

      Submitted on briefs August 22, 2003.

      Decided January 14, 2004.

    2004 WI App 28
    (Also reported in 676 N.W.2d 522.)

      On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of David P. Lowe and Paul R. Jacquart of Jacquart & Lowe, S.C., Milwaukee.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Randall J. Sandfort of Marshfield Clinic, Marshfield.
    Before Anderson, PJ., Brown and Snyder, JJ.
   SNYDER, J.

¶ 1. Deborah E. and Terry S. Wiegert appeal from an order granting Dr. Jerry W. Goldberg's motion for summary judgment. The Wiegerts contend that the trial court erred when it concluded that the applicable statute of limitations barred the Wiegerts' claim against Dr. Goldberg for medical malpractice. We disagree and affirm the order of the trial court.

FACTS

¶ 2. On November 24, 1997, Deborah Wiegert (Wiegert) was hospitalized at St. Joseph's Hospital in Sheboygan county with an undiagnosed inflammatory/autoimmune disorder that included symptoms of fatigue, pain in her extremities, and insomnia. While hospitalized, she saw Dr. Goldberg, who prescribed medication that provided relief of her symptoms. Following release from the hospital, Wiegert followed up with Dr. Goldberg by appointment on December 30, 1997, and then by phone in January and February 1998.

¶ 3. Wiegert's symptoms returned and she called Dr. Goldberg on March 18, 1998. Dr. Goldberg prescribed 30 mg. of Temazepam per day for thirty days without requiring an office appointment. Possible side effects of Temazepam include anxiety, insomnia, abuse and addiction, depression, disinhibition, and other mental and behavioral reactions.

¶ 4. On April 14, 1998, Wiegert called Dr. Goldberg's office for a refill of Temazepam. Dr. Goldberg did not speak to Wiegert, but provided her with prescriptions for three thirty-day refills of Temazepam. In April 1998, Wiegert's behavior started to change drastically. She experienced mood fluctuations, in addition to aggressive, argumentative, and unstable behavior that led to several interventions by local police. Wiegert made an appointment with Dr. Goldberg for May 12, 1998. Dr. Goldberg's notes from this appointment state that Wiegert's condition had improved, but make no reference to her use of Temazepam, and no mention of the behavioral problems Wiegert had been experiencing prior to the visit. The parties dispute whether Wiegert discussed her behavioral changes with Dr. Goldberg at the May 12 appointment, but for purposes of this appeal, Dr. Goldberg accepts her contention that she did.

¶ 5. After the May 12 appointment, Wiegert's condition deteriorated rapidly, and on June 16, 1998, Wiegert became manic and chased her husband's car through the streets of Sheboygan, ramming into it with her own vehicle.

¶ 6. Later that day, the police were called to the Wiegert home where Wiegert had stripped off her clothing and begun to cut her chest, breasts, arms, and legs with pieces of glass from a container she had broken. The police detained Wiegert and she was committed to Sheboygan Memorial Medical Center, where she stayed until June 18, 1998. The hospital psychiatrist informed Weigert that her abnormal behavior was probably caused by the Temazepam, and she stopped taking the drug.

¶ 7. The Wiegerts filed their claim of medical malpractice on June 14, 2001. Dr. Goldberg then moved for summary judgment on grounds that the Wiegerts' action was not timely brought under Wis. Stat. § 893.55 (2001-02). Dr. Goldberg argued that the statute of limitations had run because the claim was not filed within three years of Dr. Goldberg's last negligent act on May 12, 1998, the date of Wiegert's findl visit to Dr. Goldberg. The Wiegerts argued that the continuum of negligent medical treatment doctrine extended Dr. Goldberg's negligence to at least June 18,1998, because Dr. Goldberg negligently failed to monitor Wiegert during the course of her use of Temazepam. The trial court granted Dr. Goldberg's motion for summary judgment and found that no negligent act occurred after May 12, 1998. The Wiegerts appeal from the order for summary judgment.

DISCUSSION

¶ 8. In reviewing a grant of summary judgment, an appellate court applies the standards set forth in Wis. Stat. § 802.08(2) in the same manner as the circuit court. Hubbard v. Messer, 2003 WI 145, ¶ 7, 267 Wis. 2d 92, 673 N.W.2d 676. Our methodology is as follows. We must first determine whether the complaint states a claim. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987). If the plaintiff has stated a claim and the pleadings show the existence of factual issues, then we must examine whether the moving party has presented a defense that would defeat the claim. Preloznik v. City of Madison, 113 Wis. 2d 112, 116, 334 N.W.2d 580 (Ct. App. 1983). If the defendant has made a prima facie case for summary judgment, the court examines the pleadings, affidavits, depositions, answers to interrogatories, and admissions on file to determine whether a genuine issue exists as to any material fact, or whether reasonable conflicting inferences may be drawn from undisputed facts, therefore requiring a trial. See Green Spring Farms, 136 Wis. 2d at 315.

¶ 9. Summary judgment is proper when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2). We will reverse a decision granting summary judgment if either (1) the trial court incorrectly decided legal issues, or (2) material facts are in dispute. Deminsky v. Arlington Plastics Mach., 2001 WI App 287, ¶ 9, 249 Wis. 2d 441, 638 N.W.2d 331, aff'd, 2003 WI 15, 259 Wis. 2d 587, 657 N.W.2d 411, reconsideration denied, 2003 WI 91, 262 Wis. 2d 505, 665 N.W.2d 378. Taking these in reverse order, we first scour the record to determine whether material facts are in dispute. All inferences drawn from the underlying facts are interpreted in the light most favorable to the nonmoving party; therefore, we consider the pleadings and affidavits in the light most favorable to the Wiegerts. See Grams v. Boss, 97 Wis. 2d 332, 338-39, 294 N.W.2d 473 (1980).

¶ 10. A claim for medical malpractice, like any claim for negligence, requires four elements: (1) a breach of (2) a duty owed (3) that results in (4) an injury or injuries or damages. Paul v. Skemp, 2001 WI 42, ¶ 17, 242 Wis. 2d 507, 625 N.W.2d 860. The Wiegerts have alleged all elements required for a medical malpractice claim and Dr. Goldberg's answer is sufficient to join issue. Dr. Goldberg's motion for summary judgment provides a prima facie case based on the statutory time limits for medical malpractice claims proscribed by Wis. Stat. § 893.55(1). The Wiegerts' response and accompanying affidavit assert that an issue of material fact does exist. Our analysis of the record, however, indicates that only a question of law remains.

¶ 11. The Wiegerts argue that "[b]y providing Mrs. Wiegert with a continuum of negligent care, including prescribing ninety days of medication with dangerous side effects, Dr. Goldberg must accept a ninety day period of professional responsibility to monitor his patient." In support of their argument, the Wiegerts reference the affidavit of Peter R. Breggin, M.D. Dr. Breggin states:

It is my opinion that Dr. Goldberg provided Mrs. Wiegert a continuum of substandard care that began on the date of his first temazepam prescription to her, March 18, 1998, and continued through and after June 18, 1998 because Dr. Goldberg was not monitoring her use of the drug or its effects during this unusually lengthy period of use.

Dr. Goldberg, for purposes of this appeal, does not dispute that a physician has a duty to monitor a patient who is taking medication such as Temazepam. Rather, Dr. Goldberg asserts that the last act of negligence could not have occurred later than May 12, 1998, Wiegert's final office visit. The Wiegerts point to the dispute over the last date of negligence as an issue of material fact, rendering summary judgment inappropriate.

¶ 12. We disagree with the Wiegerts' attempt to recast the question of Dr. Goldberg's duty from a question of law to an issue of material fact. The issue before us is whether Dr. Goldberg's duty to monitor Wiegert was ongoing and constant through the full ninety-day prescription refill period. Whether a legal duty exists in a negligence case and the scope of that duty are questions of law. See Gould v. Am. Family Mut. Ins. Co., 187 Wis. 2d 671, 675, 523 N.W.2d 295 (Ct. App. 1994), rev'd on other grounds, 198 Wis. 2d 450, 543 N.W.2d 282 (1996). Whether Dr. Goldberg's legal duty to monitor Wiegert existed until June 18, 1998, is, therefore, a question of law. Summary judgment is proper and will be upheld on review when only a question of law is presented. Hubbard, 267 Wis. 2d 92, ¶ 7.

¶ 13. We now turn our attention to whether the trial court correctly decided the question of law. Dr. Goldberg asserts that the Wiegerts' claim is barred by the applicable statute of limitations. The Wiegerts and Dr. Goldberg agree that the applicable statute of limitations is Wis. Stat. § 893.55(1), which provides in relevant part:

[A]n action to recover damages for injury arising from any treatment or operation performed by, or from any omission by, a person who is a health care provider, regardless of the theory on which the action is based, shall be commenced within the later of:
(a) Three years from the date of the injury, or
(b) One year from the date the injury was discovered ....

¶ 14. Under this statute, the date of Wiegert's injury triggers the beginning of the limitations period. A patient has either the three-year general time period or the one-year time period from the date of discovery, whichever is later, in which to file a claim. See Judicial Council Committee's Note, 1979, Wis. Stat. § 893.55(1). However, the Wiegerts base their medical malpractice claim on the continuum of negligent medical treatment doctrine. A continuum of negligent medical treatment occurs where an initial negligent act is followed by a chain of negligent medical care related to a single condition. See Robinson v. Mount Sinai Med. Ctr., 137 Wis. 2d 1, 28-29, 402 N.W.2d 711 (1987).

¶ 15. To invoke the continuum of negligent medical treatment rule, a patient must show four elements: (1) a continuum of care, (2) a continuum of negligent medical care, (3) that the medical care was related to a single condition, and (4) that the precipitating factor in the continuum was the original negligent act. Westphal v. E.I. du Pont de Nemours & Co., Inc., 192 Wis. 2d 347, 369-70, 531 N.W.2d 386 (Ct. App. 1995). For purposes of this appeal, the parties agree that: (1) Dr. Goldberg provided health care services to Wiegert; (2) he prescribed Temazepam on March 18, 1998, thirty tablets with no refills, and prescribed three refills on April 14, 1998; (3) as a result of his prescriptions, Temazepam was delivered to Wiegert on March 19, April 14 and May 11, 1998 (a total of ninety tablets); (4) Wiegert experienced mental and behavioral changes as a result of taking the Temazepam; and (5) there was no contact between Dr. Golberg and Wiegert after the May 12, 1998 office visit.

¶ 16. Establishing a prima facie claim under the continuum of negligent medical treatment rule does not relieve the Wiegerts of the requirement to file within the statutory time limit. Accordingly, we turn our attention to the question of when the Wiegerts' cause of action accrued. Our supreme court has held: Tamminen v. Aetna Cas. & Sur. Co., 109 Wis. 2d 536, 559, 327 N.W.2d 55 (1982).

A cause of action accrues only when the cause of action is complete; and where, as here, it is averred in the affidavits that the negligent acts of malpractice were continuous, the cause of action is not complete until the last date on which the malpractice occurred. If an action is timely brought in relationship to that last date, the entire cause of action is within the jurisdiction of the court.

¶ 17. The Wiegerts argue that Tamminen supports their position that Dr. Goldberg's duty to monitor Wiegert continued through June 18, 1998, and therefore the last negligent act occurred on June 18, 1998, when no monitoring took place. Our reading of Tam-minen reveals no such conclusion. In that case, Tam-minen sued her physician for negligent treatment with respect to surgical, medical, and hospital care in connection with a gastric bypass procedure performed on November 4, 1975. Id. at 539. Our supreme court held that Tamminen's cause of action accrued on March 30, 1976, the date of her final discharge from the hospital. Id. at 558-59. The court held that a series of negligent acts, which form a "single unit of negligent treatment," should constitute but one cause of action. Id. at 558. The Tamminen court was concerned that splitting what amounted to a single cause of action into discreet claims would allow "only a relatively insignificant portion of [a patient's] claim to be tried." Id. at 549. There is no language that guides us to create an ongoing and constant duty to monitor through some vague and indefinite period, during which prescriptions may or may not be filled.

¶ 18. The Wiegerts also rely on Robinson to support their argument that Dr. Goldberg's final act of negligence occurred on the last date of the prescription period. In Robinson, the sixteen-year-old patient sought medical treatment for a toothache and headache at the Mount Sinai emergency room where he was seen by a hospital resident and the initial misdiagnoses of his condition occurred. Robinson, 137 Wis. 2d at 5-6. The resident gave Robinson oral medication and sent him home with instructions to follow up with his doctor in two weeks. Id. at 6. Three days later, Robinson returned to the emergency room and was seen by a physician who then admitted him to Milwaukee Children's Hospital. Id. Four major neurosurgical procedures were performed on Robinson while at Children's Hospital. Id. Upon discharge from Children's Hospital, Robinson, described as "thoroughly demented and a total invalid," was transferred to Sacred Heart Rehabilitation Hospital. Id. at 6-7.

¶ 19. The Wiegerts point out that in Robinson, the "administration of the allegedly inappropriate drug into Robinson, accompanied by the alleged failure of Children's Hospital to consider other treatment options, an omission of care within three years of the date of filing, was enough to preserve the entire continuum of negligence for suit even though over three years had elapsed from the date of any negligent treatment by Mount Sinai." The Robinson case did include negligently prescribed medication, but further attempts at analogy fail. The Robinson court was reviewing the issue of whether services rendered by successive health care providers constituted a continuum of negligent medical treatment such that a single cause of action could arise. Id. at 4. Robinson does not instruct us that a physician's duty to monitor a patient continues through some vague and indefinite period, during which prescriptions may or may not be filled.

¶ 20. No case law supports the Wiegerts' position. The Wiegerts' contention would furthermore lead to an unreasonable result. If physicians have a constant and ongoing duty to monitor patients through the end of a prescription drug regimen, how could we determine when a breach has occurred? Must physicians monitor patients weekly? Must they monitor daily? Will a phone call or email message suffice, or must there be an office visit? How will a physician's duty to monitor vary depending upon the drug prescribed? Some prescriptions provide refills for a six-month or one-year term. What is a physician's duty to monitor over a long-term prescription period? We decline the Wiegerts' invitation to impose such vague and undefined duty on physicians. Even Dr. Breggin's affidavit reveals that the scope of the duty the Wiegerts are attempting to place on Dr. Goldberg is unwieldy. In his affidavit, Dr. Breggin states that the "FDA approved manufacturer's labeling for temazepam provides that... if it is taken for longer periods of time such as 2 to 3 weeks, periodic reevaluation is required." (Emphasis added.)

¶ 21. While we acknowledge that the Wiegerts have established, for purposes of this appeal, that Dr. Goldberg had a duty to monitor Wiegert, we cannot agree that such a duty is constant and ongoing, subject to breach twenty-four hours a day during the entire prescription period. More appropriately, we hold that Dr. Goldberg had a duty at the time he wrote the prescriptions as stated in the trial court's analysis:

[A]ny claim of an omission was an omission that occurred in the distinct time frame Dr. Goldberg either intentionally or unintentionally did not require follow-up when he gave the prescriptions and/or when he saw the patient. At that point in time his negligence or omission, his negligent conduct is complete.

CONCLUSION

¶ 22. We hold that because no issue of material fact precludes summary judgment, it is an appropriate vehicle for resolving this case. We further conclude that although the Wiegerts state a claim based on the continuum of negligent medical treatment rule, the claim was not timely filed under Wis. Stat. § 893.55(1). Accordingly, the order of the trial court is affirmed.

By the Court. — Order affirmed.

       All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.


author: NETTESHEIM, J.

text:
    In re the Termination of Parental Rights to Caleb J.F., a Person Under the Age of 18: Courtney F. Petitioner, v. Ramiro M.C., Respondent-Appellant, Caleb J.F., by his Guardian ad Litem, Krislyn M. Holaday, Interested Party-Respondent.
    Court of Appeals

      No. 03-3018.

      Submitted on memoranda November 26, 2003.

      Decided January 21, 2004.

    2004 WI App 36
    (Also reported in 676 N.W.2d 545.)

      On behalf of the respondent-appellant, the cause was submitted on the petition of Christine L. Hansen, assistant state public defender, of Waukesha, and David L. Coon, guardian ad litem, of Brookfield.
    On behalf of the petitioner-respondent, the cause was submitted on the petition of Mark A. Brellenthin, guardian ad litem, of Brookfield, and Jason R. Smith, of The Law Center for Children and Families, of Madison.
    On behalf of the interested party-respondent, a response was filed by Krislyn M. Holaday, guardian ad litem, of Snyder & Ek, S.C., of Oconomowoc.
    Before Anderson, PJ., Nettesheim and Snyder, JJ.
   NETTESHEIM, J.

¶ 1. This action involves the involuntary termination of the parental rights (TPR) of sixteen-year-old Ramiro M.C. to his alleged child, Caleb J.F. The issue is whether the juvenile court erred by releasing Ramiro's juvenile and Department of Health and Human Services records to Caleb's guardian ad litem (GAL) for use in the TPR proceeding without first conducting an in camera review of those records to determine their relevance to the TPR proceeding.

¶ 2. We conclude that the statutory procedures set forth in Wis. Stat. ch. 48 required the juvenile court to determine the relevance of Ramiro's records to the TPR proceeding by an in camera examination prior to disclosure. Because the juvenile court did not conduct such an in camera examination, we reverse the order releasing Ramiro's records, and we remand for the juvenile court to conduct an in camera examination to determine the relevance, if any, of the records to the TPR proceeding.

¶ 3. Ramiro additionally appeals from an order in the TPR proceeding denying his motion for a protective order barring discovery of his juvenile records. Because the TPR court determined that the juvenile court's prior order releasing Ramiro's juvenile records governed the protective order request, the TPR court denied the motion for a protective order. Since we reverse the juvenile court's order releasing the records, we vacate the TPR court's order denying the protective order.

BACKGROUND

¶ 4. On September 16, 2003, Caleb's mother, Courtney E, who consented to the voluntary termination of her parental rights, filed a petition requesting the involuntary termination of Ramiro's rights to Caleb. As grounds for the petition, Courtney alleged that Ramiro had failed to assume parental responsibility under Wis. Stat. § 48.415(6) (2001-02). The matter was assigned to Judge Linda M. Van de Water, the regularly assigned juvenile court judge. On September 23, 2003, the juvenile court appointed guardian ad ¡items for Caleb and for each parent.

¶ 5. On September 25, 2003, Caleb's GAL, Attorney Krislyn M. Holaday, filed a "Petition for Release of Juvenile Records" in the TPR proceeding requesting the opening of Ramiro's juvenile court and department records pursuant to Wis. Stat. §§ 48.396(2)(a), 938.396(2)(a), 48.78(2)(a) and 938.78(2)(a). Citing to State v. Bellows, 218 Wis. 2d 614, 582 N.W.2d 53 (Ct. App. 1998), the GAL set forth her reasons for requesting review of Ramiro's records, including independent information that Ramiro may have been the subject of a sexual assault allegation. The following day, without a hearing or notice to Ramiro, the juvenile court judge signed the GAL's proposed "Authorization and Order to Open Court Records for Inspection." A plea hearing was scheduled for October 8, 2003. Shortly thereafter advocate counsel was appointed for Ramiro.

¶ 6. When the GAL received a copy of the order releasing Ramiro's records, she faxed a copy of the order to Ramiro's counsel. Upon receipt of the order, Ramiro's counsel filed an objection. In addition, counsel filed a substitution of judge request against Judge Van de Water at the plea hearing. Despite the substitution request, Judge Van de Water ruled that the issue concerning the release of Ramiro's juvenile records would remain before her as the regularly assigned juvenile court judge. For the moment, Judge Van de Water confirmed her order releasing Ramiro's juvenile records, but she ordered further briefing on the issue and scheduled the matter for a further hearing. Thereafter, the TPR proceeding was assigned to Judge Kathryn Foster.

¶ 7. Following this further hearing, Judge Van de Water again confirmed her ruling. In support, the judge stated that the admissibility of the evidence would be a matter for Judge Foster at the TPR proceedings. In addition, the judge stated that she did not "know how [Holaday] would be a fit and proper guardian ad litem without knowing what is [in the juvenile records], whether or not it can be used or can't be used, but certainly she should have that information if she is going to make a decision regarding the welfare of Caleb.”

¶ 8. At a later hearing that same day in the TPR proceeding, Judge Foster addressed Ramiro's motion for a protective order barring discovery of his juvenile records. Denying the motion, Judge Foster noted that the issue had already been addressed in the proceedings before Judge Van de Water. As such, Judge Foster deferred to that ruling and denied Ramiro's request for a protective order.

¶ 9. On November 4, 2003, Ramiro filed a motion for stay pending interlocutory appeal from both orders. On November 5, Judge Van de Water granted the stay for a period of ten days, ordering that Caleb's GAL have no further inspection of Ramiro's juvenile records until November 15, 2003. The judge additionally ordered that the parties not disseminate any information from Ramiro's records until November 15, 2003, or pending further order from the court of appeals. On November 11, 2003, Judge Foster entered a written order in the TPR matter denying Ramiro's motion for stay of the denial of the protective order pending appeal and allowing the GAL to depose Ramiro regarding his juvenile records.

¶ 10. Ramiro followed with a petition for leave to appeal Judge Van de Water's order releasing his juvenile records to the GAL and Judge Foster's order denying Ramiro's request for a protective order in the TPR matter. We granted the petition on November 17, 2003.

DISCUSSION

Standard of Review

¶ 11. The decision to issue an order for the release of juvenile or department records is left to the discretion of the juvenile court. Rock County Dep't of Soc. Servs. v. DeLeu, 143 Wis. 2d 508, 509-10, 422 N.W.2d 142 (Ct. App. 1988) (the juvenile court has discretion to determine if the confidential agency records should be disclosed or made available for inspection). A discretionary decision is one a reasonable court could reach by a consideration of the relevant law, the facts and a process of logical reasoning. State v. LaBine, 198 Wis. 2d 291, 306, 542 N.W.2d 797 (Ct. App. 1995). In order to be sustained, a court's discretion must be demonstrably based on the record and must rely on the appropriate and applicable law. Id. at 306-07.

¶ 12. In this case, the ultimate issue is whether the governing statutes required the juvenile court to conduct an in camera review of Ramiro's juvenile records prior to their release. This issue presents a question of law, which we review de novo. Teague v. Bad River Band, 2003 WI 118, ¶ 23, 265 Wis. 2d 64, 665 N.W.2d 899.

Rules of Statutory Construction

¶ 13. When we construe a statute, our aim is to ascertain the intent of the legislature. State v. Richard G. B., 2003 WI App 13, ¶ 8, 259 Wis. 2d 730, 656 N.W.2d 469, review denied, 2003 WI 16, 259 Wis. 2d 104, 657 N.W.2d 709 (Wis. Feb. 19, 2003) (No. 02-1302). Conventional statutory construction rules would have us first assess whether the language of the statute is clear and unambiguous. Id. If so, our inquiry ends and we simply apply the language to the facts of the case. Id. If not, we determine legislative intent from the words of the statute in relation to its context, subject matter, scope, history, and the object the legislature intended to accomplish. Id.

¶ 14. However, recent decisions from our supreme court involving statutory construction have not employed this threshold inquiry as to whether the statute is ambiguous or unambiguous. See Hubbard v. Messer, 2003 WI 145, ¶ 9, 267 Wis. 2d 92, 673 N.W.2d 676; Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI 150, ¶ 13, 267 Wis. 2d 158, 672 N.W.2d 275. Instead, the supreme court moved directly to an analysis of the legislative intent by looking to resources traditionally reserved for ambiguous statutes. "When interpreting a statute, our purpose is to discern legislative intent. To this end, we look first to the language of the statute as the best indication of legislative intent. Additionally, we may examine the statute's context and history." Village of Lannon, 2003 WI 150 at ¶ 13 (citations omitted). We will employ this new approach in this case.

Statutory Interpretation

¶ 15. The statutes at issue in this case fall into three groups: (1) Wis. Stat. §§ 48.396(2) and 938.396(2) governing the inspection and disclosure of juvenile records; (2) Wis. Stat. §§ 48.78(2) and 938.78(2) governing the inspection of agency records; and (3) Wis. Stat. § 48.293(2) governing discovery in Wis. Stat. ch. 48 proceedings. When statutes deal with the same subject matter or have a common purpose, we apply the doctrine of in pari materia by reading, applying and construing them together in a manner that harmonizes all in order to give each full force and effect. State v. Jeremiah C., 2003 WI App 450, ¶ 17, 260 Wis. 2d 359, 659 N.W.2d 193.

¶ 16. Here, all of these statutes deal with the common subject of the inspection and disclosure of juvenile records. Moreover, as our analysis of these statutes will reveal, all of these statutes assist in implementing the goals and policies of the Juvenile Justice Code relating to the confidentiality of such records. Therefore, we will read all of the statutes in pari materia.

¶ 17. Wisconsin Stat. §§ 48.396(2)(a) and 938.396(2)(a), governing juvenile court records, both provide in relevant part, "Records of the court assigned to exercise jurisdiction under [ch. 48 and ch. 938] . . . shall not be open to inspection or their contents disclosed except by order of the court assigned to exercise jurisdiction under [ch. 48 and ch. 938] or as permitted under this section [or s. 48.375(7)(e)]." Similarly, Wis. Stat. §§ 48.78(2)(a) and 938.78(2)(a), the statutes governing agency records pertaining to children, provide that such records are not subject to inspection or disclosure except as provided under Wis. Stat. ch. 48 and Wis. Stat. ch. 938 or "by order of the court."

¶ 18. Caleb's GAL argues that Judge Van de Water's release of Ramiro's records was proper under these statutes since the release was accomplished "by order of the court." We reject this argument because it ignores the "relevancy" requirement set out in the discovery provisions of the sister statute, Wis. Stat. § 48.293(2), and unduly diminishes the important gatekeeper rule of the juvenile court regarding the confidentiality of juvenile and agency records.

¶ 19. The discovery statute permits discovery of all records relating to a child "which are relevant to the subject matter of a proceeding" under Wis. Stat. ch. 48. Wis. Stat. § 48.293(2) (emphasis added). While this statute does not expressly require an in camera inspection, we deem the legislature's use of the term "relevant" as instructive on the question. The statute does not permit the wholesale inspection of a juvenile's file. Rather, it limits the inspection to only those materials that are "relevant." Obviously, some entity must make this "relevancy" determination. One of two candidates emerges — the juvenile court or the party seeking discovery. To commit this determination to the party or entity seeking discovery would stand the statute on its head since it would necessarily allow and require an inspection of the entire record by á stranger who has no responsibility to serve as the gatekeeper of the file. Thus, the only logical and sensible interpretation is that the legislature intended the juvenile court to make this "relevancy" determination. And, that determination can only be made by an in camera inspection of the records.

¶ 20. This interpretation also comports with the traditional notion that the judge, not the party seeking discovery, is the arbiter of relevancy when it comes to discovery disputes. Just as Wis. Stat. § 48.293(2) makes relevancy the benchmark for discovery in proceedings under Wis. Stat. ch. 48, so also does Wis. Stat. § 804.01, the general statute governing discovery in civil proceedings. "Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action ..." Id. (emphasis added). Case law has long held that the trial courts are the arbiters of discovery disputes. See, e.g., Shier v. Freedman, 49 Wis. 2d 41, 43, 181 N.W.2d 400 (1970) ("The sole issue on this appeal is whether the trial court abused its discretion in granting plaintiffs motion for the inspection of the medical books or journals .. ..") (emphasis added). We presume that the legislature enacted the discovery provisions of § 48.293(2) with an awareness of this well-established law. See Peters v. Menard, Inc., 224 Wis. 2d 174, 186, 589 N.W.2d 395 (1999).

¶ 21. Reading the discovery statute in pari mate-ria with the statutes barring inspection or disclosure of juvenile court or agency records, we conclude that the legislature intended that the juvenile court must make a threshold relevancy determination by an in camera review when confronted with: (1) a discovery request under Wis. Stat. § 48.293(2); (2) an inspection request of juvenile records under Wis. Stat. §§ 48.396(2) (a) and 938.396(2)(a); or (3) an inspection request of agency records under Wis. Stat. §§ 48.78(2)(a) and 938.78(2)(a).

¶ 22. Our reversal of the juvenile court's order rests on a further ground. In support of the ruling releasing Ramiro's records without first determining their relevancy to the TPR proceeding, Judge Van de Water stated that Ramiro's confidentiality concerns were matters of evidentiary admissibility for Judge Foster in the TPR proceeding. However, this reasoning blurs the distinction between a discovery ruling on the one hand and an evidentiary ruling on the other. The issue before Judge Van de Water was whether any of Ramiro's juvenile records was relevant for purposes of discovery in the TPR proceeding. In contrast, the issue before Judge Foster will be whether any of the disclosed records are relevant for evidentiary purposes.

¶ 23. Stated differently, but to the same effect, discovery rulings are not evidentiary rulings. Instead, discovery rulings simply prescribe the outer bounds of allowable discovery. Under Wis. Stat. § 804.01(2)(a), the test for permissible discovery is whether the "[information sought appears reasonably calculated to lead to the discovery of admissible evidence." We see no reason why this should not be the same test for purposes of discovery under Wis. Stat. § 48.293(2).

¶ 24. In summary, Judge Van de Water had an important gatekeeper role to perform when confronted with the GAL's discovery request. That role was to determine whether any of Ramiro's juvenile court or agency records were relevant to the GAL's discovery request in the TPR proceeding. That role is markedly different from that which Judge Foster will perform as the judge presiding at the TPR proceedings. If we upheld Judge Van de Water's ruling, the GAL would have full access to Ramiro's records without any prior judicial supervision or input. Because Judge Van de Water misperceived the distinction between a discovery ruling before trial and an evidentiary ruling at trial, an in camera inspection of the records never occurred in this case.

The Case Law

¶ 25. Our holding is supported by the few cases that addressed this topic. In Rock County Dep't of Soc. Servs. v. DeLeu, 143 Wis. 2d 508, 509-10, 422 N.W.2d 142 (Ct. App. 1988), this court addressed Wis. Stat. § 48.78(2)(a), the statute conferring confidentiality on agency records concerning a juvenile. As noted, this statute, like Wis. Stat. § 48.396 covering juvenile court records, bars inspection or disclosure of agency records except "by order of the court." DeLeu, 143 Wis. 2d at 509-10. In DeLeu, the juvenile court, without first conducting an in camera review of the records, ordered the county department of social services to deliver its files to a criminal court judge for purposes of an in camera review. DeLeu, 143 Wis. 2d at 509. The department appealed. Id. In defending the order, the criminal defendant argued that, prior to ordering the release of agency records, the juvenile court had properly considered the interest of the juvenile and the public interest in maintaining the confidentiality of the records and the criminal defendant's interest in a fair trial. Id. at 510. We concluded that the juvenile court had not exercised its discretion because it ordered the department to release the records to the criminal court judge without first conducting an in camera review, thereby delegating its duty to determine which, if any, of the agency's files would be disclosed to the criminal defendant or made available for inspection. Id. at 510-11.

¶ 26. Thus, DeLeu instructs that the phrase "by order of the court" contemplates an exercise of discretion that cannot be meaningfully undertaken without measuring the reasons underlying the request for the inspection against the information actually contained in that record. In DeLeu, the juvenile court had performed only half of that exercise — ascertaining the reasons for the requested inspection. However, the court failed to perform the other half — measuring those reasons against the record itself.

¶ 27. The same situation exists here. While hearing out Caleb's GAL as to the reasons for the requested inspection, Judge Van de Water failed to measure those reasons against the content of Ramiro's juvenile records. Therefore, the judge erroneously exercised her discretion by ordering the disclosure of Ramiro's records without first conducting an in camera review to determine the relevance of the records to the TPR proceedings and without first providing notice to the juvenile or his or her representative.

¶ 28. Two other cases, while not directly controlling, lend support to our holding. In State ex rel. Herget v. Waukesha County Circuit Court, 84 Wis. 2d 435, 267 N.W.2d 309 (1978), the plaintiffs in a civil action sued a juvenile and his parents for damage caused by the juvenile's intentional acts. The plaintiffs sought to discover the law enforcement records of the juvenile regarding the incident. Id. at 442. The statute in existence at the time barred inspection or disclosure of peace officers' records of children, but like the current Wis. Stat. § 48.396(2)(a), contained an exception allowing inspection "by order of the court." Herget, 84 Wis. 2d at 446.

¶ 29. Because the statute did not prescribe the circumstances in which the court could order the disclosure of records, the Herget court looked to the statutory scheme of Wis. Stat. ch. 48. Herget, 84 Wis. 2d at 449. The court observed that the statutes mandate confidentiality as the general rule and disclosure as the exception, thus expressing the legislature's determination that the best interests of the child and the administration of the juvenile justice system require protecting the confidentiality of police, court and social agency records relating to juveniles. See id., at 451-52.

¶ 30. The Herget court held:

In view of the statutory expression of the strong public interest in promoting the best interests of the child and the administration of the juvenile justice system by protecting the confidentiality of police, court, and social agency records relating to juveniles ... the circuit court is justified in ordering the discovery of all or any part of sec. 48.26 records only when the court has reviewed the records in camera and has made a determination that the need for confidentiality is outweighed by the exigencies of the circumstances.

Herget, 84 Wis. 2d at 451-52.

¶ 31. The Herget court then set forth the procedures to be followed prior to the disclosure of a child's records: (1) the petition made by a person seeking the disclosure of records for use in private litigation must describe the information sought, the basis for the belief that the information is in the child's police records, its relevance to the plaintiffs action, the probable admissibility of the information as evidence at trial and efforts made to obtain the information elsewhere; (2) the child must be notified that the records are being sought and the child must be given an opportunity to respond; and (3) the court must make an in camera inspection of the file. Id. at 452-53.

If the court determines that certain information contained in [the] police file is essential to plaintiffs' cause and cannot be obtained with reasonable effort from other sources, the court must then determine whether plaintiffs' need for that information outweighs society's interest in protecting its confidentiality. In making this determination the circuit court must balance two private and two societal interests: the victim's interest in recovering for the damage he has suffered and the juvenile's interest in rehabilitation and in avoiding the stigma of revelation; the redress of private wrongs through private litigation and the protection of the integrity of the juvenile justice system.
If, after balancing these interests, the circuit court determines that certain information should be disclosed, the court must carefully tailor its discovery order to permit disclosure of only that information. The trial. court shall make a record of the reasons for its determination to allow or not to allow discovery, and the record shall be sealed.

Id. at 453 (emphasis added; footnotes omitted).

¶ 32. The Her get procedures were later discussed in Bellows, 218 Wis. 2d 614. There, in addition to other charges, the defendant was charged with child neglect. Id. at 617. On the eve of trial, the State obtained the juvenile court's release of a CHIPS petition filed against the defendant and the minutes of the CHIPS proceeding indicating that the defendant had admitted to the petition. Id. at 618, 626. Although the juvenile court had conducted an in camera inspection, the court had released the records without a hearing, without an opportunity for a representative of the children to be heard on the question, and without an analysis of the "best interests" of the children. Id. at 627. Relying on Herget, this court held that the juvenile court procedure was deficient and therefore the adult court had erred in admitting the records. Bellows, 218 Wis. 2d at 626-34.

¶ 33. Both Herget and Bellows rest on two fundamental principles: the importance of the confidentiality of juvenile records and the importance of the juvenile court's role as the "gatekeeper" of those records. We conclude that Herget and Bellows support our conclusion that the law requires an in camera inspection prior to granting any request for the disclosure of a child's juvenile court and department records for purposes of any other proceeding.

¶ 34. In reaching this conclusion, we recognize that the disclosure of Ramiro's juvenile records would occur in the closed setting of a TPR proceeding whereas the records in Herget and Bellows would occur in the public forums of a civil and criminal court. We also recognize that here it is a GAL, acting as an agent of the TPR court, rather than an adversary party, who is seeking the inspection. See Paige K.B. v. Molepske, 219 Wis. 2d 418, 430, 580 N.W.2d 289 (1998) (the GAL essentially functions as an agent or arm of the court, charged with the same standard that must ultimately govern the court's decision — the best interests of the child). On the same theme, we acknowledge Judge Van de Water's concern that without unfettered access to Ramiro's juvenile records, the GAL might not be able to make a fully informed recommendation to Judge Foster as to whether Ramiro's parental rights should be terminated.

¶ 35. Despite these factual differences and concerns, we adhere to our holding for two reasons. First, as our statutory analysis reveals, the legislature intended that the juvenile court determine the relevancy of juvenile court records prior to any release of the records. If the legislature had wanted to reduce the gatekeeper function of the juvenile court when the records will be revealed in another Wis. Stat. ch. 48 proceeding or where the records are sought by a GAL as opposed to an adversary party, it could have done so by eliminating the relevancy requirement in those settings. Second, although both Herget and Bellows noted the risk that the records would be revealed in a public forum, both cases rest on more fundamental principles —the confidential nature of juvenile records and the important role of the juvenile court as the gatekeeper of such records.

¶ 36. We also observe that the Herget procedures are now codified in Wis. Stat. §§ 48.396(5) and 939.396(5). Since these statutes deal only with law enforcement records, an argument could be made that the legislature did not intend these procedures to apply to juvenile court records. However, our analysis of the statutes has brought us to a contrary interpretation. As such, there was no need for the legislature to codify the Herget procedures with regard to juvenile court records.

Protective Order

¶ 37. Ramiro additionally appeals Judge Foster's ruling in the TPR proceeding denying his motion for a protective order under Wis. Stat. § 804.01(3). Pursuant to that statute, if a party files a motion and shows good cause, "the court may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Ramiro's request to Judge Foster for a protective order echoed his arguments to Judge Van de Water against the disclosure of his juvenile records.

¶ 38. In denying Ramiro's motion, Judge Foster deferred to the prior ruling of Judge Van de Water allowing the GAL to inspect Ramiro's juvenile records. As a result, Judge Foster concluded that the prior ruling governed Ramiro's request for a protective order. However, in light of our decision reversing Judge Van de Water's ruling, it follows that we must vacate Judge Foster's order.

CONCLUSION

¶ 39. We conclude that a request for discovery of a juvenile record pursuant to Wis. Stat. §§ 48.396(2)(a) or 938.396(2)(a) or a request for inspection of an agency record pursuant to Wis. Stat. §§ 48.78(2)(a) or 938.78(2) (a) requires the juvenile court to conduct an in camera review of the juvenile records to determine whether they are relevant to the stated purpose of the discovery or inspection. Although not at issue in this case, we further conclude that the juvenile court must provide notice of such a request to the juvenile and provide an opportunity to be heard.

¶ 40. Since the juvenile court did not conduct an in camera inspection, we reverse the order releasing Ramiro's juvenile records and we remand with directions that the juvenile court conduct such a review. We further vacate the order denying the protective order.

By the Court. — Order reversed and cause remanded; order vacated.

       This court granted Ramiro M.C.'s request for leave to appeal on November 17, 2003. Although this case was originally a one-judge appeal, we ordered that it be converted to a three-judge appeal pursuant to Wis. Stat. Rule 809.41(3) (2001-02). All references to the Wisconsin Statutes are to the 2001-02 version.

       On November 17, 2003, Ramiro submitted the results of genetic testing indicating a 99.9% probability that he is the father of Caleb and requesting an order finding clear and convincing evidence that he is Caleb's biological father. The record does not reflect any juvenile court ruling on this matter.

       On November 20, 2003, the legislature amended Wis. Stat. § 48.396(2)(g). This statute, as amended, provides:
      Upon request of any court assigned to exercise jurisdiction under this chapter and ch. 938, any municipal court exercising jurisdiction under s. 938.17(2), or a district attorney, corporation counsel, or city, village, or town attorney to review court records for the purpose of any proceeding in that court or upon request of the attorney or guardian ad litem for a party to a proceeding in that court to review court records for the purpose of that proceeding, the court shall open for inspection by any authorized representative of the requester the records of the court relating to any child who has been the subject of a proceeding under this chapter.

        See 2003 Wis. Act 82, § 1. This legislation was published on December 5, 2003, and became effective on December 6, 2003, after the orders appealed in this case were entered. Therefore, the amended statute does not apply.

       An earlier petition to terminate the parental rights of both Ramiro and Courtney had been dismissed for failure to allege sufficient facts.

       Ramiro's petition for leave to appeal also sought review of the juvenile court's order denying his motion to remove the guardian ad litems for Ramiro and Courtney. This court denied this portion of the petition for leave to appeal, and we therefore do not address the issue.

       WisConsin Stat. §§ 48.396(2)(a) and 938.396(2)(a) cover juvenile court records. WISCONSIN Stat. §§ 48.78(2) (a) and 938.78(2)(a) cover agency records.

       Although the record does not include a transcript of this proceeding, it appears that the parties agreed to this procedure. In any event, the propriety of Judge Van de Water retaining jurisdiction over the release of Ramiro's records is not before us.

       However, Judge Foster did admonish all parties not to disclose the contents of Ramiro's records for any other purpose than to conduct discovery in the pending TPR case.

       We do so acknowledging that, in a given case, this new approach could produce a statutory interpretation result contrary to the plain language of the statute. Such, however, is not the result in this case.

       The law pertaining to TPR proceedings is set forth in Subchapter VIII of Wis. Stat. ch. 48, which includes §§ 48.40 through 48.435. Other than §§ 48.432, 48.433 and 48.434, which pertain to the release of medical information and birth parent identity to adoptees, neither of which is germane to the issue in this case, the TPR procedures do not contain a discovery statute. Therefore, the general discovery procedures set forth in Subchapter V of ch. 48, § 48.293, govern the discovery at issue in this case. See also State v. Tammy F., 196 Wis. 2d 981, 986-87, 539 N.W.2d 475 (Ct. App. 1995) (§ 48.293 is the exclusive source of discovery rights of parties in ch. 48 actions).

       In this case, although Ramiro did not initially receive notice of the GAL's inspection request and of the juvenile court's original order releasing the records, he was later notified of the court's ruling and was permitted to be heard on the matter.

       Although the juvenile justice code is now contained in Wis. Stat. ch. 938, it nevertheless maintains its requirements of confidentiality. See Wis. Stat. § 938.396(1).

       The facts of this case demonstrate that the first and second requirements of State ex rel. Herget v. Waukesha County Circuit Court, 84 Wis. 2d 435, 267 N.W.2d 309 (1978), were satisfied. As to the first requirement, the GAL described the information she was seeking, the basis for her belief that the juvenile records might contain that information, and the relevance to the TPR proceeding. As to the second requirement, Ramiro received notice (albeit belatedly) of the GAL's request and he was allowed to be heard on the matter. However, the third Herget requirement — an in camera inspection by the juvenile court — did not occur.