author: LUNDSTEN, J.

text:
    James H. Daughtry d/b/a La Quinta Mortgage, James H. Daughtry, as Attorney in Fact for Steve Welty and Associates, Roberta Fleming, Donald J. Troy, Sharron Troy, Dolores E. Thompson, Geraldine B. Smith, Harold Armburst, Chang Family Trust of 1995, Robert J. McDonald, Susan J. McDonald, Gurley 1980 Family Trust, Patricia A. Maietta, Santo LaFerrara, Carole R. Otto, William Hall, Phyllis Hall and Holmes Family Trust, Plaintiffs-Appellants, v. MPC Systems, Inc., MPC Development LLC, 400 Main Street Partners LLC, James C. Harlan III and Ian R. Waddell, Defendants-Co-Appellants, Brack Thermal System, Inc., United Building Centers, United States Fire Protection/Wisconsin, Inc., Daniel W. Parmenter, State of Wisconsin Department of Workforce Development, and Doerflinger Condominium Association, Inc., Defendants, City of La Crosse, Defendant-Respondent.
    Court of Appeals

      No. 02-2424.

      Submitted on briefs March 10, 2003.

    Decided March 18, 2004.

    2004 WI App 70

      (Also reported in 679 N.W.2d 808.)

      • On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Thomas M. Pyper and Jeanne M. Armstrong of Whyte Hirschboeck Dudek S.C., Madison.
    On behalf of the defendants-co-appellants, the cause was submitted on the briefs of William G. Skemp of William Skemp Law Firm, S.C., La Crosse, and Phillip B. Greer of Newport Beach, California.
    On behalf of the defendant-respondent, the cause was submitted on the briefs of Patrick J. Houlihan, City Attorney, and Pamela A. Captain, Assistant City Attorney, for the City of La Crosse.
    Before Deininger, PJ., Vergeront and Lundsten, JJ.
   LUNDSTEN, J.

¶ 1. A developer, MPC, entered into a contract with the City of La Crosse to purchase and renovate a building. MPC acquired financing from La Quinta. When MPC failed to complete renovations on time, the City sought to exercise a contract clause giving it the right to buy back the building. MPC disputed the City's allegation that MPC was responsible for delays. During this same time period, MPC also stopped making mortgage payments.

¶ 2. La Quinta eventually brought a foreclosure action against MPC and named the City as a codefen-dant. The City counterclaimed against La Quinta and cross-claimed against MPC. The circuit court granted summary judgment in favor of the City and against both MPC and La Quinta. As to MPC, the court declared that MPC had breached the contract and the City had the right to exercise the buy-back clause. As to La Quinta, the court declared that the City's ownership interest upon buy-back is superior to the interest created by the mortgage held by La Quinta.

¶ 3. On appeal, MPC argues that the circuit court erred in granting summary judgment to the City. MPC makes four arguments: (1) the circuit court erroneously refused to acknowledge the answer MPC filed responding to the City's cross-claim; (2) the circuit court erroneously entered default judgment against MPC; (3) the circuit court compounded its default judgment error by relying on the default judgment as an admission by MPC that it breached its contract with the City; and (4) the circuit court erroneously failed to defer to the separate lawsuit initiated by the City in which MPC is litigating the breach issue. We reject all of MPC's arguments, but nonetheless reverse the summary judgment in favor of the City because of our resolution of arguments made by La Quinta.

¶ 4. La Quinta argues that the circuit court erred in granting summary judgment in favor of the City and against La Quinta. La Quinta contends there is a factual dispute concerning whether MPC breached its contract with the City that precludes summary judgment. On this topic, we address the following questions: (1) Did La Quinta waive its argument that MPC breached the contract? (2) Does La Quinta have a right to litigate the breach issue? (3) Did the circuit court err when it prohibited La Quinta from relying on the affidavits of an MPC officer? (4) Does one of the MPC officer's affidavits create a material factual dispute? We conclude that La Quinta did not waive the breach argument, and we answer the remaining questions in the affirmative. Therefore, we agree with La Quinta that a material factual dispute precludes summary judgment in favor of the City.

¶ 5. La Quinta also contends that it is entitled to summary judgment against the City. For purposes of these arguments, La Quinta assumes that MPC breached the contract, thereby entitling the City to buy back the building. La Quinta asserts that its mortgage interest is superior to the City's buy-back right for two reasons. First, the mortgage La Quinta holds is a "purchase money mortgage" and, as such, it is superior to the City's buy-back right. Second, La Quinta argues that its mortgage is a "construction lien" within the meaning of the contract between MPC and the City which specifies that the City's right to buy back the building is subject to construction liens. We agree with the circuit court that these arguments lack merit, and we decline to grant summary judgment in favor of La Quinta.

¶ 6. Therefore, we reverse summary judgment against both MPC and La Quinta and remand with directions.

Background

¶ 7. The City of La Crosse owned a historic retail building called the Doerflinger Building. MPC offered to buy and extensively renovate the building. Negotiations ensued, resulting in a property sales contract between MPC and the City dated March 12, 1998. The contract contained a reversion clause, giving the City the right to buy back the Doerflinger Building for the purchase price, $50,000, if MPC failed to "substantially complete" the renovation by September 30, 1999. The contract language on this topic is as follows:

If [MPC] does not... substantially complete [renovation] within the time periods provided herein, this Agreement, at the option of CITY, shall be null and void and the CITY, upon payment of the purchase price of Fifty Thousand Dollars ($50,000.00). .. shall have the option to re-acquire the property subject to construction or mechanical liens existing at that time.

The contract also required that MPC provide proof that it "has the financing to complete the renovation, remodeling, landscaping and other costs in connection with the project."

¶ 8. MPC acquired financing from La Quinta. La Quinta agreed to provide MPC with financing for both the purchase price and renovations in exchange for a first mortgage security interest. The first mortgage was executed on April 6,1998. The City determined that the financing agreement was satisfactory, and a quitclaim deed was recorded on August 14, 1998. The deed states that "conveyance is subject to [the contract which provides], among other things, that the City has an option to reacquire the above-described property should the renovation of the property not be done in accordance with said Contract." The first mortgage was recorded on August 28, 1998.

¶ 9. Approximately two years later, on April 20, 2000, the City issued a "stop work notice" to MPC. Thereafter, La Quinta stopped funding loan draws for the project, and MPC stopped making loan payments to La Quinta.

¶ 10. MPC failed to meet the timetable set forth in the contract. On May 2, 2001, the City filed a lawsuit against MPC, separate from the one before us, alleging that MPC breached the contract. That case, captioned City of La Crosse v. Frontier Insurance Co., et al., Case No. 01-CV-256, is being held in abeyance pending this appeal.

¶ 11. On January 28, 2002, La Quinta commenced the lawsuit that is the subject of this appeal. La Quinta named as defendants MPC and several other parties, including the City, with potential claims against the Doerflinger Building. La Quinta sought foreclosure, alleging that MPC had defaulted on its loan from La Quinta. La Quinta asserted that the Doerflinger Building was owned in fee simple by MPC and that any claim or lien alleged by the City was "subordinate and junior" to the lien held by La Quinta.

¶ 12. On March 12, 2002, the City sought to exercise its right to buy back the Doerflinger Building by asserting that MPC had breached the contract and declaring the Contract for Conveyance null and void.

¶ 13. On April 9, 2002, the City counterclaimed against La Quinta and cross-claimed against MPC. In both of these claims, the City asserted that MPC had breached the contract by failing to "substantially complete" renovation on time. The City asked the circuit court for an order declaring that the City had the right to buy back the Doerflinger Building, free and clear of any mortgage interest held by La Quinta. The City further asked the court to declare that its ownership, upon repurchase, was not encumbered by the mortgage interest held by La Quinta.

¶ 14. MPC did not file a timely answer to La Quinta's foreclosure action and did not file a timely answer to the City's cross-claim. In addition, a co-owner of and negotiator for MPC, Conrad Seymour, failed to attend a scheduled deposition, at which Seymour was to be deposed by the City and La Quinta. The City had subpoenaed Seymour to attend. The deposition was rescheduled at least once, but Seymour continued to fail to cooperate.

¶ 15. The City moved for sanctions against MPC, asking the court to prohibit MPC or "any other party" from using information supplied by Seymour for purposes of deciding summary judgment motions. The City also moved for default judgment on its cross-claim against MPC based on MPC's failure to file an answer. Finally, the City moved for summary judgment against La Quinta, asserting that the City's reversionary interest was superior to La Quinta's interest.

¶ 16. MPC did not respond to the City's default judgment motion.

¶ 17. La Quinta objected to any order that would prevent it from presenting evidence from Seymour. La Quinta opposed summary judgment against it, relying in part on the Seymour affidavits it had submitted. La Quinta also moved for summary judgment against MPC and the City, asserting that the undisputed facts showed that MPC had not breached the contract and, therefore, MPC still owned the building, but also alleging that MPC had defaulted on its loan from La Quinta. La Quinta asserted that it possessed a lien with priority over all other claims on the property.

¶ 18. The circuit court granted the City's request that no party be permitted to rely on evidence from Seymour.

¶ 19. With respect to MPC, the circuit court treated the City's motion for default judgment as a motion for summary judgment and granted the motion. The circuit court concluded that by failing to file a timely response to the City's cross-claim, and by failing to file a responsive pleading or counter-affidavits to the City's summary judgment motion, MPC admitted the City's allegation that MPC had breached the contract. The circuit court declared that the City has the right to buy back and own the Doerflinger Building "free and clear" of "any interests" of MPC.

¶ 20. With respect to La Quinta, the circuit court granted summary judgment in favor of the City. Among other reasons given for awarding summary judgment in favor of the City, the circuit court explained that La Quinta did not have standing to argue that MPC did not breach its contract with the City and that La Quinta was bound by admissions flowing from MPC's failure to file responsive pleadings to the City's cross-claim. The circuit court declared that the City has the right to buy back and own the Doerflinger Building "free and clear" of La Quinta's mortgage.

¶ 21. With respect to the dispute between La Quinta and MPC, the circuit court granted summary judgment in favor of La Quinta, declaring that MPC owed La Quinta $1,346,780.45 pursuant to the mortgage note.

Discussion

I. Standard of Review

¶ 22. We review summary judgment de novo, applying the same method as the trial court. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987). Summary judgment is appropriate when there is no material factual dispute and the moving party is entitled to judgment as a matter of law. Germanotta v. National Indem. Co., 119 Wis. 2d 293, 296, 349 N.W.2d 733 (Ct. App. 1984). Summary judgment methodology is well established and need not be repeated here. See, e.g., Lambrecht v. Estate of Kaczmarczyk, 2001 WI 25, ¶¶ 20-24, 241 Wis. 2d 804, 623 N.W.2d 751.

II. The City's Summary Judgment Motion Against MPC

¶ 23. The circuit court granted summary judgment in favor of the City, declaring that the City has the right to buy back and. own the Doerflinger Building. MPC asserts this is error for four reasons: (1) the circuit court erroneously refused to acknowledge the answer MPC filed responding to the City's cross-claim; (2) the circuit court erroneously entered default judgment against MPC; (3) the circuit court compounded its default judgment error by relying on the default judgment as an admission by MPC that it breached its contract with the City; and (4) the circuit court erroneously failed to defer to the separate lawsuit initiated by the City in which MPC is litigating the breach issue. We reject all of MPC's arguments, but nonetheless reverse the summary judgment in favor of the City.

¶ 24. If this action involved only MPC and the City, we would have no trouble affirming the circuit court's judgment in favor of the City. However, as explained in the part of this opinion dealing with La Quinta's appeal, we conclude that La Quinta has the right to litigate whether MPC breached the contract with the City and a factual dispute precludes summary judgment. Because it is nonsensical under the particular facts of this case to let stand a judgment against MPC declaring the City to be the owner of the Doer-flinger Building based on MPC's breach, and at the same time permit La Quinta to proceed with its argument that MPC owns the building because MPC did not breach the contract, we reverse that part of the summary judgment declaring that the City has the right to buy back the Doerflinger Building. Instead, we conclude that the appropriate sanction against MPC in this lawsuit, under the unusual facts of this case, is to preclude MPC from litigating whether it breached the contract with the City. On remand, the circuit court should determine whether MPC should be dismissed from this lawsuit or whether it should continue as a party, despite our holding that MPC may not be an advocate with respect to whether it breached its contract with the City.

¶ 25. In the following subsections, we explain why MPC's arguments on appeal have no merit.

A. MPC's Late Answer

¶ 26. MPC argues that the circuit court erroneously refused to "acknowledge" the answer MPC filed responding to the City's cross-claim. The City explains that MPC's answer was untimely and that MPC did not request an extension of time or even attempt to provide factual assertions establishing excusable neglect. MPC ignores the fact that its answer was late and makes no attempt to rebut the City's assertion that MPC failed to request an extension or establish excusable neglect. The circuit court properly concluded that MPC had not filed a timely answer.

B. Default Judgment

¶ 27. MPC argues that the circuit court erroneously entered default judgment against MPC. Relying on Wis. Stat. § 806.02 and Pollack v. Calimag, 157 Wis. 2d 222, 235, 458 N.W.2d 591 (Ct. App. 1990), MPC asserts: "a counter claimant cannot obtain a default judgment against a defendant." However, as the City points out, no default judgment was entered; the circuit court denied the City's motion for default judgment and instead treated the motion as one for summary judgment. Accordingly the circuit court could not have violated any rule against entering default judgment.

C. Use of MFC's Failure as an Admission

¶ 28. MPC asserts that the circuit court compounded its default judgment error by relying on the default judgment as an admission by MPC that it breached its contract with the City. MPC reasons that, because the circuit court's "finding" of a breach was based on an erroneous default judgment, there still exist "questions of material fact that preclude granting a motion for summary judgment."

¶ 29. In the previous subsection, we explained that the circuit court did not enter default judgment against MPC. Thus, MPC's argument has a faulty starting point. In its reply brief, MPC implicitly acknowledges that default judgment was not entered, and raises a different issue: "what can the trial court do if it finds that there is not a responsive pleading to a counter claim." MPC contends the answer is nothing. MPC reasons that without a judgment "there is no finding of fact which could give rise to a determination of any breach." We fail to understand this argument. Summary judgment is not based on fact finding. If MPC means to. argue that its failure to file an answer or other responsive pleading cannot be considered an admission for purposes of summary judgment, it has not made or developed that argument.

¶ 30. The City has identified the correct issue and has addressed it. The question is this: In the absence of an answer to a cross-claim and in the absence of any other responsive pleadings, may a court deem facts alleged in a cross-claim and submissions filed in connection with a summary judgment motion admitted for purposes of summary judgment? The City contends the answer is yes, and we agree. A party must file an answer to a cross-claim. Wis. Stat. § 802.01(1). In addition, averments are deemed admitted when not denied. See Wis. Stat. § 802.02(4); see also Mitchell Bank v. Schanke, 2004 WI 13, ¶ 34, 268 Wis. 2d 571, 676 N.W.2d 849, rev'g 2002 WI App 225, 257 Wis. 2d 723, 652 N.W.2d 636. In this case, MPC failed to file an answer to the City's cross-claim and failed to deny averments made in submissions by the City. Thus, for purposes of summary judgment, MPC has failed to dispute any fact alleged by the City.

D. The Separate Lawsuit

¶ 31. Finally, MPC asserts that the circuit court erroneously ignored the separate lawsuit filed by the City against MPC, City of La Crosse v. Frontier Insurance Co., et al., Case No. 01-CV-256. MPC argues that the circuit court violated Wis. Stat. § 802.06(2)(a) 10 by failing to dismiss the City's cross-claim because, MPC asserts, the separate lawsuit "deals with the exact same issues and the exact same parties." MPC states that, in the separate lawsuit, "the City of La Crosse is claiming that MPC breached its contract," which is the same claim the City is making in its cross-claim. The City responds that this issue has been waived because MPC did not move for dismissal on this basis before the circuit court. MPC replies that its attorney advised the circuit court that the breach issue was pending in the separate lawsuit and, therefore, the circuit court was obligated under § 802.06(2)(a) 10 to dismiss the City's cross-claim.

¶ 32. We have reviewed the portion of the transcript where MPC contends its trial counsel made the separate lawsuit argument. That exchange cannot reasonably be read as advising the circuit court that the City's cross-claim should be dismissed because of the other lawsuit. We deem the issue waived.

III. Summary Judgment Issues Between the City and La Quinta

¶ 33. In the following subsections, we deal with two topics. First, whether there is a material factual dispute regarding the City's right to buy back the Doerflinger Building that precludes summary judgment in favor of the City. Second, whether, even if the City has a right to buy back the building, La Quinta is entitled to summary judgment because its mortgage interest is superiorato the City's buy-back interest.

A. Whether Summary Judgment was Properly Granted Against La Quinta

¶ 34. La Quinta first argues that averments by Conrad Seymour of MPC show a dispute as to whether MPC breached the contract and, consequently, whether the City has the contractual right to buy back the Doerflinger Building. On this topic, we address the following questions: (1) Did La Quinta waive its argument that MPC breached the contract? (2) Does La Quinta have a right to litigate the breach issue? (3) Did the circuit court err when it prohibited La Quinta from relying on the Seymour affidavits? (4) Does one of the Seymour affidavits create a material factual dispute? We conclude that La Quinta did not waive its breach argument, and answer the remaining questions in the affirmative. Therefore, we agree with La Quinta that a material factual dispute precludes summary judgment in favor of the City.

1. Waiver

¶ 35. Without using the word "waiver," the City argues that La Quinta waived its right to assert a factual dispute regarding whether MPC breached the contract. The City argues that, regardless whether La Quinta has the right to litigate the breach issue and regardless whether the Seymour affidavits are considered, La Quinta admitted there is no factual dispute precluding summary judgment. The City points to La Quinta's assertion before the circuit court that factual disputes relating to construction delays and breach are not material to La Quinta's summary judgment motion. The City quotes the italicized language below, taken from a La Quinta memorandum supporting its request for summary judgment:

The City's reacquisition right ripened only on specified breaches of contract by MPC. While there are significant disputes between MPC and the City over who is responsible for construction delays and why the Doerflinger Project is still not completed, those factual disputes are not material to La Quinta's motion. For purposes of this motion, La Quinta assumes that the City can show that it is entitled to reacquire the property, but only subject to the full extent of La Quinta's construction mortgage lien existing "at [this] time." That amount is $1,356,600.42 as of June 2, 2002. See Daughtry Aff., ¶ 17. If, however, the Court were to disagree, the significant factual disputes on the question of whether the City can exercise its reacquisition rights precludes summary judgment in favor of the City.

The City's reliance on the italicized language is divorced from context. La Quinta argued that any factual dispute regarding the breach did not preclude summary judgment in favor of La Quinta. La Quinta went on, both in the above-quoted language and elsewhere, to assert that there are factual disputes relating to the breach that preclude summary judgment in favor of the City. We reject the City's waiver argument.

2. La Quinta's Right to Argue that MPC Did Not Breach the Contract Between MPC and the City

¶ 36. The circuit court concluded that La Quinta lacked standing to litigate whether MPC breached the contract and, therefore, lacked standing to litigate whether the City was the lawful owner of the Doer-flinger Building. The circuit court's lengthy decision is not amenable to quick summarization, but it is fair to say that part of the circuit court's reasoning was as follows: having decided that the City was entitled to summary judgment against MPC based on MPC's failure to respond to the City's factual assertion that MPC breached the contract, La Quinta should not be permitted to continue and litigate the very same issue in the context of its dispute with the City. The circuit court was understandably concerned with the prospect of inconsistent holdings regarding whether the City owned the Doerflinger Building. We have the same concern. However, the question remains whether there is a reason why La Quinta may not fully litigate its dispute with the City, including the dispute regarding who breached the contract. We agree with La Quinta that there is no such reason.

¶ 37. The key to understanding our analysis is understanding that we are not addressing whether La Quinta has standing to argue that it has some sort of right under the contract between MPC and the City. Rather, the breach issue simply forms a part of the factual backdrop for the dispute between La Quinta and the City because it is pertinent to whether the City or La Quinta has a superior interest in the Doerflinger Building. If MPC breached the agreement and the City has the right to buy back the building, that situation forms the necessary factual underpinning for the City's counter-claim contention that its ownership interest in the Doerflinger Building will be superior to any interest La Quinta may have as a result of the mortgage agreement. Conversely, if MPC did not breach the agreement and the City is not the building owner, La Quinta's asserted interest is superior to the City's.

¶ 38. The most helpful case identified by the parties is Precision Erecting, Inc. v. M & I Marshall & Ilsley Bank, 224 Wis. 2d 288, 592 N.W.2d 5 (Ct. App. 1998). In order to understand why Precision Erecting supports La Quinta's position here, it is necessary to describe in detail the pertinent parts of that decision.

¶ 39. In Precision Erecting, a Waukesha company named AFW Foundry contracted with Antonie & Associates to coordinate improving an AFW business property. Id. at 293. While performing on this contract, Antonie purchased a piece of equipment from a Nambe Mills, Inc. Antonie made a $7,000 downpayment on the $70,000 price, and Nambe delivered the equipment. Nambe received no further payment. Nambe was not the only subcontractor or supplier on the project not getting paid. A subcontractor named Precision Erecting sued AFW for unpaid bills and AFW responded with a third-party complaint against Antonie, Nambe, and twenty-one other third-party defendants. Id. at 293-94. AFW's third-party complaint is the subject of the appeal in Precision Erecting.

¶ 40. Precision Erecting and the other third-party subcontractors and suppliers alleged that AFW owed them a total of $365,000. AFW claimed that Antonie was not its agent, but rather a general contractor and, therefore, AFW's liability was limited to the amount it owed Antonie under AFW's contract with Antonie. This amount, AFW argued, was as little as $85,000 because some subcontractors and suppliers had already agreed to accept a pro rata portion of the amount owed. Id. at 294. Antonie filed an answer alleging it was a project manager, not a general contractor. Similarly, Nambe filed an answer alleging Antonie was an agent, not a general contractor. AFW moved for summary judgment against all of the third-party defendants, requesting a judgment establishing its liability to these various defendants in the amount of about $86,000. In a turnabout, Antonie submitted a letter stating it did not oppose AFW's summary judgment motion. Nambe did not respond at all. Id. The circuit court granted summary judgment, declaring that Antonie was a general contractor and directing that all subcontractors and suppliers be paid out of an $85,957 trust funded by AFW. The circuit court subsequently allocated $11,340 of this trust to Nambe, an amount representing 18% of Nambe's $63,000 claim. Nambe appealed the judgment. Id. at 294-95.

¶ 41. On appeal, Nambe effectively asked that it be allowed to litigate the contractual relationship between AFW and Antonie because of Nambe's own interest in holding AFW liable for the balance due to Nambe. This court described the issue as "whether the summary judgment to AFW against Antonie precludes Nambe from arguing that Antonie was an agent of AFW rather than a general contractor." Id. at 300. We determined that issue preclusion barred any further litigation regarding the relationship between AFW and An-tonic. Id. at 304-09. An important part of our issue preclusion analysis hinged on the fact that Nambe could have, but failed to "assert [] itself at the summary judgment stage if it felt material facts regarding Antonie's status were in dispute." Id. at 301. We explained: "The very fact that a summary judgment motion was made alerted Nambe that someone was alleging that there were no facts in dispute. If [Nambe] did not agree, it should have come forward at that time." Id. at 309. We further explained:

We observe it to be self-evident that a summary judgment motion by its very nature alleges certain facts to be undisputed. If a litigant who is not the subject of the motion for summary judgment nonetheless has reason to dispute the facts supporting the motion, it is that litigant's duty to appear and object to the motion. If not, and summary judgment is granted, the facts underlying that judgment are binding on all other parties to the suit as a matter of issue preclusion. That is what the trial court held and we agree.

Id. at 292-93.

¶ 42. In essence, La Quinta is in the same position Nambe would have been in had Nambe asserted its right to weigh in on the nature of the contractual relationship between AFW and Antonie. In Precision Erecting, Nambe's rights with respect to AFW turned on the construction of a contract to which Nambe was not a party. If, under the AFW/Antonic contract, An-tonic was AFW's agent, then AFW would have been liable to Nambe for the $63,000 outstanding balance. We opined that, regardless whether Antonie chose to contest AFW's assertion that Antonie was a general contractor, Nambe had "every right to appear and object to the summary judgment motion." Id. at 306. That is, Nambe had the right to participate and argue that Antonie was not a general contractor under the AFW/Antonic contract and, consequently, that AFW was liable to Nambe for the full outstanding balance.

¶ 43. It would be inconsistent to tell Nambe in Precision Erecting that it passed up its chance to litigate the contractual relationship between AFW and Antonie, but now tell La Quinta that it has no right to litigate whether MPC breached MPC's contract with the City. Just as Nambe had a right to litigate a contract issue between AFW and Antonie because of the consequences that flowed to Nambe, regardless whether Antonie disputed AFW's position, La Quinta has the right to litigate the breach issue between MPC and the City, regardless whether MPC pursued the issue. Not only does La Quinta have the right to litigate the breach issue, under Precision Erecting La Quinta would have faced issue preclusion had it not pursued the issue.

3. Whether the Circuit Court Erred in Refusing to Consider the Seymour Affidavits Submitted by La Quinta

¶ 44. Conrad Seymour is a co-owner of MPC and was involved in negotiations with the City regarding the purchase and renovation of the Doerflinger Building. Following commencement of this litigation, Seymour failed to appear for deposition by the City. Based on this failure, the City asked the circuit court to prohibit MPC or "any other party" from using information supplied by Seymour for purposes of deciding summary judgment motions. La Quinta, recognizing that the City's request affected La Quinta's ability to submit evidence from Seymour, opposed the request. The circuit court granted the City's request and made clear that its ruling applied to La Quinta.

¶ 45. The parties dispute whether Wis. Stat. § 804.12(4) provides authority for prohibiting La Quinta from presenting affidavits from Seymour. Section 804.12(4) provides, in relevant part:

If a party or an officer, director, or managing agent of a party or a person designated under s. 804.05(2)(e) or 804.06(1) to testify on behalf of a party fails (a) to appear before the officer who is to take the party's deposition, after being served with a proper notice,... the court in which the action is pending on motion may make such orders in regard to the failure as are just, and among others, it may take any action authorized under [§ 804.12(2)(a)l, 2, and 3].

Under § 804.12(2)(a)2, authorized sanctions include:

An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting the disobedient party from introducing designated matters in evidence ....

¶ 46. La Quinta argues that Wis. Stat. § 804.12(4) authorizes sanctions only against a disobedient party, that is, a party that fails to cooperate with discovery, and La Quinta points out that it did not fail to cooperate with discovery. The City does not argue that § 804.12(4) authorizes sanctions against a non-disobedient party. Instead, the City argues that § 804.12(4) authorizes the exclusion of the Seymour affidavits because Seymour is an officer of MPC and MPC is a party. The City's argument explains why a sanction was properly imposed against MPC, but fails to address why § 804.12(4) provides authority for preventing La Quinta from presenting evidence from Seymour.

¶ 47. We are uncertain, but the City seemingly contends that a circuit court has the inherent authority to exclude evidence proffered by an innocent party if the source of the evidence failed to cooperate with discovery attempted by another party. The City provides no authority or argument for this position, and we are reluctant to resolve the issue in the absence of adversarial briefing. However, we conclude we need not resolve this legal question because, even assuming a court has the authority to exclude evidence under these circumstances to avoid unfairness, the facts here do not support the exercise of such authority.

¶ 48. When this topic was discussed before the circuit court, counsel for La Quinta noted that La Quinta never tried to stop the City from deposing Seymour. La Quinta's counsel observed that he too had been waiting with the attorneys for the City when Seymour did not show up. La Quinta's counsel suggested that the court defer a ruling on the summary judgment motions to give the City a chance to "take the deposition of Mr. Seymour under an order by the court subject to contempt." The City responded that La Quinta and MPC had been "in bed" together for the last three or four years. The City argued that La Quinta's suggestion that the case be delayed while the City deposed Seymour was "just one more effort on their part to not get this case done."

¶ 49. In rejecting La Quinta's suggestion that it use its contempt power to compel Seymour's attendance at a deposition, the circuit court did not base its decision on any misbehavior or failing by La Quinta. In fact, the court agreed that La Quinta had no apparent control over Seymour. Instead, the court focused its attention on fairness to the City:

I don't think that allowing a witness to present evidence only on behalf of one side and not subject himself to discovery or herself to discovery is fair, and it may be that [La Quinta] doesn't have control over Mr. Seymour and that they don't have an exact identity of interests, but in this case it would appear to me that all of the affidavits submitted by Mr. Seymour are in support of the position of [La Quinta], and that he has aligned himself with [La Quinta], and I think that the facts in this case in terms of when those affidavits were prepared and the fact that he didn't appear for the deposition lead me to the conclusion that I should not consider those affidavits in support of [La Quinta's] position at this point in time.

¶ 50. We first note that, on appeal, the City does not argue that the sanction imposed against La Quinta was justified because of misbehavior by La Quinta. We are left, then, with the fairness rationale expressed by the circuit court. This rationale is reasonable as far as it goes, but it does not adequately take into account that the remedy imposed prevented La Quinta from litigating an issue it has a right to litigate. The exclusion of this evidence was a "drastic remedy." See Jenzake v. City of Brookfield, 108 Wis. 2d 537, 542, 322 N.W.2d 516 (Ct. App. 1982). Rather than first impose this drastic remedy against a non-misbehaving party, the circuit court should have, as suggested by La Quinta's counsel, attempted to use its contempt power to compel Seymour's attendance. The City did not argue below, and does not argue on appeal, that it would have been harmed by the delay associated with such an attempt. See id. at 545 (when concealment of testimony unfairly affects a party's ability to try a case, the harmed party should demonstrate why a continuance is not an appropriate remedy).

¶ 51. We conclude that the circuit court deprived a non-misbehaving party of the ability to present evidence without sufficiently exploring alternatives that would have ameliorated unfairness to the City. Accordingly, the Seymour affidavits are properly considered for purposes of determining whether the City is entitled to summary judgment.

4. Whether One of the Seymour Affidavits Creates a Material Factual Dispute

¶ 52. La Quinta argues that the City is not entitled to summary judgment because one of the Seymour affidavits raises a material factual dispute as to whether the City improperly prevented MPC from performing on the contract. We agree.

¶ 53. One of the Seymour affidavits avers that the City interfered with MPC's ability to perform on the contract by improperly issuing "stop work" notices. In particular, Seymour's affidavit avers that the City issued a stop work notice based on the wrong set of plans. Seymour specifies the outdated plans used and the revised plans that should have been used. Seymour averred that he "personally pointed out the error ... to the Board of Public Works in May 1999 by providing documentation of the change in plans and bond reduction." Seymour averred that the La Crosse Board of Public Works agreed that an error had occurred, but would not lift the "Stop Work Notice." Seymour averred that MPC lost eight months because of this, which caused MPC to fail to complete renovation of the building by the contract deadline. Thus, Seymour avers in plain terms that the City, by knowingly issuing an improper stop work notice, interfered with MPC's ability to comply with the contract.

¶ 54. The City provides only one response to La Quinta's argument that Seymour's averments raise a factual dispute as to whether the City was responsible for MPC's failure. The City points out that an "unavoidable delays" clause was deleted from the agreement between MPC and the City. The deleted clause reads:

In the event of unavoidable delays beyond the control of [MPC] and CITY, the date for commencement and/or date for substantial completion of the improvements shall be correspondingly set back by the same number of days involved in the period of unavoidable delays beyond the control of [MPC] or CITY.

The City asserts that, because this clause was deleted from the agreement, "[i]t does not matter who or what caused the delays" and, therefore, MPC is responsible even if the City improperly hindered MPC. La Quinta argues that deletion of the unavoidable delays clause is beside the point because when two parties contract they impliedly agree not to hinder the performance of the other. We agree with La Quinta.

¶ 55. In Wisconsin, "[i]f one person enters into a contract with another, there is an implied promise by each that each person will do nothing to hinder or obstruct performance by the other." Wis JI — Civil 3060; see also Ekstrom v. State, 45 Wis. 2d 218, 222, 172 N.W.2d 660 (1969) (" '[T]here is an implied undertaking in every contract on the part of each party that he will not intentionally and purposely do anything to prevent the other party from carrying out his part of the agreement, or do anything....'" (quoting 17 Am. Jur 2d, Contracts § 256, at 653, 654)); Gessler v. Erwin Co., 182 Wis. 315, 338, 193 N.W. 363 (1924) (" 'Where a party stipulates that another shall do a certain thing, he thereby impliedly promises that he will himself do nothing which will hinder or obstruct that other in doing that thing ....'" (quoting 2 Williston, Contracts, at 1307, 1308)).

¶ 56. Because Seymour's affidavit raises a factual issue as to whether the City improperly interfered with MPC's ability to substantially complete its work by the contract due date, and because we reject the City's only counterargument on this topic, we conclude that a material factual dispute precludes summary judgment in favor of the City. If, on remand, further discovery produces additional evidence on this issue, the City may attempt to show there is no material factual dispute regarding whether MPC breached the contract.

B. Whether Summary Judgment in Favor of La Quinta is Required Because the Mortgage Gives La Quinta a Right Superior to the City's Interest, Even if MPC Breached the Contract

1. Whether a Purchase Money Mortgage Has Priority Over the Reversionary Interest Created by the Contract

¶ 57. La Quinta argues that, even if it is assumed that MPC breached the contract, thereby entitling the City to buy back the Doerflinger building, this court should nonetheless grant summary judgment to La Quinta because its mortgage agreement with MPC gives La Quinta an interest in the property superior to the City's right to buy back the property. La Quinta asserts this is true because the mortgage was a "purchase money mortgage" and, as such, it takes precedence over any other claim to the property. The parties dispute whether the mortgage is a "purchase money mortgage," but we need not resolve that dispute. We agree with the circuit court and the City that, even if the mortgage agreement between La Quinta and MPC is properly characterized as a "purchase money mortgage," it does not give La Quinta an interest superior to the City's right to buy back the property.

¶ 58. Our analysis here largely tracks that of the circuit court, and we begin with the same proposition assumed by that court: absent an exception set forth in the law, a party may not convey an interest greater than the interest the party possesses. This general proposition is exemplified in the property law context by Gilchrist v. Foxen, 95 Wis. 428, 70 N.W. 585 (1897).

¶ 59. In Gilchrist, a property owner conditionally gifted the property to her daughter. Id. at 429. The deed recited that the property was transferred subject to the condition that the mother be supported in "good manner" during her lifetime. Id. The daughter and her husband acquired two mortgage loans on the property. Id. After the daughter died and the husband absconded, the mother re-entered the property. Id. at 437-38. A mortgagee sought to foreclose on the property. The court rejected foreclosure, finding that the condition had not been met and, therefore, the mother lawfully regained title. Id. at 438-40. While addressing the rights of the mortgagee, the Gilchrist court explained: "[E]very person acquiring any right, title, or interest in the premises, from, through, or under the daughter, or her husband, or both, by deed, mortgage, or otherwise, necessarily took and received the same subject to those provisions contained in the deed." Id. at 435. That is, the Gilchrist court concluded that an interest in the property acquired by the mortgagee from the owner could not be greater than the interest the owner acquired through the deed. See also Minneapolis Threshing Mach. Co. v. Hanson, 112 N.W. 217, 218 (Minn. 1907) (a mortgagee who obtains a mortgage from an owner, and subsequently seeks to obtain property by foreclosure, may only acquire the property rights the owner possessed under the deed).

¶ 60. Here, MPC purchased conditional ownership of the Doerflinger Building. Unlike a typical sales contract, MPC acquired the Doerflinger Building subject to the City's right to buy back the building if MPC failed to "substantially complete" renovations by September 30, 1999. Similarly, the deed stated that the conveyance was subject to this reversion clause in the contract.

¶ 61. La Quinta does not take issue with the general proposition that a party may not convey an interest greater than the interest the party possesses. Instead, La Quinta asserts that an exception to this general rule is present here because La Quinta's mortgage agreement with MPC is a purchase money mortgage. La Quinta relies on Northern State Bank v. Toal, 69 Wis. 2d 50, 230 N.W.2d 153 (1975), for the proposition that a purchase money mortgage is superior to any claim. In its reply brief, La Quinta asserts that the court in Northern State Bank held that where a purchase money mortgage is executed pursuant to an agreement as part of a continuous transaction, the mortgage "takes precedence over any other claim or lien attaching to the property." See id. at 55 (emphasis supplied by La Quinta). However, Northern State Bank does not stand for the sweeping proposition asserted by La Quinta.

¶ 62. The "any other claim" language from Northern State Bank that La Quinta relies on is not a part of the holding in that case; rather, it is part of a description of the circuit court's reasoning. Id. at 55. Moreover, even if the supreme court in Northern State Bank had indicated adoption of the "any other claim" language, La Quinta would still have two problems. First, such language would be dicta because the court in Northern State Bank was not asked to decide whether every type of claim or interest is trumped by a purchase money mortgage. Second, there is no indication that the Northern State Bank court contemplated that it was addressing the type of interest retained by the City of La Crosse in this case.

¶ 63. In Northern State Bank, a creditor held a judgment against a man named Toal in the amount of approximately $30,000. Id. at 51. After that judgment had been obtained, Toal applied for a mortgage loan to purchase a home. In his application, Toal listed his $30,000 judgment as a debt. Id. at 51-52. Based on the advice of counsel that a purchase money mortgage would have preference over the prior judgment, the lender accepted Toal's application and took a mortgage on the home. Id. at 52. When Toal subsequently defaulted on the mortgage payments, the mortgagee/lender and the judgment holder disputed whether the purchase money mortgage took priority over the prior judgment. Id. While ruling in favor of the mortgagee/lender, the supreme court relied on authority stating that a purchase money mortgage has priority over earlier judgments and judgment hens against the mortgagor. Id. at 55-56. Neither Northern State Bank, nor any of the authority cited in that opinion, addresses the sort of pre-existing property interest held by the City in this case.

¶ 64. La Quinta has failed to provide authority for its assertion that a purchase money mortgage has priority over the type of reversionary interest held by the City. We agree with the circuit court's conclusion that, in the absence of a provision in the contract between MPC and the City making the City's reversion-ary right subordinate to the type of mortgage held by La Quinta, the City's reversionary right, and its lawful exercise of that right, extinguishes La Quinta's interest in the Doerflinger Building.

2. Whether La Quinta's Mortgage Interest Is a "Construction Lien" Within the Meaning of the Contract

¶ 65. Here, La Quinta once again assumes for argument sake that MPC breached the contract, thereby entitling the City to buy back the Doerflinger Building. In this argument, La Quinta asserts that its mortgage is a "construction lien" within the meaning of the MPC/City contract and, therefore, La Quinta's mortgage interest is superior to the City's interest because the contract specifies that the City's right to buy back the Doerflinger Building is subject to construction liens.

¶ 66. La Quinta argues that the term "construction . .. liens" in the contract is ambiguous and that one reasonable interpretation of the term includes La Quinta's mortgage on the Doerflinger Building. "Contractual language is ambiguous only when it is 'reasonably or fairly susceptible of more than one construction.' " Town of Neenah Sanitary Dist. No. 2 v. City of Neenah, 2002 WI App 155, ¶ 9, 256 Wis. 2d 296, 647 N.W.2d 913 (quoting Borchardt v. Wilk, 156 Wis. 2d 420, 427, 456 N.W.2d 653 (Ct. App. 1990)). "The interpretation of a written contract, including the determination of whether its terms are ambiguous, is a legal matter that we decide independently." Town of Neenah, 256 Wis. 2d 296, ¶ 9.

¶ 67. La Quinta cites various sources for the proposition that a mortgage creates a "lien." See, e.g., Mutual Fed. Sav. & Loan Ass'n v. Wisconsin Wire Works, 58 Wis. 2d 99, 104, 205 N.W.2d 762 (1973) ("[T]he interest of the mortgagee is that of a lien holder."). However, these sources miss the mark because the contract term at issue here is not the general term "lien," but the more specific term "construction lien." La Quinta has not provided any support for its argument that the term "construction lien" encompasses an interest created by a mortgage. To be clear, the ambiguity requirement is not met by a showing that the meaning of a contract term is uncertain because the term is undefined and has no single generally accepted meaning. In the context of this case, there needed to be a showing that a reasonable person could read the term in the contract as encompassing a mortgage interest. La Quinta failed to do that.

¶ 68. In contrast, many sources treat mortgages and construction liens as distinct from each other. See, e.g., Wozniak v. Wozniak, 121 Wis. 2d 330, 337, 359 N.W.2d 147 (1984) (discussing the differences between mortgages, judgment liens, and construction liens); R. Fredrick Redi-Mix, Inc. v. Thomson, 96 Wis. 2d 715, 723, 292 N.W.2d 648 (1980) ("A construction lien is a remedy created by statute to insure payment to contractors, subcontractors, tradesmen, laborers and ma-terialmen who have furnished labor or materials in good faith for the improvement of another's property."); Mortgage Assocs., Inc. v. Monona Shores, Inc., 47 Wis. 2d 171, 186-87, 177 N.W.2d 340 (1970) (construction liens have priority over unrecorded mortgages); Marine Bank of Appleton v. Hietpas, Inc., 149 Wis. 2d 587, 589, 439 N.W.2d 604 (Ct. App. 1989) (affirming the circuit court's decision that a construction lien was subordinate to a mortgage); see also Wis. Stat. § 779.01(3).

¶ 69. Accordingly, although we use different reasoning than the circuit court, we agree with its conclusion that the term "construction hen" in the contract unambiguously excludes La Quinta's mortgage interest.

Conclusion

¶ 70. Although we reject each of MPC's arguments and would, apart from La Quinta's dispute with the City, affirm summary judgment against MPC, we nonetheless reverse that part of the summary judgment declaring that the City has the right to buy back the Doerflinger Building. We conclude that the appropriate sanction against MPC is to preclude MPC from litigating whether it breached the contract with the City. On remand, the circuit court should determine whether MPC should be dismissed from this lawsuit or whether MPC should continue as a party, despite our holding that MPC may not be an advocate with respect to whether it breached its contract with the City. MPC has not appealed that part of the circuit court's order granting summary judgment in favor of La Quinta against MPC. Accordingly, we do not address that part of the order. Regarding the circuit court's separate order dated August 23, 2002, we affirm the order insofar as it sanctions and imposes costs on MPC. That order, however, may not be enforced against La Quinta.

¶ 71. Further, we agree with La Quinta that a material factual dispute concerning whether MPC breached its contract precludes summary judgment in favor of the City. However, we reject La Quinta's argument that its mortgage interest is superior to the City's interest even if MPC breached the contract and the City has the right to buy back the Doerflinger Building. Thus, we deny summary judgment in favor of La Quinta on that basis. We also reverse that portion of the summary judgment order discharging the lis pendens, no. 1301353, filed on January 28, 2002, and the amended lis pendens, no. 1308283, filed on April 12, 2002.

¶ 72. Our resolution of these issues means we must also reverse the order directing MPC and La Quinta to pay the City costs. A new order for costs may be appropriate depending on the results of additional proceedings.

¶ 73. Accordingly, we remand to the circuit court for further proceedings consistent with this opinion.

By the Court. — Judgments and order reversed and cause remanded with directions.

       We employ the same shorthand terms used by the parties when referring to the appellants and co-appellants. We collectively refer to the appellants as "La Quinta," even though La Quinta assigned its interest in the mortgage to other named plaintiffs-appellants. Similarly, we collectively refer to the co-appellants as "MPC."

       Throughout its briefing, and in pleadings submitted to the circuit court, the City speaks in terms of being declared the "owner" of the Doerflinger Building. However, the City does not explain how it can be the owner before it pays MPC the purchase price, offset by any losses sustained by the City in connection with the Desmond lease or other losses described in the contract. The City does not direct our attention to any place in the record indicating the actual buy-back amount or whether it has paid that amount. Further, the circuit court's order declares that the "City is entitled to take back the property." Accordingly, we speak in terms of the City's right to buy back the building.

       This means MPC may not move to dismiss the City's cross-claim under Wis. Stat. § 802.06(2)(a)10 (1999-2000), a topic discussed later in this section. All further references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       The circuit court treated the City's motion for default judgment as a motion for summary judgment, and we do the same. MPC has not argued that the City must lose because it filed the wrong type of motion.

       The full exchange was as follows:
      [Counsel for MPC]: I think - I think it does enlist the breach. I don't think it in any manner deals with a finding of liability, and if in fact the reality is that Mr. Daughtry indicates that there's monies due that haven't been paid and that's the basis for taking it back, then the city is in its foreclosure action not asking for a determination of the breach, but is simply asking that it have priority, then all those issues I think still remain the purview of Judge Rosborough [presiding in the separate lawsuit], and based upon that -
      THE COURT: They might be pending in front of Judge Rosborough, but they are also alleged in the claim here and they're alleged to have been breached.

       In a case of this complexity, this statement warrants qualification. The City has not explained in its brief why it would have an interest in the Doerflinger Building superior to La Quinta's if the City does not have the right to buy back the building because of MPC's breach. Our statement in the text is based on the absence of any indication in the appellate briefs that there is an alternative basis for the City asserting that it has an interest in the Doerflinger Building superior to La Quinta's interest. However, this litigation will continue, and we do not mean to preclude the City from proffering other theories, provided they are consistent with this opinion.

       It may be that a circuit court has the authority to deny a third party, such as La Quinta, the right to litigate an issue if the court guarantees the third party that it will not face issue preclusion. However, we do not address that issue because that did not happen here.

       We stress that our conclusion on this topic might have been different if the City had produced evidence that La Quinta was, to some degree, responsible for Seymour's lack of cooperation and if the City had argued that such misbehavior by La Quinta justified the sanction imposed by the circuit court. However, the City has not directed our attention to such evidence and has not made that argument.

       Seymour had been served with a subpoena that informed him that his failure to appear would subject him to possible sanctions, including contempt. Attendance at a deposition "may be compelled by subpoena as provided in s. 805.07." Wis. Stat. § 804.05(1); see also Wis. Stat. § 804.05(3)(b)4. The statutory subpoena form in Wis. Stat. § 805.07 contains the following language: "Failure to appear may result in punishment for contempt which may include monetary penalties, imprisonment and other sanctions." See also Evans v. Luebke, 2003 WI App 207, ¶ 17, 267 Wis. 2d 596, 671 N.W.2d 304 ("Contempt power is recognized as an 'inherent' judicial power, that is, one that does not necessarily derive from legislative mandate and which inheres in the definition of a court.").

       Before the circuit court, La Quinta also argued that, even ignoring the Seymour affidavit, the breach issue was put into dispute by affidavits of several other persons. La Quinta has abandoned that argument on appeal.

       La Quinta makes, but does not adequately develop, another argument regarding a distinct factual dispute. La Quinta asserts that it received assurances that, under the Contract for Conveyance, La Quinta's mortgage interest would supersede the City's right to buy back the Doerflinger Building. La Quinta points out that in one of Seymour's affidavits he asserts he informed the City Attorney that no one would lend money to MPC if the City's right to buy back the Doerflinger Building could result in the lender losing the building as security for the loan. Seymour averred that, in response to his warning, the City added the "subject to construction and mechanical liens existing at the time" language to the contract and informed Seymour that the term "construction and mechanical liens" included the eventual mortgage holder's interest. Therefore, according to La Quinta, there is a factual dispute regarding whether MPC and the City intended that the term "construction lien" covered the La Quinta mortgage. Missing from La Quinta's argument, however, is any reason why this extrinsic evidence of the intent of the contracting parties is admissible. In general, a party must demonstrate a contract is ambiguous before introducing extrinsic evidence of the parties' intent. See Kernz v. J.L. French Corp., 2003 WI App 140, ¶ 10, 266 Wis. 2d 124, 667 N.W.2d 751, review denied, 2003 WI 140, 266 Wis. 2d 62, 671 N.W.2d 849 (Oct. 27, 2003) (No. 02-1291). Elsewhere in this decision we explain that La Quinta has failed to demonstrate that the term "construction lien" is ambiguous. However, nothing in our opinion precludes La Quinta from pursuing this issue again on remand.

       La Quinta argues that cases such as Gilchrist and Minneapolis Threshing are inapposite because they involve an absolute right to reacquire the property upon the occurrence of certain conditions, not, as here, a right to reacquire with an express limitation. However, even assuming La Quinta has accurately identified a distinction, La Quinta never explains why the distinction matters. We need not address undeveloped arguments. See Truttschel v. Martin, 208 Wis. 2d 361, 369, 560 N.W.2d 315 (Ct. App. 1997) ("[W]e do not decide issues that are not adequately developed by the parties in their briefs.").

        See State v. Sartin, 200 Wis. 2d 47, 60 n.7, 546 N.W.2d 449 (1996) ("Dicta is a statement or language expressed in a court's opinion which extends beyond the facts in the case and is broader than necessary and not essential to the determination of the issues before it.").

       La Quinta also argues that the circuit court erroneously concluded that the term "construction ... liens" in the contract unambiguously has the same meaning ascribed the term in Wis. Stat. § 779.01(3). We need not address that argument because La Quinta never demonstrates that a reasonable reading of "construction liens" includes the interest held by a mortgagee.

       The parties debate the definition of "construction lien" contained in the sixth edition of Black's Láw Dictionary. We note that the current seventh edition of Black's has a different definition, and that neither the definition in the sixth edition nor the definition in the seventh edition supports La Quinta's argument here.


source: Caselaw Access Project

author: DEININGER, EJ.

license: Public Domain

text:
    Theresa M. Young and William H. Young, III, Plaintiffs-Appellants, Hydrite Chemical Company Health and Welfare Plan 502, Signicast Medical, Prescription Drug and Short Term Disability Plan, Involuntary-Plaintiffs, v. Aurora Medical Center of Washington County, Inc. f/k/a Hartford Memorial Hospital, Aurora Medical Group, Inc., Hartford Clinic, Mary Rashel, CRNA, The Medical Protective Company, and The Wisconsin Patient's Compensation Fund, Defendants-Respondents.
    Court of Appeals

      No. 03-0224.

      Submitted on briefs September 8, 2003.

    Decided March 18, 2004.

    2004 WI App 71
    (Also reported in 679 N.W.2d 549.)

      On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Sean N Duffey and Daniel J. O'Brien of Schulz, Duffey & O'Brien, S.C., Milwaukee.
    On behalf of the defendants-respondents, Aurora Medical Center, Aurora Medical Group, Inc., Hartford Clinic, Mary Rashel, CRNA and the Medical Protective Co., the cause was submitted on the brief of Randal N. Arnold and David J. Hanus of Hinshaw & Culbertson, Milwaukee.
    On behalf of the defendant-respondent, Wisconsin Patient's Compensation Fund, the cause was submitted on the brief of Paul J. Kelly and Mark K. Longua of Bor gelt, Powell, Peterson & Frauen, S.C., Milwaukee.
    Before Deininger, EJ., Vergeront and Higgin-botham, JJ.

       Petition to review denied 6-8-04.

   DEININGER, EJ.

¶ 1. Theresa and William Young appeal an order dismissing as time-barred their complaint against Aurora Medical Center and the Wisconsin Patient's Compensation Fund. The Youngs argue that the trial court erred in dismissing their action because two statutes, Wis. Stat. §§ 893.12 and 655.44(4) (2001-02), operate to extend and toll the three-year statute of limitations applicable to their claims. We conclude that the Youngs may claim the benefit of the tolling provision under the pre-filing mediation statute, § 655.44, notwithstanding the fact that they initially requested mediation under Wis. Stat. § 655.445 after filing a previous court action. We also conclude, however, that the statute of limitations had run before the Youngs requested mediation, and, accordingly, we affirm the order of the circuit court.

BACKGROUND

¶ 2. The facts that spawned this litigation are not in dispute. Theresa Young sustained an injury on or before December 3,1998, following a surgical procedure at the Aurora Medical Center. Aurora waived the Youngs' portion of the amount due for both the surgical procedure and for additional treatment necessitated by the injury. Young received her last follow-up treatment from Aurora on February 23, 1999.

¶ 3. The Youngs filed suit against Aurora Medical Center, the Wisconsin Patient's Compensation Fund, and several other defendants on November 30,. 2001. They requested mediation pursuant to Wis. Stat. § 655.445 on December 5, 2001. The Youngs failed, however, to serve their summons and complaint within ninety days as required by Wis. Stat. § 801.02(1), and as a result, the action was later dismissed. They filed a second action against the same defendants on March 28, 2002, and timely served the summons and complaint.

¶ 4. Aurora and the Fund moved to dismiss the Youngs' second action, arguing that it was barred by the three-year statute of limitations for medical malpractice claims because it was filed more than three years after the date of Theresa's injury on December 3, 1998. The Youngs contended, however, that Aurora's waiver of the portion of their medical bills not covered by health insurance constituted a "payment," which, by virtue of Wis. Stat. § 893.12, operated to delay the expiration of the statute of limitations until three years from the date of Young's final treatment on February 23, 1999. In addition, they argued that the statute was tolled under Wis. Stat. § 655.44(4) from the date of their mediation request on December 5, 2001, until thirty days after the mediation period ended in early March 2002, thereby rendering timely their March 28th filing of the present action.

¶ 5. The circuit court agreed with the Youngs that Wis. Stat. § 893.12 applied to their claim, extending their time to file suit until February 23, 2002. The court also concluded, however, that the Youngs' request for mediation made pursuant to Wis. Stat. § 655.445, the post-filing mediation statute, could not be retroactively recharacterized as a request for mediation under Wis. Stat. § 655.44, the pre-filing mediation statute. Thus, because § 655.445 contains no tolling provision, the circuit court concluded that the Youngs' suit, filed on March 28, 2002, was time-barred. Accordingly, the court granted the motion to dismiss and entered an order to that effect. The Youngs appeal.

ANALYSIS

¶ 6. In order for the Youngs to prevail, they must convince us of two things. The first is that the request for mediation they filed under Wis. Stat. § 655.445 after filing their first lawsuit may be treated as a pre-filing mediation request under Wis. Stat. § 655.44 when their first action failed for lack of timely service. If so, § 655.44(4) operates to toll the running of the statute of limitations from the date of the mediation request until thirty days after the last day of the mediation period. However, because the Youngs' mediation request was not filed until December 5, 2001, which is more than three years from the date of Theresa's injury, the Youngs cannot save their second action unless we also conclude that Aurora's waiver of a portion of the amount due for Theresa's medical treatment constituted a "payment" under Wis. Stat. § 893.12. If it did, the limitation period arguably did not expire until three years from the date of her last receipt of medical treatment from Aurora, which occurred on February 23, 1999.

¶ 7. The first issue requires us to ascertain how two interrelated statutes apply to the facts before us, while the second requires us to determine the meaning of a term found in, but not defined by, a third statute. Thus, both issues present questions of statutory interpretation that we decide de novo. See Ocasio v. Froedtert Mem'l Lutheran Hosp., 2002 WI 89, ¶ 11, 254 Wis. 2d 367, 646 N.W.2d 381. Our chief objective is to ascertain and give effect to the intent of the legislature. See Truttschel v. Martin, 208 Wis. 2d 361, 365, 560 N.W.2d 315 (Ct. App. 1997). To discern that intent, we first look to the language of the statute. See Anderson v. City of Milwaukee, 208 Wis. 2d 18, 25, 559 N.W.2d 563 (1997). If the plain language of the statute clearly sets forth the legislature's intent, we apply the statute accordingly and need look no further for assistance in interpreting it. See Jungbluth v. Hometown, Inc., 201 Wis. 2d 320, 327, 548 N.W.2d 519 (1996).

¶ 8. All persons who wish to pursue medical malpractice claims are required under Wis. Stat. ch. 655 to request mediation either before or immediately after filing a medical malpractice action in the circuit court. See Wis. Stat. §§ 655.44(5) and 655.445(1). Section 655.44, entitled "Request for mediation prior to court action," provides that any applicable statute of limitation is tolled for the duration of the mediation period and for thirty days thereafter. Section 655.44(4). Section 655.445, the statute governing a "Request for mediation in conjunction with court action," has no similar tolling provision because it applies only after a court action has already been filed. The date of filing the action, assuming timely and proper service, determines whether the applicable statute of limitations has been met, and thus tolling would serve no purpose. Instead, § 655.445(2) and (3) effectively stay any scheduling orders and prohibit discovery and other pretrial and trial proceedings from occurring until the mediation period expires.

¶ 9. Aurora and the Fund argue that once a claimant files a court action and requests mediation "in conjunction with" a court action under Wis. Stat. § 655.445(1), the claimant may not recharacterize that same mediation request as one made "prior to" a court action under Wis. Stat. § 655.44. They base this argument on the following passage from our opinion in Seaquist v. Physicians Insurance Co. of Wisconsin, Inc., 192 Wis. 2d 530, 531 N.W.2d 437 (Ct. App. 1995):

A claimant must choose one of two ways of participating in the mediation system. A claimant may first file a court action, in which case the claimant must then file a request for mediation within fifteen days of the court filing. Sections 655.44(5) and 655.445(1), Stats. All time periods under the statutes relating to scheduling are tolled until the expiration of the mediation period .... The alternative ... is to file a request for mediation before filing a court action. In this situation, the statute of limitations is tolled from the date the director of state courts receives the mediation request if delivered in person, or the date on which it is mailed by registered mail, and remains tolled until "30 days after the last day of the mediation period under s. 655.465(7)."

Id. at 541 (citations omitted, emphasis added).

¶ 10. The respondents reason that, because a malpractice claimant "must choose one of two ways of participating in the mediation system," id., a claimant who chooses to file a court action and then request mediation under Wis. Stat. § 655.445(1) cannot thereafter claim to have chosen the other (pre-filing) mediation option under Wis. Stat. § 655.44. They point out that § 655.445(1) requires a malpractice claimant to file a request for mediation "within 15 days after the date of filing an action in court," but service of process need not be accomplished for up to ninety days after filing. See Wis. Stat. § 801.02(1). According to Aurora and the Fund, this means that § 655.445 clearly contemplates that an action may be filed but not yet "commenced" at the time of a mediation request. If the action is not thereafter properly commenced by timely service, and the statute of limitations expires in the interim as it did here, the respondents maintain that malpractice claimants should be treated no differently than plaintiffs in other types of actions who fail to properly commence their actions within the applicable limitations periods. Aurora and the Fund argue that the plain language of the statutes and our discussion in Seaquist require precisely this result.

¶ 11. The Youngs assert that nothing in Wis. Stat. ch. 655 precludes the application of Wis. Stat. § 655.44 to their mediation request once the first court action they filed failed to become a "commenced" action. They argue that the quoted passage in Seaquist illustrates only that there are two options available as to the timing of mediation requests, not that there is any substantive difference between a mediation request that follows the filing of an action and one that precedes it. We agree with the Youngs that the two statutes are not, on their face, mutually exclusive.

¶ 12. We conclude that nothing in the language of either section precludes the application of the provisions of Wis. Stat. § 655.44 to the mediation request the Youngs filed on December 5, 2001, once the action they filed on November 30th became a nullity. Our conclusion in no way undermines the apparent purpose of the two statutes of ensuring that no court action on a medical malpractice claim will be allowed to proceed until mediation of the claim has been attempted and failed. Moreover, by enacting § 655.44(4), the legislature has expressed its intent that a limitations period not expire while mediation is in progress. Our interpretation furthers that end. We thus turn to the second issue on which the Youngs must prevail in order to save their action.

¶ 13. In order for the Youngs to benefit from the tolling provision under Wis. Stat. § 655.44(4), their request for mediation must have been filed prior to the expiration of the statute of limitations on their claim. As we have explained, the Youngs' mediation request was filed on December 5, 2001, and thus it was timely for purposes of § 655.44(4) only if the three-year statute of limitations on the Youngs' claim extended beyond December 3, 2001, the third anniversary of Theresa's injury. The Youngs contend that Aurora's waiver of the Youngs' co-pay portion of the amount due for Theresa's surgery and related post-surgical treatment constituted a "payment" on their claim within the meaning of Wis. Stat. §§ 885.285 and 893.12 (quoted at footnote 3). As a result, in the Youngs' view, the statute of limitations on their claim did not begin to run until the date of the last treatment Theresa received from Aurora. We disagree.

¶ 14. As, we have noted, when the meaning of statutory language is disputed, our task is to determine what the legislature intended it to mean. See Truttschel, 208 Wis. 2d at 365. Unless a specific definition is provided by statute, words should be given their ordinary and accepted meaning. See Sheboygan County Dep't of Health & Human Servs. v. Jodell G., 2001 WI App 18, ¶ 13, 240 Wis. 2d 516, 625 N.W.2d 307. The term "payment" is not defined in either Wis. Stat. §§ 885.285 or 893.12. Reference to dictionary definitions is thus allowed because no statutory definition is available. Id. Webster's Unabridged Third New International Dictionary 1659 (1993) defines "payment" as "the act of paying or giving compensation." Black's Law Dictionary 1150 (7th ed. 1999) primarily defines "payment" as the "[pjerformance of an obligation, by the delivery of money." (Emphasis added.)

¶ 15. We conclude that the meaning of "payment" is plain and unambiguous in the context of the present dispute. Based on the cited definitions, the plain and ordinary meaning of the term does not encompass a decision to waive or forego a portion of an amount due for services rendered. Aurora did not make a "payment" to the Youngs because at no time did it "deliver money" by issuing a check or engaging in any other overt "act of paying or giving compensation" to Theresa for her injuries.

¶ 16. Accordingly, we hold that Aurora's waiver of the Youngs' co-pay portion of amounts due for Theresa's surgery and related post-surgical treatment does not constitute a payment on their claim within the meaning of Wis. Stat. §§ 885.285 and 893.12. The limitations period on the Youngs' claim thus began to run on the date of Theresa's injury and expired prior to the Youngs' request for mediation on December 5, 2001. Having already expired, the statute of limitations could not be tolled under Wis. Stat. § 655.44(4) and the present action is time-barred.

CONCLUSION

¶ 17. For the reasons discussed above, we affirm the judgment of the circuit court.

By the Court. — Order affirmed.

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

       Wisconsin Stat. § 655.445(1) provides, in relevant part, that

        any person.. . having a claim or a derivative claim under this chapter for bodily injury or death because of a tort or breach of contract based on professional services rendered or that should have been rendered by a health care provider shall, within 15 days after the date of filing an action in court, file a request for mediation.
      Subsections (2) and (3) of the statute provide that all time periods under any scheduling order are "tolled" and "no discovery may be made and no trial, pretrial conference or scheduling conference may be held until the expiration of the mediation period."

       Wisconsin Stat. § 893.12 provides that, "if a payment is made as described in s. 885.285(1)," the limitation period becomes "either the period of time remaining under the original statute of limitations or 3 years from the date of the last payment made under s. 885.285(1), whichever is greater." Wisconsin Stat. § 885.285(l)(a) refers, in relevant part, to a "settlement with or any payment made to an injured person, or to another on behalf of any injured person, or any person entitled to recover damages on account of injury or death of such person." (Emphasis added.)

       WisConsin Stat. § 655.44(4), which applies to mediation requests that precede court action, provides that
      [a]ny applicable statute of limitations is tolled on the date the director of state courts receives the request for mediation if delivered in person or on the date of mailing if sent by registered mail. The statute remains tolled until 30 days after the last day of the mediation period....

       Wisconsin Stat. § 801.02(1) provides that
      [a] civil action in which, a personal judgment is sought is commenced as to any defendant when a summons and a complaint naming the person as defendant are filed with the court, provided service of an authenticated copy of the summons and of the complaint is made upon the defendant under this chapter within 90 days after filing.

       We concluded in Parr v. Milwaukee Building & Construction Trades, AFL-CIO, 177 Wis. 2d 140, 501 N.W.2d 858 (Ct. App. 1993), that the word "payment" in Wis. Stat. §§ 885.285 and 893.12 is ambiguous with respect to whether it means the act of tendering a check or both the tender and acceptance of a check. Id. at 147-48. We did not address the issue facing us here: whether "payment" should be interpreted to include the waiver or forbearance of an amount due. A statute that is ambiguous in one context is not necessarily ambiguous in other contexts. See Hoffman v. Wisconsin Employment Relations Comm'n, 2001 WI App 87, ¶ 13, 243 Wis. 2d 1, 625 N.W.2d 906.

       We note that the Youngs have not cited, and we have not located,-any case where a "payment" was allegedly made under Wis. Stat. §§ 885.285 and 893.12 by means other than an actual transfer of money. See, e.g., Gurney v. Heritage Mut. Ins. Co., 188 Wis. 2d 68, 70, 523 N.W.2d 193 (Ct. App. 1994) (insurance company issued check); Parr v. Milwaukee Building & Constr. Trades, AFL-CIO, 177 Wis. 2d 140, 145, 501 N.W.2d 858 (Ct. App. 1993) (insurance company issued check); Riley v. Doe, 152 Wis. 2d 766, 768, 449 N.W.2d 83 (Ct. App. 1989) (insurance company paid property damage claim); H.A. Freitag & Son, Inc. v. Bush, 152 Wis. 2d 33, 39-40, 447 N.W.2d 71 (Ct. App. 1989) (cash payments made pursuant to restitution order); Thimm v. Automatic Sprinkler Corp. of America, 148 Wis. 2d 332, 334, 434 N.W.2d 842 (Ct. App. 1988) (insurance company paid property damage claim); Milwaukee Mut. Ins. Co. v. Priewe, 118 Wis. 2d 318, 320, 348 N.W.2d 585 (Ct. App. 1984) (insurance company paid medical expenses of insured); Abraham v. Milwaukee Mut.

        Ins. Co., 115 Wis. 2d 678, 680, 341 N.W.2d 414 (Ct. App. 1983) (insurance company paid property damage claim).

       The Fund also argues that any extension of the statute of limitations under Wis. Stat. § 893.12 should not apply to it because the Fund did not participate in the waiver of medical bills. Because we conclude that the waiver or forbearance of a medical bill does not constitute a "payment" under the statute, we need not address this argument.


author: PETERSON, J. HOOVER, EJ.

text:
    Bobbie Gohde and Rick Gohde, Plaintiffs-Appellants, v. MSI Insurance Company, Defendant-Respondent.
    Court of Appeals

      No. 01-2121.

      Submitted on briefs November 11, 2003.

    Decided March 23, 2004.

    2004 WI App 69
    (Also reported in 679 N.W.2d 835.)

      HooveR, EJ., concurs.
    On behalf of the plaintiffs-appellant, the cause was submitted on the briefs of Mark E. Gilbert of Giebel, Gilbert, Williams & Kohl, P.L.L.P., Roseville, Minnesota.
    On behalf of the defendant-respondent, the cause was submitted on the brief oí Joe Thrasher of Thrasher, Doyle, Pelish & Franti, Ltd., Rice Lake.
    Nonparty briefs were filed by Eric Englund of Madison, for Wisconsin Insurance Alliance; and Robert L. Jaskulski of Domnitz, Mawicke & Goisman, S.C. for The Wisconsin Academy of Trial Lawyers.
    Before Cane, C.J., Hoover, PJ., and Peterson, J.

       Petition to review denied 6-8-04.

   PETERSON, J.

¶ 1. This appeal comes to us on remand from our supreme court. Bobbie and Rick Gohde appealed a summary judgment granted in favor of MSI Insurance Company. The circuit court determined the reducing clause in the Gohdes' underinsured motorist (UIM) policy, issued by MSI, was unambiguous. We summarily affirmed. Gohde v. MSI Ins. Co., No. 01-2121, unpublished slip op. (WI App March 26, 2002) (Gohde I).

The supreme court summarily reversed and ordered the parties to rebrief in light of its decision in Badger Mut. Ins. Co. v. Schmitz, 2002 WI 98, 255 Wis. 2d 61, 647 N.W.2d 223. We then concluded the policy language was ambiguous and reversed. Gohde v. MSI Ins. Co., 2003 WI App 69, 261 Wis. 2d 710, 661 N.W.2d 470 (Gohde II). The supreme court again summarily reversed and remanded for further consideration in light of its decision in Folkman v. Quamme, 2003 WI 116, 264 Wis. 2d 617, 665 N.W.2d 857. We now conclude the policy is unambiguous when read as a whole and we affirm.

BACKGROUND

¶ 2. In November 1996, the Gohdes were injured in an automobile accident in Chetek when Jamie Lemke lost control of her vehicle and struck the Gohdes' automobile. Several passengers in Lemke's vehicle were also injured. The Gohdes sued Lemke, and the parties agreed Lemke was 100% causally negligent. Lemke's two State Farm liability policies had limits of $50,000 per person and $100,000 per accident. State Farm paid these limits in varying amounts to the injured parties. Bobbie received $100,000 and Rick, $35,000. Bobbie's stipulated damages, however, were $200,000 and Rick's were $135,000.

¶ 3. The Gohdes sought to recover the difference between their recovery from Lemke and their actual damages under their UIM policy. The UIM policy provides limits of $100,000 per person and $300,000 per accident. Prior to summary judgment, MSI paid Rick $65,000. MSI claimed it owed no more to Rick and nothing to Bobbie because of a reducing clause in the UIM policy. The parties filed cross-motions for summary judgment. The Gohdes maintained the reducing clause was ambiguous and unenforceable and, therefore, MSI should pay Bobbie $100,000 and Rick an additional $35,000. MSI argued the reducing clause was unambiguous and claimed it had paid all it was obligated to pay under the policy.

¶ 4. The trial court agreed with MSI and the Gohdes appealed. We affirmed based on our decision in Sukala v. Heritage Mut. Ins. Co., 2000 WI App 266, 240 Wis. 2d 65, 622 N.W.2d 457. In Sukala, we held a reducing clause that complied with Wis. Stat. § 632.32(5)(i) was valid, enforceable and could not be deemed illusory. See id., ¶¶ 16-19. We concluded the MSI policy was not illusory because the reducing clause complied with this statute. Gohde I, No. 01-2121, unpublished slip op. at 2. We also concluded the policy was not ambiguous. Id.

¶ 5. After we affirmed, the supreme court decided Schmitz. There, the court determined it was not enough for a reducing clause to comply with Wis. Stat. § 632.32(5)(i), but rather the clause's effects must be "crystal clear in the context of the whole policy." Schmitz, 255 Wis. 2d 61, ¶¶ 46-49. Subsequently, the supreme court granted the Gohdes' petition for review, summarily reversed and remanded for further consideration in light of Schmitz.

¶ 6. On remand, we determined the policy's language was not "crystal clear" because "MSI's reducing clause conflicts with the limit of liability language . .. and with the declarations." Gohde II, 261 Wis. 2d 710, ¶ 21. Thus, we concluded the policy was ambiguous.

¶ 7. The supreme court subsequently decided Folkman, where it clarified the "crystal clear" standard. The court stated that it did not intend Schmitz to alter the standard of review for whether an automobile insurance policy is ambiguous. "Schmitz and its predecessors do not demand perfection in policy draftsmanship. These decisions advise insurers to draft policies in a clear manner .. . ." Folkman, 264 Wis. 2d 617, ¶ 31. Thus, "crystal clear" is not the standard for ambiguity. The supreme court then reversed our decision in Gohde II and remanded for reconsideration in light of Folk-man.

DISCUSSION

¶ 8. In determining whether an insurance policy is ambiguous, we must read the policy as a whole: "There is a complementary principle to contextual ambiguity. Sometimes it is necessary to look beyond a single clause or sentence to capture the essence of an insurance agreement." Folkman, 264 Wis. 2d 617, ¶ 21. Furthermore, "The language of a policy should not be made ambiguous by isolating a small part from the context of the whole." Id.

¶ 9. The Gohdes' policy is nineteen pages. The UIM coverage begins on page eight. The UIM limits of liability and the reducing clause are on page nine:

The limit of liability shown in the Declarations for "each person" is our maximum limit of liability for all damages for bodily injury to any one person. The limit of liability shown for "each accident" is our maximum limit for all damages to two or more persons in the same accident.
This is the most we will pay regardless of the number of insureds, claims made, vehicles or premiums shown in the Declarations, or vehicles involved in the accident.
The limit of liability shall be reduced by:
1. all sums paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under the Liability Coverage of this policy, and
2. all sums paid or payable because of the bodily injury under any workers' compensation, disability benefits or any similar law.
Any payment under this coverage to or for an insured will reduce any amount that person is entitled to recover under the Liability Coverage of this policy.
In no event will an insured be entitled to recover duplicate payment for the same element of loss.

¶ 10. In Gohde II, the Gohdes argued the language in the policy's limit of liability conflicted with the language in the reducing clause. They contended that the limit of liability, described as "the most we will pay," gave the impression that the maximum amount is attainable. However, they argued, the reducing clause made that maximum amount impossible to attain. We agreed. Following Schmitz we concluded the policy's liability limit was not "crystal clear" because of the conflicting language. Gohde II, 261 Wis. 2d 710, ¶ 21. Accordingly, we held the policy was ambiguous.

¶ 11. As we have noted, the supreme court clarified the "crystal clear" language from Schmitz when it decided Folkman. Folkman warns that we cannot conclude a is policy ambiguous "by isolating a small part from the context of the whole." Folkman, 264 Wis. 2d 617, ¶ 21. In light of Folkman, we recently determined that a similar reducing clause was unambiguous in Van Erden v. Sobczak, No. 02-1595 (WI App Feb. 17, 2004). However, in that case we did not specifically discuss the "most we will pay" language that appears in the MSI policy or how Badger and Folkman affect our interpretation of the policy. The tension between Badger and Folkman is critical to our decision here and thus we address it now. We must determine whether the MSI policy is ambiguous as a whole. We conclude that it is not.

¶ 12. We first look at the organization and structure of the policy. The policy is nineteen pages long and consists of a title page, an index, the declarations, and the terms of coverage. The bottom of the title page states: "READ YOUR POLICY CAREFULLY. This policy is a legal contract between you and us. It is written in 'easy to read and understand' language." The index follows the title page. The index lists the Uninsured Motorist and UIM coverage in Part C of the policy, beginning on page six. The declarations appear on page three and state the UIM covérage limits are $100,000 for each person and $300,000 for each accident. Part C of the policy is on pages six through ten. The UIM limits of liability and the reducing clause are on page nine.

¶ 13. We conclude there is nothing in the organization and structure that produces contextual ambiguity. The policy takes the insured through an orderly and logical sequence. The declarations page and index are roadmaps at the beginning of the policy. Nothing on the declarations page states that it is the entire policy. The index lists "Limits of Liability" as a subcategory of "Underinsured Motorists Coverage." The declarations page and index are not ambiguous simply because they fail to list every limit of liability and exclusion. As the supreme court stated in Folkman, 264 Wis. 2d 617, ¶ 56, "Courts cannot ask for an informative declarations page and then fault the insurer for failing to address every nuance and speculative interpretation of coverage that an insured might raise."

¶ 14. A reasonable insured would review the declarations page, and then be directed by the index to the limits of UIM coverage. Here, the insured would find the reducing clause. The reducing clause states what is the most that will be paid under the policy, and then immediately informs the insured that those amounts "shall be reduced" in certain circumstances.

¶ 15. The Gohdes argue the conflict between "the most we will pay" language and the reducing clause causes ambiguity. Even if we were to assume that some degree of ambiguity exists, it is not "sufficient to engender an objectively reasonable alternative meaning and, thereby, disrupt an insurer's otherwise clear policy language[.]" Folkman, 264 Wis. 2d 617, ¶ 30. The policy's statement regarding the most it will pay cannot be read to the exclusion of all other relevant provisions of the policy. Id., ¶ 21. Further, "Ferreting through a policy to dig up ambiguity should not be judicially rewarded because this sort of ambiguity is insufficient." Id., ¶ 32.

¶ 16. We recently reviewed a similar UIM policy in Commercial Union Midwest Ins. Co. v. Vorbeck, 2004 WI App 11, 674 N.W.2d 665. There, the policy referred to "our maximum limit of liability." A reducing clause followed. Vorbeck contended the reducing clause was unenforceable because it contradicted the insurer's obligation to pay the maximum amount. Id., ¶¶ 28, 36-38. We concluded the statement regarding the insurer's maximum of its limit of liability did not represent "an unequivocal commitment to pay the maximum limits of liability to the exclusion of other relevant provisions of the policy." Id., ¶ 39. Instead, we determined that the insurer "will pay the maximum limits of liability in the appropriate case and under the appropriate circumstances subject to the terms of the insurance policy read as a whole." Id.

¶ 17. We reach the same conclusion here. The policy is not susceptible to more than one reasonable interpretation, and the language is not contextually ambiguous.

By the Court. — Judgment affirmed.

HOOVER, EJ.

¶ 18. (concurring). I think the policy in our case, while not presenting an organizationally complex "maze," is "plainly contradictory" in exactly the same manner as the policy in Badger Mut. Ins. Co. v. Schmitz, 255 Wis. 2d 61, 647 N.W.2d 223. The question is, is this enough? Are the "false signals," Folkman v. Quamme, 2003 WI 116, ¶ 55, 264 Wis. 2d 617, 665 N.W.2d 857, the policy sends to Gohde sufficient to avoid the reducing clause, or in light of Folk-man, is more needed? Given the tenor of Folkman, I agree with the majority and our other post-Folkman cases that the inconsistencies partially driving the Schmitz decision, as explicated in Folkman, would now, in context, be seen by our supreme court as only benignly ambiguous. Thus, the supreme court would conclude, these inconsistencies would not engender objectively reasonable alternative meanings.

¶ 19. Folkman carefully compared the policy before it to that in Schmitz. Schmitz dealt with a lengthy and complex insurance policy. But, according to Folk-man, this was not the exclusive basis upon which the Schmitz court held that the policy's reducing clause was inoperative. Rather, Folkman further teaches that "a policy should avoid inconsistent provisions, provisions that build up false expectation, and provisions that produce reasonable alternative meanings." Folkman, 264 Wis. 2d 617, ¶ 31. However, "inconsistencies in the context of a policy must be material to the issue in dispute and be of such a nature that a reasonable insured would find an alternative meaning." Id., ¶ 32.

¶ 20. In comparing the Folkman circumstances to those in Schmitz, the supreme court noted in the latter case that "a reasonable insured would likely believe that the purchase of, say, $200,00 in underinsured motorist coverage would lead to a $200,000 payment from the insurer depending on the insured's level of damages" because this was the limit stated in the declarations. Folkman, 264 Wis. 2d 617, ¶ 51. But, as the Folkman court noted, "because the policy contained a reducing clause, the insurer would never pay $200,000 to the insured ... ."Id. The Folkman court went on to observe that the effect of the reducing clause was only made clear in the reducing clause itself, with no explanation. Id., ¶ 53. This appears to be material because the Folkman court goes on to note that the UIM page contained a "typical limits of liability provision followed immediately after the schedule for underinsured motorist coverage. It stated, among other things, 'This is the most we will pay,' implying that it would pay the policy limits, although it never would." Id. Thus, the Folkman court observed, Schmitz concluded that the policy there at issue was "a maze that is organizationally complex and plainly contradictory." Id., ¶ 55.

¶ 21. As implied, I think at the core of Folkman is the supreme court's tacit retreat from some of the very considerations that led to the result in Schmitz, its painstaking references to that case notwithstanding. Thus, even though our case presents some features similar to the Schmitz case, I agree with the majority that the policy at issue is not ambiguous under Folk-man.

       Following the release of Folkman v. Quamme, 2003 WI 116, 264 Wis. 2d 617, 665 N.W.2d 857, the parties supplied us with letter briefs addressing the decision.