author: DEININGER, J.

text:
    Sentry Insurance, a Mutual Company, Plaintiff-Appellant, v. Rodney M. Davis, Anthony M. Scott, Carolyn Y. Beckham, Anthony Beckham and State Farm Mutual Automobile Insurance Company, Defendants-Respondents.
    Court of Appeals

      No. 00-2427.

      Submitted on briefs April 18, 2001. —
    Decided July 6, 2001.

    2001 WI App 203
    (Also reported in 634 N.W.2d 553.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of James M. Fredericks and Patrick S. Nolan of Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee.
    On behalf of the defendants-respondents, the cause was submitted on the brief of Sean N. Duffey and Daniel J. O'Brien of Schulz, Duffey & O'Brien, S.C., Milwaukee.
    Before Dykman, PJ., Vergeront and Deininger, JJ.
   DEININGER, J.

¶ 1. Sentry Insurance Company appeals an order which dismissed its action for a judgment declaring that its policy did not provide liability coverage to its insured, Rodney Davis, for an accident in which his vehicle was involved. The trial court declined to consider a document Sentry produced after discovery and briefing deadlines had expired. Based on the record with the document excluded, the court determined "as a matter of law, that Sentry owes coverage to" Davis. Sentry appeals the subsequent order dismissing its declaratory judgment action and an order denying its motion for reconsideration. Carolyn and Anthony Beckham, who were also involved in the accident, and their insurer, respond. We affirm.

BACKGROUND

¶ 2. Sentry argued in the trial court that the record, even with the late-produced document excluded, supported a judgment in its favor declaring no coverage for Davis's vehicle on the date of the accident. It does not renew that argument on appeal, and accordingly, we deem it abandoned. Our first task is thus to determine whether the trial court erroneously exercised its discretion in excluding the document. If it did, we would consider de novo whether the record, including the disputed document, supports a declaratory judgment of no coverage, as Sentry maintains. We conclude, however, that the trial court did not err in refusing to consider the document, and that ends our review, inasmuch as Sentry makes no claim in this court that the trial court erred in finding coverage as a matter of law if the disputed document is disregarded.

¶ 3. Given the issue before us, the events occurring during litigation loom larger than those which spawned it. The accident in question occurred on October 5, 1998. Sentry alleged in its complaint, filed May 12,1999, that it no longer provided liability coverage for Davis's vehicle on the date of the accident, coverage having been cancelled for nonpayment of premiums some three weeks earlier. The court entered a scheduling order on August 31, 1999, setting the date for completion of "all discovery" by March 15, 2000. The order also established that date as the last date for filing "all dispositive pretrial motions."

¶ 4. On February 4, 2000, Sentry moved for a declaratory judgment that it "does not have a duty to defend or indemnify Rodney M. Davis relative to a motor vehicle accident that took place on October 5, 1998." The motion was noticed to be heard on March 6, 2000. In support of its motion, Sentry filed two affidavits, the first attaching a certified copy of the insurance policy, and the second from a "representative" of Sentry. The representative averred that Sentry had sent a "cancellation bill" on September 2, 1998, to the address listed on the declaration page of Davis's policy. The bill, a copy of which was attached to the affidavit, was for a "current balance" of $185.68, and provided for a "minimum payment" in the same amount. It also provided a "due date" of September 17,1998, and the warning "You may be letting important protection cancel."

¶ 5. The Sentry representative further averred that "[e]ither Davis or his mother made a payment of $92.84 on September 14, 1998," and that on September 16th, Sentry sent Davis a letter informing him as follows:

Thank you for your payment of $92.84, however, it is not enough to avoid the cancellation of your Automobile policy which is effective September 17, 1998.
This payment is being applied to your account to cover the balance due up to the date of cancellation.
We would like to reinstate your policy and keep you as a customer. If an additional payment of $92.84 is mailed to us at the above address within 15 days, your coverage will resume one day after the postmark date on the envelope.

A copy of the September 16th letter was filed as an attachment to the affidavit. The representative further averred that Sentry received a check for $93.00 on October 6, 1998, "to reinstate Mr. Davis' policy," and that Sentry later forwarded Davis a check for $56.22 as a refunded premium for the "lapse in coverage between September 17, 1998 and October 6, 1998." In a brief accompanying the motion and affidavits, Sentry argued that the "cancellation bill" of September 2nd and its letter of September 16th were sufficient under the language of the policy and Wis. Stat. § 631.36(2) (1999-2000) to effect a cancellation of coverage prior to October 5, 1998.

¶ 6. Beckham moved on February 25, 2000, for additional time to respond to Sentry's motion, citing the need to depose or obtain information from Davis regarding the coverage dispute. Beckham's counsel averred she had been unsuccessful to date in efforts to obtain the information deemed necessary for a response. Sentry opposed Beckham's request, asserting that Davis himself was not opposing Sentry's motion and that Beckham could have compelled Davis to appear for a deposition instead of attempting to obtain an informal statement from him. At the hearing on March 6th, Beckham's counsel explained that information from Davis would be crucial in establishing that partial premium payments before and after the date of the accident served to maintain the policy continuously in effect. Sentry countered that any testimony from Davis would be irrelevant in that Sentry's mailing of a notice of cancellation was all that was required to effect a cancellation of coverage prior to the accident.

¶ 7. The court, although expressing some skepticism regarding whether testimony from any of the parties would ultimately be relevant, opted to "make sure I have everything that can be argued . . . before I decide the case." It granted a continuance of the motion hearing until May 15, 2000; directed Beckham to file a response "within four weeks of today's date [March 6]"; and provided that other parties might reply within five weeks, and Sentry within six.

¶ 8. Beckham responded to Sentry's motion on April 3rd with a brief and an affidavit from Davis setting forth his actions and contacts with Sentry's agents during the relevant time period. Beckham's first argument, however, was that Sentry's "cancellation bill" and its letter of September 16th, upon which Sentry relied, were insufficient to effect a cancellation of coverage under the policy language. Sentry filed its reply on May 8th, in the form of a brief and a second affidavit from its representative, this one attaching a document different from those which Sentry had previously submitted. The "new" document was a "Notice of Cancellation Effective 09/17/98," which was dated September 2, 1998, and informed Davis as follows:

CANCELLATION IS NOT FINAL UNTIL 09/17/98 AT 12:01 A.M. YOU CAN KEEP YOUR INSURANCE COVERAGE IN FORCE BY MAILING YOUR PAYMENT TODAY.
Cancellation Reason: Non-Payment of Premium
Minimum Amount Due: $185.86
You are hereby notified that your insurance under the policy described above will cease at and from the hour and date stated because of non-payment of premium.
We want to keep you as a customer. To avoid cancellation, please be sure that:
1. You remit at least the minimum amount due with the top portion of the premium notice in the enclosed envelope.
2. The envelope is postmarked on or. before 09/17/98.
3. Your check is honored by your financial institution.
IF PAYMENT HAS BEEN MADE, PLEASE DISREGARD.

¶ 9. Sentry's representative averred that the foregoing Notice of Cancellation had been mailed to Davis at his policy declaration address on September 2, 1998. The affidavit was silent, however, regarding why the document had not been included with the representative's first affidavit in support of Sentry's motion. Sentry's reply brief stated that, only after it reviewed Beckham's and the other defendants' response briefs, had it realized "that an additional notice, dated September 2, 1998, was sent to Davis." Sentry's attorney apologized to the court and opposing counsel "for not submitting all notices sent to Davis in its original filings in support of its motion for declaratory judgment."

¶ 10. Beckham objected to the court's consideration of Sentry's reply brief and affidavit on the grounds that it was filed three weeks beyond the date set in the court's briefing schedule; that it introduced new information which had not been provided in discovery or filed in support of Sentry's motion; and that Beckham was prejudiced by being unable to investigate and respond to the new document. After hearing argument on the matter, the court concluded as follows:

When it filed long ago, [Sentry] said ... it sent a notice. And then the issues were met, the schedule was laid out for everyone to defend their issues, and that included discovery to be done by March 15. Briefing schedules were agreed to. When defendants wished an extension, they asked for it of the Court; and the Court granted it. Everything was filed based on a perception of the facts that really had been initiated by Sentry. And then only after the deadline — and I agree it is not a long time after the deadline, but, nonetheless, after the deadline — without any request or leave of the Court to extend that deadline, an alleged new fact, which is really a critical fact in the case, is presented.. .. And I find that troubling.
I find, just as Sentry is entitled to hold Mr. Davis to his obligations under the policy, this Court can hold Sentry to its obligations under the Court's scheduling order. And, not to be picky about rules . . . but this is a matter of their notice to all parties as to what is at issue; and I don't think the defendants were given an opportunity to adequately defend against what Sentry is now saying is its case. So I am going to find that, based on the late presentation of this issue outside of the closing of discovery, outside of the extended time for filing briefs and allowing arguments, that the second notice which Sentry wishes to bring into this case will not be considered by this Court and that will not be allowed to be a basis for Sentry to argue its case.

Earlier in its ruling, the court stated that its "observation of what's happened here doesn't impute any bad faith to any of the lawyers sitting before me."

¶ 11. The court went on to conclude that, on the record before it (excluding the new document), Sentry had not established that it had properly cancelled coverage in accordance with the policy's provision requiring ten days' advance notice of cancellation. (See footnote 3.)

¶ 12. Sentry moved for reconsideration, claiming that the court's finding that it had not acted in bad faith precluded the sanction of excluding the newly presented document. In denying the motion, the court noted the distinction in the case law "between the imposition of. . . sanctions in response to a party's contempt and use of those sanctions in order to maintain the orderly administration of justice." The court explained that it excluded the document on the latter rationale, and concluded:

I think in this case to impose on the Court and on the other parties a proceeding in which pleadings were made, motions for summary judgment were brought, an extensive period of time was expended on a case which was believed to be on one set of evidence, and then suddenly to attempt to impose in the proceedings a whole new document which would change the whole procedural balance and the substantive merits of the case long after the time for disclosing such documents had passed, I find that's neither a violation of due process by ruling as I did, nor anything that upon reconsideration I believe I should modify.

Sentry appeals the court's orders dismissing its complaint and denying reconsideration.

ANALYSIS

¶ 13. Wisconsin Stat. § 804.12(2)(a) provides that "[i]f a party . . . fails to obey an order to provide . . . discovery .. . the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following: ... 2. An order .. . prohibiting the disobedient party from introducing designated matters in evidence." In addition, Wis. Stat. § 802.10(3) and (7) authorize circuit courts to enter scheduling orders and to impose sanctions under § 804.12 for violations of them. The scheduling order in this case required discovery to be completed by March 15, 2000. The order also provided, in bold type, "FAILURE TO COMPLY WITH THE TERMS OF THIS ORDER SHALL BE CONSIDERED CAUSE FOR IMPOSING SANCTIONS WHICH MAY INCLUDE THE DISMISSAL OF CLAIMS AND DEFENSES. See § 804.12 and 805.03 Wis. Stats."

¶ 14. Sentry does not dispute that it did not provide the "new" document to Beckham in response to Beckham's request for production of documents. See Wis. Stat. § 804.09. Neither does it dispute that it first produced the document on May 8, 2000, a date that was not only after the discovery deadline, but also after the time set by the court for Sentry to reply to Beckham's response to its summary judgment motion. Accordingly, the issue in this case is not whether Sentry failed to provide timely discovery, or whether it violated court-ordered deadlines. Sentry concedes as much, and thus tacitly concedes that the court was empowered to impose sanctions for its transgressions. Sentry's argument on appeal is that the court erroneously exercised its discretion in imposing the "severe sanction of holding certain facts established, finding insurance coverage as a matter of law, and dismissing Sentry's complaint."

¶ 15. As a preliminary matter, we take issue with Sentry's characterization of the sanction imposed by the trial court. The court did not hold certain facts established, find coverage, and dismiss Sentry's complaint as sanctions for Sentry's late production of the document. The only sanction imposed was that the court excluded the late-produced document from its consideration of Sentry's motion for summary judgment. The court then considered the arguments of counsel regarding the merits of Sentry's motion based on Sentry's original and timely submissions, ruled against Sentry, and entered judgment in favor of the defendants, which it was permitted to do. See Wis. Stat. § 802.08(6) ("If it shall appear to the court that the party against whom a motion for summary judgment is asserted is entitled to a summary judgment, the summary judgment may be awarded to such party even though the party has not moved therefor.").

¶ 16. Sentry's trial counsel understood at the May 15th hearing that the only sanction at issue was whether the court would consider the "new" document, and he did not argue that the document was vital to Sentry's position. To the contrary, he informed the court as follows:

[SENTRYS COUNSEL]: ... First of all, we submit that this Court can proceed forward and entirely ignore the September 2nd notice. If you look at the other notice that was sent to Mr. Davis ... we contend that that in and of itself stands as notice within [applicable statute]. That in and of itself is the notice we can go forward on today.

Later, counsel and the court had the following colloquy:

THE COURT: So you are saying, if I were to rule out anything that I deem to be late filing and just go on the original notice, you would be willing to argue and you think you could prevail on that?
[SENTRY'S COUNSEL]: Well, I think so, under the language of the statute. I would ask that this Court do consider the September 2nd notice....
THE COURT: But today is the 15th. I think whatever is filed was by the 11th or 12th, so they didn't have a lot of time after your May 10th filing.
[SENTRYS COUNSEL]: I would ask the Court to consider that issue and that document as well. But I think that both of them independently can stand on their own.

And, at the hearing on Sentry's motion for reconsideration, counsel again acknowledged that the sanction at issue was exclusion of the document: "It is our position that, if we weren't in bad faith and the document can't be stricken, it ought to be considered."

¶ 17. We question, therefore, whether we are required to apply the rationale of Schneller v. St. Mary's Hospital, 162 Wis. 2d 296, 470 N.W.2d 873 (1991), to the present facts. The supreme court explained in Schneller that the effect of imposing one of the lesser sanctions permitted under Wis. Stat. § 804.12 may be the equivalent of outright dismissal of a claim or defense: "When the circuit court denied the Schnellers' motion to amend its scheduling order to name additional experts, it effectively dismissed their case as a sanction for their conduct in failing to comply with the scheduling order." Id. at 311. Given Sentry's position in the trial court that the court could proceed to consider the merits of its motion without considering the "new" document, we are somewhat discomforted by its argument in this court that we must review the court's action under the "egregious conduct" standard applicable to more drastic sanctions, such as the dismissal of a claim or defense.

¶ 18. Nonetheless, we recognize that "a litigant is not forever bound to a losing argument." State v. Petty, 201 Wis. 2d 337, 348, 548 N.W.2d 817 (1996) (citation omitted). Sentry's failure to renew on appeal its argument that it had effectively cancelled Davis's coverage, even if the "new" document is not considered, is a tacit concession that it can prevail only if the document is considered. We will also assume, without deciding, that if the "new" document were considered, Sentry would be entitled to a judgment declaring that it provided no liability coverage to Davis on the date of the accident. Accordingly, we will consider whether the trial court erred in imposing a sanction for Sentry's violations that, in hindsight, appears to have effectively precluded Sentry from prevailing in its action. We conclude the trial court did not err.

¶ 19. The decision to impose sanctions under Wis. Stat. §§ 802.10(7) and 804.12 lies within the trial court's discretion. Siker v. Siker, 225 Wis. 2d 522, 535, 593 N.W.2d 830 (Ct. App. 1999). A discretionary decision will be sustained if the circuit court has examined the relevant facts, applied a proper standard of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach. Loy v. Bunderson, 107 Wis. 2d 400, 414-15, 320 N.W.2d 175 (1982). The question is not whether this court as an original matter would have imposed the sanction; it is whether the circuit court abused its discretion in doing so. Johnson v. Allis Chalmers Corp., 162 Wis. 2d 261, 273, 470 N.W.2d 859 (1991). The court's discretion to impose sanctions is "not dependent on a showing that the opposing party has been actually prejudiced by the delay." Schneller, 162 Wis. 2d at 314 (citing Johnson). The circuit court's "broad discretion" in the matter of sanctioning parties for violating scheduling orders "is absolutely essential to the court's ability to efficiently and effectively administer its calendar." Id. at 310.

¶ 20. Because we are treating the exclusion of the "new" document as effectively "causing the ultimate dismissal" of a plaintiffs case, id. at 308, it cannot be sustained unless (1) Sentry's conduct was "egregious," and (2) Sentry provided no "clear and justifiable excuse" for violating the discovery deadline and briefing schedule. See Johnson, 162 Wis. 2d at 276-77. We briefly address the second requirement first because there is no basis in the present record for finding a "clear and justifiable" excuse for the late production of the document. Although counsel made references in its arguments before the trial court to a "photocopying error" by Sentry personnel, no substantiation is to be found in the affidavits of Sentry's representative or counsel for this assertion. Accordingly, we conclude that Sentry has not established a "clear and justifiable excuse" for its noncompliance.

¶ 21. With respect to whether its conduct was "egregious," Sentry emphasizes that the court found that its counsel had not acted "in bad faith." The implication is that conduct cannot be egregious unless it is undertaken in bad faith. We note, however, that although cases dealing with the present issue sometimes mention "bad faith," it is cited in the alternative. See, e.g., Johnson, 162 Wis. 2d at 275 ("Our case law establishes that dismissal is improper. . . unless bad faith or egregious conduct can be shown on the part of the noncomplying party." (emphasis added) (citation omitted)); Schneller, 162 Wis. 2d at 311 ("[T]he circuit court did not expressly state that the conduct of the Schnellers' initial counsel was egregious or in bad faith. . . ." (emphasis added)). We conclude that the terms "egregious" and "bad faith" are not necessarily synonymous, and that a party can be guilty of egregious conduct even if it did not act in "bad faith." Moreover, as Beckham argued in the trial court, just because the court concluded that Sentry's counsel had not acted in bad faith, this does not mean that it could not conclude that the conduct of Sentry itself was egregious.

¶ 22. We may affirm the trial court's sanction if it implicitly found Sentry's conduct in this case to be egregious so long as "the facts provide a reasonable basis on review for the court's conclusion." Schneller, 162 Wis. 2d at 311. The court expressly considered the timeline of significant events in the litigation, and we conclude that it provided a reasonable basis for the court to find that Sentry had committed a flagrant (see footnote 8) violation of the court's scheduling orders:

When it filed long ago [approximately one year], [Sentry] said ... it sent a notice. And then the issues were met, the schedule was laid out for everyone to defend their issues, and that included discovery to be done by March 15. Briefing schedules were agreed to. When defendants wished an extension, they asked for it of the Court; and the Court granted it. Everything was filed based on a perception of the facts that really had been initiated by Sentry. And then only after the deadline — and I agree it is not a long time after the deadline, but, nonetheless, after the deadline — without any request or leave of the Court to extend that deadline, an alleged new fact, which is really a critical fact in the case, is presented.... And I find that troubling.

¶ 23. Furthermore, we observe that Sentry is chargeable with knowledge of what its policy required in the way of notice to its insured in order to cancel coverage for nonpayment of premiums. The entire basis of Sentry's lawsuit, and of its motion for summary judgment, was its claim that it had cancelled Davis's coverage in late September of 1998. Sentry and its counsel thus knew, or should have known, that a document critical to its claim was one giving Davis at least ten days' advance notice of the cancellation for nonpayment in September 1998. The "hole" in its case created by the absence of the September 2nd Notice of Cancellation should therefore have been readily apparent to Sentry's representative or its counsel when assembling and transmitting the claim file during discovery, or at the latest, when preparing Sentry's submission in support of its motion for summary judgment. The "shockingly noticeable or evident" (see footnote 8) nature of the omission, under the circumstances, provides additional support for the trial court's conclusion that Sentry's late production of the document constituted an egregious violation of its ordered deadlines.

¶ 24. Finally, we note again that we do not decide de novo whether the "new" document should have been excluded from consideration. "A trial court's discretionary determination . . . may encompass a result 'which another judge or another court,' including this one, might not have reached on the present facts." Siker, 225 Wis. 2d at 542 (citing Hartung v. Hartung, 102 Wis. 2d 58, 66, 306 N.W.2d 16 (1981)). Sanctions other than exclusion of the document might have been imposed under Wis. Stat. § 804.12. Alternatively, the hearing on Sentry's motion might have been postponed in order to allow the defendants additional time to respond to the newly produced document. Sentry, however, did not argue, at either the initial hearing or on its motion for reconsideration, that the court should continue the motion hearing or impose a different sanction for its tardy production of the document. We are generally very reluctant to find an erroneous exercise of discretion where a party fails to ask a trial court to exercise its discretion in a particular manner. See State v. Gollon, 115 Wis. 2d 592, 604, 340 N.W.2d 912 (Ct. App. 1983).

CONCLUSION

¶ 25. For the reasons discussed above, we conclude the trial court did not erroneously exercise its discretion in declining to consider the "new" document when deciding Sentry's motion for summary judgment. Because Sentry does not argue that the trial court erred in determining that, on the record before it, liability coverage was in effect on the date of the accident, we affirm the orders dismissing Sentry's complaint and denying reconsideration.

By the Court. — Orders affirmed.

       State Farm Insurance Company insured the vehicle of Carolyn Beckham, in which Anthony Beckham was a passenger. Counsel for State Farm has filed a response brief on behalf of these three parties, to whom we will refer collectively as "Beckham." Attorneys for Rodney Davis and for Anthony Scott, who was driving Davis's vehicle, informed us by letter that they "adopt" State Farm's brief and would not otherwise be participating in this appeal.

       All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       WISCONSIN Stat. § 631.36(2)(a) provides, in relevant part, that an "insurance policy may be canceled by the insurer prior to the expiration of the agreed term... for failure to pay a premium when due," but that no cancellation for nonpayment "is effective until at least 10 days after the 1st class mailing or delivery of a written notice to the policyholder." Section 631.36(2)(b). Davis's policy included the following language regarding cancellation:
      We may cancel this policy only for the reasons stated in this condition by notifying you in writing of the date cancellation takes effect. This cancellation notice maybe delivered to you or mailed to you at your mailing address shown on the declarations. Proof of mailing shall be sufficient proof of notice.
      Cancellation for Nonpayment
      If you haven't paid the premium ... we may cancel at any time by notifying you at least 10 days before the date cancellation takes effect.

       Although denominated a "motion for declaratory judgment," Sentry's motion was one for summary judgment granting the relief requested in its complaint. Under Wis. Stat. § 802.08(2), a party opposing a summary judgment motion must file countering affidavits "at least 5 days before the time fixed for the hearing." The court may, however, "order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had" on behalf of parties opposing the motion. Section 802.08(4).

       Beckham's counsel filed an affidavit to the effect that Sentry had not provided the "new" document in its initial (July 29, 1999) and supplemental (December 7, 1999) responses to a request for production of documents, which Beckham had issued on June 30, 1999.

       Quoting the Wisconsin Supreme Court's decision In the Matter of Disciplinary Proceedings Against Donald C. Haberman, 128 Wis. 2d 390, 392, 382 N.W.2d 439 (1986).

       As we have noted, the affidavit of the Sentry representative which accompanied the "new" document was silent regarding the circumstances of the document's discovery and provides no explanation of why it was not provided earlier. At the May 15th hearing, Sentry's counsel told the court "some of these documents were double-sided, and in fact the fifth page on the documentation that we submitted to all parties was actually only copied on one page. That was the notice of the cancellation." In its brief in support of its motion for reconsideration, Sentry asserted that after receiving the responses to its motion for summary judgment, Sentry's counsel "discovered that not all relevant notices were contained in the Sentry claims file" that had been provided to the defendants in discovery, and that "[ajfter several weeks, Sentry's counsel was able to obtain the relevant notice of September 2,1998 that was sent to Davis." At the reconsideration hearing, Sentry's counsel again asserted that "something that we discovered was not copied and sent to us," and that "[w]e found out that somebody (sic) wasn't copied that should have been. We took the best steps we could to get it as quickly as we could, and we did it." Not only are these mere assertions of counsel, as opposed to testimony or averments, but they are lacking in detail as to who made the error, precisely when it was discovered, and what "best steps" were taken to correct the alleged oversight.

       According to the RaNdom House Dictionaey of the English Language (2d ed., 1987), "egregious" means "extraordinary in some bad way; glaring, flagrant," while "bad faith" signifies a "lack of honesty and trust." "Flagrant," in turn, means "shockingly noticeable or evident; obvious, glaring." We conclude that a party could commit a flagrant discovery or scheduling order violation without necessarily lacking honesty in so doing.


source: Caselaw Access Project

author: ROGGENSACK, J.

license: Public Domain

text:
    Brandon Apparel Group, Inc., Plaintiff-Counterclaim-Defendant, v. Pearson Properties, Ltd., Clyde Pearson, and Helenann Pearson, Defendants-Counterclaim-Plaintiffs, Clyde Pearson, Third-Party Plaintiff-Respondent, v. Eric Lefkofsky, Third-Party Defendant-Appellant.

    Court of Appeals

      No. 00-2532.

      Submitted on briefs April 18, 2001. —
    Decided July 12, 2001.

    2001 WI App 205
    (Also reported in 634 N.W.2d 544.)

      On behalf of the third-party defendant-appellant, the cause was submitted on the briefs of G. Michael Halfenger, Anne Berleman Kearney and Jessica E. Price of Foley & Lardner of Milwaukee and Donald K.S. Petersen and Steven R. Lefkofsky of Petersen & Lefkof-sky of Bloomfield Hills, Michigan.
    On behalf of the third-party plaintiff-respondent, the cause was submitted on the brief of Donald K. Schott and Valerie Bailey-Rihn of Quarles & Brady LLP of Madison.
    Before Roggensack, Deininger and Lundsten, JJ.

       Petition to review denied 10-23-01.

   ROGGENSACK, J.

¶ 1. Eric Lefkofsky appeals the circuit court's decision to grant default judgment in favor of Clyde Pearson because Lefkofsky engaged in bad-faith discovery practices, including failing to appear for a court-ordered deposition four weeks before a scheduled trial. He argues that the circuit court erred by (1) finding that his conduct was in bad faith and without a clear and justifiable excuse; (2) awarding default judgment to Pearson; and (3) failing to conduct a separate hearing to determine the amount of damages. We conclude that: (1) the circuit court's findings that Lefkofsky's conduct was in bad faith and without a clear and justifiable excuse are not clearly erroneous; (2) Lefkofsky's conduct hampered the ability of the court to promote the orderly processing of the case, which provided a sound basis for the circuit court to exercise its discretion by granting default judgment; and (3) Lefkofsky did not request a hearing or attempt to submit proof to contest the amount of the judgment, thereby waiving any argument that judgment for a lesser amount should have been entered. Accordingly, we affirm the judgment of the circuit court.

BACKGROUND

¶ 2. Lefkofsky and Bradley Keywell purchased Clyde and Helenann Pearson's apparel manufacturing business in 1994. The purchase included more than 100 pieces of machinery used to manufacture apparel. In connection with the purchase, Brandon Apparel Group, Inc., the operating business entity of the purchasers, executed a $1 million subordinated debenture to be held by and payable to Pearson Properties, Ltd., a new entity owned by the Pearsons. The subordinated debenture required Brandon Apparel to make monthly interest payments to Pearson Properties, with the $1 million principal due in August 2004. Lefkofsky and Clyde Pearson also drew up a handwritten side agreement that provided the following:

This is an understanding among two parties — Eric Lefkofsky and Cap [Clyde] Pearson. Eric is one of the people buying Cap's business, Brandon, Inc. Under the terms of the sale of Brandon, Cap and his wife, Hel-enann, will be owed $1,000,000 under a long term debenture. This debenture has no collateral backing it up. Eric and Cap have reached a side agreement among Gentlemen. Eric will personally guarantee one half the money Cap is owed ($500,000) with both his handshake and his signature. If the new company refuses to pay Cap the money he is owed, without just and valid reason, Cap may enforce this letter to collect from Eric. Cap has told Eric that he is buying a good, solid company. If this is true, which Eric believes it is, Eric feels he should stand behind the money Cap is owed just as Cap is willing to stand behind the Company he is selling Eric. It was with this understanding that the above was so agreed.

Both Lefkofsky and Pearson signed the side agreement.

¶ 3. In May 1996, Brandon Apparel filed a fourteen-count complaint against the Pearsons and Pearson Properties, alleging that much of the machinery included in the purchase was defective. Brandon Apparel also notified the Pearsons that it planned to stop paying interest on the subordinated debenture because it had a right to unilaterally offset its damages. The circuit court ordered Brandon Apparel to continue making the full payment, with $6,000 per month going to Pearson Properties and the balance to an escrow account. By September 1999, only a single claim for breach of warranty remained. Brandon Apparel was four months behind on its monthly payments due under the subordinated debenture, and it again notified the Pearsons that it was stopping the monthly payments.

¶ 4. Pearson Properties counterclaimed against Brandon Apparel based on its failure to make the payments required by the subordinated debenture. Clyde Pearson also filed a third-party claim against Lefkofsky in his individual capacity, alleging a right to payment under the side agreement because Brandon Apparel had refused to pay according to the terms of the subordinated debenture. Lefkofsky asserted that he was not liable under the side agreement because Brandon Apparel had, in the words of the side agreement, "just and valid reason" for nonpayment and the company he had purchased was not "good" or "solid."

¶ 5. Lefkofsky and Brandon Apparel repeatedly stonewalled the Pearsons' attempts to obtain discovery regarding the alleged defects in the equipment that were central to both Brandon Apparel's claim and its defense to liability on Pearson's third-party claim. Their May 24, 2000 responses to interrogatories illustrate the problem.

Interrogatory No. 2: Please identify in detail all appraisals in your possession compiled from 1994 until today's date, on any equipment and/or machinery that was purchased by Brandon Apparel from the Pear-sons. ...
Response No. 2: Brandon will produce, at a mutually agreeable date and time, non-privileged, relevant documents that remain in its possession and that it is able to locate.
Interrogatory No. 3: Please state the current locations of the equipment and/or machinery purchased by Brandon Apparel from the Pearsons pursuant to the Asset Purchase Agreement.
Response No. 3: Brandon objects to this interrogatory as being overbroad, burdensome, and harassing. All of the equipment purchased by Brandon under the Asset Purchase Agreement is not at issue in this case. With respect only to the equipment at issue in this case, any equipment that has not been sold or otherwise disposed of is either at Brandon's facility in Chicago, at its warehouse in Wisconsin, or in the bank's control or possession.
Interrogatory No. 4: Please state whether Brandon Apparel currently has possession of any equipment and/or machinery purchased from the Pearsons pursuant to the Asset Purchase Agreement, and if so, list all equipment in Brandon Apparel's possession by description and serial number.
Response No. 4: Brandon objects to this interrogatory as being overbroad, burdensome, and harassing. All of the equipment purchased by Brandon under the Asset Purchase Agreement is not at issue in this case. With respect only to the equipment at issue in this case, Brandon relies on its responses to the defendants' previous interrogatories (asking that this equipment be identified) and in the Affidavit of John Kovacs, previously submitted to the Defendants.

Therefore, although trial was scheduled for July 24, 2000, Pearson Properties was unable in late May to ascertain the location of the equipment, its condition, or even what equipment was alleged to be defective.

¶ 6. On May 30, 2000, the Pearsons served various discovery requests on Brandon Apparel, including notices of deposition for Lefkofsky and Keywell. Both had been previously deposed in 1996. Brandon Apparel moved for a protective order to halt the depositions, arguing that redeposing the pair was unnecessary.

¶ 7. At a June 12, 2000 pretrial conference, the circuit court considered Pearson's third-party claim and held as a matter of law that Brandon Apparel's insolvency was not a "just and valid reason" to excuse Lefkofsky from liability under the side agreement. The circuit court also ordered Lefkofsky and Keywell to appear for depositions at the offices of Pearson Properties' counsel in Milwaukee on June 27, 2000.

¶ 8. Late in the afternoon of June 26, Brandon Apparel's counsel (who also represented Lefkofsky) faxed a letter to the court and Pearson's counsel. The letter stated, in part:

I am ... advising you that Brandon Apparel Group is financially unable to proceed any further with the prosecution of its claims for breach of warranty in this case, and is unable to financially defend against Pearson Properties' claim for breach of the Subordinated Debenture. ...
Based on Brandon's inability to continue to finance this litigation, I assume your clients will seek entry of an Order dismissing Brandon's claims, and providing for a Judgment on behalf of Pearson Properties on the Counterclaim against Brandon. Brandon will not be responding to any outstanding discovery, as it no longer is pursuing any claims, and as it no longer is defending against any claims — thus, discovery relating to Brandon is no longer applicable. Similarly, the depositions of Brad Keywell and Eric Lefkofsky will not be going forward in Wisconsin tomorrow. These individuals were noticed as representatives of Brandon, and on the theory that because Brandon is a plaintiff pursuing claims in Wisconsin, they can be deposed in Wisconsin. On this basis, Judge Miller agreed. Of course, this scenario is no longer true. If you would like to set up a time to depose Eric Lefkofsky as a third-party defendant, please let me know and we can set up a convenient time in Chicago to do so.

¶ 9. Lefkofsky and Keywell did not appear for the scheduled depositions. Pearson moved for default judgment on his third-party claim against Lefkofsky as a sanction for failing to appear for his deposition as ordered. On July 10, 2000, the circuit court granted the motion for default judgment and ordered default damages of $500,000 plus costs and interest, the full amount specified in the side agreement. Lefkofsky did not request a hearing or present affidavits on the issue of damages. He appeals the circuit court's judgment.

DISCUSSION

Standard of Review.

¶ 10. We examine the circuit court's decision to grant a default judgment under the erroneous exercise of discretion standard. Kerans v. Manion Outdoors Co., 167 Wis. 2d 122, 130, 482 N.W.2d 110, 113 (Ct. App. 1992). When we review a discretionary determination, we examine the record to determine if the circuit court logically interpreted the facts, applied the proper legal standard, and used a demonstrated, rational process to reach a conclusion that a reasonable judge could reach. State v. Keith, 216 Wis. 2d 61, 69, 573 N.W.2d 888, 892-93 (Ct. App. 1997). We will affirm the circuit court's factual findings unless they are clearly erroneous. Wis. Stat. § 805.17(2) (1999-2000); Hur v. Holler, 206 Wis. 2d 335, 342, 557 N.W.2d 429, 432 (Ct. App. 1996).

Default Judgment.

¶ 11. Default judgment terminates litigation without regard to the merits of the claim; therefore, a circuit court should impose it as a sanction only when a harsh sanction is necessary. Hudson Diesel, Inc. v. Kenall, 194 Wis. 2d 531, 542, 535 N.W.2d 65, 69 (Ct. App. 1995). Wisconsin Stat. § 804.12 authorizes the circuit court to grant default judgment for various discovery violations, including a party's failure to attend his or her own deposition. To grant default judgment, the circuit court must find that the noncomplying party's conduct is without a clear and justifiable excuse and conclude that the noncompliance was either egregious or in bad faith. Smith v. Golde, 224 Wis. 2d 518, 526, 592 N.W.2d 287, 291 (Ct. App. 1999) (citing Hudson Diesel, 194 Wis. 2d at 542, 535 N.W.2d at 69). Under § 804.12(2)(a)3., a circuit court may enter a default judgment as a sanction for bad-faith discovery violations when the offending party has not proved it had a clear and justifiable excuse for its conduct. Johnson v. Allis Chalmers Corp., 162 Wis. 2d 261, 275, 470 N.W.2d 859, 864 (1991). The circuit court may conclude a party operated in bad faith where the party has "intentionally or deliberately delayed, obstructed or refused the requesting party's discovery demand." Hudson Diesel, 194 Wis. 2d at 543, 535 N.W.2d at 69. A circuit court is not required to analyze a specific set of factors before awarding a default judgment; instead, it should focus on "the degree to which the party's conduct offends the standards of trial practice." Johnson, 162 Wis. 2d at 286, 470 N.W.2d at 869. For example, we have sustained a circuit court's finding of bad faith based on a "spirit of noncooperation," Midwest Developers v. Goma Corp., 121 Wis. 2d 632, 650, 360 N.W.2d 554, 563 (Ct. App. 1984), and on "a pattern of last-minute offerings of inadequate material and failure to respond to the plaintiffs attempts at communication." Kerans, 167 Wis. 2d at 131, 482 N.W.2d at 113. A circuit court may find that a party acted in bad faith as long as it is clear from the record that the court was convinced of the party's bad faith, even though the court did not use the words "bad faith." Englewood Cmty. Apartments Ltd. P'ship v. Alexander Grant & Co., 119 Wis. 2d 34, 40 n.3, 349 N.W.2d 716, 719 n.3 (Ct. App. 1984) (holding that the circuit court implicitly found bad faith when it characterized a party's conduct as a "pattern of abuse," "dilatory," and "reflective of a cavalier approach").

¶ 12. Underlying the court's power to grant a default judgment for discovery violations is the need for the circuit court to control the administration of the cases which come before it.

The court's authority to dismiss actions emanates not merely from a need to prevent injustice to the parties in the particular action, but also from a need to prevent injustice to the operation of the judicial system as a whole. The circuit courts have a duty to discourage the protraction of litigation, preserve judicial integrity,, and promote the orderly processing of cases. Dismissal, in some instances, is necessary to maintain these interests. Each time the court's orders are disregarded, the administration of justice suffers because the court's time is misused to accommodate the noncomplying party's dilatoriness at the expense of the other party and all other litigants awaiting the court's attention.

Johnson, 162 Wis. 2d at 281-82, 470 N.W.2d at 867 (citation omitted).

1. Bad Faith/Clear and Justifiable Excuse.

¶ 13. To determine whether the circuit court erroneously exercised its discretion in granting default judgment for $500,000 to Pearson on his third-party claim, we first examine its underlying factual findings. The circuit court's findings that Pearson proved Lefkofsky's conduct was in bad faith and that Lefkofsky did not prove a clear and justifiable excuse for the failed discovery must be sustained if they are not clearly erroneous. Johnson, 162 Wis. 2d at 275, 470 N.W.2d at 864; Hur, 206 Wis. 2d at 342, 557 N.W.2d at 432.

¶ 14. The record demonstrates a clear and continuing pattern of intentional, deliberate discovery violations by Lefkofsky and Brandon Apparel. They culminated in Lefkofsky's refusal, in direct violation of the court's order, to attend his June 27 deposition, and they are sufficient to support a finding of bad faith. Without disputing any of the alleged discovery violations, Lefkofsky argues only that the circuit court never found that he acted in bad faith. He correctly observes that the circuit court never used the words "bad faith" in granting the default judgment motion. However, we conclude that its comments constitute an implicit finding that Lefkofsky acted in bad faith. Englewood Cmty. Apartments, 119 Wis. 2d at 40 n.3, 349 N.W.2d at 719 n.3.

¶ 15. As in Englewood, the circuit court's bad faith finding was obvious. For example, at the July 10 hearing, the court chided Lefkofsky for lack of candor with the court, rebuked his counsel for refusing to identify issues for a trial scheduled to begin in two weeks, including why Lefkofsky believed he did not have to pay the $500,000 addressed in the side agreement, and found that Lefkofsky's abusive discovery practices had made it extremely difficult for the other parties to present their case. The circuit court's implicit finding of bad faith is not clearly erroneous.

¶ 16. Lefkofsky concedes that he did not attend the deposition, but he contends that he had a clear and justifiable excuse because he was noticed only in his capacity as an officer of Brandon Apparel, which had voluntarily withdrawn its last claim the previous afternoon. In support of this argument, he offers the notice of deposition, the abbreviated caption of which does not include him as a third-party defendant, and various carefully chosen excerpts from the notice of deposition and the hearing transcript. However, at the July 10 hearing on Pearson's motion for default judgment, the circuit court stated that it had not limited Lefkofsky's deposition to only those issues that could be inquired into in his capacity as an officer and director of Brandon Apparel. The circuit court said,

... I can guarantee we never talked about what capacity they were being deposed. I was looking at whatever issues are out there.. .. [Additionally], any defenses he's going to raise, are the same. If he raises any defense with regard to the equipment and its defective condition, it will be exactly the same information we'd have been getting in this trial as it relates to the original claim of Brandon Apparel.

And further, the notice of deposition did not state that Lefkofsky was to appear only in his official capacity as an officer and director of Brandon Apparel, nor does any statement of the court or counsel at the June 12 pretrial conference support Lefkofsky's interpretation of the court's order. The circuit court also expressly referred to Pearson's third-party claim in ordering Lefkofsky to attend the deposition, without objection from Lefkofsky.

¶ 17. Furthermore, Brandon Apparel was still a party to the lawsuit on June 27, when the deposition was scheduled to occur. Once a responsive pleading is filed, a plaintiff may dismiss a case only by order of the court. Wis. Stat. § 805.04(2). By a faxed letter, Brandon Apparel informed the court and other parties that it was dropping its claim late in the afternoon of June 26, but that letter did not dismiss the action Brandon Apparel had commenced and to which the Pearsons had made responsive pleadings, including a counterclaim. Therefore, Lefkofsky's argument that he was not required to attend the deposition has absolutely no basis in law or in fact and provides no clear and justifiable excuse for his refusal to appear. Accordingly, we conclude that the circuit court's findings that Lefkofsky acted without a clear and justifiable excuse, as well as in bad faith, are not clearly erroneous.

2. Default Judgment.

¶ 18. We now address whether the circuit court erroneously exercised its discretion in granting a default judgment to Pearson. Lefkofsky's conduct throughout this litigation ran counter to what the discovery statutes require. His failure to appear at the June 27 deposition was the culmination of several years of abusive discovery practice. At the June 12 pretrial conference, the circuit court ordered that he be deposed in preparation for a trial scheduled to take place in only six weeks. At the pretrial, Lefkofsky and Brandon Apparel asserted they were prepared to litigate based on the allegedly defective condition of more than 100 pieces of equipment. Although they had previously deposed Lefkofsky and Keywell and submitted numerous interrogatories and requests for admission, the Pearsons had been unable to inspect the equipment, determine its condition, or even learn which particular pieces of equipment were allegedly defective. The circuit court ordered the depositions in an attempt to narrow the issues for trial, and Lefkofsky's intentional refusal to comply with the court's order severely hampered the court's ability to promote the orderly processing of the case, as the circuit court explained:

No matter how I look at it Brandon and Mr. Eric Lefkofsky,. . . have made it extremely difficult for the [third-party] plaintiffs to proceed with first their defense and now their claims on the third-party complaint. They have made it very difficult for this court to orderly bring this matter forward for completion before a jury.

¶ 19. Lefkofsky also argues that the circuit court erred because it never considered a lesser sanction. However, the court was not required to examine whether a lesser sanction would be sufficient because Lefkofsky's conduct was intentional. Hudson Diesel, 194 Wis. 2d at 545, 535 N.W.2d at 70. Based on the record before us and the court's patient administration of the case prior to granting default judgment, we conclude that the circuit court did not erroneously exercise its discretion in granting the default judgment.

3. Damages.

¶ 20. Lefkofsky contends that the circuit court was required to receive additional evidence to assess damages. The default judgment statute provides, "If proof of any fact is necessary for the court to give judgment, the court shall receive the proof." Wis. Stat. § 806.02(2). This proof may be presented through an evidentiary hearing or by means of affidavits. Midwest Developers, 121 Wis. 2d at 651, 360 N.W.2d at 564. However, no further evidence regarding damages is required if the defendant was previously notified of the amount claimed as damages and never questioned or contested it. Id. at 652, 360 N.W.2d at 564 (citing United States v. DeFrantz, 708 F.2d 310, 312 (7th Cir. 1983)). Furthermore, a responding party who fails to move for a hearing on damages or present other proof disputing the movant's damages figure is considered to have waived the argument on appeal. Kerans, 167 Wis. 2d at 132, 482 N.W.2d at 113. This is particularly appropriate in cases where the circuit court has awarded default judgment as a sanction for bad-faith discovery violations, as remanding the case for consideration of damages presents more opportunities for delay and obstruction. Id. at 132, 482 N.W.2d at 114.

¶ 21. Lefkofsky does not contest that Pearson's third-party complaint notified him that Pearson was claiming $500,000 in damages under the terms of the side agreement or that $500,000 was requested as a sanction. Furthermore, the record shows that Lefkof-sky did not request a hearing to present proof disputing the $500,000 damage figure, nor did he attempt to submit affidavits or any other type of proof to contest the amount claimed. By failing to proceed on any of these options before the circuit court, we conclude he has waived this argument for appeal. Kerans, 167 Wis. 2d at 132, 482 N.W.2d at 113.

¶ 22. Lefkofsky also argues that the circuit court erroneously exercised its discretion by prohibiting him from submitting evidence to demonstrate that he was not liable under the terms of the side agreement. Specifically, he claims that the circuit court prohibited him from submitting evidence of (1) the defective nature of the equipment, which he argues is relevant to whether the company was "good" and "solid" at the time of sale, and (2) Brandon Apparel's inability to pay, which he contends is relevant to whether the company had a "just and valid reason" for failing to make the payments required by the subordinated debenture.

¶ 23. However, the court awarded default judgment to Pearson based on its conclusion that Lefkofsky had, in bad faith and without a justifiable excuse, deliberately refused to provide discovery. Thereafter, the defenses he now attempts to raise were foreclosed; liability was established. The only subject on which proof may have been received was the amount which remained unpaid on the side agreement. Lefkofsky put in no proof contesting that $500,000 remained unpaid. Accordingly, we conclude that the circuit court did not erroneously exercise its discretion when it set the damages according to the amount alleged to be due under the side agreement, $500,000.

CONCLUSION

¶ 24. We conclude that: (1) the circuit court's findings that Lefkofsky's conduct was in bad faith and without a cleár and justifiable excuse are not clearly erroneous; (2) Lefkofsky's conduct hampered the ability of the court to promote the orderly processing of the case, which provided a sound basis for the circuit court to exercise its discretion by granting default judgment; and (3) Lefkofsky did not request a hearing or attempt to submit proof to contest the amount of the judgment, thereby waiving any argument that judgment for a lesser amount should have been entered. Accordingly, we affirm the judgment of the circuit court.

By the Court. — Judgment affirmed.

       The Pearsons' attorney immediately responded by requesting copies for which he said they would pay, but by the July 10th hearing on Pearson's motion for default judgment, nothing had been produced.

       A June 2, 2000 letter from Brandon Apparel's counsel revised the response to this interrogatory as follows:
      ... I am now advised that the majority, if not all, of the equipment at issue is located at Brandon's Georgia facility. The address is 1113 South Main Street, Sylvania, GA. Of course, we still see absolutely no relevance to this Interrogatory, as the location of this equipment is not at issue and has no bearing on this case.

       The circuit court also entered judgment on the counterclaim for Pearson Properties against Brandon Apparel in the amount of $1 million. Brandon Apparel does not appeal the judgment against it.

       All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       There may be some ambiguity in our previous decisions on the appropriate standard. Hudson Diesel states that a circuit court may sanction a party for abuse of discovery based on conduct that is either egregious or in bad faith. Hudson Diesel, Inc. v. Kenall, 194 Wis. 2d 531, 543, 535 N.W.2d 65, 69 (Ct. App. 1995). Egregious conduct is conduct that, although unintentional, is "extreme, substantial, and persistent." Id. at 543, 535 N.W2d at 69-70. However, we held in a later decision that a trial court should dismiss a cause of action under Wis. Stat. § 804.12(4) only in the case of "egregious conduct," although our decision did not explicitly define "egregious conduct." Geneva Nat'l Cmty. Ass'n, Inc. v. Friedman, 228 Wis. 2d 572, 580, 598 N.W.2d 600, 604 (Ct. App. 1999). Both decisions cite Johnson v. Allis Chalmers Corp., 162 Wis. 2d 261, 470 N.W.2d 859 (1991) for this proposition. We read Johnson to allow dismissal based either on bad faith or on egregious conduct. See id. at 275, 470 N.W.2d at 864; see also Sentry Ins. v. Davis, 2001 WI App 203, ¶ 21, 247 Wis. 2d 501, 634 N.W.2d 553 (noting distinction between bad faith and egregious conduct).

       Lefkofsky cites no law to support his contention that he was not required to appear at the deposition because he did not appear on the notice's abbreviated caption as a third-party defendant, and we can find none. We are not required to consider undeveloped arguments, and we decline to do so here. Truttschel v. Martin, 208 Wis. 2d 361, 369, 560 N.W.2d 315, 319 (Ct. App. 1997).

       Contesting the amount claimed means more than simply denying liability in the answer to a third-party claim. Kerans v. Manion Outdoors Co., 167 Wis. 2d 122, 132, 482 N.W.2d 110, 113 (Ct. App. 1992).


author: NETTESHEIM, PJ.

text:
    Renate Dahmen and Helmut Dahmen, Plaintiffs-Respondents, v. American Family Mutual Insurance Co., Defendant-Appellant.
    Court of Appeals

      No. 00-1232.

      Submitted on briefs April 6, 2001. —
    Decided August 1, 2001.

    2001 WI App 198
    (Also reported in 635 N.W.2d 1.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs oí James T. Murray, Jr., Timothy J. Pike, and Michael J. Wirth oí Peterson, Johnson & Murray, S.C. of Milwaukee.
    On behalf of the plaintiffs-respondents, the cause was submitted on the brief oí Adrian P Schoone, Mark J. Leuck, and Chris G. Halverson of Schoone, Fortune, Leuck, Kelly & Pitts, S.C. of Racine.
    Before Nettesheim, PJ., Brown and Snyder, JJ.
   NETTESHEIM, PJ.

¶ 1. American Family Mutual Insurance Co. appeals from a nonfinal order denying its motion to bifurcate the trial of the two claims made against it by the respondents, Renate and Helmut Dahmen. The Dahmens' first claim is for un-derinsured motorist (UIM) benefits under a policy issued by American Family to the Dahmens. Their second claim alleges bad faith by American Family in denying their request for UIM benefits. American Family contends that the trial court erred in denying its motion to bifurcate the Dahmens' claims and stay discovery on the bad faith claim pending the resolution of the UIM claim. We agree. Because of the risk of prejudice and jury confusion inherent in litigating a claim of bad faith with an underlying claim for UIM benefits, we conclude that the trial court erred in denying American Family's motion to bifurcate these claims and stay discovery. We therefore reverse the trial court's order.

Background

¶ 2. The issues in this case stem from an automobile accident that occurred on September 5, 1998. A vehicle operated by Renate was struck by another vehicle operated by Roger Doyle. At the time of the collision, Doyle had an insurance policy that provided damage liability limits in the amount of $50,000. The Dahmens' automobile insurance policy with American Family provided UIM coverage with limits of liability of $150,000 per person and $300,000 per accident.

¶ 3. Following the accident, the Dahmens filed a claim with Doyle's insurance carrier alleging that Doyle's negligence caused the accident. Doyle's insurance carrier later offered to settle the matter for Doyle's policy limit. In correspondence to the Dahmens' attorney dated August 27, 1999, American Family confirmed that the Dahmens could accept Doyle's insurance carrier's policy limits in exchange for a full and final release of Doyle and his insurance carrier. American Family also informed the Dahmens' attorney that American Family would require a consultant review of Renate's medical records before evaluating a claim for UIM coverage benefits under her American Family policy. Subsequently, on September 2, 1999, the Dah-mens accepted the policy limit of $50,000 from Doyle's insurance carrier in settlement of their claims against him and his insurance carrier. The Dahmens then made a claim for UIM coverage benefits from their insurer, American Family.

¶ 4. On December 30, 1999, American Family denied the Dahmens' claim for UIM coverage benefits based on its determination that the payment from Doyle's insurance carrier and American Family's waiver of its medical expense lien of approximately $4000 had adequately compensated Renate for her injury. In support of its denial, American Family indicated that its "consultant" had advised that Renate's accident-related injury had resolved by June 3, 1999, and that any ongoing medical care should be ascribed to her preexisting condition and not to the automobile accident. Shortly thereafter, on January 4, 2000, the Dahmens' attorney demanded copies of the consultant review of Renate's medical records from American Family. American Family refused to provide this information to the Dahmens.

¶ 5. On February 4, 2000, the Dahmens filed the instant action raising two claims against American Family. The first claim is for UIM coverage benefits sufficient to cover all claims and damages in excess of $50,000 caused by the automobile accident. The second claim alleges that American Family acted in bad faith in denying the Dahmens' claim for UIM coverage benefits. The Dahmens seek compensatory and punitive damages. American Family's answer denied that the Dah-mens' damages resulting from the accident exceeded $50,000 and denied any failure to act in good faith in evaluating the Dahmens' UIM claim.

¶ 6. On March 6, 2000, American Family filed a motion to bifurcate the Dahmens' UIM and bad faith claims. In support of its motion, American Family argued that trying the bad faith claim in conjunction with the UIM claim would "unfairly prejudice American Family's ability to defend itself against the UIM claim by demanding the production of privileged information which otherwise would most certainly not be discoverable in a typical UIM case." The Dahmens opposed American Family's motion arguing that it lacked supporting evidence and that bifurcation would be unfair to the Dahmens and would unduly increase their litigation expenses.

¶ 7. The trial court heard oral arguments pertaining to American Family's motion on April 17, 2000. At the close of the hearing, the trial court denied American Family's motion finding that the benefits of allowing the Dahmens to litigate their claims in one trial outweighed any potential prejudice to American Family, noting that the form of the verdict and the jury instruction could sufficiently remedy any prejudice. The trial court also noted that it would consider any request made by American Family for a protective order of privileged materials if necessary. In a written order filed on April 26, 2000, the trial court set forth the following reasoning:

[T]he issues and facts that would need to be tried in the claim for [UIM] benefits would be substantially the same as many of the facts and issues presented for trial in the claim for bad faith.. .. [A]ny potential prejudice to American Family by proceeding with both claims in one trial would be outweighed by the considerations of judicial economy, avoid delay and duplication of time and expense. The issues are not so complex that they would be unduly confusing or difficult for a jury.

American Family appeals.

Discussion

¶ 8. At the outset, we note that the Dahmens' coverage under their UIM policy is not at issue in the underlying action now pending before the trial court. American Family does not dispute that Renate's automobile accident is covered by her UIM policy. Rather, American Family's position is that the Dahmens' damages did not exceed the $50,000 coverage limit of the underlying policy and, therefore, they are not entitled to benefits under their UIM policy. The Dahmens claim that their damages exceed the underlying policy limits and, therefore, American Family is liable for the remaining amount. The Dahmens additionally claim that American Family acted in bad faith in denying their claim for UIM benefits.

¶ 9. We begin by acknowledging the supreme court's recent decision in Waters v. Pertzbom, 2001 WI 62, 243 Wis. 2d 703, 627 N.W.2d 497. In Waters, the court confirmed that only claims, not issues, are subject to bifurcation under Wis. Stat. § 805.05(2) (1999-2000). Waters, 2001 WI 62 at ¶¶ 18-24. Here, we deal with separate claims, not issues. We do note, however, that the legislative history of this statute reveals that the rule barring bifurcation of issues does not apply to issues regarding insurance coverage. Id. at ¶¶ 21, 23.

¶ 10. The appellate issues are limited to the claims of bifurcation and the stay of discovery. American Family argues that the trial court's failure to bifurcate the Dahmens' claim for UIM benefits from its claim of bad faith and its refusal to stay discovery will likely result in irreparable prejudice and, contrary to, the trial court's findings, will not promote judicial economy. The Dahmens contend that they will bear additional litigation expenses if their claims are bifurcated. The Dahmens also argue that American Family will not be prejudiced if discovery is not stayed and the claims are tried together unless it acted in bad faith and, hence, has something to hide.

¶ 11. A trial court's authority to bifurcate claims for trial is derived from the language of Wis. Stat. §§ 906.11 and 805.05(2). The former authorizes a trial judge to exercise reasonable control over a trial to ensure the ascertainment of truth, to avoid needless consumption of time, and to protect witnesses. The latter provides in relevant part, "The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition or economy . . . may order a separate trial of any claim . .. always preserving inviolate the right of trial in the mode to which the parties are entitled." Sec. 805.05(2). In making its decision, the trial court must consider the potential prejudice to the parties, the complexity of the issues, the potential for jury confusion and the issues of convenience, economy and delay. See Hoffman v. Merrell Dow Pharm., Inc., 857 F.2d 290, 306-08 (6th Cir. 1988). This bifurcation decision is addressed to the trial court's discretion. See Muchow v. Goding, 198 Wis. 2d 609, 628, 544 N.W.2d 218 (Ct. App. 1995). Likewise, the decision whether to stay discovery is committed to the trial court's discretion. Konle v. Page, 205 Wis. 2d 389, 393, 556 N.W.2d 380 (Ct. App. 1996). We will not reverse the trial court's decision unless it is clearly shown that the trial court failed to consider the relevant facts, apply the proper standard of law and reach a conclusion a reasonable judge could reach. Loy v. Bunderson, 107 Wis. 2d 400, 414-15, 320 N.W.2d 175 (1982).

¶ 12. American Family first contends that the bifurcation of the Dahmens' claims and the stay of discovery are necessary to prevent irreparable prejudice. American Family's concerns are rooted in the discovery process. A claim for UIM benefits is separate and distinct from a claim of bad faith. See Anderson v. Cont'l Ins. Co., 85 Wis. 2d 675, 686, 271 N.W.2d 368 (1978) (bad faith conduct by an insurer towards its insured is a tort separate and apart from any breach of contract). The evidence necessary to support a claim of bad faith is very different from that necessary to support a claim for UIM benefits. While the Dahmens' claim for UIM coverage will turn on the amount of their damages, a claim of bad faith will examine American Family's handling of the Dahmens' UIM claim.

¶ 13. In litigating a claim of bad faith, the Dah-mens will be entitled to discovery of American Family's work product and attorney/client material containing information relevant as to how the Dahmens' claim was handled. This information would include American Family's internal determination to deny benefits, its evaluation as to how a jury may value the Dahmens' claim and its approach to settlement. This information would not be available to the Dahmens if they were proceeding solely on a claim for UIM benefits.

¶ 14. American Family argues that the discovery of this information will prevent it from fairly defending the underlying contract claim and that presentation of this information at trial will irreparably confuse and prejudice the jury. It also contends that the discovery of information related to the bad faith claim will interfere with settlement negotiations on the underlying claim for UIM benefits.

¶ 15. While Wis. Stat. § 805.05(2) authorizes the trial court to bifurcate claims, there is no law in Wisconsin as to whether, as a matter of policy, a trial court should do so when presented with a claim of bad faith and an underlying claim for UIM benefits. American Family points to other jurisdictions that have spoken to the difficulty of addressing a bad faith claim with an underlying claim against the same defendant in a single trial. These courts have been reluctant to allow discovery on the bad faith claim until the coverage issue has been determined. See Allstate Ins. Co. v. Swanson, 506 So. 2d 497, 498 (Fla. Dist. Ct. App. 1987); Marsillo v. Nat'l Surety Corp., 112 F.R.D. 692, 697 (D. Mont. 1986); Maryland Am. Gen. Ins. Co. v. Blackmon, 639 S.W.2d 455, 457-58 (Tex. 1982). The court in Blackmon observed, "[I]f a plaintiff attempting to prove the validity of a claim against an insurer could obtain the insurer's investigative files merely by alleging the insurer acted in bad faith, all insurance claims would contain such allegations." Id. at 457-58. Similarly, in Swanson, the court noted that if a claim for bad faith is prosecuted simultaneously with an underlying coverage claim, the discovery rule could be circumvented by simply combining the two causes of action. Swanson, 506 So. 2d at 498.

¶ 16. We recognize that, unlike the case at bar, the cases cited by American Family each involved a dispute as to the insurer's liability for coverage whereas here the underlying claim relates to damages only. Nevertheless, the cases are instructive as to the risk of prejudice to the insurance carrier when discovery proceeds on a bad faith claim while an underlying claim against the same defendant remains unresolved. Wisconsin Stat. § 805.05(2) provides that a trial court may order a separate trial "always preserving inviolate the right of trial in the mode to which the parties are entitled." The bifurcation of the Dahmens' claims accomplishes this. American Family is entitled to the same discovery protections and privileges enjoyed by other litigants.

¶ 17. In addition, we are not satisfied that the use of properly drafted jury instructions and a special verdict will sufficiently remedy the prejudice that would likely result if the two claims are litigated in a single trial. Even though the evidence relevant to the bad faith claim is wholly unrelated to the underlying claim for UIM benefits, the evidence on the two issues will likely overlap. Even the best-intentioned and properly instructed jury might not maintain the discipline to discern between the two claims. As a result, the risk for jury confusion and prejudice to American Family is substantial.

¶ 18. We also are perplexed by the trial court's statement that American Family's discovery concerns might be addressed by protective orders. If issued, such orders would clash with the trial court's ruling denying bifurcation. If the two claims are to be tried together, the Dahmens would be entitled to full and effective discovery as to both claims.

¶ 19. We also conclude that bifurcation and a stay of discovery on the bad faith claim might well enhance, rather than defeat, the interests of judicial economy and possible settlement. If a jury finds that the Dah-mens' injuries do not exceed the underlying policy limits, it would not be necessary to proceed with a trial on the claim of bad faith. And if the Dahmens are permitted to proceed with discovery on the bad faith claim, the information gleaned from such might well chill any motivation to settle the underlying claim.

Conclusion

¶ 20. We conclude that the considerations bearing on the bifurcation decision weigh in favor of bifurcation for the following reasons: (1) the failure to bifurcate a claim of bad faith from an underlying claim for UIM benefits would significantly prejudice American Family; (2) the two distinct claims present differing evidentiary requirements that increase the complexity of the issues and the potential for jury confusion; and (3) a separate initial trial on the claim of UIM benefits increases the prospect of settlement and promotes economy by narrowing the issues for the jury and potentially eliminating the need for a later trial on the bad faith claim. We therefore conclude that the trial court erroneously exercised its discretion in denying American Family's motion to bifurcate the Dahmens1 claims and to stay discovery. We reverse the trial court's order and remand for further proceedings consistent with this opinion.

By the Court. — Order reversed and cause remanded.

       On September 12, 2000, we granted American Family's petition for leave to appeal.

       The Dahmens additionally argued that American Family acted in bad faith and that it had breached its fiduciary duties to the Dahmens. Understandably, the trial court did not address these arguments in its ruling as these are factual issues for the jury to decide.

       We placed this case on hold pending the supreme court's decision in Waters v. Pertzbom, 2001 WI 62, 243 Wis. 2d 703, 627 N.W.2d 497.

       All references to the Wisconsin Statutes are to the 1999-2000 version.

       We therefore will not address the Dahmens' appellate arguments pertaining to whether American Family violated its fiduciary duties to the Dahmens or whether American Family acted in bad faith in denying the Dahmens1 claim for UIM benefits. These are factual matters to be determined by the jury and are irrelevant to the appellate issues.

       In order to show bad faith against an insurer, the plaintiff "must show the absence of a reasonable basis for denying benefits of the policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim." Anderson v. Cont'l Ins. Co., 85 Wis. 2d 675, 691, 271 N.W.2d 368 (1978). The jury is able to "consider whether [the plaintiffs) claim was properly investigated, and whether the results of the investigation were given a reasonable evaluation and review." Wis JI — Civil 2761.

       The Dahmens dismiss the concern that attorneys will gain access to information otherwise protected by work product and attorney/client privileges by simply adding a claim for bad faith to an underlying contract claim. The Dahmens believe that Wisconsin law governing frivolous claims, see Wis. Stat. § 814.025, will sufficiently deter attorneys from doing so. We are not so optimistic. The test for frivolousness is extremely stringent. Frivolousness exists only when there is no reasonable basis for a claim and all doubts are resolved in favor of the attorney. Atkinson v. Mentzel, 211 Wis. 2d 628, 648, 566 N.W.2d 158 (Ct. App. 1997).

       The Dahmens additionally argue that Allstate Insurance Co. v. Swanson, 506 So. 2d 497 (Fla. Dist. Ct. App. 1987), is inapplicable because it involved a simple claim of nonpayment whereas they have "specific and well-founded claims of bad faith." The Dahmens overlook that whether they have a well-founded claim of bad faith remains to be determined by the jury.


author: NETTESHEIM, EJ.

text:
    State of Wisconsin, Plaintiff-Respondent, v. Robert W. Wodenjak, Defendant-Appellant.

    Court of Appeals

      No. 00-3419-CR.

      Submitted on briefs June 26, 2001. —
    Decided August 1, 2001.

    2001 WI App 216
    (Also reported in 634 N.W.2d 867.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Rex R. Anderegg oí Anderegg & Mutschler, LLP of Milwaukee.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Robert Sager, assistant district attorney.
    Before Nettesheim, PJ., Brown and Snyder, JJ.

       Petition to review denied 10-23-01.

   NETTESHEIM, EJ.

¶ 1. Robert W Wodenjak appeals from a judgment of conviction for operating a motor vehicle while intoxicated (OWI) pursuant to Wis. Stat. § 346.63(l)(a) (1999-2000). Wodenjak was convicted as a fourth-time repeat offender pursuant to § 346.65(2)(d). Wodenjak challenges the trial court's denial of his motion to suppress the results of a blood test. Wodenjak argues that there was no exigency under the Fourth Amendment permitting the police to perform a blood test because he had previously offered to submit to a breath test. We reject Wodenjak's argument and affirm the judgment of conviction.

FACTS

¶ 2. The underlying facts are not in dispute. Wisconsin State Trooper Timothy Berg arrested Wodenjak for OWI on March 7, 1999, in Winnebago county. Berg had access to a functioning Intoxilyzer machine at the time of the arrest. However, state patrol policy provided that the primary test for repeat OWI offenders was a blood test. Therefore, Berg transported Wodenjak to a local hospital for a blood test. At the hospital, Berg advised Wodenjak under the Implied Consent Law, Wis. Stat. § 343.305(4), and asked Wodenjak if he would submit to a blood test. In response, Wodenjak asked if he could take a breath test. Berg rejected this request, stating that the blood test was the primary test for repeat offenders. Wodenjak then refused the blood test and Berg noted the refusal on the implied consent form.

¶ 3. Berg then advised Wodenjak that, despite the refusal, state patrol policy required a blood sample from a repeat offender with or without the offender's consent. Wodenjak then changed his mind and submitted to the blood test.

¶ 4. The State filed a criminal complaint charging Wodenjak with OWI as a repeat offender. Wodenjak followed with a motion to dismiss arguing that the blood test procedure was unreasonable under the Fourth Amendment because he had volunteered to submit to the less invasive breath test procedure. The trial court denied the motion. Thereafter Wodenjak entered a no contest plea to the OWI charge, and he appeals from the ensuing judgment of conviction.

DISCUSSION

¶ 5. On appeal, Wodenjak renews his trial court argument that the taking of his blood was unreasonable under the Fourth Amendment because he was willing to submit to the less invasive breath test procedure. The question of whether the reasonableness standárd of the Fourth Amendment is satisfied presents a question of constitutional law that we review de novo. State v. Thorstad, 2000 WI App 199, ¶ 4, 238 Wis. 2d 666, 618 N.W.2d 240, review denied, 239 Wis. 2d 310, 619 N.W.2d 93, 2000 WI 121 (Wis. Oct. 17, 2000) (No. 99-1765-CR), cert. denied, Thorstad v. Wisconsin, 121 S. Ct. 1099 (U.S. Wis. Feb. 20, 2001) (No. 00-1145).

¶ 6. Two Wisconsin cases are relevant to the appellate issue. The first, and most important, is State v. Bohling, 173 Wis. 2d 529, 494 N.W.2d 399 (1993). There, the police informed Bohling under the Implied Consent Law and asked him to submit to a breath test. Id. at 534. Bohling refused. Id. The police then informed Bohling that, despite his refusal, they would seek a blood sample and that force, if necessary, would be used. Id. at 534-35. As a result, Bohling submitted to the blood test. Id. at 535. By motion to suppress, Bohling challenged the blood test on Fourth Amendment grounds. Id. at 533. Bohling contended that the test was unreasonable because there were no exigent circumstances justifying the warrantless draw of his blood. Id.

¶ 7. The supreme court rejected Bohling's argument. Id. at 533-34. The court's opinion was based largely on Schmerber v. California, 384 U.S. 757 (1966), where the United States Supreme Court held that a warrantless blood draw did not violate the reasonableness requirement of the Fourth Amendment under certain conditions. Bohling, 173 Wis. 2d at 537. The Bohling court held:

The dissipation of alcohol from a person's blood stream constitutes a sufficient exigency to justify a warrantless blood draw. Consequently, a warrantless blood sample taken at the direction of a law enforcement officer is permissible under the following circumstances: (1) the blood draw is taken to obtain evidence of intoxication from a person lawfully arrested for a drunk-driving related violation or crime, (2) there is a clear indication that the blood draw will produce evidence of intoxication, (3) the method used to take the blood sample is a reasonable one and performed in a reasonable manner, and (4) the arrestee presents no reasonable objection to the blood draw.

Id. at 533-34 (footnote omitted).

¶ 8. The second case is Thorstad. There, the police informed Thorstad under the Implied Consent Law and asked him to submit to a blood test. Thorstad agreed. He later filed a motion to suppress, contending that the blood test procedure was unreasonable under the Fourth Amendment because it was involuntary and nonconsensual.

¶ 9. Relying on Bohling, the court of appeals rejected Thorstad's constitutional challenge to the blood test procedure. The Thorstad court said:

However, Bohling does not require that the subject of the blood test give consent or voluntarily take the test nor does Bohling thus depend on whether the subject of the blood test was deemed to have consented under Wis. Stat. § 343.305. Therefore, Thorstad's contention that his blood test was an unreasonable search must ultimately rest on one of the following premises: (1) the requirements of Bohling were not met; (2) § 343.305 is unconstitutional; or, (3) Bohling is unconstitutional.

Thorstad, 2000 WI App 199 at ¶ 10 (citation omitted; footnote omitted). Noting that it was bound by the holding of Bohling, the court concluded that the blood test procedure was constitutionally permissible because the Bohling factors were satisfied. Thorstad, 2000 WI App 199 at ¶¶ 11, 17.

¶ 10. In summary, the teaching of Bohling and Thorstad is that a forcible warrantless blood draw does not violate the Fourth Amendment if the conditions specified in Bohling are satisfied. And it makes no difference whether the suspect refuses the primary breath test and then submits to the blood test (Bohling) or the suspect submits to the primary blood test (Thorstad).

¶ 11. Wodenjak correctly observes that unlike Bohling and Thorstad, here he asked for the alternate breath test before he submitted to the primary blood test. Based on those facts, Wodenjak argues there was no exigency justifying a blood test because the less invasive breath test procedure was available to the police and because a breath test result has the same evidentiary value as a blood test result. This argument targets the third and fourth factors under Bohling. Wodenjak contends that his willingness to take the available breath test rendered the "method used to take the blood" unreasonable under the third factor of Bohling and also constituted a "reasonable objection" on his part under the fourth factor of Bohling. See Bohling, 173 Wis. 2d at 534.

¶ 12. We appreciate the factual distinctions between this case on the one hand and Bohling and Thorstad on the other. But we nonetheless conclude that the holdings of those cases govern here. Bohling recognizes that the dissipation of alcohol from a person's blood constitutes an exigent circumstance justifying a warrantless blood draw subject to certain conditions. Bohling, 173 Wis. 2d at 533. Thorstad states that both Bohling and Schmerber hold that a blood test performed in a medical setting satisfies both the "reasonable method" and "reasonable manner" requirements of the law. Thorstad, 2000 WI App 199 at ¶ 15. Wodenjak does not cite to any law, and we otherwise know of none, which holds that the availability of less invasive alternate tests changes the holding of these cases or that the police must consider such alternate tests when deciding whether to obtain a blood draw from a suspect.

¶ 13. In summary, both the United States Supreme Court and the Wisconsin Supreme Court have put their constitutional stamp of approval on the war-rantless taking of a blood draw subject to certain conditions and controls. Those conditions and controls do not require the police to consider alternate tests. Therefore, Wodenjak's request for the less invasive breath test and the availability of such a test did not deprive Berg of his authority to obtain a blood sample from Wodenjak under Bohling.

¶ 14. We uphold the trial court's ruling denying Wodenjak's motion to suppress.

By the Court. — Judgment affirmed.

       All references to the Wisconsin Statutes are to the 1999-2000 version.

       Berg apparently had information that Wodenjak was a repeat offender and he was charged as such in the criminal complaint.

       Berg testified that he did not recall Wodenjak making this inquiry, but acknowledged that he might have. Wodenjak testified that he did make the inquiry, and we accept that fact for purposes of this appeal. In addition, we note that the record is unclear as to whether Wodenjak made this inquiry before or during the implied consent colloquy. However, this uncertainty is not critical because, under either scenario, Wodenjak's inquiry came before he submitted to the blood test.

       Based upon Wodenjak's change of mind, Berg struck the notation on the implied consent form that Wodenjak had refused the test. We glean from this that the State did not charge Wodenjak with unlawfully refusing to submit to a chemical test under the Implied Consent Law.

       The complaint also charged Wodenjak with operating a motor vehicle with a prohibited blood alcohol concentration (PAC) pursuant to Wis. Stat. § 343.63(l)(b). The transcript of the plea and sentencing proceeding does not reveal that the State moved to dismiss this charge. And the judgment of conviction refers only to an OWI conviction pursuant to § 346.63(l)(a). Upon remittitur of the record in this case, we direct the parties and the court to address the status of the PAC charge because, based upon the appellate record, that charge appears to still be pending against Wodenjak.

       Wisconsin Stat. § 343.305(3) (c) states that the Implied Consent Law "does not limit the right of a law enforcement officer to obtain evidence by any other lawful means." Therefore, we agree with Wodenjak that the law of search and seizure, not the law of implied consent, controls this case.

       Those conditions are: (1) the police have a clear indication that the evidence they seek will be found in the suspect's blood; (2) exigent circumstances exist; and (3) the method used to take the blood sample is reasonable and is performed in a reasonable manner. State v. Bohling, 173 Wis. 2d 529, 537, 494 N.W.2d 399 (1993).

       Wodenjak also relies on Nelson v. City of Irvine, 143 F.3d 1196 (9th Cir. 1998). There, in a class action suit alleging 42 U.S.C. § 1983 violations, the plaintiffs alleged that they had been coerced into submitting to blood tests and deprived of the statutory option to take a breath or urine test. Nelson, 143 F.3d at 1199. Reversing a judgment on the pleadings, the Ninth Circuit held that the exigent circumstances justifying a blood test were not present when an arrestee consents to a breath or urine test, and such tests are available. Id. at 1207.
      We reject Wodenjak's reliance on Nelson for two reasons. First, as Thorstad has stated, "To the extent, if any, that Nelson is in conflict with the exigent circumstances analysis of Bohling and Schmerber [v. California, 384 U.S. 757 (1966)], it is not for this court to resolve that conflict." State v. Thorstad, 2000 WI App 199, ¶ 9, 238 Wis. 2d 666, 673, 618 N.W.2d 240, review denied, 239 Wis. 2d 310, 619 N.W.2d 93, 2000 WI 121 (Wis. Oct. 17, 2000) (No. 99-1765-CR), cert. denied, Thorstad v. Wisconsin, 121 S. Ct. 1099 (U.S. Wis. Feb. 20, 2001) (No. 00-1145). Second, and more importantly, Nelson interpreted California's implied consent law which gives the suspect the option of choosing which test to take. Nelson, 143 F.3d at 1201. (Further, California law requires that breath and urine tests be available: a DUI arrestee "has the choice of whether the test shall be of his or her blood, breath, or urine, and the officer shall advise the person that he or she has that choice.") In contrast, the Wisconsin implied consent law accords no such option to the arrestee. Instead, the implied consent law authorizes the police to designate the primary test. Wis. Stat. § 343.305(2).