author: N. PATRICK CROOKS, J.

text:
    Gary Richards, Plaintiff-Respondent-Petitioner, v. First Union Securities, Inc., Defendant-Appellant.
    Supreme Court

      No. 2004AP1877.

      Oral argument March 21, 2006.

      Decided May 31, 2006.

    2006 WI 55
    (Also reported in 714 N.W.2d 913.)

      For the plaintiff-respondent-petitioner, there were briefs by James Bolt and James A. Bolt Law Office, Fitchburg, and oral argument by James Bolt.

    For the defendant-appellant, there was a brief by Michael H. Schaalman, Robert J. Pluta, Brian D. Winters, and Quarles & Brady LLP, Milwaukee, and oral argument by Michael H. Schaalman.

   N. PATRICK CROOKS, J.

¶ 1. Petitioner Gary Richards (Richards) seeks review of a published court of appeals' decision reversing the circuit court's denial of defendant First Union Securities, Inc.'s (First Union) motion to reopen a default judgment against it pursuant to Wis. Stat. § 806.07 (2003-04). We address two issues on appeal. First, which party has the burden of proof on a motion under § 806.07 to set aside or vacate a default judgment, where the motion involves the question of whether the service was proper? Second, how should a court construe the terms "officer, director or managing agent" pursuant to Wis. Stat. § 801.11 (5) (a)?

¶ 2. We reverse the decision of the court of appeals. We hold that the burden of proof is on the party seeking, pursuant to Wis. Stat. § 806.07, to set aside or vacate a default judgment, where the question of proper service is involved. Furthermore, we determine that the test set forth in Carroll v. Wisconsin Power & Light Co., 273 Wis. 490, 79 N.W.2d 1 (1956), is the appropriate one to determine who is a managing agent pursuant to Wis. Stat. § 801.11(5)(a). We remand this case to the circuit court for further action consistent with this opinion, including evidentiary proceedings involving an application of the Carroll test, as well as providing an opportunity for a thorough review and explanation on the issue of whether the motion of First Union was timely, and whether Ronald McGrath (McGrath) was an officer, director, or managing agent of First Union. Upon remand, the circuit court must make findings of fact and conclusions of law relating to the evidence which will be presented to it.

I-I

¶ 3. On July 23, 2002, Richards filed an action in Waukesha County Circuit Court against First Union, in part to recover investment losses as the result of alleged violations of the antifraud sections of the Wisconsin Uniform Securities Law. The next day Richards' process server, Carlton Manske (Manske), attempted to serve a copy of the summons and complaint on the defendant by serving Kim Wisniewski (Wisniewski), the operations manager of First Union's Brookfield branch. According to Manske's affidavit, upon arriving at First Union's Brookfield branch, he stated the purpose of his appearance, asked the office personnel to identify and direct him to the individual authorized to accept service for the corporation, and confirmed the individual's authority to accept service. Manske was directed to Wisniewski, who accepted service. Manske later filed with the circuit court an affidavit, which indicated that the manner of service was "Corporate Service: by leaving, during office hours, copies at the office of the person/entity being served, leaving same with the person apparently in charge thereof."

¶ 4. In September 2002 First Union contacted Richards to inform him that he had signed an arbitration agreement that required him to arbitrate his disputes. Richards consented to stay the court case in favor of arbitration on the condition that First Union initiate a National Association of Securities Dealers, Inc.'s arbitration and pay the filing fee. On October 29, 2002, Richards sent a letter to First Union indicating that if the arbitration fee was not paid by November 5, 2002, he would withdraw the offer to arbitrate and proceed with the lawsuit. First Union failed to pay the arbitration fee or file an answer to the action. On November 12, 2002, Richards filed, in the circuit court, a motion for a default judgment, which included an affidavit from his counsel, James Bolt, stating that the summons and complaint were duly filed and served on the defendant's registered agent. The circuit court granted the motion.

¶ 5. One year later, on November 13, 2003, Richards sent First Union a letter demanding payment of the default judgment in the amount of $72,448.34, plus interest accrued since the date of the judgment. Richards began garnishment proceedings when First Union failed to pay. First Union filed an answer to the garnishment on February 9, 2004, and a motion to reopen the default judgment on February 25, 2004. It apparently based its motion on Wis. Stat. § 806.07(1)(d) and (h).

¶ 6. First Union's motion to reopen the default judgment was based, in major part, on a claim of insufficient service of process under Wis. Stat. § 801.11. The motion asked that the court dismiss Richards' claims, or alternatively, First Union asked the court to issue a stay pending arbitration pursuant to Wis. Stat. § 788.02. First Union included, in support of its motion, affidavits from the branch manager of its Brookfield office, McGrath, and Wisniewski. Wisniewski's affidavit stated that she was not an officer, director, or managing agent of First Union, nor was she authorized to accept service. She asserted that her duties were limited to ensuring that the brokers of the Brookfield office properly filled out forms for compliance with the rules and policies of First Union. Similarly, McGrath's affidavit stated that he was not an officer, director, or managing agent of First Union, nor was he authorized to accept service; however he did acknowledge that he was the person in charge of the Brookfield branch office during the entire year of 2002. McGrath also claimed that there were no officers, directors, or managing agents of First Union in Wisconsin, and that there were no employees or persons otherwise authorized to accept service in the state, except its registered agent. He further stated that First Union was a foreign corporation, with CSC-lawyers Incorporating Service located in Madison as its registered agent to accept service in Wisconsin.

¶ 7. The circuit court, Judge Robert G. Mawdsley presiding, denied First Union's motion, concluding "the record clearly reflects that defects in personal service were waived."

¶ 8. First Union appealed the decision of the circuit court. On appeal, Richards filed a motion to strike the portion of First Union's brief that asserted that, based on McGrath's affidavit, the wrong office was served because Richards claimed McGrath's status was never an issue in the circuit court, and thus was being improperly raised for the first time on appeal. In the alternative, Richards sought to amend the record on appeal to include a statement made by McGrath in an affidavit in a different case, Wachovia Securities v. Eberle, (.Eberle affidavit). In the Eberle affidavit, McGrath stated he was a "Senior Vice President at Wachovia Securities and the Branch Manager of the Wachovia Securities office located in Brookfield, Wisconsin. [His] responsibilities include supervising and training the employees in Wachovia's Brookfield office." The court of appeals denied Richards' motion to strike, holding that the factual assertion was made in the circuit court, although not specifically litigated or addressed by the circuit court. Furthermore, the court of appeals denied Richards' motion to amend the record to include reference to the Eberle affidavit.

¶ 9. In a split decision, the court of appeals reversed the circuit court and allowed First Union to reopen the default judgment pursuant to Wis. Stat. § 806.07. The majority held that First Union did not waive its right to object to the lack of personal jurisdiction. Furthermore, based on the affidavits of Wisniewski and McGrath, the court of appeals held that Wisniewski was not a managing agent of First Union upon whom corporate service could be made directly, and McGrath, as the branch manager of the Brookfield branch office, also was not a managing agent of First Union. Consequently, the service did not constitute proper service on the office of a managing agent under the alternative service option of Wis. Stat. 801.11(5)(a), which provides that "[i]n lieu of delivering the copy of the summons to the officer specified, the copy may be left in the office of such officer, director or managing agent with the person who is apparently in charge of the office." Wis. Stat. § 801.11(5)(a). Therefore, since Richards had failed to comply with the rules for service of process, the circuit court did not have personal jurisdiction over First Union, and the default judgment was void.

¶ 10. Judge Richard S. Brown dissented, arguing that although the majority acknowledged that First Union had the burden of proving ineffective service, it had, in effect, improperly shifted the burden of proving effective service to Richards. In support of his position, Judge Brown cited the majority's conclusion that there was " 'scant evidence in the record'" to support McGrath's status. Richards, 284 Wis. 2d 530, ¶ 24 (Brown, J. dissenting) (citation omitted). Therefore, Judge Brown reasoned, First Union had not met its burden of proof, and the default judgment should stand. Alternatively, because the record was devoid of information about McGrath's authority and responsibilities, Judge Brown argued that the case should be remanded pursuant to Wis. Stat. § 752.35, as there had been no factual determination about McGrath's status.

¶ 11. Richards timely requested that the court of appeals reconsider its decision and remand the case to the circuit court for a hearing on the issue of whether McGrath was a managing agent. The court of appeals denied Richards' motion for reconsideration. Richards petitioned this court for review; his petition was granted on November 15, 2005.

HH I — I

¶ 12. The legal issues concerning the reopening of a default judgment and whether personal service was sufficient are dependent on the interpretation and application of statutes, and therefore are questions of law which an appellate court reviews de novo. Useni v. Boudron, 2003 WI App 98, ¶ 8, 264 Wis. 2d 783, 662 N.W.2d 672. The procedural issues involve questions of law, and are therefore reviewed de novo as well. See Paige K.B. v. Steven G.B., 226 Wis. 2d 210, 225, 594 N.W.2d 370 (1999). A circuit court's findings of fact are reviewed to determine whether such findings are contrary to the great weight and clear preponderance of the evidence. See West v. West, 82 Wis. 2d 158, 165, 262 N.W.2d 87 (1978),

¶ 13. First Union argues that the circuit court did not have personal jurisdiction over it, as Richards had failed properly to serve the corporation pursuant to Wis. Stat. § 801.11(5). Therefore, First Union requests that, because a judgment rendered without personal jurisdiction is void, the default judgment should be vacated. See id. at 166 (if a party obtains a judgment without obtaining personal service pursuant to the statute, the judgment is considered void). Furthermore, First Union maintains that there is adequate evidence in the record to support the court of appeals' conclusion that there was inadequate service of process on First Union.

¶ 14. Richards argues that First Union, as the moving party seeking to reopen the default judgment, has the burden of proof in support of the motion. It is Richards' position that there was insufficient evidence in the record to determine that the judgment was void for lack of personal jurisdiction. Richards further argues that McGrath, as branch manager for the Brookfield office, was a "managing agent" for First Union. Therefore, Richards concludes, First Union was adequately served pursuant to Wis. Stat. § 801.11(5)(a).

¶ 15. Wisconsin Stat. § 806.07 allows relief from a judgment or order. It provides, in relevant part, "[o]n motion and upon such terms as are just, the court... may relieve a party or legal representative from a judgment, order or stipulation for the following reasons: ... (d) [t]he judgment is void. . . ." Wis. Stat. § 806.07(1). A judgment is "void" for purposes of § 806.07 when the court rendering it lacked subject matter or personal jurisdiction. See Wengerd v. Rinehart, 114 Wis. 2d 575, 338 N.W.2d 861 (Ct. App. 1983).

A

¶ 16. We first address the issue of which party bears the burden of proof on the issue of whether personal jurisdiction was obtained through proper service of process. We agree with both the court of appeals' majority and dissent that there is " 'scant evidence in the record'" upon which to ascertain whether McGrath was a "managing agent" for purposes of the statute. See Richards, 284 Wis. 2d 530, ¶¶ 18-21, ¶ 24 (Brown, J. dissenting).

[53

¶ 17. We further agree with Judge Brown's dissent that, in general, the party invoking the judicial process in its favor bears the burden of production and persuasion. Wolfe v. Wolfe, 2000 WI App 93, ¶ 15, 234 Wis. 2d 449, 610 N.W.2d 222. First Union, however, relies on Danielson v. Brody Seating Co., to argue that the burden of proving personal jurisdiction is properly placed on the party asserting jurisdiction. Danielson v. Brody Seating Co., 71 Wis. 2d 424, 427-28, 238 N.W.2d 531 (1976).

¶ 18. There are three principal cases we must examine to determine which party has the burden when a party seeks to reopen a default judgment and have a determination that such judgment was void: Danielson, Emery v. Emery, 124 Wis. 2d 613, 622, 369 N.W.2d 728 (1985), and West, 82 Wis. 2d 158.

¶ 19. In Danielson, defendant Brody Seating Co. sought to dismiss the complaint against it for lack of personal jurisdiction on the ground of improper service. Danielson, 71 Wis. 2d at 426. At the circuit court hearing on the motion, Danielson "offered proof of service in the form of an affidavit of Deputy Sheriff Y. Battista, in which he swears that he served the summons and complaint on the Brody Seating Company 'by delivering to and leaving with one M. Brody true copies' of the summons and complaint." However, there was substantial evidence introduced to the circuit court that on the purported date of service, there was no officer, director, managing agent, or any other person associated with the corporation with the name M. Brody. Id. Even though the summons and complaint wound up on the desk of an individual upon whom service would have been effective, such notice was insufficient. "Personal delivery requires that'. . . there must be a direct and actual delivery of the papers to the defendant himself by the one making service.'" Id. at 429 (footnote omitted). Declaring that "[t]he burden of proving a defendant is subject to the jurisdiction of the court is on the plaintiff or the party asserting jurisdiction," the court held that Danielson had failed to meet that burden. Id. at 427-28 (footnote omitted).

¶ 20. Two years later, in West, this court, again, addressed the issue of which party bears the burden of proof that personal jurisdiction was obtained through proper service of process. West, 82 Wis. 2d at 161. West involved the sufficiency of service of a summons and complaint for divorce through the statutorily prescribed alternative service option of service by publication. Service by publication required the plaintiff to establish first that he or she had used due diligence to serve the complaint personally but was unable to locate the defendant.

¶ 21. In West, the decedent's estate appealed from an order that vacated a judgment of divorce granted to the decedent, because the circuit court concluded that personal service was ineffective. This court upheld the decision of the circuit court, which "held that the attempted acquisition of jurisdiction by publication was ineffective, because there was a showing that due diligence had not been exercised to serve [the surviving spouse] personally," and therefore "held the judgment was void for want of personal jurisdiction.. . ." Id. at 164.

¶ 22. Placing the burden on the party seeking to reopen and vacate the judgment, the West court stated:

The question to be decided on the motion to vacate and to hold the judgment void is simply whether there was credible evidence to show that due diligence was not exercised.... On review, the test is that usually applied where findings of fact are made by a trial judge. Are the findings of fact contrary to the great weight and clear preponderance of the credible evidence?

Id. at 165.

¶ 23. Several years later, in Emery, this court relied on West to hold that the burden of proof that service was insufficient was properly placed upon the party that sought to reopen and vacate the judgment. Emery, 124 Wis. 2d at 622; see also Haselow v. Gauthier, 212 Wis. 2d 580, 585, 587, 569 N.W.2d 97 (Ct. App. 1997).

¶ 24. In Emery, appellant husband brought an action to vacate a judgment of divorce for lack of personal jurisdiction. The circuit court had refused to vacate the divorce judgment, finding that the wife, Ms. Emery, had exercised "reasonable diligence in her attempt to serve Mr. Emery personally, and that Ms. Emery did comply" with the statutes "when she instituted substituted service by publication." Emery, 124 Wis. 2d at 616.

¶ 25. Among the husband's arguments, Mr. Emery contended "that the circuit court erred as a matter of law by placing the burden of proof upon Mr. Emery at the hearing on the motion to vacate the divorce judgment." Id. at 622. The court cited West to support its reasoning that the circuit court had "properly placed the burden upon Mr. Emery, who sought to vacate the judgment, to produce credible evidence to show that Ms. Emery did not exercise reasonable diligence in her attempt to personally serve him." Id.

¶ 26. The Emery court further concluded that Danielson "is distinguishable in that it involved a motion to dismiss a complaint for want of personal jurisdiction. In the instant case we are dealing with a motion to vacate a judgment and the standard described in West applies." Id. at 623.

¶ 27. As was the case in Emery, First Union seeks to reopen and vacate a judgment, not dismiss a complaint. We are not persuaded by First Union's argument claiming that, because a judgment is void when there is want of personal jurisdiction, there is a special reason to place the burden of defending the judgment on the nonmoving party. Placing such burden on the nonmov-ing party was specifically rejected by this court in Emery, where the court held that the burden properly was placed on the husband who brought the action to vacate the judgment of divorce for lack of personal jurisdiction. Emery, 124 Wis. 2d at 622. We conclude, therefore, that the standard articulated in Emery and West is the appropriate one to apply to the case at bar. Therefore, we hold that the burden of proof is on the person seeking to reopen and set aside or vacate the default judgment. Furthermore, we hold that the evidence necessary to set aside such a judgment is evidence sufficient to allow a court to determine that the circuit court's findings of fact were " 'contrary to the great weight and clear preponderance of the credible evidence[].'" Emery, 124 Wis. 2d at 622 (quoting West, 82 Wis. 2d at 165).

B

¶ 28. We next turn to the question of what it means to be a managing agent pursuant to Wis. Stat. § 801.11(5)(a), which is one way to satisfy the statutory service of process requirements. As we have consistently held, actual notice of the plaintiffs action, alone, is insufficient. See Danielson, 71 Wis. 2d at 429. An inquiry into the adequacy of service of a summons requires an examination of "whether the appropriate statutory procedures for service have been complied with." Id. (footnote omitted).

¶ 29. Wisconsin Stat. § 801.11(5)(a) provides that proper service of a summons on a corporation or Limited Liability Company — service that is sufficient to convey personal jurisdiction — is achieved:

By personally serving the summons upon an officer, director or managing agent of the corporation or limited liability company either within or without this state. In lieu of delivering the copy of the summons to the officer specified, the copy may be left in the office of such officer, director or managing agent with the person who is apparently in charge of the office.

Wis. Stat. § 801.11(5)(a). As the parties concede that Wisniewski was not a managing agent, one issue before this court is whether McGrath was a managing agent, and whether service was, therefore, effective under the alternate service option of § 801.11(5)(a), since a copy was left at McGrath's office with Wisniewski.

¶ 30. Richards argues that McGrath is just such a managing agent, and therefore First Union was successfully served. First Union maintains that McGrath is not a managing agent, thus the circuit court did not have personal jurisdiction over it when the court issued its default judgment.

¶ 31. In Carroll, this court examined the predecessor statute to Wis. Stat. § 801.11(5)(a) — Wis. Stat. § 262.09(3) (1955-56). Carroll, 273 Wis. 490. Section 262.09(3) described the persons upon whom a notice to a corporation — in that case a notice of injury — could be properly served. " 'If [the action is] against any other domestic corporation, [the summons may be served by delivering a copy] to the president, vice president, superintendent, secretary, cashier, treasurer, director, trustee, or managing agent.'" Id. at 492 (quoting Wis. Stat. § 262.09(3) (1955-56)).

¶ 32. Carroll involved the validity of service of process on N.A. Landt (Landt), who directed operations at Wisconsin Power & Light's generating station in Wisconsin Dells. Id. The question before the court was whether Landt was a "managing agent" pursuant to Wis. Stat. § 262.09(3) (1955-56). The court acknowledged that Landt "directed operations at the plant, had charge of the machinery and its maintenance and had 25 men under him." Id. at 493. However, the court also noted that, while Landt recommended people for "employment in the generating plant,. . . the Madison office hired them." Id. Similarly, "Landt issued requests for supplies, but the purchases were made by the Madison office." Id.

¶ 33. "In construing the term 'managing agent' as it appears in such statutes," the Carroll court began, "this court has held that it relates to an agent having a general supervision of the affairs of the corporation." Id. (citing Upper Mississippi Transp. Co. v. Whittaker, 16 Wis. 233, [220*3 (1862)). The court ultimately concluded that the terms "superintendent" and "managing agent" had corresponding meanings in the statute. "Both terms relate to a person possessing and exercising the right of general control, authority, judgment, and discretion over the business or affairs of the corporation, either on an overall or part basis, i.e., everywhere or in a particular branch or district." Carroll, 273 Wis. at 494 (emphasis in original). Noting that Landt's "authority was not general, but was limited to the management of the physical operation of the plant and its maintenance," the court concluded that he was not a managing agent for purposes of the service of process statute. Id.

¶ 34. In Derrick v. The Drolson Co., 69 N.W.2d 124 (Minn. 1955), the Supreme Court of Minnesota adopted a test similar to that articulated by this court in Carroll. Derrick involved the sufficiency of service of a summons upon a domestic corporation. In that case, a process server entered the office of The Drolson Company, asked for an officer, and was directed to Edward Vogt (Vogt). The process server asked Vogt if he was an officer and the managing agent of the company, and Vogt allegedly responded that he was. Id. at 126-27. Vogt later denied such an acknowledgment. The court concluded that Vogt was not an officer of the corporation, and therefore focused its inquiry on whether Vogt was a managing agent of the corporation authorized to receive service pursuant to the statutory requirements. The Minnesota court noted that the rationale behind the requirement that a managing agent be some person "invested by the corporation with general powers involving the exercise of judgment and discretion" was because "the agent must be one who could reasonably be expected to apprise the corporation of the service and the pendency of the action." Id. at 129 (footnote omitted). The court reasoned:

It follows that the significant factors in determining whether a particular agent is a "managing agent" for the purpose of receiving service are the extent to which the agent has power to exercise independent judgment and discretion in executing the business of the corporation, and whether his position is of such a character and rank as to make it reasonably certain that the corporation will be apprised of the service.

Id.

¶ 35. We are satisfied that the Minnesota Supreme Court's decision in Derrick is quite helpful in applying the Carroll test and assisting a circuit court in determining what constitutes a managing agent. We disagree with First Union that the record is sufficient for this court to determine whether McGrath was or was not a managing agent. As there is insufficient evidence in the record to apply the Carroll test to the facts in this case, we remand the issue to the circuit court to make such a determination.

¶ 36. Furthermore, the court of appeals' majority held that First Union did not waive its right to challenge whether the circuit court had personal jurisdiction over it. We are unable to hold, on the record before us, whether there was such a waiver as determined by the circuit court in its ruling. First Union neither answered the complaint, nor made any appearances in the action prior to its motion to reopen and set aside or vacate the default judgment. Since the record is insufficient to determine whether or not there was such a waiver, we remand that issue to the circuit court for a determination. In the case before us, the circuit court determined that the circumstances were not extraordinary, and therefore did not qualify for a ruling under Wis. Stat. § 806.07(l)(h). The circuit court held the issue concerning defects in personal service was waived, apparently on the basis that First Union did not file its § 806.07 motion within one year of the date that the default judgment was entered. We note that the one-year time period only applies to motions based upon § 806.07(l)(a) or (c). Motions based on subsections (d)-(h) are subject only to the "reasonable time" standard. See Wis. Stat. § 806.07(2).

I — I hH hH

¶ 37. We reverse the decision of the court of appeals. We hold that the burden of proof is on the party seeking, pursuant to Wis. Stat. § 806.07, to set aside or vacate a default judgment, where the question of proper service is involved. Furthermore, we determine that the test set forth in Carroll is the appropriate one to determine who is a managing agent pursuant to Wis. Stat. § 801.11(5)(a). We remand this case to the circuit court for further action consistent with this opinion, including evidentiary proceedings involving an application of the Carroll test, as well as providing an opportunity for a thorough review and explanation on the issue of whether the motion of First Union was timely, and whether McGrath was an officer, director, or managing agent of First Union. Upon remand, the circuit court must make findings of fact and conclusions of law relating to the evidence that will be presented to it.

By the Court.— The decision of the court of appeals is reversed, and this matter is remanded to the circuit court for further action consistent with this opinion.

        Richards v. First Union Sec., Inc., 2005 WI App 164, 284 Wis. 2d 530, 702 N.W.2d 45.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise indicated.

       Since the initiation of this action, Wachovia Securities acquired First Union Securities, Inc.

       Waukesha County Case No. 03CV2295 (September 23, 2003).

       Explaining the clearly erroneous standard of review regarding circuit court findings of fact, the court of appeals explained:

        While we now apply the "clearly erroneous" test as our standard of review for findings of fact made by a trial court without a jury, cases which apply the "great weight and clear preponderance" test to the same situation may be referred to for an explanation of this standard of review because the two tests in this state are essentially the same.

        Noll v. Dimiceli's, Inc., 115 Wis. 2d 641, 643, 340 N.W.2d 575 (Ct. App. 1983)(citation omitted); see also Robertson-Ryan v. Pohlhammer, 112 Wis. 2d 583, 592, n.*, 334 N.W.2d 246 (1983) (Abrahamson, J., dissenting) (under Wis. Stat. § 805.17(2) (1983-84) the "clearly erroneous" test applicable to the findings of fact of a circuit judge sitting without a jury is the same as the "against the great weight and clear preponderance of the evidence" test).

       Regarding the alternative method of service of process, as there was "no evidence in the instant case that the summons was left with anyone associated with Brody Seating Company, much less with someone apparently in charge of the office," the court also rejected this argument. Danielson v. Brody Seating Co., 71 Wis. 2d 424, 430, 238 N.W.2d 531 (1976).

        See also Nelson v. Stop and Ship Cos., 596 A.2d 4 (Conn. 1991) which held that the terms" 'general or managing agent or manager' are concomitant terms meaning a person whose position, rank, duties and responsibilities make it reasonably certain that the corporation will be apprised of service made upon that person." Id. at 6 (citation omitted).

       Other jurisdictions have reached similar conclusions. See, e.g., Green v. Morningside Heights Hous. Corp., 177 N.Y.S.2d 760 (1958), which concluded that the term "managing agent" was to be given a liberal interpretation, and while strict language might limit the definition to include persons who could be served to one who managed the entire corporation, the probable meaning would include one in charge of a branch office whose powers were general. Id. at 761.

        See Derrick v. The Drolson Co., quoting Minnesota Rules of Civil Procedure 4.03 which provided, in relevant part, that service of summons upon a corporation shall be made " 'by delivering a copy to an officer or managing agent, or to any other agent authorized expressly or impliedly or designated by statute to receive service of summons....'" Derrick v. The Drolson Co., 69 N.W.2d 124, 127 (Minn. 1955)(quoting Rules of Civil Procedure 4.03).

       Similarly, we conclude there is insufficient evidence in the record to determine whether the fact that McGrath's position as branch manager bestowed on him the responsibility of ensuring compliance with state and federal securities laws, was of such nature that he possessed the general authority required to satisfy the definition of managing agent.

       Richards makes a secondary argument that McGrath was an "officer" of the corporation pursuant to Wis. Stat. § 801.11(5)(a). Because the record and arguments concerning this issue are largely undeveloped, such a determination is properly one for the circuit court. We thus remand that issue to the circuit court as well. There is no claim that McGrath was a director of First Union.
      Although we do not decide this issue, we note that there is authority in Wisconsin that may be helpful to the circuit court in its determination of whether McGrath was an officer.
      An officer is "a person charged with important functions of management such as a president, vice president, treasurer, etc." Among the facts a court may consider are: (1) the individual's managerial duties; (2) whether the position occupied is one of authority; and (3) whether the individual possesses superior knowledge and influence over another and is in a position of trust.

        Modern Materials, Inc. v. Advanced Tooling Specialists, Inc., 206 Wis. 2d 435, 442-443, 557 N.W.2d 835 (Ct. App. 1996)(internal citations omitted). See also, e.g., Hyde v. Bd. of Comm'rs of Wells County, 198 N.E. 333, 337 (Ind. 1935)(in determining whether one is an officer or an employee, important tests include the tenure by which a position is held, whether its duration is defined by statute or ordinance creating it, or whether it is temporary or transient); Jefferson County v. Case, 12 So.2d 343, 346 (Ala. 1943) (an officer is distinguished from an employee in the greater importance, dignity and independence of his position).

       We acknowledge, without deciding, the fact that under certain circumstances, a motion to reopen and vacate a judgment pursuant to Wis. Stat. § 806.07 might be properly deemed waived because the motion was not filed within a reasonable time. See Wis. Stat. § 806.07(2). See also State ex rel. Cynthia M.S. v. Michael F.C., 181 Wis. 2d 618, 627, 511 N.W.2d 868 (1908)("Determining whether motions under sec. 806.07(l)(h), Stats., have been made within a reasonable time requires a case by case analysis of all relevant factors. This analysis should be guided by the fact that while respect for the finality of judgments is an important concern, the purpose of sec. 806.07(l)(h) is to allow courts to do substantial justice when the circumstances so warrant."); EPF Corp. v. Pfost, 210 Wis. 2d 79, 88-89, 563 N.W.2d 905 (Ct. App. 1997)(citation omitted)(In determining whether an application for relief complies with the "reasonable time" requirement of § 806.07(2), a court balances two competing factors: "the need for finality of judgments and the ability of a court to do substantial justice when the circumstances so warrant.").

       With regard to First Union's pending motion to strike those portions of Richards' brief that relate to the Eberle affidavit, we grant that motion to strike such portions, as well as the affidavit itself, since the affidavit and the arguments based on it were not before the circuit court at the original hearing on First Union's motion.


source: Caselaw Access Project

author: ANN WALSH BRADLEY, J. DAVID T. PROSSER, J.

license: Public Domain

text:
    Shane T. Drinkwater, Plaintiff-Respondent, v. American Family Mutual Insurance Company, Jason R. Honshel and Additional Fictional Party #1 and Additional Fictional Party #2, Defendants, Medical Associates Health Plans, Subrogated Defendant-Appellant.
    Supreme Court

      No. 2004AP1793.

      Oral argument March 14, 2006.

      Decided June 1, 2006.

    2006 WI 56
    (Also reported in 714 N.W.2d 568.)

      For the subrogated defendant-appellant, there were briefs (in the court of appeals) by Stephen C. Krumpe and O'Connor & Thomas, P.C., Dubuque, LA, and oral argument by Stephen C. Krumpe.

    For the plaintiff-respondent, there was a brief (in the court of appeals) by Mark H. Hoskins, Jr., and
      Hoskins, Kalnins, McNamara & Vogelsberg, Lancaster, and oral argument by Mark H. Hoskins, Jr.

    An amicus curiae brief was filed (in the court of appeals) by William C. Gleisner, III and Law Offices of William C. Gleisner, III, Milwaukee; Rhonda L. Lan-ford and Habush Habush & Rottier, S.C., Madison, on behalf of the Wisconsin Academy of Trial Lawyers.
   ANN WALSH BRADLEY, J.

¶ 1. This case is before the court on certification by the court of appeals pursuant to Wis. Stat. § 809.61 (2003-04). Medical Associates Health Plan, Inc. ("the Plan"), an Iowa corporation, appeals a circuit court judgment that applied Wisconsin law and determined that Shane Drink-water must be made whole before the Plan was entitled to subrogation against his recovery for personal injuries. Drinkwater, a Wisconsin resident, was injured in a motor vehicle accident in Wisconsin, and the Plan paid medical expenses on his behalf through his employer's health insurance plan.

¶ 2. The issue is whether Iowa law or Wisconsin law applies to the Plan's subrogation claim against Drinkwater. Applying choice-of-law principles, we determine that Wisconsin law applies. Accordingly, Drink-water must be made whole under Wisconsin law before the Plan may recover for any of Drinkwater's medical expenses. We conclude that the Plan is not entitled to subrogation against Drinkwater's recovery because he was not made whole under Wisconsin law. Therefore, we affirm the circuit court judgment.

H

¶ 3. The background facts relevant to this appeal are undisputed. Drinkwater is a Wisconsin resident who works at a company located in Iowa. He sustained injuries that included a severe leg fracture when another motor vehicle struck his motorcycle in September 2002 in Wisconsin. The driver of the other vehicle was also a Wisconsin resident who was covered under an insurance policy issued by a Wisconsin insurance company. Both vehicles were registered in Wisconsin.

¶ 4. The Plan paid health care expenses on Drinkwater's behalf pursuant to a group health insurance contract it issued to Drinkwater's employer. The Plan is an Iowa non-profit corporation and its principal offices and place of business are located in Iowa, although it has clinics in Iowa, Illinois, and Wisconsin. The contract was issued to Drinkwater's employer in Iowa.

¶ 5. Drinkwater commenced an action for personal injuries, naming the other driver and the driver's insurer as defendants, and naming the Plan as a potentially subrogated party. The Plan counterclaimed and cross-claimed, alleging a subrogated interest in the damages Drinkwater sought.

¶ 6. More specifically, the Plan alleged that pursuant to Iowa law, it was entitled to "first dollar" reimbursement and payment in full for all of its subrogated expenses without deduction or offset. It alleged that its subrogation interest was not subject to the Wisconsin "made-whole" doctrine of Rimes v. State Farm Mutual Automobile Insurance Co., 106 Wis. 2d 263, 316 N.W.2d 348 (1982), but rather that it was entitled to full reimbursement from any of Drinkwater's recovery based upon the terms of the Plan contract and Iowa law.

¶ 7. The Plan contract contained a clause providing that the contract "shall be governed by and interpreted in accordance with the laws of the State of Iowa." It also contained a subrogation clause, which provided as follows:

If a Member suffers an injury or condition, for which benefits are provided by [the Plan], through acts or omissions of a third party for which said third party (or any person or organization liable for such third party's conduct) is or may be legally liable, or if the Member recovers benefits from any person or organization by reason of such injury or condition, [the Plan] shall bé subrogated, to the extent of the reasonable cash value of benefits, supplies, and services provided by [the Plan], to all the Member's rights of recovery against any person or organization ....

¶ 8. The other driver's negligence was conceded, as was the lack of any contributory negligence on Drinkwater's part. The insurer for the other driver paid its policy limit of $250,000.

¶ 9. Drinkwater and the Plan agreed to escrow $89,006.10 of the proceeds, the amount that the Plan had paid for his health care expenses. The Plan moved for a determination of its subrogation rights, requesting that the circuit court decide whether it was entitled to "overturn" Wisconsin's made-whole doctrine and whether Drinkwater was made whole.

¶ 10. The circuit court determined that Wisconsin law applied. It conducted a Rimes "made-whole" hearing in order to calculate Drinkwater's damages. The court found that his total damages were $424,000 as follows:

Medical expenses: $132,000
Past loss of earnings: $7,000
Future loss of earning capacity: $10,000
Past pain, suffering, and disability: $125,000
Future pain, suffering, and disability: $150,000

¶ 11. Accordingly, the circuit court concluded that Drinkwater would not be made whole by receipt of the $250,000 in proceeds from the tortfeasor's insurance. Applying Wisconsin's made-whole doctrine, it determined that Drinkwater was entitled to the escrowed funds. The court entered judgment in favor of Drink-water, and the Plan appealed.

II

¶ 12. The parties agree that under Wisconsin sub-rogation law, including Rimes, the Plan would not be entitled to subrogation against Drinkwater. The circuit court calculated his damages to be $424,000, which included $132,000 in medical expense, but he received only $250,000 from the tortfeasor. As the circuit court determined, Drinkwater was therefore not made whole. He would be further short-changed for every dollar that the Plan was able to recover. The Plan admits that if Wisconsin's made-whole doctrine applies, then Drink-water prevails.

¶ 13. Conversely, Iowa has rejected Wisconsin's made-whole doctrine. Ludwig v. Farm Bureau Mutual Insurance Co., 393 N.W.2d 143, 146 (Iowa 1986) ("We disagree with the holding of the Rimes case."). The parties agree that under Iowa law the Plan would be entitled to invade Drinkwater's recovery of $250,000 to obtain reimbursement of medical expenses it paid on his behalf. Consequently, the question of whether Wisconsin law or Iowa law applies will determine the outcome of this case.

¶ 14. In order to resolve this question, we must employ a choice-of-law analysis in order to determine whether Iowa law or Wisconsin law applies. This choice-of-law determination is a question of law subject to independent appellate review. American Family Mut. Ins. Co. v. Powell, 169 Wis. 2d 605, 609, 486 N.W.2d 537 (Ct. App. 1992).

A

¶ 15. We begin with a review of the development and status of the made-whole doctrine in Wisconsin. The made-whole doctrine in Wisconsin has deep and firm roots. It traces back at least 75 years to Hamill v. Kuchler, 203 Wis. 414, 232 N.W. 877 (1931), and is based largely on the equitable nature of subrogation.

¶ 16. In Hatnill, a property case involving mortgage and lien rights, the court explained that "subrogation does not arise until the debt has been fully paid." Hamill, 203 Wis. at 425. "Until that is done the right of subrogation is a mere inchoate right and cannot be enforced." Id. (quoting Defiance Mach. Works v. Gill, 170 Wis. 477, 483, 175 N.W. 940 (1920)). Subrogation "is a creation of the law whereby the substantial ends of justice may be accomplished regardless of contract relations." Id. (quoting Poluckie v. Wegenke, 137 Wis. 433, 437, 119 N.W. 188 (1909)).

¶ 17. These concepts from Hamill were reinforced and applied in the insurance context in Garrity v. Rural Mutual Insurance Co., 77 Wis. 2d 537, 541-46, 253 N.W.2d 512 (1977). In Garrity the court concluded that a subrogation clause in a standard fire insurance policy "did not change the substantive common law rights of the insured." Garrity, 77 Wis. 2d at 541. The court cited "the general rule that there is no subrogation until the insured is made whole." Id. at 542. "[T]he insurer has no right as against the insured where the compensation received by the insured is less than his loss." Id. at 543 (quoting Couch on Insurance, § 61.61 (2d ed. 1968)).

¶ 18. Subsequently, in Rimes, this court again reinforced the centrality of the equitable nature of subrogation, concluding that "only where an injured party has received an award ... which pays all of his elements of damages ... is there any occasion for sub-rogation." Rimes, 106 Wis. 2d at 275. This time, the court was addressing whether an automobile insurer that made payments to an insured under the medical-pay provisions of its policy could enforce a subrogation agreement when the insured received in settlement less than the total damages incurred. Id. at 264.

¶ 19. The court in Rimes looked to Garrity as its guide, explaining that "one who claims subrogation rights, whether under the aegis of either legal or conventional [contractual] subrogation, is barred from any recovery unless the insured is made whole." Id. at 272. It said that the purpose of subrogation is to prevent a double recovery. Id. Thus, only when an insured has received full damages from the tortfeasor and has been paid for a portion of those damages by the insurer is the insurer, under principles of equity, entitled to subrogation. Id. When either the insurer or insured must to some extent go unpaid, the loss should be borne by the insurer because that is a risk that the insured has paid the insurer to assume. Id. at 275-76 (citing Garrity, 77 Wis. 2d at 542.)

¶ 20. This court again reaffirmed Wisconsin's commitment to the made-whole doctrine in Ruckel v. Gassner, 2002 WI 67, 253 Wis. 2d 280, 646 N.W.2d 11. In a unanimous decision, it held that under Rimes and Garrity, an insured must be made whole before an insurer may exercise subrogation rights against its insured, even when unambiguous language in an insurance contract states otherwise. Ruckel, 253 Wis. 2d 280, ¶¶ 4, 40, 43.

¶ 21. Ruckel, much like the case at bar, involved medical expenses paid under a group benefit plan. Id., ¶¶ 6-7. The insurance contract included a subrogation clause entitling the insurer to full repayment of the expenses. Id., ¶ 9. It stated that the insurer's right to repayment was "prior and superior" to the right of any other person, including the beneficiary. Id.

¶ 22. The court explained that the insurer's argument, that the subrogation clause in its policy was clear, "misse[d] the point." Id., ¶ 41. Rather, the court explained: "The clause is not unclear; it is inequitable. It is contrary to the most fundamental precepts of subrogation." Id. Subrogation under circumstances where the insured had not been made whole "turn[s] the entire doctrine of subrogation on its head." Id.

¶ 23. Thus, our case law culminating with Ruckel establishes that in Wisconsin the made-whole doctrine can trump express language in an insurance contract: "[P]ursuant to this court's holdings in Gar-rity and Rimes, an insurer is not entitled to subrogation against its insured unless and until the insured is made whole, regardless of contractual language to the contrary." Id., ¶ 43.

B

¶ 24. The Plan asserts that this is a contract case and that its Iowa choice-of-law clause is controlling. Furthermore, the Plan argues that even if the clause is not controlling, Iowa is the state with the most significant relationship to the question at hand. Thus, the Plan contends, Iowa law should control under a choice-of-law analysis. We disagree.

¶ 25. This court recognized in Bush v. National School Studios, Inc., 139 Wis. 2d 635, 407 N.W.2d 883 (1987), that there is a qualification on the freedom to contract for choice of law. The qualification "has been recognized by commentators and frequently invoked by courts." Id. at 642. Although parties may seek to promote "certainty and predictability in contractual relations," they will not be "permitted to do so at the expense of important public policies of a state whose law would be applicable if the parties choice of law provision were disregarded." Id.; see also Beilfuss v. Huffy Corp., 2004 WI App 118, ¶¶ 13, 16, 20, 274 Wis. 2d 500, 685 N.W.2d 373; General Med. Corp. v. Kobs, 179 Wis. 2d 422, 428, 507 N.W.2d 381 (Ct. App. 1993) ("parties cannot, by contract, override fundamental polices of the state whose law would be applicable absent the choice of law provision").

¶ 26. "A precise delineation of those policies which are sufficiently important to warrant overriding a contractual choice of law stipulation is not possible." Bush, 139 Wis. 2d at 643. However, "statutes or common law which make a particular.. . contract provision unenforceable ... or that are designed to protect a weaker party against the unfair exercise of superior bargaining power by another party, are likely to embody an important state public policy." Id.

¶ 27. In Bush, for example, a school portrait photographer initiated an action against the corporation for which he worked, asserting that he was terminated without cause in violation of the Wisconsin Fair Dealership law. Id. at 637-38. This court concluded that it would not honor the parties' choice-of-law clause specifying Minnesota law in light of the strong public policy represented by Wisconsin's fair dealership laws. Id. at 639, 644-45.

¶ 28. Another example of this qualification on the freedom to contract for choice-of-law is Beilfuss. There, a sales manager sought to have covenants not to compete with his former employer declared unenforceable. Beilfuss, 274 Wis. 2d 500, ¶¶ 2-3. The court of appeals determined that the covenants were not enforceable under Wisconsin's long-standing public policy controlling covenants not to compete, despite a choice-of-law provision in the contract specifying that Ohio law applied. Id., ¶¶ 3, 7, 20.

¶ 29. A Bush-type qualification on the freedom to contract for choice of law is apt here. First, this court's jurisprudence culminating in Ruckel establishes that in Wisconsin the made-whole doctrine trumps an express contract provision to the contrary. Second, the contractual bargaining in this case occurred between the Plan and Drinkwater's employer, not between the Plan and Drinkwater. He had no choice or opportunity to bargain as to the terms of the Plan contract. If a party who actually bargained for a choice-of-law clause may seek to set it aside based on an overriding state public policy, as in Bush and Beilfuss, certainly a party who had no choice or opportunity to bargain for such a clause may do likewise, at least when it dictates his or her right to recover damages.

¶ 30. Moreover, the issue before us is not simply one of contract, as the Plan asserts. To treat it as such, without recognizing the tort aspects that this issue implicates, is to ignore the true nature of the question before the court. To rest the analysis of this case only on contract contravenes this court's analysis in Ruckel, which applied equity, not contract, to a tort recovery. In Ruckel we held that an insurer is not entitled to subrogation until the insured is made whole "regardless of contractual language to the contrary." Ruckel, 253 Wis. 2d 280, ¶ 43.

¶ 31. For all of these reasons, we determine that the express choice-of-law provision for Iowa law in the Plan contract does not necessarily control the Plan's subrogation right against Drinkwater's recovery for personal injuries. Rather, we must apply a choice-of-law analysis to determine if, absent the clause, Wisconsin law would apply. See Bush, 139 Wis. 2d at 642; Kobs, 179 Wis. 2d at 428.

C

¶ 32. Wisconsin's choice-of-law jurisprudence, at least up until recently, has had something of a checkered past. It would likely be impossible to fully reconcile the 30 years of Wisconsin jurisprudence immediately following this court's decision in Wilcox v. Wilcox, 26 Wis. 2d 617, 133 N.W.2d 408 (1965). In Wilcox, the court joined the "choice of law revolution" of the 1960s by rejecting traditional choice-of-law analysis that inflexibly looked to the law of the place of a wrong, "lex loci delicti." See Shirley A. Wiegand, Officious Intermed- dling, Interloping Chauvinism, Restatement (Second), and Leflar: Wisconsin's Choice of Law Melting Pot, 81 Marq. L. Rev. 762, 772 (1998); see also Wilcox, 26 Wis. 2d at 620-21.

¶ 33. Professor Wiegand, in the article cited, maintained that "choice-of-law decisions in this state have traveled a very bumpy road" beginning with Wilcox. Wiegand, 81 Marq. L. Rev. at 796. She explained that although this court had "hoped for a 'practical and workable' approach which would serve as 'a guide to the future to provide a uniform common law of conflicts,' lower court decisions demonstrate that vision has not yet been achieved." Id. at 803 (quoting Wilcox, 26 Wis. 2d at 621, 635) (footnotes omitted).

¶ 34. We need not attempt to reconcile all of the cases to which Professor Wiegand referred in 1998. The question now before us, which involves the made-whole doctrine, is not clearly controlled by any of our previous choice-of-law cases. We apply instead our more recent choice-of-law jurisprudence to determine whether Iowa law or Wisconsin law applies.

¶ 35. Since the time that Professor Wiegand wrote, this court decided State Farm Mutual Automobile Insurance Co. v. Gillette, 2004 WI 31, 251 Wis. 2d 561, 641 N.W.2d 662, and Beloit Liquidating Trust v. Grade, 2004 WI 39, 270 Wis. 2d 356, 677 N.W.2d 298. Both cases, Gillette in particular, supply the choice-of-law framework for our analysis here.

¶ 36. Gillette establishes — perhaps contrary to some of the cases criticized in the Wiegand article — that insurance-related issues which arise as part of a personal injury lawsuit are not always readily categorized as sounding in tort or contract. In Gillette, this court explained that when an insured sues an insurance company for underinsured motorist coverage, "contract law and tort law converge." Gillette, 251 Wis. 2d 561, ¶ 31. "Contract law applies to interpret the insurance policy, but an insured's right to underinsured motorist benefits hinges on the existence of a tort cause of action against the underinsured motorist." Id.

¶ 37. Similarly here, where the Plan seeks subro-gation against Drinkwater's recovery from the tortfea-sor, contract law and tort law converge. Although contract law applies to the interpretation of the Plan's insurance contract with Drinkwater's employer, his right to recover hinges on the existence of his tort cause of action against the tortfeasor.

¶ 38. The issue before us cannot be characterized purely as one of contract. At oral argument, the Plan’s counsel asserted that its claim was only a contract claim and that "but for" the Plan contract, it would have no claim. It can just as easily be said, however, that the Plan would have no claim but for the tort that set this case in motion. The Plan concedes, as it must, that "the contract involves the proceeds of a tort action." Indeed, the Plan's counterclaim and cross-claim as a potentially subrogated party incorporate all of Drinkwater's allegations "that are essential to state a negligence cause of action for personal injuries."

¶ 39. Regardless of how the issue in this case is characterized, Drinkwater's right to recover is diminished on a dollar-for-dollar basis to the extent that the Plan is entitled to subrogation. Drinkwater's right to recover in tort is thus tightly bound to the Plan's subrogation right, just as the Gillette plaintiffs right to recover was tightly bound to his insurance company's asserted rights under the insurance contract in that case. We therefore follow Gillette, applying its choice-of-law framework to determine whether Wisconsin law or Iowa law applies. The framework in Beloit Liquidating is similar. Thus, we look also to its principles to guide us.

¶ 40. The "first rule" in the choice-of-law analysis under Gillette is "that the law of the forum should presumptively apply unless it becomes clear that non-forum contacts are of the greater significance." Gillette, 251 Wis. 2d 561, ¶ 51 (internal quotations omitted). Under Gillette, if it is not clear that the nonforum contacts are of greater significance, then the court applies five choice-influencing factors:

(1) Predictability of results;

(2) Maintenance of interstate and international order;

(3) Simplification of the judicial task;

(4) Advancement of the forum's governmental interests; and

(5) Application of the better rule of law.

Gillette, 251 Wis. 2d 561, ¶ 53; see also Heath v. Zellmer, 35 Wis. 2d 578, 595-96, 151 N.W.2d 664 (1967).

¶ 41. The court in Beloit Liquidating referred to two tests to apply in a choice-of-law analysis. The first test is "whether the contacts of one state to the facts of the case are so obviously limited and minimal that application of that state's law constitutes officious in-termeddling." Beloit Liquidating, 270 Wis. 2d 356, ¶ 24 (quoting American Standard Ins. Co. v. Cleveland, 124 Wis. 2d 258, 263, 369 N.W.2d 168 (Ct. App. 1985)). The second test involves an examination of the five choice-influencing factors. Beloit Liquidating, 270 Wis. 2d 356, ¶ 25.

¶ 42. The "first rule" of Gillette and the first test of Beloit Liquidating are related. It could not "become[] clear that nonforum contacts are of the greater significance" (Gillette) if the nonforum state's contacts are "so obviously limited and minimal that application of that state's law constitutes officious intermeddling" (.Beloit Liquidating).

¶ 43. That said, we need not address further the relationship of the "first rule" of Gillette and the first test of Beloit Liquidating. The application of either Gillette's "first rule" or Beloit Liquidating's first test to the facts here necessitates that we apply the five choice-influencing factors. It is not "clear" whether Iowa's contacts are of the "greater significance" {Gillette), yet Iowa's contacts are not "so obviously limited and minimal" that application of Iowa law would constitute officious intermeddling {Beloit Liquidating).

¶ 44. Specifically, the relevant contacts of Iowa and Wisconsin include the following:

• The accident and Drinkwater's injuries occurred in Wisconsin.
• Drinkwater is a Wisconsin resident who works at an Iowa company.
• The Plan is an Iowa corporation with its principal offices and place of business located in Iowa, although it has clinics in Iowa, Illinois, and Wisconsin.
• The Plan contract was issued in Iowa to Drinkwater's employer.
• The tortfeasor is a resident of Wisconsin and was covered under an insurance policy issued by a Wisconsin insurance company.
• Both Drinkwater and the other driver were operating vehicles registered in Wisconsin at the time of the accident.

¶ 45. Both Wisconsin's and Iowa's contacts are significant. It is not clear that Iowa's contacts are of greater significance {Gillette). At the same time, however, Iowa's contacts are more than minimal and limited {Beloit Liquidating). We therefore turn to apply the five choice-influencing factors.

¶ 46. Predictability of results. This factor deals with the parties' expectations; put another way, what legal consequences comport with the predictions or expectations of the parties? Gillette, 251 Wis. 2d 561, ¶ 54. Whether the application of Iowa law or Wisconsin law is more likely to lead to predictable and expected results under the facts of this case depends on which party's perspective on predictability and expectations is considered.

¶ 47. On the one hand, the application of Iowa law is consistent with the Plan's ability to predict and expect that Iowa law will apply to all its insureds or members. On the other hand, Wisconsin citizens are entitled to some assurance that when they suffer injuries within their own state, they can generally predict and expect that Wisconsin law will dictate their rights to recovery.

¶ 48. It may be true that the Plan reaps some benefit from the ability to know with complete predictability that Iowa law will apply. Yet, the application of Wisconsin law in this case does not completely undermine predictability for the Plan. A company such as the Plan is in a relatively good position to calculate the risks associated with decreased predictability whether Iowa law will apply. In contrast, we would not expect reasonable Wisconsin insureds to foresee that they should routinely over-insure themselves for injuries resulting from Wisconsin accidents on the off chance they might become subject to another state's law that effectively limits their recovery.

¶ 49. Thus, although the application of Iowa law might modestly increase predictability for the Plan, the application of Wisconsin law would facilitate predictability for Wisconsin citizens such as Drinkwater. The Plan, and those similarly situated, are in a better position to calculate the risk of a modest amount of unpredictability and adjust accordingly. The first factor therefore points at least somewhat to the application of Wisconsin law.

¶ 50. Maintenance of interstate order. This factor requires that a jurisdiction which is minimally concerned defer to a jurisdiction that is substantially concerned. Gillette, 251 Wis. 2d 561, ¶ 55. Under the facts of this case both jurisdictions are more than minimally concerned.

¶ 51. We cannot say that the application of Wisconsin law would appreciably impede state-to-state commercial intercourse as compared to the application of Iowa law. Although it might be said that the application of Wisconsin law would discourage Iowa companies from hiring Wisconsin residents, it might just as easily be said that the application of Iowa law would discourage Wisconsin citizens from working for Iowa corporations. Thus, somewhat paradoxically, both Iowa and Wisconsin have at least some interest in the application of either jurisdiction's laws.

¶ 52. In addition, we note that this case does not appear to involve the risk of forum shopping. The accident occurred in Wisconsin, and both Drinkwater and the tortfeasor who caused his injuries are Wisconsin residents. Similarly, any fear that a prospective plaintiff would move to this state merely to take advantage of its made-whole doctrine is unfounded. All in all, the second factor does not appreciably favor Iowa law or Wisconsin law.

¶ 53. Simplification of the judicial task. This court has stated a general rule that the judicial task is rarely simplified when lawyers and judges must apply themselves to foreign law. Beloit Liquidating, 270 Wis. 2d 356, ¶ 28; see also Finch v. Southside Lincoln-Mercury, Inc., 2004 WI App 110, ¶ 30, 274 Wis. 2d 719, 685 N.W2d 154 ("application of our own law, as opposed to the law of a foreign jurisdiction, will always simplify our judicial task, except where Wisconsin law is complex or uncertain as compared to that of the other jurisdiction").

¶ 54. The judicial task would not be simplified by the application of Iowa law. In order to see why, we will delve a bit deeper into Iowa law.

¶ 55. In Ludwig, the Iowa Supreme Court rejected the Wisconsin approach to the made-whole doctrine. Ludwig, 393 N.W.2d at 146. It concluded that amounts recovered against a third party for separate elements of a claim can be identified and credited toward subrogation claims, even though other elements of the claim against the third party may not be fully satisfied. Id. The court explained that its holding could be implemented if parties included allocation of elements of damages in settlement documents or special interrogatories. Id.

¶ 56. The Iowa Supreme Court acknowledged that in many cases identification of specific amounts could become difficult because a lump sum settlement might be made. Id. at 146 n.2. Similarly, the court recognized, the insured and third party might be "less than solicitous" of the interests of a subrogee, and might therefore attempt to establish by agreement that the settlement included little to no reimbursement for the element of damages in which the subrogee is interested. Id. Thus, the court reasoned, a mini-trial such as that in Rimes might be required. Id.; see also Iowa American Ins. Co. v. Pipho, 456 N.W.2d 228, 230 (Iowa Ct. App. 1990) (remanding for a "mini-trial" because a settlement did not state what share of the plaintiffs medical bills was attributed to a settlement agreement).

¶ 57. Accordingly, it cannot be said that the application of Iowa law would simplify the judicial task. Iowa case law suggests that a Rimes-type hearing may often be required under Iowa law. Thus, the application of Iowa law would be no simpler than the application of Wisconsin law. Moreover, the Ludwig court’s discussion causes us concern that the application of Iowa law might inject additional opportunities for litigants to game the system, thereby increasing the potential complexity of the judicial task. This factor points to the application of Wisconsin law.

¶ 58. Advancement of the forum's governmental interests. "The question in private litigation, such as in an automobile-accident case, is whether the proposed nonforum rule comports with the standards of fairness and justice that are embodied in the policies of the forum law." Gillette, 251 Wis. 2d 561, ¶ 62 (quoting Heath, 35 Wis. 2d at 598 (1967)). "If it appears that the application of forum law will advance the governmental interest of the forum state, this fact becomes a major, though not in itself a determining, factor in the ultimate choice of law." Gillette, 251 Wis. 2d 561, ¶ 62; accord Beloit Liquidating, 270 Wis. 2d 356, ¶ 30.

¶ 59. Wisconsin has a strong interest in compensating its residents who are victims of torts. Gillette, 251 Wis. 2d 561, ¶ 61; Conklin v. Horner, 38 Wis. 2d 468, 481, 157 N.W.2d 579 (1968) ("The policy of our tort law is to compensate those who are injured by negligent acts.").

¶ 60. Our state's made-whole doctrine, with its deep and firm roots, is a central means by which Wisconsin's interest in compensating its resident tort victims is effectuated. The court has repeatedly reaffirmed the strength and reach of the doctrine. As already explained, this occurred most recently in Ruckel in which the court held that under Rimes and Garrity an insured must be made whole before an insurer may exercise subrogation rights against its insured, even when an unambiguous subrogation clause in an insurance contract states otherwise. Ruckel, 253 Wis. 2d 280, ¶¶ 4, 40, 43.

¶ 61. In order for this factor to weigh in favor of the application of Wisconsin law, we need not determine that Iowa's law is a "bad law" or that it "serves no legitimate purpose." Gillette, 251 Wis. 2d 561, ¶ 65. We can, and do, however, determine that limiting Drinkwater's net recovery to less than the damages he would recover under Wisconsin law undermines Wisconsin's significant interest in fully compensating its citizens who are tort victims. This factor points strongly to the application of Wisconsin law.

¶ 62. Application of the better rule of law. As previously suggested, we need not and do not necessarily conclude that Iowa law is bad law or serves no legitimate purpose. Yet, this court's repeated affirmations of Wisconsin's made-whole doctrine must to some extent be taken as an indication of Wisconsin's view that our made-whole doctrine constitutes the better rule. This court has rejected the Iowa approach.

¶ 63. We cannot help but observe that the application of Iowa law would seem to work inequitable results, at least from the viewpoint of a tort system such as that in Wisconsin. At oral argument, counsel for the Plan conceded that if Drinkwater's medical expenses had been $251,000, a sum that is $1,000 more than the limits of the tortfeasor's liability insurance, under Iowa law the Plan would have been subrogated to all of Drinkwater's recovery. In other words, according to the Plan's counsel, the most severe cases of injury are those in which the injured party would be most likely to end up with a net recovery of zero. This is the type of result that, as we declared in Ruckel, "turn[s] the entire doctrine of subrogation on its head." Ruckel, 253 Wis. 2d 280, ¶ 41. The final factor thus points to the application of Wisconsin law.

¶ 64. Considering the five choice-influencing factors together, we conclude that Wisconsin law should apply. All of the factors either point to the application of Wisconsin law or are neutral. The parties agree, as do we, that under Wisconsin's made-whole doctrine, the Plan is not entitled to any subrogation against Drinkwater's recovery. Accordingly, we need go no further to conclude that the circuit court judgment must be affirmed.

HH 1 — I I — i

¶ 65. In sum, we conclude that Wisconsin law applies to require that Drinkwater must be made whole before the Plan is entitled to subrogation against Drinkwater's recovery for his personal injuries. The Plan is not entitled to subrogation because Drinkwater was not made whole under Wisconsin law. Accordingly, we affirm the circuit court judgment.

By the Court. — The judgment of the Grant County Circuit Court is affirmed.

DAVID T. PROSSER, J.

¶ 66. {dissenting). The made-whole doctrine is a well-established feature of Wisconsin tort and insurance law. I support this doctrine and wish it were the law in all jurisdictions. Unfortunately, it is not. We must recognize that fact in considering this case.

¶ 67. Shane Drinkwater was very badly injured by an underinsured Wisconsin motorist. He has not been made whole. If Mr. Drinkwater were employed by a Wisconsin employer and insured by a Wisconsin insurer, there would be no dispute that the made-whole doctrine would apply to his case. But the facts are otherwise. At the time of the accident, Mr. Drinkwater worked for an Iowa employer and was insured by an Iowa health plan. In the insurance contract, the Iowa insurer explicitly reserved its subrogation rights, as permitted under Iowa law, and it unambiguously provided that Iowa law would govern the contract.

¶ 68. Mr. Drinkwater's employer, United Clinical Laboratories, is located in Dubuque. The company has more than 100 employees.

¶ 69. The Dubuque metropolitan area includes the states of Illinois, Iowa, and Wisconsin. Jo Daviess County in Illinois and Grant County in Wisconsin are directly across the Mississippi River from Dubuque. Because of this geography, there is a good possibility that Shane Drinkwater was not the only Wisconsin resident who worked for United Clinical Laboratories. There is a good possibility that Illinois residents work there as well.

¶ 70. All the employees of United Clinical Laboratories who live in Iowa and all the employees of United Clinical Laboratories who live in Illinois are governed by the subrogation clause in the Medical Associates Health Plan. The Illinois residents are governed by the clause because Illinois, like Iowa, does not recognize the made-whole doctrine.

¶ 71. United Clinical Laboratories is one of numerous employers in the border states of Illinois and Iowa who employ Wisconsin residents. Many of these employers afford their employees health care plans that contractually reserve subrogation rights and do not recognize the made-whole doctrine. Some of these employers may be much smaller than United Clinical Laboratories. Conversely, Shane Drinkwater is one of the thousands of Wisconsin residents who drive across this state's border to take advantage of an employment opportunity and health insurance in one of these neighboring states.

¶ 72. These Wisconsin residents will receive enhanced protection because of this court's decision if they are involved in an accident in Wisconsin. They will receive more protection than their co-workers and consequently may become more expensive to insure than their co-workers who live in Illinois or Iowa. This may have an effect on health care costs for their employers. It may have an effect on Wisconsin resident employment.

¶ 73. In resolving the choice of law issue presented here, the court skillfully marshals the facts and policy in a manner that supports its decision. But some of the facts carry no weight. For instance, the fact that "[t]he tortfeasor is a resident of Wisconsin and was covered under an insurance policy issued by a Wisconsin insurance company," majority op., ¶ 44, is really not relevant. The law would not be different if the tortfeasor lived in Illinois and was covered under a policy issued by an Illinois insurance company. What is important is that the tortfeasor's insurer provided liability coverage.

¶ 74. The fact that "[b]oth Drinkwater and the other driver were operating vehicles registered in Wisconsin at the time of the accident," id,., also is not significant. It merely supplements the fact that the two drivers were Wisconsin residents.

¶ 75. There are three important Wisconsin-related facts: (1) Mr. Drinkwater was and is a Wisconsin resident; (2) his accident occurred in Wisconsin; and (3) his suit was filed in Wisconsin.

¶ 76. The rule of this case is that Wisconsin law will trump Illinois or Iowa subrogation law on a Wisconsin injury to a Wisconsin resident when the case is tried in a Wisconsin court.

¶ 77. What is not clear is what the result would be if there were a Wisconsin injury to an Illinois or Iowa resident and the case were tried in a Wisconsin court against the insured's home state insurer (like Medical Associates Health Plan) claiming subrogation rights. Because Wisconsin is visited by hundreds of thousands of out-of-state tourists, this sort of scenario must be anticipated.

¶ 78. We also do not know what the result would be if a Wisconsin resident like Mr. Drinkwater were to be injured in an Illinois or Iowa accident but able to sue in Wisconsin and bring in the out-of-state insurer claiming subrogation.

¶ 79. This uncertainty undermines the predictability of results. As this court stated:

Predictability is one of the choice-influencing considerations that deserves special emphasis in consensual arrangements... . [S]ince a legal relationship is entered into by pre-arrangement, it is imperative that the parties know their rights will be the same, irrespective of the forum, and that their agreement will have the same consequences, irrespective of where the contract is performed or where a dispute in regard to it is resolved.

Heath v. Zellmer, 35 Wis. 2d 578, 596, 151 N.W.2d 664 (1967).

¶ 80. The result in this case is certainly fair to Mr. Drinkwater. The nagging concern is whether our decision will have collateral consequences to other people or the law.

       There are actually two plan contracts for two different years involved in this case, but the terms of the contracts as relevant here are the same. We refer to the contracts in the singular throughout this opinion.

       The Plan is incorrect in asserting that "Schlosser [v. Allis-Chalmers Corp., 86 Wis. 2d 226, 271 N.W.2d 879 (1978)]'s rationale, if not holding, is directly on point." That case, which involved a group life insurance plan, might be distinguished in a number of ways. For our purposes here, it is sufficient to note that the controversy in Schlosser sounded only in contract, and the court applied a different choice-of-law framework from that in State Farm Mutual Automobile Insurance Co. v. Gillette, 2002 WI 31, 251 Wis. 2d 561, 641 N.W.2d 662.

       We caution that neither the law of the forum nor the law of the place of accident is the choice-of-law rule applicable to every fact situation or issue that might arise regarding a group benefit plan or a contractual subrogation clause. See Gillette, 251 Wis. 2d 561, ¶ 87. "A law of one jurisdiction could be invoked with respect to some issues and in some fact situations and the law of another jurisdiction invoked in respect to other issues and other fact situations." Id.

      Thus, the dissent paints our opinion with too broad a brush when it declares that "[t]he rule of this case is that Wisconsin law will trump Illinois or Iowa subrogation law on a Wisconsin injury to a Wisconsin resident when the case is tried in a Wisconsin court." Dissent, ¶ 76.
      In addition, we note that both parties agree that this case does not involve a self-funded insurance plan that is subject to the federal Employment Retirement Income Security Act (ERISA). Thus, we are not presented with questions such as federal preemption of state subrogation law under ERISA in this case. For further discussion of ERISA questions, see Arnold E Anderson, 2 Wisconsin Insurance Law §§ 10.124-10.126 (5th ed. 2004); see also Ruckel v. Gassner, 2002 WI 67, ¶ 42 n.7, 253 Wis. 2d 280, 646 N.W.2d 11 (explaining that legislatively-sanctioned subrogation, including ERISA, may override common law made-whole principles).

       The factors were suggested by Robert A. Leflar in his article, Choice-Influencing Considerations in Conflicts Law, 31 N.Y.U. L. Rev. 267 (1966). See Beloit Liquidating Trust v. Grade, 2004 WI 39, ¶ 25 n.15, 270 Wis. 2d 356, 677 N.W.2d 298. This court first applied the factors in Heath v. Zellmer, 35 Wis. 2d 578, 595-96, 151 N.W.2d 664 (1967).

       In Beloit Liquidating, the court applied the five factors even after determining that the application of the nonforum state's law would have constituted officious intermeddling. Beloit Liquidating, 270 Wis. 2d 356, ¶¶ 24-32, 677 N.W.2d 298; see also Finch v. Southside Lincoln-Mercury, Inc., 2004 WI App 110, ¶¶ 28-31, 274 Wis. 2d 719, 685 N.W.2d 154; but see American Standard Ins. Co. v. Cleveland, 124 Wis. 2d 258, 263, 369 N.W.2d 168 (Ct. App. 1985) ("[I]f no officious intermeddling would result, then we apply the choice-influencing considerations . . . .").

        Cf. Gillette, 251 Wis. 2d 561, ¶ 59 ("A Wisconsin court can easily and simply apply Manitoba law to determine damages in the present case."). Professor Leflar explained as follows: "It has been argued that a court should apply its own local law unless there is good reason for not doing so. No one can deny the propriety of this argument so long as the 'unless' clause is adequately emphasized.1' Leflar, 31 N.Y.U. L. Rev. at 288 (footnote omitted).

       This court has also recognized "admonitory" and deterrent aspects of our tort law. Gillette, 251 Wis. 2d 561, ¶ 64; Conklin v. Horner, 38 Wis. 2d 468, 482, 157 N.W.2d 579 (1968). Similarly, the court has said: "It is in the interest of this state and of its citizens to retain where possible those laws which require motorists to refrain from acts of ordinary negligence." Conklin, 38 Wis. 2d at 483.

        Eddy v. Sybert, 783 N.E.2d 106, 110 (Ill. App. Ct. 2003).

        Ludwig v. Farm Bureau Mut. Ins. Co., 393 Wis. 2d 143 (Iowa 1986).

       The Wisconsin Department of Revenue estimates that in 2004 more than 53,000 Wisconsin residents were employed at jobs in Illinois. See Letter dated December 28, 2005, from Michael L. Morgan, State of Wisconsin Secretary of Revenue, to Brian Hamer, Director, Illinois Department of Revenue (on file with the State of Wisconsin Department of Revenue, Madison, Wisconsin).