Jennifer Buth v. Daniel Pyawasay ( 2023 )

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
May 16, 2023
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.
Appeal No. 2022AP1 Cir. Ct. No. 2020CV5561
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I
JENNIFER BUTH,
PLAINTIFF-APPELLANT,
V.
DANIEL PYAWASAY AND JODI PYAWASAY,
DEFENDANTS-RESPONDENTS,
WILLIAM J. PROM, INC., D/B/A REALTY EXECUTIVES ELITE,
DEFENDANT.
APPEAL from an order of the circuit court for Milwaukee County:
WILLIAM SOSNAY, Judge. Affirmed in part; reversed in part and cause
remanded for further proceedings.
Before Brash, C.J., Donald, P.J., and White, J.
No. 2022AP1
Per curiam opinions may not be cited in any court of this state as precedent
or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
¶1 PER CURIAM. Jennifer Buth appeals from the order of the circuit
court granting summary judgment to Daniel and Jodi Pyawasay (the Pyawasays)
and dismissing her claims of misrepresentation and fraud in the Pyawasays’ sale of
their home to Buth. Buth argues that the circuit court granted judgment prior to
the issues being joined for trial because the Pyawasays failed to answer the
amended complaint. We agree that the issues were not joined; therefore, we
reverse the circuit court’s order with regard to the summary judgment and we
remand for further proceedings. The court’s order addressed multiple other
motions: we reverse the three evidentiary motions denied as moot, but we affirm
the orders denying default judgment and dismissing the Pyawasays’ counterclaim.
BACKGROUND
¶2 This case begins with Buth’s purchase of a house owned by the
Pyawasays’ located in Greendale (the Property) in July 2020. Buth filed a
complaint against the Pyawasays and their real estate agent, William J. Prom, Inc.,
in September 2020, alleging nine counts: fraudulent misrepresentation, theft by
fraud, breach of contract, breach of warranty, breach of implied warranty,
intentional misrepresentation, fraud in the inducement, negligent
misrepresentation, and strict liability misrepresentation. Buth alleged that when
she entered the Property after closing she was confronted with a serious pet urine
problem affecting the duct work, flooring, and subflooring. Additionally, she
alleged that in the attempted remediation of the pet urine problem, she discovered
that certain repairs and remodeling of the Property had been completed without
required permits.
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¶3 After both the Pyawasays and their real estate agent answered, Buth
filed an amended complaint in January 2021. The record reflects that the real
estate agent filed an answer to the amended complaint, but the Pyawasays did not.
The Pyawasays’ original counsel moved to withdraw and replacement counsel
stipulated to represent them in April 2021. Shortly after that, the court signed an
amended scheduling order as stipulated by the parties, which was then amended
again by stipulation in June 2021. The parties each filed motions to exclude
certain expert witnesses and certain evidence.
¶4 The Pyawasays moved for summary judgment in September 2021,
positing that Buth’s claims were baseless and arguing that even if her allegations
were true, there was no “defect” of the Property under the law. The Pyawasays
contended an alleged pet odor is not a defect of the Property that would need to be
disclosed on the Real Estate Condition Report, pursuant to WIS. STAT. § 709.03
(2021-22).1
¶5 Two days later, Buth moved for default judgment because the
Pyawasays failed to file an answer or other responsive pleading to the amended
complaint and the time for joining had expired, pursuant to WIS. STAT. § 802.06.
She also moved to strike the Pyawasays’ evidentiary motions and motion for
summary judgment.
¶6 On November 2, 2021, the circuit court conducted a hearing on the
Pyawasays’ motion for summary judgment, Buth’s motion for default judgment,
Buth’s motion to strike the summary judgment motion, and the parties’ various
1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
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evidentiary motions. The court reviewed the facts and procedural posture of the
case. Addressing the motion for default judgment, the court noted that “in order to
preserve judicial time and resources,” the court may consider whether it would be
compelled to reopen a default judgment on the grounds of “excusable neglect.” In
opposing the motion for default judgment, the Pyawasays argued that their original
counsel was a family friend and not skilled in litigation. The court considered
whether “extraordinary circumstances [were] present justifying relief in the
interest of justice” citing to Miller v. Hanover Ins. Co., 2010 WI 75, 326 Wis. 2d
640, 785 N.W.2d 493. The court concluded that the policy and legal standard
weighed in favor of denying the motion for default judgment because the
allegations in the amended complaint were the same as the original complaint and
the Pyawasays have a meritorious defense to Buth’s claims. The court denied the
motion for default judgment.
¶7 The court then turned to the motion for summary judgment. The
court examined WIS. STAT. § 709.03, which sets forth the required information in
a Real Estate Condition Report. It noted that for this purpose, a “defect” was “a
condition that would have a significant adverse effect on the value of the property
… significantly impair the health or safety of future occupants of the property, or
that if not repaired, removed or replaced, would significantly shorten or adversely
affect the expected normal life of the premises.” The court concluded that a pet
odor in the home was not a “defect” as defined by § 709.03; it would not
“significantly impair the health or safety of the occupants or shorten the normal
life of the premises.” It noted that the examples provided by the legislature and in
case law do not include pet odor. Therefore, the court concluded that as a matter
of law, there was no genuine issue of material fact in dispute and the Pyawasays
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were entitled to judgment as a matter of law. The court granted judgment to the
Pyawasays and dismissed Buth’s action.
¶8 When clarification was requested by Buth’s counsel, the circuit court
explained that default judgment was disfavored under the law. “Here, even while
the letter of the law, arguably, and I say that in that context, may have been
broken, the spirit of the law provides that that should not be granted.” The court
further denied the Pyawasays’ counterclaim for emotional distress in their original
answer.
¶9 Buth appeals the order granting summary judgment. Buth does not
challenge the default judgment decision.
DISCUSSION
¶10 Buth argues that the circuit court erred when it granted summary
judgment before the issues were joined. To resolve this appeal, we consider both
the standards to review summary judgment and joining issues.
¶11 A civil action commences with a summons and complaint in
accordance with WIS. STAT. § 801.02. See Split Rock Hardwoods, Inc. v. Lumber
Liquidators, Inc., 2002 WI 66, ¶1, 253 Wis. 2d 238, 646 N.W.2d 19. The
defendant then serves an answer or with certain statutory defenses, a motion,
within the time specified in WIS. STAT. § 802.06(1). Filing an answer joins the
issue. See Schuett v. Hanson, 2007 WI App 226, ¶13, 305 Wis. 2d 729, 741
N.W.2d 292. “A party may amend the party’s pleading once as a matter of course
at any time within 6 months after the summons and complaint are filed or within
the time set in a scheduling order.…” WIS. STAT. § 802.09(1). “An amended
pleading is subject to the service and filing requirements of WIS. STAT. § 801.14,”
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and it is “‘amended,’ pursuant to []§ 802.09(1), when it is served upon the
parties.” Schuett, 305 Wis. 2d 729, ¶¶6-7. “Where an amended complaint makes
no reference to the original complaint and incorporates no part of the original
complaint by reference, the amended complaint supplants the original.” Id., ¶11.
¶12 As a general rule, the circuit court may not hear a motion for
summary judgment before the pleadings are complete. See City of La Crosse v.
Jiracek Cos., Inc., 108 Wis. 2d 684, 690, 324 N.W.2d 440 (Ct. App. 1982).2
“Whether the circuit court properly granted summary judgment … is a question of
law that we review independently, applying the same standards used by the circuit
court.” Tatera v. FMC Corp., 2010 WI 90, ¶15, 328 Wis. 2d 320, 786 N.W.2d
810. Summary judgment is governed by WIS. STAT. § 802.08. “Summary
judgment is appropriate where there is no genuine dispute of material fact and the
moving party is entitled to judgment as a matter of law.” Tews v. NHI, LLC, 2010
WI 137, ¶42, 330 Wis. 2d 389, 793 N.W.2d 860.
¶13 On appeal, it appears undisputed that the circuit court acted within
its discretion to deny the motion for default judgment because it concluded that the
Pyawasays may have had a meritorious defense of excusable neglect to pursue
vacating a default judgment under WIS. STAT. § 806.07. See J.L. Phillips &
Assocs., Inc. v. E & H Plastic Corp., 217 Wis. 2d 348, 357, 577 N.W.2d 13(1998). Further, it appears undisputed that the amended complaint did not
incorporate by reference any part of the original complaint and in effect,
2
We note that a motion to dismiss pursuant to WIS. STAT. § 802.06(2) may be heard
before the pleadings are complete and the circuit court may convert a motion to dismiss for
failure to state a claim into a summary judgment motion, but only with requisite notice to all
parties. CTI of Ne. Wisconsin, LLC v. Herrell, 2003 WI App 19, ¶5, 259 Wis. 2d 756, 656
N.W.2d 794.
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supplanted the original. See Schuett, 305 Wis. 2d 729, ¶11. Therefore, after the
default judgment was denied, the posture of the case was that the amended
complaint was the operative complaint to which the Pyawasays had not answered,
and the time for joining issues had expired.
¶14 Our supreme court addressed what should occur under similar
circumstances:
If a defendant fails to file a timely served answer within a
reasonable time after service, the plaintiff may move for a
“just” order under WIS. STAT. § 805.03…. The plaintiff’s
motion may seek the immediate filing of the answer or an
appropriate sanction, including costs and attorney’s fees, or
both. The motion may also ask the court to strike the
answer and enter a default judgment as a sanction if the
plaintiff can show prejudice to itself or to the court.
The appropriate response to a motion to strike an
answer on grounds that the answer was not filed within a
reasonable time after service is to file the answer and then
move to enlarge time under WIS. STAT. § 802.01(2).
Moving to enlarge time under § 802.01(2) will give the
circuit court flexibility in weighing the facts, the equities,
and the policies at issue.
Split Rock Hardwoods, Inc., 253 Wis. 2d 238, ¶¶54-55 (footnotes omitted). Here,
Buth both moved for default judgment and moved to strike the Pyawasays’ motion
for summary judgment and evidentiary motions.3 The record reflects that the
circuit court denied both motions, although it spent the majority of its analysis on
3
The record does not reflect that affidavits of service with regard to the amended
complaint were filed with the court—a point raised in the Pyawasays’ briefs to the circuit court.
However, this issue was not addressed or analyzed by the circuit court. We decline to address
this issue without adequate factual development. See generally Storm v. Legion Ins. Co., 2003
WI 120, ¶5, 265 Wis. 2d 169, 665 N.W.2d 353 (remanding an issue that was factual in nature and
not addressed by the circuit court).
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the default judgment and it did not consider options to deal with the unanswered
amended complaint.
¶15 When Buth moved for default or to strike, the Pyawasays did not
move to expand their time to answer, but instead made four arguments to the
circuit court in opposition. They argued that: (1) the circuit court lacked personal
jurisdiction over the case because the original summons was not personally served
because the named party was the singular fictitious person Daniel and Jodi
Pyawasay; (2) the amended summons and complaint was not personally served on
Daniel or Jodi; (3) both the original and amended summons and complaints were
improperly signed; and (4) the amended summons failed to state the addresses of
the parties. These matters were not resolved before the circuit court.
¶16 During the motion hearing, the circuit court moved quickly from the
default judgment to the summary judgment motion. It did not address that the
issues were not joined by the unanswered amended complaint, which meant that a
summary judgment motion could not be heard in this procedural posture. The
pleadings must be complete for the circuit court to hear a motion for summary
judgment. See City of La Crosse, 108 Wis. 2d at 690. The court acknowledged
that the amended complaint was nearly identical to the original complaint,
adjusting only the named defendants. However, we conclude that the previous
joining of issues resulting from the Pyawasays’ answer to the original complaint
were “nullified.” See Schuett, 305 Wis. 2d 729, ¶13. Further, the circuit court did
not address the Pyawasays’ arguments about personal jurisdiction. Moreover, the
court did not decide that the amended complaint did not supplant the original
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complaint or that the Pyawasays were excused from answering the amended
complaint.4
¶17 We conclude that the circuit court’s decision to grant summary
judgment was premature. Because the issues had not been joined, the Pyawasays
could not be entitled to judgment as a matter of law. See WIS. STAT. § 802.08.
We reverse the circuit court’s order in part, with regard to summary judgment, as
well as the three evidentiary motions denied as moot, but we affirm the orders
denying default judgment and dismissing the Pyawasays’ counterclaim. We
remand for further proceedings consistent with this decision, beginning again after
default judgment was denied.5 The circuit court must determine whether the
Pyawasays may enlarge the scheduling order to have time to answer the amended
complaint—or to pursue motions in lieu of an answer pursuant to WIS. STAT.
§ 802.06(2).6 Only after the issues are joined, may the circuit court consider any
summary judgment motions. See City of La Crosse, 108 Wis. 2d at 690.
4
The Pyawasays devote considerable argument on appeal to their interpretation of
Buth’s argument, contending that Buth asserted that the circuit court lacked authority to excuse
them from answering the amended complaint. Our examination of the record supports that Buth
argues that the circuit court did not, in fact, expressly excuse the Pyawasays from answering the
amended complaint, not that it lacked authority. The record from the motion hearing shows that
the circuit court did not expressly excuse the Pyawasays from answering the amended complaint.
Because this argument is not based on the facts in the record or in response to Buth’s argument,
we reject it and do not address it further.
5
The Pyawasays argue that Buth failed to respond to the motion for summary judgment;
the record reflects that Buth moved to strike that motion instead. Because we have reversed the
order granting summary judgment, on remand, that motion and its briefing are no longer pending.
6
Alternatively, we do not preclude the circuit court from determining whether the
Pyawasays’ unaddressed jurisdictional claims have merit or have been waived. The Pyawasays
ask this court to affirm on alternative grounds on these issues; however, we decline to do so
because the claims have not been analyzed by the circuit court. See generally Storm, 265 Wis. 2d
169, ¶5 (remanding an issue that was factual in nature and not addressed by the circuit court).
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¶18 On appeal, the Pyawasays also brought a motion for costs pursuant
to WIS. STAT. § 809.25(3), arguing that Buth filed a frivolous appeal. “If an
appeal … is found to be frivolous by the court, the court shall award to the
successful party costs, fees, and reasonable attorney fees under this section.” Id.
The Pyawasays argue that Buth and counsel should have known that the appeal
was “without any reasonable basis in law or equity and could not be supported by
a good faith argument for an extension, modification or reversal of existing law.”
See § 809.25(3)(c)2. Because we conclude that the summary judgment was
granted in error before the issues were joined, this appeal was not frivolous.
Therefore, the Pyawasays’ motion for costs is denied.
CONCLUSION
¶19 For the reasons stated above, we conclude that the circuit court erred
when it granted summary judgment to the Pyawasays. We reverse that part of the
order as well as the three evidentiary motions denied as moot, but we affirm the
orders denying default judgment and dismissing the Pyawasays’ counterclaim.
We remand for further proceedings consistent with this decision.
By the Court.—Order affirmed in part; order reversed in part and
cause remanded for further proceedings.
This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.
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