Improper Service – Claim Preclusion

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WI Court of Appeals – District II

Case Name: Richard E. Olson et al v. Aleksandar Ivanovic

Case No.: 2015AP1803

Officials: Neubauer, C.J., Reilly, P.J., and Hagedorn, J.

Focus: Improper Service – Claim Preclusion

Richard Olson is the sole owner of Webcom Solutions, Inc. (WSI). WSI contracted with respondents Webcom, Inc. and Callidus Software, Inc. to sell software, and as part of that agreement, the parties agreed to submit any disputes “arising out of or relating to” the agreement to arbitration. Following disputes, arbitration proceedings were in fact commenced and concluded with an award. Subsequently, however, Olson filed suit in the circuit court on behalf of himself personally and his company raising various tort claims he believes are not subject to arbitration. Critically, Olson did not properly serve the respondents. The respondents answered with a motion to dismiss on substantive grounds, rather than asserting improper service. Olson responded with a motion for default judgment, maintaining service was proper and that the motion to dismiss was filed after the statutory time to answer. The circuit court denied the motion for default judgment and granted the respondents’ motion to dismiss under the doctrine of claim preclusion.

Olson and WSI appeal on two grounds. They argue the court should have granted default judgment and that claim preclusion does not apply because the complaint alleges claims different from those brought in arbitration, Olson and WSI are not in privity, and the complaint alleges claims that are not arbitrable. We hold that (1) the circuit court permissibly and properly denied the motion for default judgment because Olson and WSI never proved service on the respondents; and (2) Olson’s and WSI’s claims are precluded because they share a common nucleus of operative fact with those brought in arbitration, Olson and WSI are in privity, and the claims brought in the complaint were, or could have been, arbitrated because they arose out of and related to the agreement. Accordingly, we affirm the circuit court’s order dismissing Olson’s and WSI’s lawsuit, and the judgment for costs and attorneys’ fees.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.