99-1119 National Operating, L.P., v. Mutual Life Ins. Co., et al.

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The debtor and the secured party engaged in a series of multi-million dollar financing transactions. The declaratory judgment was issued by default; it does not acknowledge and then confirm, in specific terms, a waiver of debtor’s right to redeem collateral upon payment of the loan, nor does it make any specific reference to extinguishing rights under Article 9 or Chapter 409.

The rule on claim preclusion in a declaratory judgment action is different from the rule on claim preclusion in typical litigation: A declaratory judgment is binding only as to matters which were actually decided in the action, not to matters which might have been litigated in the proceeding but were not.

DISSENTING OPINION: Crooks, J., joined by Wilcox, J. “Even though the default debtor had certain rights under Chapter 409, the debtor should have asserted these rights in an answer to the creditor’s complaint for declaratory judgment. Debtor failed to raise those rights; the doctrine of claim preclusion bars debtor from now raising those rights in a new action.”

Reversed and remanded.

Review of a Decision of the Court of Appeals, Prosser, J.

Attorneys:

For Appellant: Mark F. Foley, Milwaukee

For Respondent: Thomas M. Olejniczak, Green Bay