Default judgment — sureties

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Wisconsin Court of Appeals

Civil

Civil Procedure — default judgment — sureties

Default judgment may be entered against a surety without a finding of liability on the underlying subcontract.

“Old Republic attempts to distinguish this case from Otto because Otto involved an insurance company, not a surety, and the insurance company could be directly sued under the direct action statute, WIS. STAT. § 632.24. While it is true Otto involved the direct action statute and this case does not, the distinction is of no import because the Otto court’s interpretations of the relevant statutes were of general application and were in no way limited to insurer-insured cases. Otto, 311 Wis. 2d 84, ¶¶48-50, 52-56. The court emphasized: ‘Significantly, the default judgment statute provides no circumstances in which a party is in default and yet is exempt as a matter of law from the provisions of the default judgment statute.’ Id., ¶50. The Otto court left no room to exempt sureties from application of the default judgment provisions.”

“Here, Old Republic did not file a timely answer or move for an extension of time to make its untimely answer timely. It cannot contest liability when it has no valid answer putting liability in issue. See Martin, 117 Wis. 2d at 444. Further, without an answer, Old Republic necessarily is deemed to have admitted the allegations in the complaint that: PCS and Backus entered into a subcontract for Backus to perform electrical work; PCS and Old Republic entered into a contract in which Old Republic agreed to act as surety for PCS to guaranty PCS’s performance and payment for, among other things, amounts due Backus under the subcontract; PCS wrongfully terminated the subcontract with Backus and denied Backus’s requests for payment for work Backus performed; PCS ‘owes [Backus $25,313.11]’ related to Backus’s work; and ‘as surety for [PCS], Old Republic … owes [Backus $25,313.11]’ related to Backus’s work. See Otto, 311 Wis. 2d 84, ¶42, 47-49, 54-56, 73.”

Affirmed.

Recommended for publication in the official reports.

2011AP3004 Backus Electric Inc. v. Petro Chemical Systems Inc.

Dist. II, Fond du Lac County, Wirtz, J., Gundrum, J.

Attorneys: For Appellant: Rosenfeldt, Paul, Fond du Lac; For Respondent: Van Horn, Thomas A., Manitowoc; Rosenfeldt, Paul, Fond du Lac;