Breach of Sale

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WI Court of Appeals – District III

Case Name: Coleman & Hartman, S.C. v. iAMg, LLC

Case No.: 2021AP001398

Officials: Gill, J.

Focus: Breach of Sale

Prior to 2014, Coleman & Hartman, S.C., Larry Coleman, and Sue Hartman (collectively, C&H) owned and operated an accounting firm. In 2014, C&H entered into two agreements to sell the accounting business to iAMg, LLC, Seth Parker, Amanda Oestreich, and Melissa Barthman (collectively,

iAMg). C&H ultimately sued iAMg, asserting a number of causes of action arising out of that sale. iAMg, in turn, counterclaimed asserting various causes of action arising out of C&H’s claimed breach of the sale agreements.

iAMg appeals and C&H cross-appeals. Both parties claim that the circuit court erroneously exercised its discretion by dismissing with prejudice all of their respective claims based upon discovery violations. The parties also argue that the court erred in denying their respective motions for reconsideration, and CarlsonSV—where Hartman works as a CPA and which was impleaded by iAMg—asserts that the court properly exercised its discretion in dismissing iAMg’s counterclaims because dismissal of only C&H’s claims would unfairly prejudice CarlsonSV.

The appeals court concludes that the circuit court did not erroneously exercise its discretion in sanctioning C&H for discovery violations, pursuant to WIS. STAT. § 804.12(2) (2021-22), by dismissing its claims with prejudice after finding that C&H’s violations were “egregious,” without excuse, and “extreme, substantial, and persistent.” Nor did the court erroneously deny C&H’s motion for reconsideration. However, the appeals court further concludes that the court did erroneously exercise its discretion in sanctioning iAMg for discovery violations by dismissing its counterclaims with prejudice because the court did not make a finding that iAMg violated any discovery order, or that it did so egregiously or in bad faith and without excuse. Section 804.12(2) only permits a court to sanction an offending party for discovery violations. Furthermore, the court erroneously found that CarlsonSV would be prejudiced if iAMg’s counterclaims were not dismissed

Affirmed, reversed, and remanded

Decided 07/18/23

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