COURT OF APPEALS DECISION DATED AND FILED February 1, 2011 A.
John Voelker Acting Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
from a judgment of the circuit court for
Before
¶1 PER CURIAM. The City of
BACKGROUND
¶2 Premium Properties owns a warehouse in
¶3 Beginning in February 2006, the City issued thirteen citations to Premium Properties. Each citation alleged Premium Properties had violated municipal ordinance § 7-6-1(d)(4),[1] which prohibits a “wholesaler, dealer or jobber” from storing fireworks within five-hundred feet of a residence. See Prescott, Wis., Ordinances § 7-6-1(d)(4), available at http://www.prescottwi.org/ordinances.html. The citations were prosecuted in municipal court. After two years of litigation, the municipal court determined the City could not enforce ordinance § 7-6-1(d)(4) because it contained a fireworks storage restriction more onerous than that imposed by state law.
¶4 The City appealed to the circuit court, which concluded the ordinance was enforceable. Premium Properties then moved to dismiss, arguing it was not the proper defendant. Premium Properties conceded it owned the warehouse where the fireworks were stored, but it contended Victory Fireworks actually owned the fireworks.
¶5 After an evidentiary hearing, the circuit court held that Premium Properties was not a proper defendant to the citations. However, rather than outright dismissing the citations, the court amended them to substitute Victory Fireworks as defendant. The court determined that “Victory Fireworks and Wayne Schulte are one in the same thing with Premium Properties” and concluded, “[T]here’s absolutely no prejudice to Mr. Schulte, in my opinion, or to Victory Fireworks … to amend this to have [Victory Fireworks] be the defendant[.]” Immediately thereafter, the court found Victory Fireworks guilty of all thirteen ordinance violations. Premium Properties and Victory Fireworks now appeal.[2]
DISCUSSION
¶6 “It is within a trial court’s discretion to allow amendment
of pleadings until and even after judgment[.]”
Wright v. Mercy Hosp. of
¶7 Here, the circuit court did not articulate the legal basis
for its decision to amend the citations.[3]
However, the City argues we should
nevertheless affirm because the amendment was proper under either Wis. Stat. § 800.025 or Wis. Stat. § 802.09.
¶8
¶9 The corresponding civil procedure statute, Wis. Stat. § 802.09, allows late amendment
of pleadings “by leave of court” and states that “leave shall be freely given
at any stage of the action when justice so requires[.]” Wis.
Stat. § 802.09(1). The
statute grants the court broad discretion to amend pleadings, but the amendment
may not prejudice the opposing party. See Suchomel,
288
¶10 The City argues the amendment of the citations did not prejudice Victory Fireworks because both Victory Fireworks and Premium Properties are controlled by Schulte. Because Schulte was present at the evidentiary hearing, the City contends he had notice and an opportunity to rebut the City’s claims. The circuit court came to a similar conclusion, stating, “Victory Fireworks and Wayne Schulte are one in the same thing with Premium Properties …. [T]here’s absolutely no prejudice to Mr. Schulte … or to Victory Fireworks [by granting the substitution of parties].”
¶11 The problem with the City’s argument and the circuit court’s conclusion is that, regardless of its relationship with Schulte and Premium Properties, Victory Fireworks is a separate legal entity. The citations were issued against Premium Properties. Victory Fireworks was never served as required by statute. See Wis. Stat. § 801.11(5). Victory Fireworks did not appear as a party at the evidentiary hearing and was not represented by counsel. It never had notice of the charges, and it never had the opportunity to hear and dispute the evidence against it. This is prejudicial as a matter of law, to say nothing of violating basic notions of due process. The circuit court erroneously exercised its discretion by allowing the amendment.[4]
¶12 The City argues Premium Properties waived[5] any objection by litigating the case for three-and-one-half years before objecting. However, the City fails to note that Premium Properties spent those years challenging the municipal and circuit courts’ jurisdiction on the basis that ordinance § 7-6-1(d)(4) was invalid. After the circuit court issued its final decision on the validity of the ordinance, Premium Properties quickly asserted other defenses, including that the citations named the wrong defendant.
¶13 The City also argues Victory Fireworks waived its right to object to being substituted as a defendant. However, up until the final evidentiary hearing, Victory Fireworks was not a party to the case. While the City contends Victory Fireworks should have intervened to defend its rights, we do not agree that Victory Fireworks was required to offer itself to the City to be accused of an ordinance violation.
¶14 Finally, the City contends Victory Fireworks is equitably
estopped from arguing it was improperly substituted as a defendant. Equitable estoppel requires proof of: “(1) action or non-action, (2) on the part of
one against whom estoppel is asserted, (3) which induces reasonable reliance
thereon by the other, … (4) which is to his or her detriment.” Milas v. Labor Ass’n of
By the Court.—Judgment reversed.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
[1] The citations actually alleged Premium Properties had violated municipal ordinance § 7-6-1(7)(4). There is no such ordinance. The circuit court acknowledged that the ordinance number on the citations was incorrect and amended them to state the correct number. On appeal, neither Premium Properties nor Victory Fireworks challenges the court’s correction of the ordinance number.
[2] In
addition to arguing the circuit court improperly amended the citations, Premium
Properties and Victory Fireworks raise several other claims of error. Because we hold the circuit court improperly
amended the citations to substitute Victory Fireworks as defendant, we need not
address these additional arguments.
Furthermore, because Victory Fireworks was substituted as defendant for Premium Properties, we note that Premium Properties should no longer be a party to this action. We therefore question whether Premium Properties is a proper party to this appeal. However, because we nevertheless reverse the circuit court’s judgment, we need not address this issue further.
[3] Victory Fireworks asserts the circuit court relied on Wis. Stat. §§ 803.01 and 803.03. The record does not support this contention.
All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[4] Admittedly,
in limited circumstances courts disregard the corporate fiction by “piercing
the corporate veil” and imposing personal liability on shareholders for
corporate debts. See, e.g., Consumer’s Co-op of Walworth Cnty. v. Olsen,
142
[5] Waiver
is the “voluntary and intentional relinquishment of a known right.” Consumer’s Co-op, 142