Alliant Credit Union v. City of Columbus

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
March 30, 2023
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10 and
RULE 809.62.

Appeal No. 2022AP258 Cir. Ct. No. 2021CV109

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

ALLIANT CREDIT UNION,

PLAINTIFF-RESPONDENT,

V.

CITY OF COLUMBUS AND
COLUMBUS COMMERCE CENTER, LLC,

DEFENDANTS,

MICHAEL EISENGA,

DEFENDANT-APPELLANT.

APPEAL from a judgment and orders of the circuit court for
Columbia County: ALAN J. WHITE and TROY D. CROSS, Judges. Affirmed.

Before Blanchard, P.J., Kloppenburg, and Graham, JJ.
No. 2022AP258

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

¶1 PER CURIAM. Alliant Credit Union sued the City of Columbus,
Columbus Commerce Center, LLC, and Michael Eisenga.1 As pertinent to this
appeal, Alliant claimed that Eisenga and the LLC: conspired to defraud Alliant by
requesting and receiving reimbursements from the City on real estate taxes that
Alliant had paid; through the same means, intentionally converted the
reimbursements for their own use and profit; and through the same means, unjustly
enriched Eisenga and the LLC. Eisenga now appeals circuit court orders that denied
Eisenga’s motion to dismiss him from the action and denied Eisenga’s motion to
enlarge time for him to answer the complaint. Following those rulings, the court
granted Alliant’s motion for a default judgment and entered a money judgment
against Eisenga in favor of Alliant. We reject Eisenga’s arguments and affirm.

BACKGROUND

¶2 On April 28, 2021, Alliant filed a civil complaint in Columbia County
circuit court naming the City, Eisenga, and the LLC. The following are pertinent
allegations in the complaint.

¶3 In May 2019, Alliant filed a foreclosure action on a mortgage that was
held by an entity of which Eisenga was “the principal” and that was secured by
property in Columbus, and a receiver was appointed to manage and control the
property. In July 2019 and January 2020, Alliant paid outstanding real estate taxes,
interest, and penalties on the Columbus property, which totaled $140,865.79. In
July 2019 and February 2020, “Eisenga, through his entity Columbus Commerce

1
When we refer to Eisenga by last name in this opinion we mean the individual person.

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Center, LLC … ‘invoiced’ the City for reimbursement of the real estate taxes” that
had been paid by Alliant, “knowing that Alliant, and not Eisenga or any of his
entities, had paid the taxes.” As a result, in August 2019 and March 2020, “the City
paid Eisenga and his entities $110,970.48 to reimburse the payment of real estate
taxes.”

¶4 As pertinent to this appeal, Alliant made three claims, all related to
these allegations about the tax reimbursements: civil conspiracy to defraud,
conversion, and unjust enrichment.

¶5 Attorney William Gergen filed an answer in the instant case on behalf
of the LLC on June 11, 2021, but neither Gergen nor anyone else filed an answer at
that time on behalf of Eisenga.

¶6 Also on June 11, 2021, Gergen filed a motion to dismiss the complaint
in its entirety, this time on behalf of Eisenga, arguing that the complaint fails to state
a claim against Eisenga. See WIS. STAT. § 802.06(2)(a)6. (identifying one defense
that may be pled by motion, the “[f]ailure to state a claim upon which relief can be
granted”).2 The basis for the motion was that all three of Alliant’s claims relate
“only to the transaction between” the LLC and the City, and do not allege conduct
by Eisenga individually. Alliant filed a response opposing the motion to dismiss.

¶7 On July 26, 2021, the circuit court heard additional argument on the
motion to dismiss at a hearing.3 Eisenga personally attended the hearing, at which

2
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
3
The Honorable Alan J. White decided the motion to dismiss issue and the Honorable
Troy D. Cross decided the other issues in this appeal. We refer to both using the same phrase, “the
circuit court.”

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No. 2022AP258

Gergen represented him. The court orally denied the motion at the hearing and
memorialized its ruling in an order issued on July 28, 2021.

¶8 On September 30, 2021, Alliant filed a motion for default judgment
against Eisenga. The basis for the motion was the following sequence of facts and
related law: (1) Eisenga filed the motion to dismiss under WIS. STAT. § 802.06(2),
before filing an answer; (2) the circuit court denied that motion by order dated
July 28, 2021; (3) under these circumstances and pursuant to § 802.06(1), Eisenga
was required to serve on Alliant a pleading responsive to the complaint within 10
days after notice of the court’s denial of the motion to dismiss; and (4) Eisenga
failed to file a responsive pleading within that time period—indeed, he never filed
an answer to the complaint.

¶9 On October 11, 2021, Gergen filed the following, each on behalf of
Eisenga: (1) an answer to the complaint; (2) a motion to enlarge the time to file the
answer under WIS. STAT. § 801.15(2)(a);4 and (3) an affidavit by Gergen. In the
affidavit, Gergen averred in pertinent part that he had made the mistake of thinking
that, when he filed the answer on behalf of the LLC on June 11, 2021, he had filed
the same answer on behalf of Eisenga as well.

¶10 On November 8, 2021, the circuit court held a hearing to address
Eisenga’s motion to enlarge the time for the filing of the answer and Alliant’s

4
WISCONSIN STAT. § 801.15(2)(a) provides in pertinent part:

When an act is required to be done at or within a specified
time, the court may order the period enlarged but only on motion
for cause shown and upon just terms…. If the motion is made
after the expiration of the specified time, it shall not be granted
unless the court finds that the failure to act was the result of
excusable neglect. The order of enlargement shall recite by its
terms or by reference to an affidavit in the record the grounds for
granting the motion.

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No. 2022AP258

motion for default. The court ruled that it would have to deny Eisenga’s motion to
enlarge the time under Hedtcke v. Sentry Insurance Co., 109 Wis. 2d 461, 326
N.W.2d 727 (1982), if there were not “reasonable grounds for” Eisenga’s
“noncompliance with the statutory time period (excusable neglect)” for the filing of
the answer. See id. at 468 (“when the circuit court determines that there is no
excusable neglect, the motion [to enlarge time under WIS. STAT. § 801.15(2)(a)]
must be denied”).

¶11 The circuit court then turned to the issue of excusable neglect, and
quoted the test from Hedtcke: “[T]hat neglect which might have been the act of a
reasonably prudent person under the same circumstances,” which is “not
synonymous with neglect, carelessness or inattentiveness.” Id. (quoted sources
omitted). The court determined that Gergen had not “given me any option” except
to determine that Eisenga’s failure to file an answer was not acting as “a reasonably
prudent person under the circumstances.” The court noted that Gergen began work
on the case on April 30, two days after the complaint was filed, but waited until
October 11, which was “another 11 days” after Alliant filed the default motion, to
file an answer on behalf of Eisenga. The court observed that it was “not happy”
about having to render its excusable neglect decision, and that the court was
generally “not in favor of granting technical relief to parties,” but it characterized
the facts as extreme.

¶12 The circuit court entered written orders denying the motion to enlarge
time and granting the motion for default judgment, and entered a money judgment
against Eisenga and in favor of Alliant in the amount of $110,970.48.

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¶13 Eisenga appeals the circuit court orders denying his motion to dismiss
him from the action and denying his motion to enlarge time for him to answer the
complaint.5

DISCUSSION

I. MOTION TO DISMISS

¶14 In challenging the circuit court’s denial of his motion to dismiss,
Eisenga does not compare the allegations in the complaint with the elements of any
of the complaint’s three pertinent causes of action. Instead, his primary argument
in the circuit court and again on appeal has been to assert, in a sweeping manner,
that the complaint, as he now puts it, does “not allege any facts, or acts, committed
by Michael Eisenga.” This sweeping statement is incorrect and we reject it on that
basis, as explained below. We also briefly explain why we reject Eisenga’s
secondary argument on this issue, which he purports to develop for the first time on
appeal and which references the concept of immunity based on the use of a corporate
form.

¶15 “Whether a complaint states a claim upon which relief can be granted
is a question of law for our independent review.” Data Key Partners v. Permira
Advisers LLC, 2014 WI 86, ¶17, 356 Wis. 2d 665, 849 N.W.2d 693 (citation
omitted). When reviewing a motion to dismiss, “factual allegations in the complaint
are accepted as true for purposes of our review,” as well as all “reasonable

5
Eisenga does not present a developed argument that, even if the circuit court’s rulings
denying the motion to dismiss and the motion to enlarge time were proper, it was an erroneous
exercise of discretion for the circuit court to grant the motion for default judgment or to enter the
money judgment. See Johns v. County of Oneida, 201 Wis. 2d 600, 605, 549 N.W.2d 269 (Ct.
App. 1996) (WIS. STAT. § 806.02(1) “confers discretion upon the trial court in deciding whether to
grant default judgment, and its exercise of discretion will be affirmed on appeal unless [an
erroneous exercise] is shown.”).

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No. 2022AP258

inferences” arising from the factual allegations, although “legal conclusions
asserted in a complaint are not accepted.” Id., ¶¶18-19 (citations omitted).

¶16 We conclude that, as he did in the circuit court, Eisenga in his
principal argument on appeal essentially asks us to ignore both the allegations in the
complaint and the reasonable inferences that arise from the allegations. As
summarized above, the complaint alleges that in July and February 2020, Eisenga
submitted invoices to the City for reimbursements of the real estate taxes that had
been paid by Alliant, at a time when he knew that Alliant had paid the taxes, and
that as a result, in August 2019 and March 2020, the City “reimbursed” Eisenga for
taxes that Eisenga knew had been paid by Alliant. It is true that the complaint also
names the LLC as a party and alleges that Eisenga acted “through” the LLC in
allegedly submitting the invoices and that the payments were made to “Eisenga and
his entities.” However, the complaint attributes these actions, at least in part, to
Eisenga.

¶17 Further, as the circuit court suggested in rejecting this limited
argument, Eisenga’s argument seemingly ignores the “all reasonable inferences”
aspect of the motion-to-dismiss analysis in appearing to fault the complaint for
failing to specifically allege a time, place, and manner in which Eisenga personally
transferred any portion of the “reimbursements” to one of his own personal
accounts. Eisenga fails to explain why factual allegations of such details would be
needed to support claims of civil conspiracy to defraud, conversion, or unjust
enrichment.

¶18 We now turn briefly to the alternative argument about corporate form
that Eisenga attempts to develop for the first time on appeal. In the circuit court,
Eisenga’s written motion to dismiss contained no reference to this argument. Then,

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No. 2022AP258

during the course of a dialog with the court at the hearing on the motion, Gergen
asserted that the complaint does not allege “what is popularly termed piercing the
corporate veil.” This brief oral reference was not well developed nor was it
supported by any legal authority. Nevertheless, the circuit court responded to this
new argument by observing that the complaint alleges fraud. The court further said
that it understood the law to be that “officers of corporate entities” can “lose their
insulation from lawsuits” if there is an allegation that the officers committed fraud.
Responding to the court’s statement of this legal proposition, Gergen replied:
“That’s correct. I apologize, Your Honor. I don’t disagree with that premise.”

¶19 Now, on appeal, Eisenga makes references purportedly tied to the
alter ego theory of liability and the concept of “piercing the corporate veil.” Without
attempting to untangle the details of what Eisenga might be attempting to argue as
pertinent to the complaint here and then comparing that to the proper legal
standards, we reject these arguments on two grounds.

¶20 First, as the summary above reveals, Eisenga failed to preserve these
arguments by presenting them to the circuit court. See Townsend v. Massey, 2011
WI App 160, ¶25, 338 Wis. 2d 114, 808 N.W.2d 155 (citing State v. Rogers, 196
Wis. 2d 817, 827, 539 N.W.2d 897 (Ct. App. 1995) (forfeiture rule requires that
parties must “make all of their arguments to the trial court” to preserve the
arguments)). Indeed, as summarized above, after Gergen came up with an
undeveloped assertion along these lines during the course of the hearing, he then
agreed with the circuit court’s suggestion that allegations of fraud would eviscerate
any such argument. Alliant properly argues on appeal that it would be unfair for
this court to entertain this new argument.

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¶21 Second, even if we were to reach these new arguments on appeal, they
are undeveloped and raise more questions than answers. See State v. Pettit, 171
Wis. 2d 627, 646, 492 N.W.2d 633 (Ct. App. 1992) (“We may decline to review
issues inadequately briefed.”). It is sufficient to cite the following as a significant
example of the deficiencies. Eisenga does not even attempt to address the legal
proposition raised by the circuit court: theories of immunity from liability based on
a corporate form may be analyzed differently in the context of allegations of fraud.

II. MOTION TO ENLARGE TIME

¶22 Eisenga’s arguments are difficult to track, but he appears not to
challenge the circuit court’s determination that there was not excusable neglect for
his failure to comply with the deadline by which he had to file an answer under WIS.
STAT. § 802.06(1). Instead, the argument that Eisenga most clearly articulates is
that the circuit court erred in applying Hedtcke to determine that the court was
required to deny his motion to enlarge time under WIS. STAT. § 801.15(2)(a) if there
was not excusable neglect. Eisenga asserts that Hedtcke contains “contradictory
and even confusing” statements, but that when Hedtcke is interpreted properly and
in light of subsequent case law, the rule that emerges is that a circuit court is required
to consider the interest of justice in this context even if there was no excusable
neglect. We reject this argument because the rule stated in Hedtcke is unambiguous.

¶23 As the circuit court here correctly noted, the language of our supreme
court in Hedtcke states the proper test under WIS. STAT. § 801.15(2)(a):

In determining whether to grant the dilatory party
relief, the first step is to determine if there are reasonable
grounds for the noncompliance with the statutory time
period (excusable neglect). If the motion is made after the
expiration of the specified time, an order enlarging the time
for performing an act must be based on a finding of
excusable neglect; when the circuit court determines that

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No. 2022AP258

there is no excusable neglect, the motion must be denied.
Jolitz v. Graff, 12 Wis. 2d 52, 57, 106 N.W.2d 340 (1960).

Hedtcke, 109 Wis. 2d at 468.6 Eisenga relies heavily on statements contained in a
Wisconsin Lawyer article to suggest that these clear statements are no longer
controlling, but we are obligated to follow the law as stated by our supreme court.

¶24 Eisenga misses the target on this issue in citing precedent involving
reviews of circuit court decisions addressing motions for relief from judgment under
WIS. STAT. § 806.07(1), not motions to enlarge statutory filing deadlines under WIS.
STAT. § 801.15(2)(a). For example, he relies on statements in Miller v. Hanover
Insurance Co., 2010 WI 75, 326 Wis. 2d 640, 785 N.W.2d 493, determining that a
party had met its burden of proving that extraordinary circumstances existed to
justify vacating a default judgment, in part based on the interests of justice. See id.,
¶¶35, 51, 59. Eisenga fails to address the fact that our supreme court in Miller was
reviewing a decision of the circuit court denying a motion for relief from a default

6
Our decision is controlled by Hedtcke v. Sentry Insurance Co., 109 Wis. 2d 461, 326
N.W.2d 727 (1982). But given the nature of Eisenga’s argument, we further note that the rule has
been clearly stated by our supreme court for decades. The Court was similarly clear in the passage
of Jolitz that is cited on this point by the court in Hedtcke:

The statute authorizing the trial court to enlarge the time
in which to serve the bill of exceptions prescribes the only grounds
upon which the enlargement can be granted. The enlargement
must be based upon a finding of cause or excusable neglect. There
are no other exceptions. When the court determines that there is
no cause or excusable neglect, the denial of the motion must
follow as a matter of law. Meyers v. Thorpe, [227 Wis. 200, 202-
03, 278 N.W.2d 462 (1938)].

Jolitz, 12 Wis. 2d at 57. Similarly clear statements are found in Meyers and also in authority on
which Meyers relies, Johnson v. Retzlaff, 200 Wis. 1, 227 N.W. 236 (1929). Johnson is cited in
Hedtcke for the following proposition: an enlargement of time is “‘not a favor to be granted to a
litigant as a matter of grace.’” Hedtcke, 109 Wis. 2d at 468; see also Johnson, 200 Wis. at 4-5
(“frustration” of the goal of prompt resolution of litigation caused by “the dilatoriness of attorneys
will be accorded ever-diminishing tolerance.”).

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No. 2022AP258

judgment, and that the court explicitly stated “we are not deciding whether the
circuit court properly denied [a party’s] motion to enlarge time.” See id., ¶¶1, 43,
59. Again, it would be for our supreme court, or the legislature, to change the law
in this area.

¶25 On the topic of WIS. STAT. § 806.07, Eisenga on appeal makes an
argument based on Johns v. County of Oneida, 201 Wis. 2d 600, 549 N.W.2d 269
(Ct. App. 1996), in which we addressed potential reliance on § 806.07 by a party
against whom a motion for a default judgment has been filed. We now explain the
pertinent discussion in Johns, the history of Eisenga’s references to Johns, and why
we reject the argument because Eisenga failed to preserve it in the circuit court.

¶26 In Johns, after the defendant missed the statutory deadline to answer
the complaint, the plaintiff moved to strike the answer as untimely and for a default
judgment. Id. at 603-04. The circuit court exercised its discretion to find that
“extraordinary circumstances” existed under WIS. STAT. § 806.07(1)(h) to deny the
motion for a default judgment.7 Johns, 201 Wis. 2d at 604. Citing Hedtcke, the
plaintiff on appeal argued that the defendant’s failure to meet the deadline was not
excusable neglect and therefore the circuit court was required to grant a default
judgment. Id. at 604-05. This court explained that it is not an erroneous exercise
of discretion for a circuit court to deny a motion for default judgment based on the
court’s determination that, if a default judgment were granted on the basis of the
defendant’s failure to file a timely answer, the judgment would be immediately

7
Under the catch-all provision, WIS. STAT. § 806.07(1)(h), relief from a judgment may be
granted “upon such terms as are just,” based on “reasons justifying relief from the operation of the
judgment.” “In exercising its discretion in determining whether it should grant relief from a
judgment, the circuit court ‘must consider a wide range of factors’ in determining whether
extraordinary circumstances are present, always keeping in mind the competing interests of finality
of judgments and fairness in the resolution of the dispute.” Miller v. Hanover Ins. Co., 2010 WI
75, ¶36, 326 Wis. 2d 640, 785 N.W.2d 493 (quoted source omitted).

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No. 2022AP258

reopened under § 806.07. Johns, 201 Wis. 2d at 605-06. In that circumstance, it
would be a “needless formality” to require the circuit court to grant the default
judgment only to order the reopening. Id. at 606. Applying that reasoning to the
circumstances in Johns, this court explained that because the circuit court there had
“reasonably exercised its discretion when it determined that extraordinary
circumstances existed which would warrant reopening the judgment,” the circuit
court did not need to address whether there was excusable neglect by the plaintiff
that would have warranted an enlargement of time to answer the complaint under
WIS. STAT. § 801.15(2). Johns, 201 Wis. 2d at 606-09 & n.5.

¶27 We now turn to the history of references made in this case to Johns—
more precisely, to the inadequacy of those references. At the end of a circuit court
filing in which Eisenga requested an enlargement of time for the filing of the tardy
answer, Eisenga made a brief argument that, in the event that the circuit court were
to grant Alliant’s motion for default, “the defense would have the opportunity to
move to re-open the same pursuant to WIS. STAT[]. § 806.07.” The filing then
quoted Johns for the propositions that we have just explained. This was followed
by three paragraphs, suggesting a limited argument based on § 806.07(1)(h). The
limited argument consisted of assertions that it would not be fair to Eisenga to grant
a default judgment against him based on “mistake and inadvertence” by Gergen and
that Eisenga “has a meritorious defense” because the complaint “fails to allege any
elements pertaining to Michael Eisenga’s personal liability, as opposed to that of
his LLC.”

¶28 At the hearing that followed, the circuit court opened by explaining

I have basically two motions pending. I have the motion
from Alliant Credit Union to basically default Mr. Eisenga
for failing to [timely] file an answer. And I have

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No. 2022AP258

Mr. Gergen’s motion to enlarge the time for the filing of the
answer.

Gergen did not correct or clarify that he wanted the court also to consider an
argument based on the application of WIS. STAT. § 806.07(1)(h), in light of the
reasoning in Johns. Further, despite being given an opportunity by the circuit court
to explain his arguments during the hearing, Gergen did not make a single reference
to § 806.07 or to Johns. The circuit court ruled without making reference to
§ 806.07 or to Johns. Instead, the court addressed the two issues that it had
explained at the outset it was going to address. Eisenga did not file any variety of
motion following the hearing for reconsideration or clarification addressing the
Johns issue.

¶29 Now on appeal, Eisenga faults the circuit court on the ground that it
“failed to properly consider” WIS. STAT. § 806.07 in deciding the default motion.
The argument on this issue in Eisenga’s principal brief on appeal essentially repeats
the same brief assertions he made in his written pleading in the circuit court.

¶30 We reject this Johns-based argument on the ground that, here again,
Eisenga has failed to properly preserve an argument by first presenting a developed
version to the circuit court. See Townsend, 338 Wis. 2d 114, ¶20. In the written
filing in the circuit court, he made an undeveloped argument with little prominence,
and then failed to raise it when he had an opportunity to do so at the hearing. At
best, Eisenga’s written submission in the circuit court might have stood as a partial
argument why the circuit court could have exercised its discretion in his favor, but
it failed to address the following relevant factors in a complete manner:

“whether the judgment was the result of the conscientious,
deliberate and well-informed choice of the claimant;
whether the claimant received the effective assistance of
counsel; whether relief is sought from a judgment in which
there has been no judicial consideration of the merits and the

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interest of deciding the particular case on the merits
outweighs the finality of judgments; whether there is a
meritorious defense to the claim; and whether there are
intervening circumstances making it inequitable to grant
relief.”

See Miller, 326 Wis. 2d 640, ¶36 (quoted source omitted). Even on the few relevant
points that Eisenga did reference, such as the “meritorious defense” factor, his
argument had little weight.

¶31 It only serves to illustrate the point that—in the section of Eisenga’s
principal brief on appeal in which he erroneously challenges denial of his motion to
enlarge time based on his misunderstanding that Hedtcke calls for “interest of
justice” analysis, even in the absence of a finding of excusable neglect—he now
presents an analysis of the factors that are relevant to a circuit court’s exercise of
discretion in response to a properly filed motion under WIS. STAT. § 806.07(1)(h).
This argument should have been presented to the circuit court in order to preserve
it for consideration on appeal. We could not fairly reverse the circuit court on this
record.

CONCLUSION

¶32 For all of these reasons, we affirm the circuit court orders denying
Eisenga’s motion to dismiss him from the action and denying Eisenga’s motion to
enlarge time for him to answer the complaint.

By the Court.—Judgment and orders affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

14