Par, Inc. v. Suzan Lietzau McCahey

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.
May 22, 2024
A party may file with the Supreme Court a
Samuel A. Christensen 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. 2023AP11 Cir. Ct. No. 2021CV119

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II

PAR, INC.,

PLAINTIFF-RESPONDENT,

V.

SUZAN LIETZAU MCCAHEY,

DEFENDANT-APPELLANT.

APPEAL from an order of the circuit court for Waukesha County:
MICHAEL J. APRAHAMIAN, Judge. Affirmed.

Before Gundrum, P.J., Neubauer and Lazar, JJ.

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).
No. 2023AP11

¶1 PER CURIAM. Suzan Lietzau McCahey appeals from a circuit
court order denying her motion for relief from two default judgments entered
against her in this action brought by Par, Inc. McCahey contends that because
these default judgments were the fault of her attorney, the circuit court erroneously
exercised its discretion when it concluded that McCahey had failed to establish
any entitlement to relief. McCahey further contends that the circuit court erred in
striking new arguments that she raised for the first time in a reply brief. For the
foregoing reasons, we reject McCahey’s arguments and affirm the default
judgments.

BACKGROUND

¶2 According to McCahey, the parties to this appeal are involved in
ongoing litigation against each other in Illinois and Wisconsin. Our focus,
however, is on the procedural history of the circuit court case that led to this
appeal. On March 17, 2020, Par, Inc. filed a small claims action against
McCahey, alleging conversion and statutory civil theft. McCahey initially
represented herself and filed an answer to Par’s complaint, denying Par’s claims
and raising affirmative defenses. After Par served its first set of written discovery,
Attorney Robert Malloy filed a notice of retainer on McCahey’s behalf. Malloy
eventually filed a motion to dismiss Par’s claims, along with a counterclaim that
required the action to be transferred out of small claims court and into large claims
civil court.

¶3 The Record reflects numerous pretrial motions relating to Par’s
efforts to obtain discovery from McCahey, including two successful motions to
compel discovery as well as a motion for sanctions based on McCahey’s failure to
comply with a court order compelling discovery. Par’s sanctions motion sought

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dismissal of McCahey’s counterclaim with prejudice, an order that Par’s
unanswered requests for admission be deemed admitted for the purpose of this
case, and an award of reasonable expenses, including attorney fees.

¶4 In the midst of these discovery disputes, Par also filed a motion for
leave to amend its complaint against McCahey on February 4, 2021, seeking to
add additional claims for conversion and statutory civil theft. The circuit court1
orally granted Par’s motion during a hearing on August 11, 2021, and ordered
McCahey to respond to the amended complaint within forty-five days. McCahey
failed to respond to the amended complaint, so Par filed a motion for default
judgment on October 18, 2021.2

¶5 On November 22, 2021, the circuit court held oral argument on Par’s
motion for default judgment, along with Par’s motion for discovery sanctions. On
December 14, 2021, the court entered default judgment in favor of Par on Par’s
newly added claim and awarded $9,500 in actual damages, $28,500 in exemplary
damages, and costs in an amount to be determined, as well as discovery sanctions
in an amount to be determined. The court also granted Par’s requested discovery
sanctions, dismissing McCahey’s counterclaim with prejudice and deeming
McCahey to have admitted the unanswered requests for admission. Par served
notice of entry of this judgment on December 30, 2021.

1
Although the Honorable Michael J. Aprahamian decided the motion for relief from
judgment that is the subject of this appeal, Judge Aprahamian was not assigned to this case until
January 3, 2022. Prior relevant orders were entered by the Honorable Michael O. Boren, as were
both of the default judgments.

Par’s original motion for default judgment was electronically signed, and Par filed an
2

amended motion with a handwritten signature two days later.

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¶6 Par also filed a second motion for sanctions based on McCahey’s
failure to comply with the circuit court’s scheduling order and discovery orders.
As a sanction, Par sought entry of a default judgment on Par’s original claim.
After holding oral arguments on January 31 and February 2, 2022, the circuit court
granted Par’s second motion for a default judgment on February 21, 2022. The
court awarded $10,000 in actual damages, $20,000 in exemplary damages, and
costs for a total of $42,625.84. The court also imposed discovery sanctions of
$4,895.34. Par served notice of entry of judgment on February 24, 2022.

¶7 McCahey subsequently hired a new attorney who filed a notice of
retainer on June 8, 2022. On September 15, 2022, McCahey filed a motion for
relief from the two default judgments on the grounds of excusable neglect under
WIS. STAT. § 806.07(1)(a) (2021-22)3 and extraordinary circumstances under WIS.
STAT. § 806.07(1)(h), together with a supporting brief, an affidavit signed by
McCahey, and an affidavit from her new attorney. After Par filed its brief in
opposition to McCahey’s motion for relief, McCahey filed a reply brief raising a
new argument that relied on a new affidavit from her Illinois attorney Robert
Habib as well as her own supplemental affidavit asserting new facts. Par filed a
motion to strike the new argument in McCahey’s reply brief and supporting
materials. After a hearing, the circuit court issued an order granting Par’s motion
to strike and denying McCahey’s motion for relief from the default judgments.
McCahey appeals both aspects of the court’s order.

3
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.

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No. 2023AP11

STANDARD OF REVIEW

¶8 We review the denial of a motion for relief from judgment using the
erroneous exercise of discretion standard. See Mohns, Inc. v. TCF National
Bank, 2006 WI App 65, ¶¶9, 11, 292 Wis. 2d 243, 714 N.W.2d 245 (applying the
erroneous exercise of discretion standard to a circuit court decision vacating a
judgment based on excusable neglect); Miller v. Hanover Ins. Co., 2010 WI 75,
¶29, 326 Wis. 2d 640, 785 N.W.2d 493 (cited source omitted) (applying the
erroneous exercise of discretion standard to the circuit court’s decision whether to
grant a motion for relief under WIS. STAT. § 806.07(1)(h)). We also use the
erroneous exercise of discretion standard to review a circuit court’s determination
regarding whether a party filed a motion for relief from judgment within a
reasonable time. See Rhodes v. Terry, 91 Wis. 2d 165, 170, 280 N.W.2d 248
(1979). Finally, we use the erroneous exercise of discretion standard to review the
circuit court’s decision to strike a new argument in McCahey’s reply brief and
supporting materials. See Lee v. GEICO Indem. Co., 2009 WI App 168, ¶16, 321
Wis. 2d 698, 776 N.W.2d 622 (“We review the [circuit] court's decision to impose
sanctions and the appropriateness of the sanctions ordered under an erroneous
exercise of discretion standard.”).

¶9 “A discretionary decision will be sustained if the circuit court has
examined the relevant facts, applied a proper standard of law, and, using a
demonstrated rational process, reached a conclusion that a reasonable judge could
reach.” Industrial Roofing Services v. Marquardt, 2007 WI 19, ¶41, 299 Wis. 2d
81, 726 N.W.2d 898.

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No. 2023AP11

DISCUSSION

¶10 McCahey argues that the circuit court erred in denying her motion
for relief based on excusable neglect under WIS. STAT. § 806.07(1)(a) or
extraordinary circumstances under § 806.07(1)(h). She also argues that the court
should not have struck the new arguments that she made in her reply brief and
supporting materials. In denying McCahey’s motion, the circuit court first found
that McCahey did not file her motion for relief from the default judgments within
a reasonable time. The court found that this delay weighed against granting the
motion.

¶11 Regarding McCahey’s arguments for excusable neglect under WIS.
STAT. § 806.07(1)(a), the circuit court rejected McCahey’s contention that she
should not be held responsible for Malloy’s negligent acts and omissions.
Applying the standard for whether to impute an attorney’s failures to the client set
forth in Charolais Breeding Ranches, Ltd. v. Weigel, 92 Wis. 2d 498, 514, 285
N.W.2d 720 (1979), the court determined that McCahey had not acted as a
reasonably prudent person either in retaining Malloy or in making reasonable
inquiry into the status of litigation. Moreover, the court found it significant that
McCahey had actively participated in litigation decisions at various points, such as
by adding the counterclaim that required the litigation to transfer from small
claims court to large claims civil court.

¶12 Regarding McCahey’s argument for relief based on extraordinary
circumstances under WIS. STAT. § 806.07(1)(h), the circuit court found that
McCahey had abandoned the original argument that she made in her opening brief.
The circuit court also struck McCahey’s new argument for relief based on
extraordinary circumstances, which she had raised for the first time in her reply

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No. 2023AP11

brief. Nonetheless, the circuit court explained that even considering this newly
raised argument, McCahey had failed to demonstrate extraordinary circumstances,
using the five factors set forth in Miller. See Miller, 326 Wis. 2d 640, ¶36.4 The
court found that two of the Miller factors favored McCahey, but that the remaining
three factors weighed against granting relief from the judgments. On balance, the
court concluded that “overall equity does not favor” granting the motion.

¶13 Finally, the circuit court pointed out that, if the facts set forth in
McCahey’s affidavit were true, then McCahey had an alternate avenue of relief in
the form of a malpractice action against Malloy. Thus, the court concluded that
neither legal nor equitable principles justified granting McCahey’s motion for
relief from the judgments.

1. Did McCahey file her motion within a reasonable time?

¶14 McCahey contends that the circuit court erroneously exercised its
discretion in concluding that she did not file her motion for relief from judgment
within a reasonable time. Specifically, during oral argument on the motion for
relief, McCahey’s new attorney stated that McCahey first learned about the default

4
The factors for consideration under WIS. STAT. § 806.07(1)(h) include:

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 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.

Miller, 326 Wis. 2d 640, ¶36 (quoting Sukala, 282 Wis. 2d 46, ¶11).

7
No. 2023AP11

judgments on or around April 21, 2022.5 McCahey’s new attorney filed a Notice
of Appearance on June 8, 2022, and then filed the motion for relief on September
15, 2022. In concluding that the motion was not filed within a reasonable time,
the circuit court noted both McCahey’s delay in hiring a new attorney as well as
the new attorney’s delay in filing the motion to vacate.

¶15 The relevant statute provides that a motion for relief from judgment
“shall be made within a reasonable time, and, if based on sub. (1)(a) or (c), not
more than one year after the judgment was entered.” WIS. STAT. § 806.07(2).
McCahey relies on this latter clause to argue that any motion filed within a year is
timely. McCahey is incorrect. As our supreme court has explained, “the one year
period constitutes the maximum time allowed or a ‘statute of limitations’ period
for bringing the motion to vacate on the grounds of mistake, surprise, inadvertence
or excusable neglect.” Rhodes v. Terry, 91 Wis. 2d at 171 (cited sources omitted).
But “the mere fact that the motion is brought within one year after entry of
judgment does not mean that the motion is timely.” Id. (cited source omitted).

¶16 McCahey also argues that her motion was filed within a reasonable
time because she “acted as promptly as was practical to remedy the default
judgments against her.” In particular, she points to Malloy’s deceitful conduct and

5
In her opening brief on appeal, McCahey argues that she did not learn of the judgments
against her until on or about May 5, 2022. She cites the affidavit of Robert Habib, which states
that Habib sent Malloy an email regarding the judgments on May 5, 2022. However, the
preceding paragraph of Habib’s affidavit states that “in the Spring of 2022 McCahey called me
and told me she had learned that a judgment was entered against her in Wisconsin, although she
was unaware of what had actually taken place.” The affidavit further states that McCahey
received an email from Par regarding the judgments on May 3, 2022. Because McCahey’s
proposed date of May 5, 2022, is contradicted by the Record, we hold McCahey to her attorney’s
original representation that McCahey learned about the judgments on or about April 21, 2022.

8
No. 2023AP11

her obligation to conduct a thorough prefiling investigation. McCahey also
contends that the circuit court did not assume that the allegations in her motion
were true, as required by Sukala v. Heritage Mutual Ins. Co., 2005 WI 83, ¶10,
282 Wis. 2d 46, 698 N.W.2d 610.

¶17 The transcript of the oral argument shows that the circuit court
considered McCahey’s arguments regarding the delay and rejected them. In
concluding that the motion was not filed within a reasonable time, the court
focused on two periods of delay. First, the court questioned why McCahey waited
more than a month after learning about the judgments before hiring a new
attorney. We see no argument from McCahey regarding the circuit court’s
observation that McCahey waited a “long time” to take action.

¶18 The second period of delay identified by the circuit court occurred
between June 8, 2022, when McCahey’s new attorney filed a notice of appearance,
and September 15, 2022, when McCahey filed the motion for relief. McCahey
contends that this additional delay was necessary in order to obtain her file from
Malloy. The circuit court considered this excuse but questioned why obtaining
Malloy’s files was so important given Malloy’s demonstrated lack of diligence.
Instead, the court explained that all of the necessary information could have been
obtained from the client herself, as well as from the court’s docket. Ultimately,
McCahey decided to file the motion without having obtained the file from Malloy.

¶19 A reviewing court will sustain a discretionary decision “if the circuit
court has examined the relevant facts, applied a proper standard of law, and, using
a demonstrated rational process, reached a conclusion that a reasonable judge
could reach.” Industrial Roofing Services, 299 Wis. 2d 81, ¶41. We see no basis
for concluding that the circuit court erroneously exercised its discretion in

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No. 2023AP11

determining that McCahey did not file within a reasonable time, particularly given
McCahey’s concession at oral argument that “even we would agree that it started
becoming unreasonable that we hadn’t filed anything.”

2. Did McCahey establish excusable neglect?

¶20 McCahey also argues that the circuit court erroneously exercised its
discretion in concluding that she failed to demonstrate excusable neglect under
WIS. STAT. § 806.07(1)(a). This provision permits a court to relieve a party from
judgment based on “[m]istake, inadvertence, surprise, or excusable neglect.”
“Excusable neglect is ‘that neglect which might have been the act of a reasonably
prudent person under the same circumstances.’” Mohns, 292 Wis. 2d 243, ¶9
(quoting Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 468, 326 N.W.2d 727
(1982)).

¶21 “A circuit court has wide discretion in determining whether to vacate
a judgment based on excusable neglect.” Id. (cited source omitted). The “burden
of showing excusable neglect is on the party seeking relief from the judgment.”
Id., ¶10 (citing Hansher v. Kaishian, 79 Wis. 2d 374, 389, 255 N.W.2d 564
(1977)).

¶22 McCahey contends that the failures to comply with court orders
were entirely Malloy’s fault, and that the circuit court erred in imputing Malloy’s
negligence to her, using the standard set forth in Charolais Breeding Ranches,
Ltd., 92 Wis. 2d at 514. In Charolais, our supreme court explained that
“‘excusable neglect’ is the neglect which might have been the act of a reasonably
prudent person under the same circumstances.” Id. at 512 (cited sources omitted).
“In deciding whether to impute the negligence of the lawyer to the client, the
[circuit] court must exercise its ‘equitable powers to secure substantial justice

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No. 2023AP11

between the parties.’” Id. at 514 (quoted source omitted). The court’s exercise of
discretion “may or may not call for imputation, depending on the facts of each
case.” Id.

¶23 Charolais sets forth a three-part test to determine whether the
“[m]istakes, ill advice, or other failures of a lawyer may constitute excusable
neglect on the part of the client.” Id. Specifically, a court may determine that a
client has demonstrated excusable neglect, notwithstanding an attorney’s failures,
“when the client has acted as a reasonable and prudent person in engaging a
lawyer of good reputation, has relied upon [the attorney] to protect [the client’s]
rights, and has made reasonable inquiry concerning the proceedings.” Id. (cited
sources omitted). In Charolais, our supreme court determined that the client had
established the first and second factors. Id. However, the court determined that
“the record [was] devoid of any showing that [the client] made reasonable inquiry
concerning the status of … litigation.” Id. Because the client failed to establish
one of the Charolais factors, the court concluded that the circuit court had not
erroneously exercised its discretion in determining that the attorney’s neglect
could be imputed to the client. Id. at 515.

¶24 Turning to the present case, the circuit court found that McCahey
failed to establish the first and third factors in Charolais. Specifically, the court
determined that McCahey did not make any showing that she acted reasonably and
prudently in engaging a lawyer of good reputation, or in making reasonable
inquiry concerning the proceeding. Par argues that the circuit court correctly
determined that McCahey did not demonstrate excusable neglect under the
Charolais standard.

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No. 2023AP11

¶25 Regarding the first Charolais factor, Par contends that McCahey
failed to present any evidence—either in her initial affidavit or the stricken
affidavit—that she acted reasonably to engage a lawyer of good repute. On the
contrary, Par argues that a simple Google search would have revealed Malloy’s
disciplinary history. In her reply brief, McCahey argues that a finding of
excusable neglect should not depend on the existence of a disciplinary history of
which she was unaware, because that amounts to a caveat emptor standard for
clients who are hiring lawyers. Here, however, we need not determine whether a
reasonable and prudent person would have found Malloy’s disciplinary history and
declined to hire him. Instead, we affirm because McCahey has failed to point to
any basis in the Record for concluding that she acted reasonably and prudently
when she engaged Malloy.

¶26 Likewise, Par argues that McCahey failed to present any evidence
regarding the third Charolais factor of whether she made reasonable inquiry
concerning the proceeding. Such evidence might include communications with
Malloy requesting an update or billing statements reflecting such inquiries.
Instead, McCahey’s initial affidavit in support of her motion for relief from
judgment simply repeats the mantra that various issues were “never made aware to
me by Attorney Malloy.” We agree with Par that these assertions are not
sufficient to demonstrate that McCahey made reasonable inquiry concerning the
proceeding.

¶27 Having failed to satisfy the three-part test from Charolais, McCahey
urges us to apply a different standard to evaluate whether Malloy’s conduct should
be imputed to McCahey for the purpose of evaluating whether McCahey has
demonstrated excusable neglect. According to McCahey, the Charolais standard
makes sense for “garden variety clerical errors and disorganization,” but is not

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No. 2023AP11

appropriate here given the egregiousness of Malloy’s conduct and his alleged
deception regarding the status of the litigation. We see no such limitation in
Charolais, where our supreme court stated that its test for excusable neglect
applied to “[m]istakes, ill advice, or other failures of a lawyer.” Charolais
Breeding Ranches, Ltd., 92 Wis. 2d at 514.

¶28 McCahey nonetheless argues that we should adopt the analysis used
by our supreme court in Industrial Roofing,6 where the court addressed the
question “of whether the circuit court erroneously exercised its discretion in
dismissing the plaintiff’s complaint with prejudice as a sanction for failure to
respond to discovery and violation of court orders.” Industrial Roofing Services,
299 Wis. 2d 81, ¶39. The court explained that “it is an erroneous exercise of
discretion for a circuit court to enter a sanction of dismissal with prejudice,
imputing the attorney’s conduct to the client, where the client is blameless.” Id.,
¶61. Nonetheless, the court reaffirmed its commitment to the Charolais standard,
explaining that an attorney’s conduct can be imputed to the client when the client
“fail[s] to act as a reasonable and prudent person and fail[s] to inquire about the
proceedings.” Id., ¶63 (cited sources omitted). The court explained,

Even if the record supports the view that the client … was
not itself directly to blame for [the attorney’s] failures, it
does not follow that [the client] is without fault. [The
client’s] fault lies in its failure to act in a reasonable and

6
McCahey also relies on several cases in which courts declined to hold a client
responsible for an attorney’s mistakes or misconduct. See, e.g., Paschong v. Hollenbeck, 13
Wis. 2d 415, 108 N.W.2d 668 (1961); Spencer v. Osberg, 152 Wis. 399, 140 N.W. 67 (1913);
Bloor v. Smith, 112 Wis. 340, 87 N.W. 870 (1901); Whereatt v. Ellis, 70 Wis. 207, 35 N.W. 314
(1887); Wicke v. Lake, 21 Wis. 410 (1867). These decisions all predate Charolais and are
therefore unhelpful to McCahey in light of her failure to satisfy the three-part test set forth in
Charolais.

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No. 2023AP11

prudent manner when it knew or had reason to know that
its attorney was failing to properly manage the case.

Id., ¶64.

¶29 We conclude that Industrial Roofing is unhelpful to McCahey for
two reasons. First, as Par observes, the Industrial Roofing decision involves an
appeal of the circuit court’s decision to impose a sanction of dismissal. A sanction
of “dismissal requires that the non-complying party has acted egregiously or in
bad faith.” Id., ¶43 (cited source omitted). Here, however, the time for McCahey
to appeal the dismissal of her counterclaim, or any other aspect of the circuit
court’s judgments, had long expired.7 Instead, McCahey is appealing the denial of
her motion for relief from those judgments under WIS. STAT. § 806.07(1)(a) and
(h), which respectively require a showing of excusable neglect or extraordinary
circumstances. We see nothing in our supreme court’s decision in Industrial
Roofing to indicate that its analysis should extend to motions for relief under
§ 806.07.

¶30 Second, even if we were to extend the standard from Industrial
Roofing to motions for relief from judgment, the circuit court’s findings establish
that this standard is satisfied here. Specifically, the court determined that
McCahey failed to act reasonably and prudently. This finding weighs against a
conclusion that McCahey was blameless. See Industrial Roofing Services, 299
Wis. 2d 81, ¶63 (in determining whether to impute an attorney’s egregious

7
The first judgment was entered on December 13, 2021, and the second judgment was
entered on February 21, 2022. Par filed notices of entry of judgment on December 30, 2021, and
February 24, 2022. Because Par filed a timely notice of entry of each judgment, McCahey had
forty-five days from the entry of each judgment to file a direct appeal. See WIS. STAT.
§§ 809.10(1)(e); 808.04(1).

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No. 2023AP11

conduct to the client, a court must consider the client’s “failure to act in a
reasonable and prudent manner, and the client’s knowledge or complicity in that
conduct”).

¶31 McCahey also relies on a three-part test that we used in Mohns to
evaluate a circuit court decision granting a defendant’s motion to vacate a default
judgment based on excusable neglect. See Mohns, 292 Wis. 2d 243, ¶10. In
Mohns, we concluded that the circuit court erroneously exercised its discretion by
finding excusable neglect based “solely on the fact that [the defendant] acted
promptly once its lawyers ‘got involved.’” Id., ¶11. Instead, we explained that a
finding of excusable neglect also required the circuit court to “consider whether
the moving party has acted promptly to remedy the default judgment, whether the
default judgment imposes excessive damages, and whether vacatur of the
judgment is necessary to prevent a miscarriage of justice.” Id., ¶10. Moreover,
we instructed that “[t]he circuit court must also consider that the law favors the
finality of judgments.” Id. Because these additional factors from Mohns are
intended to prevent excusable neglect from becoming “too easy a standard” for
vacating a final judgment, see id., these factors do not help McCahey satisfy her
burden of demonstrating excusable neglect in the first instance.

¶32 For similar reasons, we reject McCahey’s argument that the circuit
court erred by failing to evaluate whether she had a meritorious defense. See J.L.
Phillips & Assoc. Inc. v. E & H Plastic Corp., 217 Wis. 2d 348, 358, 577 N.W.2d
13 (1998) (“a party moving to vacate a default judgment pursuant to [WIS. STAT.]
§ 806.07(1)(a) must: (1) demonstrate that the judgment against him or her was
obtained as a result of mistake, inadvertence, surprise or excusable neglect; and
(2) demonstrate that he or she has a meritorious defense to the action”). As Par
points out, the existence of a meritorious defense only becomes a relevant

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consideration after the circuit court has found excusable neglect. See Wagner v.
Springaire Corp., 50 Wis. 2d 212, 220, 184 N.W.2d 88 (1971). In Wagner, our
supreme court explained that excusable neglect “is dependent on whether the acts
or omissions of the defendant were consistent with those of ‘a reasonably prudent
person under the same circumstances.’” Id. As such, “[t]he merits of the defense
proposed by the defendant are immaterial.” Id. Because the circuit court
determined that McCahey failed to establish excusable neglect, it was not required
to take the additional step of determining whether McCahey had a meritorious
defense. See id. at 220-21 (absent a finding of excusable neglect, “we need not
consider the merits of the defense”).

¶33 Because we conclude that the circuit court applied the proper legal
standard to the relevant facts, we reject McCahey’s argument that the circuit court
erroneously exercised its discretion in concluding that McCahey failed to
demonstrate excusable neglect under WIS. STAT. § 806.07(1)(a).

3. Did McCahey establish grounds for relief under WIS. STAT.
§ 806.07(1)(h)?

¶34 McCahey contends that the circuit court erroneously exercised its
discretion in denying her motion for relief under WIS. STAT. § 806.07(1)(h). This
provision permits the court to grant relief “for any other reason justifying relief
from the operation of judgment.” The problem for McCahey is that she
abandoned her initial argument for relief under WIS. STAT. § 806.07(1)(h).
Specifically, in her opening brief in support of her motion for relief from
judgment, McCahey argued that her basis for seeking relief under para. (1)(h) was
that “Par, Inc. has engaged in misconduct in its attempts to enforce the judgments
against her.” After Par filed its response, McCahey withdrew this argument. The
circuit court denied McCahey’s motion under para. (1)(h) on the ground that she

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No. 2023AP11

had abandoned her argument for relief under WIS. STAT. § 806.07(1)(h), and we
affirm on that basis.

¶35 McCahey now asks us to review the circuit court’s determination
that she did not demonstrate extraordinary circumstances that would justify relief
under § 806.07(1)(h). The circuit court granted Par’s motion to strike and
disregard this argument because McCahey had presented it for the first time in her
reply brief. Despite striking the argument, the court nonetheless concluded that
even if it had considered the newly raised argument, McCahey’s reply brief and
supporting materials failed to demonstrate extraordinary circumstances warranting
relief under § 806.07(1)(h).8 McCahey argues that the circuit court erroneously
exercised its discretion both in striking the argument and in rejecting it on the
merits.

¶36 Wisconsin courts generally do not consider arguments raised for the
first time in a reply brief, for reasons of fundamental fairness. See A.O. Smith
Corp. v. Allstate Ins. Cos., 222 Wis. 2d 475, 492, 588 N.W.2d 285 (Ct. App.
1998). McCahey argues that her reply brief and supporting materials were
permitted by local rule, while Par argues that the local rule only applies to
summary judgment and other pretrial motions and is therefore not relevant to a
motion for relief from a judgment.

8
McCahey contends that before denying the motion for relief under WIS. STAT.
§ 806.07(1)(h), the circuit court was required to hold a hearing on her allegations regarding
Malloy’s conduct. McCahey is incorrect. In Miller, our supreme court explained that “[i]f the
facts alleged constitute extraordinary circumstances such that relief may be warranted under
para. (1)(h), a hearing must be held on the truth of the allegations.” Miller, 326 Wis. 2d 640, ¶34
(citing Sukala, 282 Wis. 2d 46, ¶10). Because the circuit court determined that McCahey had not
satisfied her burden of establishing extraordinary circumstances, no hearing was necessary.

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No. 2023AP11

¶37 Regardless of whether the local rules permitted McCahey to file a
reply brief at all, the local rule on which McCahey relies has no bearing on the
issue of fundamental fairness that arises when a moving party raises a new
argument for the first time in its reply brief. As we explained in A.O. Smith
Corp., “[i]t is inherently unfair for an appellant to withhold an argument from its
main brief and argue it in its reply brief because such conduct would prevent any
response from the opposing party.” Id. We see no developed argument from
McCahey to suggest that the circuit court should have made an exception to the
general rule that an appellant may not raise an issue for the first time in its reply
brief. See id. We therefore conclude that the circuit court did not erroneously
exercise its discretion in striking and disregarding the new argument McCahey
made in her reply brief regarding extraordinary circumstances under WIS. STAT.
§ 806.07(1)(h). See Lee, 321 Wis. 2d 698, ¶16 (reviewing a court’s decision to
impose sanctions and the appropriateness of the sanctions using the erroneous
exercise of discretion standard). Because the court did not erroneously exercise its
discretion in striking McCahey’s new argument, we need not consider whether the
court erroneously exercised its discretion when it rejected this new argument on
the merits.

By the Court.—Order affirmed.

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

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