Background
In June 2022, Specworks, Inc. filed suit in Eau Claire County against King Embroidery & Apparel, LLC and its principal Cheryl Schmidt, asserting unjust enrichment and civil theft based on an alleged $28,425.97 overpayment for embroidery services and the retention of Specworks property. King answered and counterclaimed for breach of contract, quantum meruit, unjust enrichment, and account stated, asserting Specworks had actually underpaid by $131,483.40. The case was plagued almost immediately by discovery failures: Specworks missed repeated deadlines, forcing King to move to compel, and substantial compliance did not arrive until eight months after the original due date.
Over the course of the litigation Specworks cycled through five attorneys. Each departure prompted adjournments and new scheduling orders. By November 2024, with trial set for January 9–10, 2025, Specworks moved again to adjourn—this time because its CEO needed to attend a trade show in Germany. The circuit court denied that request, citing “something bordering on gross incompetence” in how Specworks had managed the case and concluding it would be “terribly unfair” to King to delay further.
Approximately three weeks later, Specworks’ fifth attorney, Matthew Cornetta of Ruder Ware, moved to withdraw effective December 10, 2024—the date of the final pretrial hearing. At that hearing, opposing counsel put Specworks and the circuit court on notice that Wisconsin law requires a corporation to appear through licensed counsel in a large-claim lawsuit, and that failure to do so would warrant default judgment. Specworks CEO Corina Peacock, present at the hearing, confirmed she understood a default judgment was a possibility if Specworks appeared on January 9 without counsel. Peacock later acknowledged in a declaration that she had the funds to pay Cornetta’s $24,000 advance-fee demand but chose not to, deciding it did not “make good business sense.” On January 9, 2025, Specworks appeared through Peacock alone. The circuit court granted King’s motion for default judgment and awarded $172,145.95 against Specworks, including $7,750 in attorney fees as a sanction for discovery abuses and dilatory conduct.
The Court’s Holding
The Court of Appeals affirmed the default judgment and the circuit court’s denial of post-judgment relief. On the withdrawal issue, the court held that the circuit court did not erroneously exercise its discretion in granting Cornetta’s motion. Even though the motion cited only SCR 20:1.16(b) generally and invoked confidentiality to avoid elaboration, the record supplied a sufficient basis under SCR 20:1.16(b)(7)—”other good cause”—because Specworks itself had agreed that Cornetta’s representation would terminate after the December 10 pretrial hearing. Peacock was present and raised no objection. The court further held that Specworks received reasonable notice and an adequate opportunity to secure substitute counsel: it had more than 30 days between the withdrawal order and trial, it did not object to the withdrawal, and it was expressly warned that appearing without counsel risked a default judgment.
On the motion for relief from judgment under WIS. STAT. § 806.07(1)(h), the court held that no “extraordinary circumstances” warranting relief in the interest of justice were present. The circuit court reasonably found that the default was the product of a conscientious, deliberate, and well-informed business decision: Peacock had the funds to retain Cornetta, understood the risk, and chose to proceed without counsel. The circuit court also appropriately found the evidence insufficient to establish ineffective assistance of counsel in the absence of any affidavit from Cornetta. The court further concluded that the strong interest in finality, combined with Specworks’ years-long pattern of delay and its own responsibility for bringing the case to this point, outweighed any interest in a merits adjudication and made relief inequitable to King.
Key Takeaways
- In Wisconsin large-claim litigation, a corporation cannot appear at trial through a non-attorney officer; doing so renders it unrepresented and subject to default judgment under WIS. STAT. § 806.02(5).
- A client’s express agreement that counsel’s representation will terminate on a specific date constitutes “other good cause” for withdrawal under SCR 20:1.16(b)(7), even without public disclosure of underlying reasons.
- A deliberate choice to forgo available counsel for cost reasons—made with full knowledge that default judgment was a stated risk—defeats a subsequent claim of “extraordinary circumstances” under § 806.07(1)(h).
- Courts weighing relief from default judgment may properly consider the full history of delay and bad-faith litigation conduct, not just the circumstances immediately surrounding the default.
Why It Matters
This decision reinforces a hard rule Wisconsin practitioners must convey early and often to corporate clients: unlike individual litigants, a business entity has no pro se right to appear in large-claim court proceedings, and showing up without licensed counsel is procedurally equivalent to not showing up at all. Where a party has already exhausted the court’s goodwill through chronic delay, that rule will be enforced without further accommodation.
The opinion also illustrates the high bar for post-default relief when the unrepresented appearance was a calculated economic decision. Courts will examine whether the client had actual knowledge of the risk and the means to avoid it. Here, Peacock’s own declaration—acknowledging both the warning and the available funds—effectively defeated the extraordinary-circumstances showing the statute requires. Attorneys advising clients contemplating a similar cost-benefit calculus should treat this case as a cautionary example.