Rao v. WMA Securities, Inc.

¶ 1. The defendant, WMA Securities, Inc., seeks review of an unpublished court of appeals decision affirming in part and reversing in part a judgment and an order of the Circuit Court for Rock County, James Welker, Judge.1 After the defendant continuously failed to comply with the circuit court's discovery orders, the circuit court issued an order striking the defendant's pleadings and awarding judgment by default to the plaintiff, Ramachandra Rao, M.D., against the defendant.

*627¶ 2. The circuit court ordered a hearing on damages, denying the defendant's request for a jury trial on this issue. The court of appeals affirmed the circuit court's ruling denying a jury trial.2

¶ 3. The circuit court denied the plaintiffs request for punitive damages under Wis. Stat. § 895.043 (2005-06).3 The court of appeals reversed the circuit court's denial of punitive damages, remanding the issue to the circuit court to exercise its discretion in determining the nature of the hearing on punitive damages and to determine whether punitive damages are warranted.4

¶ 4. Two issues are presented on review of the decision of the court of appeals:5

*628I. Did the circuit court violate the defendant's right of trial by jury under Article I, Section 5 of the Wisconsin Constitution when it denied the defendant's motion for a jury trial on the issue of damages after it ordered a judgment by default against the defendant?

II. Did the circuit court err in denying the plaintiffs punitive damages claim?

¶ 5. We conclude that the circuit court did not violate the defendant's right of trial by jury under Article I, Section 5 of the Wisconsin Constitution when it denied the defendant's motion for a jury trial on the issue of damages. The defendant waived its right of trial by jury in the manner set forth in Wis. Stat. §§ (Rule) 804.12(2) and 806.02. We further conclude that the circuit court erred in denying the plaintiffs claim for punitive damages solely on the basis of allegations in the complaint and in denying the plaintiff an opportunity to prove additional facts in support of the punitive damages claim.

¶ 6. Accordingly, we affirm the decision of the court of appeals. We affirm, as did the court of appeals, the circuit court's denial of the defendant's request for *629a jury trial on the issue of damages. We reverse, as did the court of appeals, the circuit court's ruling denying punitive damages, and remand the issue of punitive damages to the circuit court to exercise its discretion in determining the nature of the hearing on punitive damages and to determine whether punitive damages are warranted. We affirm the decision of the court of appeals remanding the cause to the circuit court.

¶ 7. We briefly summarize the facts giving rise to the instant case and present additional facts relating to each issue when we address that issue. The facts are more fully stated in the decision of the court of appeals.

¶ 8. The plaintiff brought an action against the defendant, an employee of the defendant, and three additional co-defendants alleging that the employee unlawfully converted hundreds of thousands of dollars from an investment account that the plaintiff maintained with the defendant. The pláintiff asserted that the defendant terminated the employee's employment but took no action to inform the plaintiff that the employment had been terminated or that the termination was for forgery and theft. The circuit court entered judgment by default against the employee. Each of the remaining co-defendants was eventually dismissed from the action.

¶ 9. The plaintiff alleged that the defendant is liable to the plaintiff for (1) vicarious liability for the employee's unlawful acts of conversion, (2) intentional misrepresentation, (3) strict responsibility misrepresentation, (4) negligent misrepresentation, (5) breach of fiduciary duty, (6) negligence, (7) breach of the implied duty of good faith in performance of a contract, and (8) breach of contract. The plaintiff demanded damages from the defendant, including compensatory damages and punitive damages.

*630¶ 10. After hearing the parties on the question whether the defendant had disobeyed discovery orders, the circuit court agreed with the plaintiffs characterization of the defendant's conduct during discovery, and, as a sanction for the defendant's violating discovery orders, the circuit court ordered the defendant's pleadings struck and granted the plaintiffs motion for judgment by default pursuant ■ to Wis. Stat. § (Rule) 804.12(2)(a) authorizing a circuit court to sanction a party for failure to comply with discovery orders.

¶ 11. No judgment by default was rendered or entered because damages had not been determined. Thus the circuit court's order also provided that the defendant would be entitled to participate in an eviden-tiary hearing to determine the amount of damages. Approximately two weeks after holding the evidentiary hearing, the circuit court rendered a default judgment against the defendant for the plaintiffs damages as determined by the circuit court.6 The judgment was then entered three days after it was rendered.7

I-H

¶ 12. We examine first the defendant's argument that the circuit court violated the defendant's right of trial by jury under Article I, Section 5 of the Wisconsin Constitution when it denied the defendant's motion for a jury trial on the issue of damages.

¶ 13. The defendant's motion for a jury trial on the issue of damages came after the circuit court *631granted the plaintiffs motion for judgment by default against the defendant as a sanction, pursuant to Wis. Stat. § (Rule) 804.12(2)(a), for failing to comply with discovery orders and ordered an evidentiary hearing on damages. The defendant had neither demanded a jury trial in the circuit court nor paid the jury fee in a timely fashion before the pleadings were struck. A co-defendant, however, did demand a jury trial and did pay the jury fee timely.8 The co-defendant was later dismissed from the case. Because neither party in the instant case raised or briefed the issue, the question whether a co-defendant's timely demand for a jury trial and timely payment of the jury fee suffices to enable the defendant to claim a constitutional right of trial by jury is not before the court. We assume (without deciding) that for purposes of the instant review the co-defendant's demand for trial by jury and payment of the jury fee can be attributed to the defendant.

¶ 14. Article I, Section 5 of the Wisconsin Constitution provides in full as follows:

The right of trial by jury shall remain inviolate, and shall extend to all eases at law without regard to the amount in controversy; but a jury trial may be waived by the parties in all cases in the manner prescribed by law. Provided, however, that the legislature may, from time to time, by statute provide that a valid verdict, in civil cases, may be based on the votes of a specified number of the jury, not less than five-sixths thereof.

*632¶ 15. Interpretation of the Wisconsin Constitution presents a question of law that this court determines independently of the circuit court and court of appeals but benefiting from their analyses.9

¶ 16. The defendant argues that if its constitutional right of trial by jury is to remain inviolate, it cannot be denied a jury trial on the issue of damages in the present case.

¶ 17. We agree with the defendant that the Article I, Section 5 right of trial by jury extends to the issue of damages. In Jennings v. Safeguard Ins. Co., 13 Wis. 2d 427, 109 N.W.2d 90 (1961), this court held that the right of trial by jury under Article I, Section 5 extends to "all issues of fact, including that of damages."10 Nevertheless, a party may waive a trial by jury on the issue of damages "in the manner prescribed by law."

¶ 18. The question presented is whether the defendant waived its right of trial by jury in the manner prescribed by law. The court has addressed waiver in previous cases. The court has declared that a defendant "has no vested right under art. I, sec. 5 [of the Wisconsin Constitution], to the manner or time in which [the right of trial by jury] may be exercised or waived, since these are merely procedural matters to be determined by law."11

*633¶ 19. The manner in which the Article I, Section 5 right of trial by jury may be waived is governed principally by Wis. Stat. § (Rule) 805.0K3).12 Section (Rule) 805.01(3) sets forth two ways in which the right of trial by jury may be waived. First, a party's failure to demand a jury trial timely in accordance with § (Rule) 805.01(2) constitutes a waiver of the jury trial right. Second, the parties or their attorneys of record may waive the right by written stipulation filed with the court or by oral stipulation made in open court and entered in the record.

¶ 20. Wisconsin Stat. § (Rule) 805.01(3) is not the exclusive provision governing the manner in which the state constitutional right of trial by jury may be waived. Under § 814.61(4), for example, a party may waive the jury trial right by failing to pay the jury fee timely. *634Section 814.61(4) states that if the jury fee is not paid timely, "no jury may be called in the action, and the action may be tried to the court without a jury."13

¶ 21. Moreover, "Wisconsin Stat. §§ 805.01(3) and 814.61 are "but two examples of how waiver [of the Article I, Section 5 right of trial by jury] may be effectuated."14

¶ 22. As both Wis. Stat. § (Rule) 805.01(3) and Wis. Stat. § 814.61 make clear, a party's "waiver" of the Article I, Section 5 right of trial by jury need not be a "waiver" in the strictest sense of that word, that is, an "intentional relinquishment of a known right."15 Instead, a party may "waive" the Article I, Section 5 right of trial by jury by failing to assert the right timely (as when a party fails to demand a jury trial timely in accordance with § (Rule) 805.01) or by violating a law setting conditions on the party's exercise of the jury trial right (as when a party fails to pay the jury fee timely in accordance with Wis. Stat. § 814.61).

¶ 23. Two examples from the case law are instructive: State ex rel. Prentice v. County Court, 70 Wis. 2d 230, 240, 234 N.W.2d 283 (1975), and Phelps v. Physicians Insurance Co. of Wisconsin, Inc., 2005 WI 85, 282 Wis. 2d 69, 698 N.W.2d 643.

*635¶ 24. In the Prentice case, Prentice waived her right to a jury trial by failing to assert the right timely. This form of "waiver" is more akin to "forfeiture" than to "waiver" in its strictest sense as an intentional relinquishment of a known right. See State v. Kelty, 2006 WI 101, ¶ 18 n.11, 294 Wis. 2d 62, 716 N.W.2d 886 (defining "forfeiture" as "the failure to make the timely assertion of a right" and as occurring "by operation of law without regard to the defendant's state of mind").

¶ 25. Prentice was one day late in demanding a jury trial and paying her jury fee. The applicable statute required Prentice to demand a jury trial and to pay the jury fee within 20 days of joining issue.16 Prentice took 21 days. The circuit court consequently denied Prentice's demand for a trial by jury.

¶ 26. This court rejected Prentice's argument that the applicable statute operated in violation of her rights under Article I, Section 5. The court held that Prentice had waived her right of trial by jury because the applicable statute "is a law which reasonably prescribes that failure of a party to act within twenty days constitutes a waiver of jury trial in cases to which [the statute] applies."17

*636¶ 27. Furthermore, we recognized in Prentice that the defendant's waiver of the jury trial right puts the defendant's demand for a jury trial at the discretion of the circuit court. We stated that once a defendant fails to meet the requirements of the statute limiting the time in which to demand a jury trial and to pay the jury fee, the defendant "loses her right and the matter of a jury trial becomes discretionary with the trial court."18 Prentice shows that this court has sustained as constitutional a circuit court's discretionary decision to deny a defendant's right of jury trial based on the defendant's waiver of the right.

¶ 28. In Phelps, the Physicians Insurance Company of Wisconsin (PIC) asserted the right of trial by jury timely but then waived the right by failing to comply with a law setting conditions on PIC's exercise of the right that it had timely asserted. PIC timely asserted its right to a jury trial but then failed to pay the jury fee timely in accordance with the circuit court's scheduling order and local rules.19 Relying upon Wis. Stat. § 814.61, the court concluded that PIC's failure to pay the jury fee timely constituted a waiver of the jury trial right that PIC had timely asserted.20

¶ 29. Prentice's and PIC's actions plainly did not evince the intent to relinquish a right known to them. Prentice "waived" her right to a jury trial by failing to assert the right timely. PIC asserted the jury trial right timely but then waived the right by failing to comply with a statute setting conditions on PIC's exercise of the right.

*637¶ 30. Thus the question presented in the instant case is whether by failing to comply with the circuit court's discovery orders and by incurring a judgment by default as a sanction, the defendant has waived its state constitutional right of trial by jury in the manner prescribed by law. More specifically, the question presented is whether Wis. Stat. § (Rule) 804.12(2), governing sanctions for discovery violations, and Wis. Stat. § (Rule) 806.02, governing default judgments, are laws prescribing the manner in which a party's right of trial by jury is waived.

¶ 31. Section (Rule) 804.12(2) (a) authorizes a circuit court to strike out pleadings or parts thereof and render a judgment by default against a disobedient party who has failed to comply with a circuit court's discovery orders.21 It provides in relevant part as follows:

(2) Failure to comply with order.

(a) If a party ... fails to obey an order to provide or permit discovery... the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following:

3. An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, *638or rendering a judgment by default against the disobedient party . .. (emphasis added).

¶ 32. Wisconsin Stat. § (Rule) 806.02 governs default judgments. Wisconsin Stat. § (Rule) 806.02 provides in relevant part as follows:

Default Judgment (1) A default judgment may be rendered as provided in subs. (1) to (4) if no issue of law or fact has been joined and if the time for joining issue has expired. Any defendant appearing in an action shall be entitled to notice of motion for judgment.

(2).. . the plaintiff may move for judgment according to the demand of the complaint.... If proof of any fact is necessary for the court to give judgment, the court shall receive the proof.

(5) A default judgment may be rendered against any defendant who has appeared in the action but who fails to appear at trial. If proof of any fact is necessary for the court to render judgment, the court shall receive the proof.

¶ 33. The interpretation of Wis. Stat. §§ (Rules) 804.12(2) and 806.02 is a question of law that we determine independently of the circuit court and court of appeals but benefiting from their analyses.22

¶ 34. Wisconsin Stat. §§ (Rules) 804.12(2)(a) and 806.02 are rules of pleading, practice, and procedure that were adopted by this court pursuant to Wis. Stat. § 751.12. Wisconsin Stat. § 751.12 provides in relevant part as follows:

*639Rules of pleading and practice. (1) The state supreme court shall, by rules promulgated by it from time to time, regulate pleading, practice, and procedure in judicial proceedings in all courts, for the purposes of simplifying the same and of promoting the speedy determination of litigation upon its merits. The rules shall not abridge, enlarge, or modify the substantive rights of any litigant.. . .

(2) All statutes relating to pleading, practice, and procedure may be modified or suspended by rules promulgated under this section....

(4) This section shall not abridge the right of the legislature to enact, modify, or repeal statutes or rules ' relating to pleading, practice, or procedure.

(5) The judicial council shall act in an advisory capacity to assist the court in performing its duties under this section.

¶ 35. A rule adopted by this court in accordance with Wis. Stat. § 751.12 is numbered as a statute, is printed in the Wisconsin Statutes, may be amended by both the court and the legislature,23 has been described by this court as "a statute promulgated under this court's rule-making authority," and has the force of law.24 Thus if the defendant relinquished its right of trial by jury in the manner prescribed by Wis. Stat. §§ (Rules) 804.12(2)(a) and 806.02, rules of practice and *640procedure, then the defendant has waived its state constitutional right to a jury trial on the issue of damages.25

¶ 36. Wisconsin Stat. § (Rule) 804.12(2), governing sanctions for violation of discovery orders, allows a circuit court to render a judgment by default against a disobedient defendant. It is well established that "judgment by default" (the term used in Wis. Stat. § 804.12(2)(a)3.) is identical to "default judgment" (the term used in Wis. Stat. § 806.02). For example, in Split Rock Hardwoods v. Lumber Liquidators, Inc., 2002 WI 66, 42 n.15, 253 Wis. 2d 238, 646 N.W.2d 19, Justice Prosser explained on behalf of the court that [a] court may enter default judgment under Wis. Stat. 804.12(2)(a) against a party for failure to comply with a discovery order (emphasis added) (citing Midwest Developers v. Goma Corp., 121 Wis. 2d 632, 650, 360 N.W.2d 554 (Ct. App. 1984)). The circuit court ordered a default judgment to be rendered against the defendant in the present case for failure to comply with a discovery order, and we look to the law governing default judgments to determine whether the defendant has a right of trial by jury on the issue of damages.26

*641¶ 37. The defendant on review accepts that the default judgment was properly rendered in the present case. According to Wis. Stat. § (Rule) 806.02, a default judgment may be rendered if no issue of law or fact has been joined. In the present case no issue of law or fact has been joined because the circuit court struck the defendant's pleadings; the circuit court thus rendered a judgment by default that satisfies Wis. Stat. § (Rule) 806.02 governing default judgment.27

¶ 38. According to Wis. Stat. § (Rule) 806.02, if proof of any fact, including damages, is necessary for the circuit court to render judgment by default, the circuit court shall receive the proof. A party who *642defaults admits liability but not the amount of damages.28 Wisconsin Stat. § (Rule) 806.02(2) and (5) do not bind the court to a single procedure for deciding factual issues when a default judgment is entered but instead provide only that "[i]f proof of any fact is necessary for the court to give judgment, the court shall receive the proof."29 The Judicial Council Committee's Note to the 1978 Supreme Court order amending Wis. Stat. § (Rule) 806.02(5) to state in conformity with subsection (2) that the circuit court "shall receive the proof," in place of "shall hear the proof," explains that a circuit court *643receiving proof of any fact in a default judgment matter has "the option of in-chamber consideration of affidavits presented by attorneys" as well as "the option of hearing proof in open court."30

¶ 39. Although Wis. Stat. § (Rule) 806.02, governing default judgments, does not explicitly address the question whether a defendant's default constitutes a waiver of the right of trial by jury on the issue of damages, the clear implication of the rule and the case law applying the rule is that by engaging in conduct that results in a default judgment the defendant has waived its right of trial by jury in the manner prescribed by Wis. Stat. § (Rule) 806.02, a rule of pleading, practice, and procedure. A right of trial by jury on the issue of damages is inconsistent with the proposition that a circuit court has discretion to determine the nature of the hearing for deciding issues of fact and has discretion to determine the nature of the procedure for establishing damages, including the discretion to decide factual issues on the basis of affidavits presented by the attorneys.

¶ 40. In Apex Electronics Corp. v. Gee, 217 Wis. 2d 378, 387, 577 N.W.2d 23 (1998), for example, a case in which the circuit court rendered default judgment on a punitive damages claim, this court held that if proof of any fact is necessary for the circuit court to give default judgment under Wis. Stat. § (Rule) 806.02, "[t]he procedure for obtaining the additional proof... is within the discretion of the circuit court." In Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 478 n.5, 326 N.W.2d 727 (1982), the court similarly stated that "[u]pon entry of a *644default judgment, the circuit court may hold a hearing or inquiry to determine damages" (citations omitted).

¶ 41. The case law further demonstrates that when default judgment is rendered pursuant to Wis. Stat. § (Rule) 804.12(2)(a), governing sanctions for a violation of a circuit court's discovery order, the procedure for deciding the issue of damages lies within the discretion of the circuit court. The court of appeals has consistently looked to Wis. Stat. § (Rule) 806.02 when determining the proper procedure for determining damages under Wis. Stat. § (Rule) 804.12(2)(a) when a default judgment was rendered.31

¶ 42. For example, in Brandon Apparel Group, Inc. v. Pearson Props., Ltd., 2001 WI App 205, 247 Wis. 2d 521, 634 N.W.2d 544, the circuit court ordered judgment by default against a third-party defendant as a sanction for the third-party defendant's failure to appear for a deposition as ordered.32 After determining that the circuit court had not erroneously exercised its *645discretion in ordering default judgment under Wis. Stat. § (Rule) 804.12(2)(a),33 the court of appeals applied Wis. Stat. § (Rule) 806.02(2) (governing default judgment) to determine whether the circuit court was required to receive additional evidence to assess damages.34 The Brandon Apparel court of appeals further ruled that when receiving proof of any fact prior to rendering judgment by default, the circuit court may receive proof "through an evidentiary hearing or by means of affidavits."35

¶ 43. This court has similarly recognized, in a case in which it rendered judgment against a disobedient party as a sanction for misconduct, that the procedure for determining damages lies within the circuit court's discretion. In Chevron Chemical Co. v. Deloitte & Touche, 176 Wis. 2d 935, 501 N.W.2d 15 (1993) (Chevron 7), which was not a default judgment case, this court imposed judgment, "on the authority provided by secs. 805.03 and 804.12, Stats., and the inherent authority courts have to enter judgment as a sanction,"36 against Deloitte, a disobedient defendant, as a sanction for repeated, flagrant, and intentional misconduct. The Chevron I court remanded the cause to the circuit court to determine the amount of damages to be awarded against Deloitte and instructed the circuit court that on remand "the matter of the amount of damages is to be treated as it is in typical default judgment cases."37

*646¶ 44. On remand the circuit court determined damages on the basis of the circuit court record, without an evidentiary hearing, even though Deloitte wanted an evidentiary hearing with all the characteristics of a bifurcated trial on damages.38 In Chevron Chemical Co. v. Deloitte & Touche LLP, 207 Wis. 2d 43, 557 N.W.2d 775 (1997) (Chevron IT), this court explained that in Chevron I it had intended to leave "the nature of the hearing on damages to the circuit court's discretion," just as in typical default judgment situations.39 The Chevron II court further held that the circuit court had not erroneously exercised its discretion when it declined to hold an evidentiary hearing and instead determined damages on the basis of the trial record, with additional briefing and oral argument.40

¶ 45. Wisconsin Stat. §§ (Rules) 804.12(2)(a) and 806.02 and case law interpreting and applying these rules establish the manner by which a party waives its Article I, Section 5 right of trial by jury on the issue of *647damages. Under these court rules, a defendant's failure to comply with the circuit court's discovery orders, resulting in default judgment against the defendant, constitutes a waiver of the defendant's state constitutional right to a jury trial on the issue of damages. Accordingly, we conclude that the circuit court did not violate the defendant's right of trial by jury under Article I, Section 5 of the Wisconsin Constitution when, adhering to Wis. Stat. §§ (Rules) 804.12(2) and 806.02, it denied the defendant's motion for a jury trial on the issue of damages.

¶ 46. Our decision in the present case is buttressed by federal cases addressing the question whether the Seventh Amendment41 right of trial by jury in civil cases survives a default judgment or sanctions for a party violating a discovery order.

¶ 47. This court, in construing Article I, Section 5 of the Wisconsin Constitution, may look for guidance to federal decisions interpreting the Seventh Amendment.42 Because the Wisconsin rules governing default *648judgments and sanctions for violations of discovery orders mirror the federal rules, federal law is also instructive in interpreting the Wisconsin rules. Rule 55 of the Federal Rules of Civil Procedure is similar to Wis. Stat. § (Rule) 806.02 governing default judgments and may guide our interpretation of the Wisconsin statute.43 Rule 37(b)(2) of the Federal Rules of Civil Procedure is essentially identical to Wis. Stat. § (Rule) 804.12(2)(a) governing sanctions for violation of discovery orders.44

¶ 48. The federal courts agree that a defendant's default extinguishes the Seventh Amendment right to a jury trial on the question of damages.45 As one federal *649court of appeals explained: "It is .. . clear that in a default case neither the plaintiff nor the defendant has a constitutional right to a jury trial on the issue of damages. Assuming that [the party] had the right to a jury trial he waived that right when he purposefully chose not to answer the suit and timely request such a trial."46 For a recitation of the history (from the first volume of Blackstone's Commentaries in 1765 until 1877) of the assessment of damages without a jury upon a default judgment rendered under court rales, see Raymond v. Danbury & Norwalk Railroad Co., 20 Fed. Cas. 332 (C.C. Conn. 1877) (No. 11,593).47 Federal law, like Wisconsin law, places the procedure for determining damages in a default judgment case within the discretion of the trial court.48

*650¶ 49. The federal courts have also held that no Seventh Amendment right to a jury trial on damages exists in cases in which default judgment was ordered as a sanction for discovery violations.49

¶ 50. The federal cases support our conclusion in the present case that by violating a circuit court's discovery orders and by incurring a judgment by default, a party waives the constitutional right of trial by jury on the issue of damages.

¶ 51. We acknowledge that at least one state supreme court has reached a conclusion that conflicts with our holding in the present case. In Curbelo v. *651Ullman, 571 So. 2d 443 (Fla. 1990), the Florida Supreme Court held that "[w]hen a jury trial has been requested by the plaintiff, the defendant is still entitled to a jury trial on the issue of damages even though a default has been entered against the defendant for failure to answer or otherwise plead."50

¶ 52. Wood v. Detroit Automobile Inter-Insurance Exchange, 321 N.W.2d 653 (Mich. 1982), is consistent with our holding in the present case. In Wood, the defendant answered but then violated the court's discovery order. The court granted the plaintiffs motion for a default judgment. On appeal, the Supreme Court of Michigan rejected the rule that a defendant's default constitutes a waiver of Michigan's state constitutional right of trial by jury when the trial court has an evidentiary hearing on damages.51 However, the Wood decision rests largely on the application of procedural rules that, unlike Wisconsin's Rules of Civil Procedure, made clear that a defendant's default could not serve as a waiver of Michigan's state constitutional right of trial by jury in civil cases. The difference between Wood and the present case lies in Michigan's procedural rules governing the manner in which the right to trial by jury may be waived.

*652¶ 53. The Wood court relied upon Michigan's default judgment rule, Rule 520 of the Michigan General Court Rules of 1963.52 In cases in which a trial court determined that further proceedings were necessary to determine damages in default judgment situations, Rule 520 expressly mandated "a right of trial by jury to the parties when and as required by the constitution."53 The Wood court therefore held that "a defaulting party who has properly invoked his right to jury trial retains that right if a hearing is held to determine the amount of recovery."54

¶ 54. Unlike the Michigan General Court Rules of 1963, Wisconsin's Rules of Civil Procedure do not require the circuit court to recognize a defaulting defendant's state constitutional right of trial by jury when the court determines that an evidentiary hearing will be held to determine the amount of damages to be awarded. Instead, the law in Wisconsin is clear that it lies within the circuit court's discretion to determine the appropriate procedure for deciding factual issues in default judgment cases and that the defaulting party therefore has no right of trial by jury. This distinction between Michigan and Wisconsin law, pertaining not to the scope of the state constitutional right to jury trials *653in civil cases but rather to matters of procedural law governing waiver of that right, explains the different holding in Wood and in the instant case.

¶ 55. For the reasons set forth, we conclude that the circuit court did not violate the defendant's right of trial by jury under .Article I, Section 5 of the Wisconsin Constitution when it denied the defendant's motion for a jury trial on the issue of damages. The defendant waived its right of trial by jury in the manner set forth in Wis. Stat. §§ (Rule) 804.12 and 806.02 by violating the circuit court's discovery order and by incurring a judgment by default.

II.

¶ 56. We next address the question whether the circuit court erred in denying the plaintiffs claim for punitive damages under Wis. Stat. § 895.043(3).

¶ 57. The parties disagree about the basis for the circuit court's denial of the plaintiffs claim for punitive damages. They disagree about whether the circuit court denied the plaintiffs punitive damages claim after considering only the allegations of the complaint or whether the circuit court based its denial on evidence the plaintiff presented at the evidentiary hearing on damages.

¶ 58. The plaintiff argues that the circuit court's denial of punitive damages was based on a procedural error, namely that the circuit court erroneously limited its determination of the plaintiffs punitive damages claim to the allegations in the complaint. The plaintiff asks this court to reverse the circuit court's denial of punitive damages and remand the issue of punitive damages to the circuit court. According to the plaintiff, this court should hold that the circuit court erred in *654limiting its determination of punitive damages to the allegations in the complaint.

¶ 59. The defendant argues that the circuit court considered all the evidence presented and did not limit itself to considering the allegations in the complaint when addressing the plaintiffs claim for punitive damages. According to the defendant, after examining the record the circuit court concluded as a matter of law that the plaintiff was not entitled to punitive damages. The defendant asks this court to affirm the circuit court and hold that because the defendant was merely silent or failed to warn the plaintiff about the employee who converted the plaintiffs funds, the defendant is as a matter of law not subject to punitive damages.

¶ 60. The court of appeals concluded that the circuit court erred in excluding the plaintiffs evidence supporting the award of punitive damages and remanded the issue of punitive damages to the circuit court.

¶ 61. We turn first (A) to deciding whether a circuit court is limited to the allegations in the complaint in determining whether to award punitive damages in a judgment by default. We then (B) examine the record to determine whether the circuit court limited its consideration of the issue of punitive damages to the allegations of the complaint. After resolving these two questions, this court (C) determines whether the circuit court erred in denying the plaintiffs claim for punitive damages.

A

¶ 62. Whether a circuit court is limited to the allegations in the complaint in determining whether to award punitive damages in a judgment by default *655presents a question of law that this court determines independently of the circuit court and court of appeals but benefiting from these courts' analyses.55

¶ 63. We agree with the court of appeals in the present case that the circuit court was required to determine whether proof of any fact was needed to determine whether the defendant acted "maliciously toward the plaintiff or in an intentional disregard óf the rights of the plaintiff,"56 justifying an award of punitive damages. The case law is clear that a circuit court is not limited to considering only the allegations of the complaint. As a general proposition, some form of inquiry beyond the complaint is required to determine the merits of a punitive damages claim.

*656¶ 64. Apex Electronics Corp. v. Gee, 217 Wis. 2d 378, 577 N.W.2d 23 (1998), upon which the court of appeals relied, governs the instant case. In Apex Electronics, the circuit court awarded judgment by default under Wis. Stat. § (Rule) 806.02 on a punitive damages claim solely on the basis of the complaint. Applying both Wis. Stat. § (Rule) 806.02 (governing default judgments) and § 895.043 (governing punitive damages), the supreme court concluded "that a circuit court entering a default judgment on a punitive damages claim must make inquiry beyond the complaint to determine the merits of the punitive damages claim and the amount of punitive damages, if any, to be awarded."57 The supreme court explained that "[wjithout conducting an inquiry beyond the complaint, a circuit court cannot determine whether a defendant's conduct justifies a punitive damages award and, if an award is justified, what amount would accomplish the purposes of punitive damages while satisfying the requirements of due process."58 The Apex Electronics court concluded that the circuit court had erred when it relied solely on the plaintiffs demand in the complaint for a certain sum in punitive damages and "when it failed to receive proof of facts necessary to determine the merits of the punitive damages claim and the amount of punitive damages, if any, to be awarded."59

¶ 65. Apex Electronics controls the present case. Whether the circuit court awards or refuses to award punitive damages in a judgment by default, the circuit court must ordinarily make inquiry beyond the com*657plaint to determine the merits of the punitive damages claim and the amount of punitive damages, if any, to be awarded. We thus conclude, as the court did in Apex Electronics, that a circuit court in ruling on a claim for punitive damages errs in basing its decision solely on the allegations in the plaintiffs complaint. The circuit court must give the complaining party an opportunity to prove facts in support of the punitive damages claim beyond those alleged in the complaint.60

B

¶ 66. We now turn to the record to determine whether the circuit court in the present case limited its consideration of the issue of punitive damages to the allegations of the complaint. We acknowledge at the outset that the record, which consists in relevant part of lengthy transcripts of two separate hearings conducted by the circuit court, is somewhat difficult to interpret. However, after examining the record as a whole, we conclude, as did the court of appeals, that the circuit court considered only the allegations of the complaint.

¶ 67. At the hearing on the defendant's motion for a jury trial on the issue of damages, the plaintiff requested an opportunity to present witnesses to testify about facts that were not alleged in the plaintiffs complaint but that supported the plaintiffs punitive damages claim. The plaintiff stated to the court that he wanted "the opportunity to come in with witnesses" not only to "establish the amount of money that was stolen *658from [the plaintiff]" but also to establish "the circumstances of those thefts." The plaintiff explained that his purpose in presenting witness testimony about the circumstances of the thefts was to "show the egregious .. . manner in which [the defendant] conducted itself so that [the plaintiff could] legitimately prepare a record. . . that will justify punitive damages against [the defendant]." The plaintiff acknowledged that it would be difficult for him to make the case for punitive damages based solely on the "bare bones" allegations in his complaint.

¶ 68. The circuit court ruled that the plaintiff could introduce witness testimony regarding the amount that was stolen from the plaintiff but that the plaintiff could not introduce witness testimony about the defendant's conduct in relation to the plaintiffs request for punitive damages. The circuit court held that although the plaintiff had a right to argue for punitive damages at the evidentiary hearing, the plaintiff would have to make such argument "from the admitted facts in the complaint." In discussing the plaintiffs right to argue for punitive damages, the circuit court stated at various points that the plaintiff was "limited to the facts in the complaint"; that the plaintiff had "the right to argue based on what it is that [he had] pled"; that the circuit court need not "get into the business of hearing testimony at all concerning all of these other matters"; that the circuit court did not "intend to get into the question of all of the activity that went on here"; and that the circuit court would consider "based on the admitted facts, now admitted facts in the complaint, whether [the plaintiff was] entitled to punitive damages or not."

¶ 69. The circuit court limited the plaintiff to the allegations of the complaint as follows:

*659I'm only going to allow the plaintiff to prove the number of dollars involved and, of course, you can argue from the admitted facts in the complaint. The complaint is deemed admitted in all of its aspects. It is deemed admitted. And you can argue for punitive damages based on that, of course. But I'm not going to get into a trial on the merits here. I believe the allegations of the complaint are deemed admitted for purposes of this proceeding. And that's what you're going to be stuck with.61

¶ 70. An exchange between the circuit court and counsel for defendant also makes clear the circuit court's intention to decide the issue of punitive damages solely on the facts alleged in the plaintiffs complaint. After the circuit court informed the defendant's counsel that it would decide the punitive damages issue on "[t]he facts that are in [the plaintiffs] complaint," the following exchange then ensued:

[DEFENDANT'S COUNSEL]: All of them?

THE COURT: All of them.

[DEFENDANT'S COUNSEL]: Nothing else?

THE COURT: Nothing else. Well, the theory on defaults is that you are limited to what's in your complaint because in a typical default situation where someone doesn't answer, the theory is that if they knew you were going to ask for something else, they might have answered.. .. They are limited to the facts in the complaint... .

¶ 71. After the hearing on the defendant's motion for a jury trial on damages, the plaintiff attempted to submit documentary evidence in support of the plaintiffs punitive damages claim. The documentary *660evidence was attached to an affidavit, signed by the plaintiffs counsel, describing the evidence. A supplemental brief also accompanied the evidence and the affidavit. In the supplemental brief, the plaintiff acknowledged that the circuit court had ruled at the motion hearing that the plaintiff "may not present witnesses to testify regarding the facts which Plaintiff believes support an award of punitive damages." The plaintiff described the documentary evidence accompanying the brief as evidence pertaining to facts already known to the circuit court through the depositions.

¶ 72. At the evidentiary hearing on damages, the plaintiff argued for punitive damages, relying upon the documentary evidence that the plaintiff had submitted to the circuit court in response to the circuit court's ruling that the plaintiff could not introduce witnesses to testify about facts supporting his punitive damages claim. The circuit court excluded this documentary evidence on hearsay grounds.

¶ 73. Immediately after the circuit court ruled that the plaintiffs documentary evidence would be excluded, the plaintiff again requested to present a witness, Ted Frydrych, to testify in support of the plaintiffs punitive damages claim. Mr. Frydrych is another of the defendant's accountholders whose assets allegedly were stolen by the same employee who allegedly stole from the plaintiff. Counsel for the plaintiff stated that it was her "offer of proof that we can establish all the facts set forth in my affidavit as well as the affidavit of Frydrych through his live testimony."62 *661In response, the circuit court stated, "All right, that affidavit will stand as your offer of proof."

¶ 74. The circuit court did not state whether it accepted counsel's offer of proof or whether it would consider the offer of proof when deciding the issue of punitive damages. When it decided punitive damages at the close of the evidentiary hearing, the circuit court made no reference to the offer of proof, to counsel's affidavit, to the affidavit of Mr. Frydrych, or to counsel's request to present Mr. Frydrych's live testimony. Mr. Frydrych never testified at the evidentiary hearing on damages. The circuit court decided punitive damages without making any clear reference to facts or evidence beyond the plaintiffs complaint.

¶ 75. At the close of the evidentiary hearing on damages, the circuit court held that judgment by default would be rendered against the defendant in the amount of $514,010 plus costs and interest, for a total judgment of $525,901.41. The circuit court also denied the plaintiffs request for punitive damages. The circuit court reasoned that "none of the money .. . that was taken from the plaintiff went into the pocket of [the defendant] other than its employee." The circuit court stated: "I do not believe that if the district attorney were to prosecute [the defendant] for theft, that such a prosecution would be successful because I don't think they can prove intent." The circuit court stated in conclusion that the defendant "behaved very badly" but that the court did "not believe that punitive damages against [the defendant] in this case would be appropriate."

¶ 76. The defendant contends that the circuit court considered the merits of the plaintiffs claim for punitive damages. It points to the circuit court's observations during the hearing on the defendant's motion *662for a jury trial on the issue of damages that some of the facts and evidence discussed by the plaintiff "sounds like negligent practice" and that the plaintiff seemed to have "a pretty high burden" of showing that the defendant was not "just sloppy" but instead acted in intentional disregard of the plaintiffs rights. According to the defendant, these statements of the circuit court show that the circuit court considered facts beyond those alleged in the complaint and concluded that the plaintiff was unable to prove his claim for punitive damages.

¶ 77. We disagree with the defendant. The circuit court's passing observations about the plaintiffs claim for punitive damages do not detract from the clarity of the circuit court's numerous comments that the circuit court was limiting the plaintiff to arguing from the facts alleged in his complaint. In any event, the circuit court's comments do not demonstrate a careful consideration of the record and an analysis of the law of punitive damages to which the parties were entitled.

¶ 78. Taken as a whole, the record supports the plaintiffs assertions that the circuit court decided the issue of punitive damages solely on the basis of allegations in the plaintiffs complaint.

C

¶ 79. Finally, we determine whether the circuit court erred in denying the plaintiffs claim for punitive damages. The circuit court erred in limiting its decision to the allegations of the complaint, in failing to review the entire record, and in failing to give the plaintiff an opportunity to present evidence to support his claim for punitive damages. Under these circumstances, the merits of the plaintiffs claim for punitive damages are not *663before this court, and we do not address them. We remand the matter to the circuit court to allow the circuit court an opportunity to exercise its discretion in determining the nature of the hearing and to determine whether punitive damages are warranted.

¶ 80. For the reasons set forth, we conclude that the circuit court erred in deciding the plaintiffs punitive damages claim solely on the basis of allegations in the complaint and in denying the plaintiff an opportunity to prove additional facts in support of the punitive damages claim.

* * * M=

¶ 81. In sum, we affirm the decision of the court of appeals. We affirm, as did the court of appeals, the circuit court's denial of the defendant's request for a jury trial on the issue of damages. The circuit court did not violate the defendant's right of trial by jury under Article I, Section 5 of the Wisconsin Constitution when it denied the defendant's motion for a jury trial on the issue of damages. The defendant waived its right of trial by jury in the manner set forth in Wis. Stat. §§ (Rule) 804.12(2) and 806.02. We reverse, as did the court of appeals, the circuit court's ruling denying punitive damages. We conclude that the circuit court erred in deciding the plaintiffs punitive damages claim solely on the basis of facts alleged in the complaint and in denying the plaintiff an opportunity to prove additional facts in support of the punitive damages claim. We remand the issue of punitive damages to the circuit court to exercise its discretion in determining the nature of the hearing on punitive damages and to determine whether punitive damages are warranted.

*664¶ 82. Accordingly, we affirm the decision of the court of appeals affirming in part and reversing in part the judgment and order of the circuit court.

By the Court. — The decision of the court of appeals is affirmed, and the cause is remanded to the circuit court for further proceedings consistent with this opinion.63