Backus Electric, Inc. v. Petro Chemical Systems, Inc., 829 N.W.2d 516

Backus sued PCS and Backus's subcontract with PCS; Old Republic acted as PCS's surety and agreed to guarantee performance and payment to Backus.
PCS and Manitowoc County answered; Old Republic failed to timely answer the amended complaint.
Backus moved for default judgment against Old Republic; counsel for Old Republic objected that its liability is derivative and contends PCS must be liable first.
The circuit court held a hearing, adjourned to review authorities, then implicitly struck Old Republic's answer and granted default judgment against Old Republic.
Old Republic appealed, challenging derivative liability and the court’s discretion in granting default judgment.
The court ultimately affirmed the default judgment, applying Otto to conclude default remedies may apply to a surety and that the court did not abuse its discretion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the default judgment was proper against Old Republic as a surety.	Backus—Old Republic’s default barred issues of liability by default.	Old Republic—liability is derivative of PCS and cannot be adjudicated until PCS is liable; no timely answer.	Yes; default judgment proper despite surety status.
Whether the circuit court properly exercised its discretion in granting default judgment.	Court should adjudicate liability and not rely on default if discretion permitted alternatives.	Court exercised discretion; no error in granting default.	Court properly exercised discretion; judgment affirmed.

Otto v. Physicians Ins. Co. of Wisconsin, 311 Wis. 2d 84 (Wis. 2008) (default judgments; insurer/insured in default; effect of failure to answer)
Martin v. Griffin, 117 Wis. 2d 438 (Wis. Ct. App. 1984) (merits of default; forfeiture of defenses; need for meritorious defenses not sufficient)
Split Rock Hardwoods, Inc. v. Lumber Liquidators, Inc., 253 Wis.2d 238 (Wis. 2002) (sanctions for failure to timely answer; discretion in default)