Butcher v. Ameritech Corp.

• Decision Date: 21 December 2006
• Docket Number: No. 2005AP2355.,2005AP2355.
• Citation: 727 N.W.2d 546,2007 WI App 5
• Parties: Stephen G. BUTCHER, Randy Meicher and Anthony F. Coffaro, on behalf of themselves and the class they represent, Plaintiffs-Appellants,<SMALL><SUP>†</SUP></SMALL> v. AMERITECH CORPORATION, a foreign corporation, Michael Morgan as Secretary of the Wisconsin Department of Revenue and Wisconsin Bell, Inc., a Wisconsin Corporation, Defendants-Respondents.
• Court: Wisconsin Court of Appeals

727 N.W.2d 546

2007 WI App 5

Stephen G. BUTCHER, Randy Meicher and Anthony F. Coffaro, on behalf of themselves and the class they represent, Plaintiffs-Appellants,^† v. AMERITECH CORPORATION, a foreign corporation, Michael Morgan as Secretary of the Wisconsin Department of Revenue and Wisconsin Bell, Inc., a Wisconsin Corporation, Defendants-Respondents.

No. 2005AP2355.

Court of Appeals of Wisconsin.

Oral Argument September 20, 2006.

Opinion Filed December 21, 2006.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Robert L. Gegios, William E. Fischer, Alexander T. Pendleton, Kohner of Mann & Kailas, S.C., Milwaukee; Jeffrey W. Purnell, Milwaukee; Dennis L. Fisher, Thomas J. Nichols, Thomas M. Hruz of Meissner Tierney, Fischer & Nichols, S.C., Milwaukee. There was oral argument by Robert L. Gegios.

On behalf of the defendants-respondents, Ameritech Corporation and Wisconsin Bell, Inc., the cause was submitted on the brief of Don M. Millis and Jordan J. Hemaidan of Michael Best & Friedrich, LLP, Madison, and Leslie M. Smith, P.C. and Todd F. Maynes, P.C. of Kirkland & Ellis, LLP, Chicago, IL. There was oral argument by Leslie M. Smith.

On behalf of the defendant-respondent, Michael Morgan, the cause was submitted on the brief of F. Thomas Creeron III, asst. attorney general, Paul L. Barnett, asst. attorney general, and Peggy A. Lautenschlager, attorney general. There was oral argument by Paul L. Barnett.

A nonparty brief was filed by Terrence M. Polich of Clifford & Raihala, SC, Madison, for the Citizens Utility Board, Inc.

Before LUNDSTEN, P.J., DYKMAN and VERGERONT, JJ.

¶ 1 VERGERONT, J

Stephen Butcher, Randy Meicher, and Anthony Coffaro, on behalf of themselves and all others similarly situated, filed this action alleging that Ameritech Corporation collected sales tax from them on services that are not telecommunication services and therefore not subject to tax under WIS. STAT. §§ 77.52(2)(a)5. and 77.51(21m).¹ They appeal the circuit court's orders dismissing their complaint on three primary grounds.²

¶ 2 First, the plaintiffs contend that the circuit court erred in dismissing their claims for monetary relief because of the voluntary payment doctrine. That doctrine "places upon a party who wishes to challenge the validity or legality of a bill for payment the obligation to make a challenge either before voluntarily making the payment, or at the time of making the payment." Putnam v. Time Warner Cable of Se. Wis., Ltd. P'ship, 2002 WI 108, ¶ 13, 255 Wis.2d 447, 649 N.W.2d 626. We conclude the circuit court correctly determined that, based on the allegations of the amended complaint, the voluntary payment doctrine applied and the exceptions for fraud, duress, and mistake of fact were not applicable.

¶ 3 Second, the plaintiffs contend the circuit court erroneously exercised its discretion in denying their motion to amend their complaint after it dismissed their claims for monetary relief under the voluntary payment doctrine. We conclude the plaintiffs have not shown that the court erroneously exercised its discretion because there is no transcript of the hearing and the plaintiffs did not file a proposed second amended complaint.

¶ 4 Third, the plaintiffs contend the circuit court erroneously exercised its discretion in dismissing the remaining claims for declaratory and injunctive relief on the ground of primary jurisdiction. We conclude the circuit court properly exercised its discretion.

¶ 5 Accordingly, we affirm the circuit court's orders dismissing the claims for monetary relief, denying the motion to amend, and dismissing the amended complaint.

BACKGROUND

¶ 6 The amended complaint alleges that Ameritech, a retailer of telecommunications products in Wisconsin, has been collecting sales taxes from its Wisconsin customers on services that are not subject to taxation because the services do not come within the definition of "telecommunications services" as defined in WIS. STAT. § 77.51(21m).³ On behalf of the class of Ameritech customers who have paid the allegedly unauthorized taxes, the complaint seeks monetary and injunctive relief for claims of breach of contract, money had and received, unjust enrichment, and violation of the tax statute and the Wisconsin Constitution. The amended complaint also names the secretary of the Wisconsin Department of Revenue (DOR) as a defendant because, the complaint asserts, DOR may have an interest in the litigation.⁴

¶ 7 Ameritech and DOR both moved to dismiss the complaint, arguing failure to state a claim and failure to exhaust administrative remedies; Ameritech also argued that the case should be dismissed based on the doctrine of primary jurisdiction. The circuit court denied the motions, discussing and rejecting the exhaustion argument but not explicitly referring to the primary jurisdiction argument. We discuss the parties' differing characterizations of this ruling infra in paragraph 44 of this opinion.

¶ 8 Ameritech filed another motion to dismiss, providing additional arguments for its position that the complaint did not state any claim on which relief could be granted. Ameritech also argued in this motion that all claims were barred by the voluntary payment doctrine. The circuit court denied the motion as to all claims except the quantum meruit claim, which it ordered dismissed. The court concluded that the voluntary payment doctrine was inapplicable because it did not apply if there was a mistake of fact and the plaintiffs here may have paid the disputed tax because of a mistake of fact.

¶ 9 After the circuit court made this decision, the supreme court decided Putnam, 255 Wis.2d 447, 649 N.W.2d 626, which addressed the voluntary payment doctrine. On Ameritech's motion for reconsideration in light of Putnam, the circuit court concluded that the voluntary payment doctrine did apply and dismissed all the claims for monetary relief. The court stated that under Putnam there was no basis for construing the pleadings to allege that the payments made to Ameritech were based on a mistake of fact. While recognizing that under Putnam, 255 Wis.2d 447, ¶ 13, 649 N.W.2d 626 (citation omitted), the voluntary payment doctrine does not apply if there is "fraud or wrongful conduct inducing payment," the court found nothing in the pleadings alleging that the payments were induced by fraud or made under duress.

¶ 10 A few days after this ruling, the plaintiffs filed an "Emergency Motion for Clarification" of the ruling in which they requested permission to amend their complaint to allege "duress, mistake and/or fraud." A "minute sheet" in the record shows that there was a hearing on this motion, at which the court denied the motion.

¶ 11 The litigation proceeded, with another judge presiding. In the spring of 2005, all parties moved for summary judgment on the issue whether the statute authorized a sales tax on the contested services. In addition, DOR and Ameritech renewed the argument for dismissal based on the doctrine of primary jurisdiction. The circuit court concluded that, with the claims for monetary relief dismissed from the case, the doctrine of primary jurisdiction warranted dismissal of the remaining claims because they could be fully disposed of through administrative action. The court therefore granted Ameritech's motion to dismiss under the primary jurisdiction doctrine, concluding that there were no remaining issues for the court to decide.

DISCUSSION

I. Voluntary Payment Doctrine

¶ 12 The plaintiffs contend the circuit court erred on four grounds when it dismissed their claims for monetary relief because of the voluntary payment doctrine: (1) the complaint itself constitutes the notice required by the doctrine; (2) it is improper to dismiss claims under the voluntary payment doctrine based on the facts alleged in their amended complaint because they are not required to "`plead around' possible affirmative defenses"; (3) the amended complaint alleges facts that come within the doctrine's exceptions for duress and mistake of fact; and (4) applying the doctrine in this case is inequitable and violates public policy as expressed in WIS. STAT. § 77.59(4).

¶ 13 Whether the circuit court correctly applied the voluntary payment doctrine to the allegations in the complaint presents a question of law, which we review de novo. See Wausau Tile, Inc. v. County Concrete Corp., 226 Wis.2d 235, 245, 593 N.W.2d 445 (1999).

¶ 14 We start with a discussion of Putnam, because that case is central to a resolution of the plaintiffs' challenges to the circuit court's application of the voluntary payment doctrine. The Putnam complaint, filed on behalf of a putative class of Time Warner customers, alleged that Time Warner imposed a five-dollar fee on customers who failed to pay their monthly cable bills on time and this constituted unlawful liquidated damages; the plaintiffs sought recovery of a portion of the late fees paid, as well as monetary and injunctive relief. Putnam, 255 Wis.2d 447, ¶¶ 4, 5, 649 N.W.2d 626. There was no allegation that the plaintiffs had objected to the late fee before or when paying it. Id., ¶ 5-7. Based on the allegations in the complaint, the circuit court and this court decided that the voluntary payment doctrine precluded recovery of any portion of the late fees already paid, and the supreme court affirmed. Id., ¶¶ 7-8, 53.

¶ 15 The supreme court described the voluntary payment doctrine as "plac[ing] upon a party who wishes to challenge the validity or legality of a bill for payment the obligation to make the challenge either before voluntarily making payment, or at the time of voluntarily making payment." Id., ¶ 13. There are three recognized exceptions: fraud, duress, and mistake of fact. Id., ¶ 36. The court explained the two primary reasons courts have adopted this doctrine: it "allows entities that receive payment for services to rely upon these funds and to use them unfettered in future...