Gorton v. Hostak, Henzl & Bichler, S.C.

• Citation: 217 Wis.2d 493,577 N.W.2d 617
• Decision Date: 06 May 1998
• Docket Number: No. 96-2776,96-2776
• Court: Wisconsin Supreme Court
• Parties: John L. GORTON, Thomas Hauch, Timothy Hauch and Michael Vander Leest, Plaintiffs-Respondents-Cross-Appellants, v. HOSTAK, HENZL & BICHLER, S.C., f/k/a Thompson & Coates, Ltd., and Robert H. Bichler, Defendants-Appellants-Cross-Respondents.

Page 617

577 N.W.2d 617

217 Wis.2d 493

John L. GORTON, Thomas Hauch, Timothy Hauch and Michael

Vander Leest, Plaintiffs-Respondents-Cross-Appellants, v. HOSTAK, HENZL & BICHLER, S.C., f/k/a Thompson & Coates,

Ltd., and Robert H. Bichler,

Defendants-Appellants-Cross-Respondents.

No. 96-2776.

Supreme Court of Wisconsin.

Argued March 4, 1998.

Decided May 6, 1998.

For the defendants-appellants-cross respondents there were briefs by Robert H. Bichler, Kenneth F. Hostak, Thomas M. Devine, JoAnne Breese-Jaeck and Hostak, Henzl & Bichler, S.C., Racine and oral argument by Robert H. Bichler.

For the plaintiffs-respondents-cross appellants there were briefs by Jon P. Axelrod, Joseph A. Ranney and DeWitt Ross & Stevens, S.C., Madison and oral argument by Jon P. Axelrod.

¶1 ANN WALSH BRADLEY, Justice

This case is before the court upon certification from the court of appeals. The circuit court ¹ concluded that a statutory award of reasonable attorney fees under Wis. Stat. § 100.18(11)(b)2 (1989-90) in the underlying action belongs to the plaintiffs and that each plaintiff is also entitled to $100 for attorney fees as a statutory item of costs. Additionally, the circuit court denied the plaintiffs' request for an award of attorney fees in pursuing this subsequent declaratory action.

¶2 Because we determine that the question of who owns the statutory award of reasonable attorney fees under Wis. Stat. § 100.18(11)(b)2 is ultimately controlled by the terms of the contract between the parties, which here give ownership to the plaintiffs, and that the award of attorney fees in declaratory actions should not extend to the facts of this case, we affirm part of the circuit court's judgment. However, because the plaintiffs' claim represents a single cause of action, we reverse that part of the circuit court's judgment which awarded attorney fees as a statutory item of costs to each named plaintiff.

¶3 The court of appeals certifies two questions of first impression to this court pursuant to Wis. Stat. § (Rule) 809.61 (1995-96). ² First, when an attorney and a plaintiff are parties to a contingent fee agreement, does a statutory award of reasonable attorney fees pursuant to Wis. Stat. § 100.18 belong to "the person suffering the pecuniary loss" or to the representative attorney? Second, do principles of equity apply to a Wis. Stat. § 806.04(8) award of appellate counsel fees when the client suing a trial attorney has already been made more than whole for damages sought in the circuit court proceedings? Finally, we also consider whether multiple partners in a lawsuit on behalf of a partnership may each collect $100 attorney fees as statutory items of cost under Wis. Stat. §§ 814.01(1) and 814.04(1)(a).

¶4 The facts of this case are not in dispute. In 1990, Gorton Farms, a general partnership consisting of the four plaintiff-farmers, retained the defendant law firm (in which defendant Bichler is a partner) to pursue American Cyanamid Co. (Cyanamid) for damages done to the plaintiffs' crops by a Cyanamid agricultural product. ³ The contingent fee contract of the parties, signed by plaintiff Gorton on behalf of Gorton Farms, entitled the defendant firm to 40% of the gross amount of any recovery "obtained after a lawsuit which involves an appeal."

¶5 The case proceeded to a jury trial and the jury returned a verdict in favor of the plaintiffs. The jury assessed the damage to Gorton Farms at $129,300 and also awarded punitive damages in the amount of $50,000. After granting a post-trial motion for costs 20 pursuant to Wis. Stat. § 814.036, ⁴ the circuit court entered a judgment for the plaintiffs in the amount of $199,885.24.

¶6 On post-verdict motion, the plaintiffs also contended that by making misrepresentations in the sale of the offending agricultural product, Cyanamid violated Wis. Stat. § 100.18. ⁵ The circuit court agreed and awarded Gorton Farms an additional $307,421.25 in reasonable attorney fees, making the total judgment against Cyanamid $507,306.49.

¶7 Cyanamid appealed the judgment. During the pendency of the appeal the defendant firm apparently sought to renegotiate its contingent fee agreement with Gorton Farms based on the firm's pursuit of attorney fees on the Wis. Stat. § 100.18 claim. However, the record does not reflect any actual change in the contractual agreement. The court of appeals affirmed the order of the circuit court and the plaintiffs were awarded additional reasonable attorney fees based on the appellate litigation.

¶8 The plaintiffs, represented by new counsel, then filed a declaratory action against the defendant firm seeking for Gorton Farms 60% of all monies to be tendered by Cyanamid, including 60% of the $711,833.05 in reasonable attorney fees and interest, as awarded by the circuit court in the underlying action. The plaintiffs also asked for actual and reasonable attorney fees arising from this suit against the defendant firm pursuant to Wis. Stat. § 806.04(8). ⁶

¶9 Shortly thereafter, Cyanamid tendered a check to the defendant firm's trust account for $1,045,487.27. This amount included all assessed damages, costs, attorney fees, and applicable interest in the underlying action. Both parties to the declaratory action moved for summary judgment.

¶10 The circuit court determined that the contingent fee contract between the parties controlled allocation of the Wis. Stat. § 100.18 attorney fees award in this case and granted summary judgment in favor of the plaintiffs. The plaintiffs were then awarded 60% of all amounts received from Cyanamid in the underlying action. ⁷ The circuit court also awarded each of the four plaintiff-partners $100 as items of costs for attorney fees pursuant toWis. Stat. §§ 814.01(1) and 814.04(1)(a). ⁸ However, the circuit court denied the plaintiffs' request for supplemental relief in the form of further attorney fees arising from the declaratory action pursuant toWis. Stat. § 806.04(8).

¶11 The defendant firm appealed the circuit court's grant of summary judgment determining ownership of the attorney fees and the assessment of $400 for attorney fees as items of costs, while the plaintiffs cross-appealed the circuit court's denial of the requested additional attorney fees as supplemental relief. The court of appeals certified the case and we accepted certification for review of all issues raised before the court of appeals.

¶12 This court reviews a grant of summary judgment using the same methodology as the circuit court. See State ex rel. Auchinleck v. Town of LaGrange, 200 Wis.2d 585, 591-92, 547 N.W.2d 587 (1996). Where, as here, there are no material facts in dispute, we must determine whether the movant is entitled to judgment as a matter of law. See id. at 592, 547 N.W.2d 587. This case presents questions of statutory and contract interpretation. We review such questions de novo. See McEvoy v. Group Health Co-op. of Eau Claire, 213 Wis.2d 507, 517, 570 N.W.2d 397 (1997) (statutes); Ford Motor Co. v. Lyons, 137 Wis.2d 397, 460, 405 N.W.2d 354 (Ct.App.1987)(contracts).

I.

¶13 We first determine which party is entitled to receive the reasonable attorney fees awarded by the circuit court pursuant to Wis. Stat. § 100.18 in the underlying action, the plaintiffs or the plaintiffs' attorney (the defendant firm). The plaintiffs claim that pursuant to the contingent fee agreement their partnership is entitled to 60% of all monies received, including the reasonable attorney fees award. The defendant firm asserts that it alone deserves the attorney fees awarded in the underlying action. ⁹ In resolving this issue, we consider the statutory grant of reasonable attorney fees and the terms of the existing contract between Gorton Farms and the defendant firm.

¶14 The express language of Wis. Stat. § 100.18(11)(b)2 is dispositive of the first step of our analysis. Wisconsin Stat. § 100.18(11)(b)2 (1989-90) states:

Any person suffering pecuniary loss because of a violation of this section by any other person ... shall recover such pecuniary loss, together with costs, including reasonable attorney fees.

¶15 The statute expressly indicates that it is the "person suffering pecuniary loss" to whom the legislature directs the recovery of reasonable attorney fees, not the representative attorney. The defendant firm has suffered no pecuniary loss attributable to Cyanamid. Thus, under the statute it is Gorton Farms that is entitled to recover the entire award of reasonable attorney fees. ¹⁰

¶16 The defendant firm points to Shands v. Castrovinci, 115 Wis.2d 352, 340 N.W.2d 506 (1983), in claiming entitlement to 100% of the reasonable attorney fees. The plaintiff in Shands, while represented by a legal services organization, successfully sued a defendant-landlord and prevailed upon appeal. However, the plaintiff's request for appellate attorney fees under Wis. Stat. § 100.20(5)(1981-82) was denied. This court reversed and determined that the plaintiff could recover appellate attorney fees under the applicable statute based on the public policy underpinnings of the fee statute. See Shands, 115 Wis.2d at 358-59, 340 N.W.2d 506.

¶17 In reaching this result in Shands, we considered whether the statutory fee award could be awarded to a plaintiff receiving free legal representation from a legal aid organization. We determined that plaintiffs "are entitled to an attorney fees award even when they are represented at no charge by a legal services organization." Id. at 361, 340 N.W.2d 506. We subsequently noted, however, "that the attorney fees award is the property of the organization providing the legal services." Id. We reached this result based on the public policy of assisting nonprofit legal organizations in taking cases that serve the public interest without remuneration directly from the aggrieved client. See Shands, 115 Wis.2d at 360-61, 340 N.W.2d 506; see also Richland School Dist. v. DILHR, 174 Wis.2d 878, 913, 498 N.W.2d 826 (1993).

¶18 The defendant...