HMO-W INC. v. SSM Health Care System
| Decision Date | 12 June 2003 |
| Docket Number | No. 02-0042.,02-0042. |
| Citation | 2003 WI App 137,667 N.W.2d 733,266 Wis.2d 69 |
| Parties | HMO-W INCORPORATED, a Wisconsin corporation, Plaintiff-Respondent-Cross-Appellant, v. SSM HEALTH CARE SYSTEM, a foreign corporation, Defendant-Appellant-Cross-Respondent, NEILLSVILLE CLINIC, S.C., a Wisconsin corporation, Defendant. |
| Court | Wisconsin Court of Appeals |
On behalf of the defendant-appellant-cross-respondent, the cause was submitted on the briefs of Peter B. Ritz of Ritz & Caflisch, S.C., Madison, and Earl H. Munson of Boardman, Suhr, Curry & Field, LLP, Madison.
On behalf of the plaintiff-respondent-cross-appellant, the cause was submitted on the briefs of Thomas M. Pyper and Cynthia L. Buchko of Whyte, Hirschboeck, Dudek, S.C., Madison.
Before Dykman, Roggensack and Lundsten, JJ.
¶ 1.
SSM Health Care System successfully exercised its dissenters' rights under WIS. STAT. ch. 180 against HMO-W. SSM appeals a judgment awarding it money damages plus interest under WIS. STAT. § 180.1301(5) (1991-92).1 SSM contends that the circuit court should have applied, post-decision, the 12% interest rate specified in WIS. STAT. § 814.04(4), rather than interest as defined in § 180.1301(5). We disagree, and affirm the circuit court. On cross-appeal, HMO-W contends that the circuit court correctly looked to the "fair and equitable" interest rate language found in § 180.1301(5), but erroneously applied that language by failing to consider and use an interest rate based on rates paid by HMO-W's subsidiary. We agree with part of HMO-W's argument. We conclude that the circuit court misused its discretion when applying § 180.1301(5), and remand for a new interest determination under that statute.
¶ 2. HMO-W is a holding corporation created to own the stock of Unity Health Plans Insurance Corporation.2 Prior to and on October 31, 1994, SSM was a minority shareholder of HMO-W. On October 31, 1994, HMO-W merged with UWS Acquisition Corporation, which is owned by Cobalt Corporation. HMO-W was the surviving entity after the merger, and continues as a holding corporation for Unity. HMO-W is now owned by Cobalt.
¶ 3. SSM voted against HMO-W's merger with UWS Acquisition and successfully asserted its dissenters' rights under WIS. STAT. ch. 180. Accordingly, SSM was entitled to compensation based on the value of SSM's shares at the time of the merger, October 31, 1994. On January 26, 1995, HMO-W paid SSM $1,456,348.48 ($1,427,760.00 as fair value, plus $28,588.48 in interest), an amount HMO-W contended included the fair value of SSM's stock on October 31, 1994, plus interest to January 26, 1995. SSM disputed the amount, and HMO-W initiated a "special proceeding" pursuant to WIS. STAT. § 180.1330. The dispute over the fair value of the stock has been resolved. It has been determined that HMO-W's January 26, 1995, payment was insufficient, and the parties agree that HMO-W owes SSM $601,232.94, plus interest from October 31, 1994.3
¶ 4. On remand, the circuit court addressed the interest component of the amount owed by HMO-W. The court applied the "fair and equitable" language from WIS. STAT. § 180.1301(5) and concluded that HMO-W should pay interest based on the prime rate.4 The circuit court found that the prime rate "is well accepted as an index figure in many commercial situations" and "reflects the cost of money to corporate borrowers." The circuit court ordered HMO-W to pay interest at a rate calculated by determining the average prime rate from the valuation date, October 31, 1994, to the "date of final payment." Both SSM's appeal and HMO-W's cross-appeal concern the circuit court's application of the interest language in § 180.1301(5) to the fair value underpayment of $601,232.94.
[1-5]
¶ 5. The resolution of both the appeal and the cross-appeal requires interpretation of WIS. STAT. § 180.1301(5). The construction of a statute is a question of law which we review without deference to the circuit court. DeMars v. LaPour, 123 Wis.2d 366, 370, 366 N.W.2d 891 (1985). We first look to the language of the statute and attempt to interpret it based on "the plain meaning of its terms." State v. Williquette, 129 Wis.2d 239, 248, 385 N.W.2d 145 (1986). Only when statutory language is ambiguous may we examine other construction aids such as legislative history, context, and subject matter. State v. Waalen, 130 Wis.2d 18, 24, 386 N.W.2d 47 (1986). A statute is ambiguous if reasonable persons could disagree as to its meaning. Williquette, 129 Wis.2d at 248. "When construing statutes we are to give them their common-sense meaning to avoid unreasonable and absurd results." Janssen v. State Farm Mut. Auto. Ins. Co., 2002 WI App 72, ¶ 16, 251 Wis.2d 660, 643 N.W.2d 857.
¶ 6. We begin with a brief summary of the applicable provisions of the dissenters' rights statutes. When, as here, a dissenting shareholder successfully exercises dissenters' rights under WIS. STAT. ch. 180, including a demand for payment that meets the criteria in WIS. STAT. § 180.1323, the corporation must make a payment to the dissenting shareholder equal to "the amount that the corporation estimates to be the fair value of his or her shares, plus accrued interest," calculated from the date the challenged "corporate action is effectuated" or from the date of "receipt of a payment demand," whichever is later. WIS. STAT. § 180.1325(1). If, as here, the dissenting shareholder disagrees with the amount of the corporation's payment, the dissenter may notify the corporation of the dissenter's estimate of the fair value of the shares and demand payment under WIS. STAT. § 180.1328. If that demand remains unsettled, the corporation must "bring a special proceeding" in the circuit court within a specified time limit and petition the court "to determine the fair value of the shares and accrued interest." WIS. STAT. § 180.1330(1). In the case before us, HMO-W opted to bring a special proceeding in the circuit court.
¶ 7. If a circuit court finds that a corporation has underpaid, the dissenter is entitled to a judgment in the "amount ... by which the court finds the fair value of his or her shares, plus interest, exceeds the amount paid by the corporation." WIS. STAT. § 180.1330(5)(a). As noted above, it was judicially determined that HMO-W underpaid SSM and that HMO-W should pay SSM $601,232.94, plus interest on that amount from October 31, 1994, the corporate action effectuation date.
¶ 8. The parties disagree on the application of statutory provisions governing interest and our attention is directed to the following statutory provisions. WISCONSIN STAT. § 180.1301 provides definitions for terms used in §§ 180.1301 to 180.1331. Section 180.1301(5) defines "interest":
"Interest" means interest from the effectuation date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all of the circumstances.
Section 180.1331, entitled "Court costs and counsel fees," provides:
(1)(a) Notwithstanding ss. 814.01 to 814.04, the court in a special proceeding brought under s. 180.1330 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court and shall assess the costs against the corporation, except as provided in par. (b).
WISCONSIN STAT. §§ 814.01 to 814.04 contain various provisions relating to costs. Of particular note here is § 814.04(4), which applies to the time period between a decision and the entry of judgment:
Except as provided in s. 807.01(4), if the judgment is for the recovery of money, interest at the rate of 12% per year from the time of verdict, decision or report until judgment is entered shall be computed by the clerk and added to the costs.
In addition, though not mentioned by either party, WIS. STAT. § 815.05(8) contains the generally applicable post-judgment interest rate on unpaid money judgments. It provides:
Except as provided in s. 807.01(4), every execution upon a judgment for the recovery of money shall direct the collection of interest at the rate of 12% per year on the amount recovered from the date of the entry thereof until paid.
¶ 9. The parties agree that the interest provision in WIS. STAT. § 180.1301(5) applies to the time between the corporate action effectuation date and the date the circuit court makes a decision regarding the fair value of the shares in a special proceeding under WIS. STAT. § 180.1330.5 We are asked to resolve whether the interest language in § 180.1301(5) or the 12% rate contained in WIS. STAT. § 814.04(4) applies to the time between the circuit court's decision regarding fair value and the date the corporation actually tenders payment.
¶ 10. SSM's reasoning is as follows:
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