Lands' End, Inc. v. City of Dodgeville

Decision Date12 July 2016
Docket NumberNo. 2015AP179.,2015AP179.
Citation370 Wis.2d 500,881 N.W.2d 702
PartiesLANDS' END, INC., Plaintiff–Appellant, v. CITY OF DODGEVILLE, Defendant–Respondent.
CourtWisconsin Supreme Court

For the plaintiff-appellant, there were briefs by Robert E. Shumaker, Michele Perreault, and DeWitt Ross & Stevens S.C., Madison, and oral argument by Robert E. Shumaker.

For the defendant-respondent, there was a brief by Ted Waskowski, Amie B. Trupke, and Stafford Rosenbaum LLP, and oral argument by Amie B. Trupke.

ON BYPASS FROM THE COURT OF APPEALS

SHIRLEY S. ABRAHAMSON, J.

¶ 1 This is an appeal from a judgment and an order of the circuit court for Iowa County, Craig R. Day, Judge. This judgment and order arose in response to the 2013 directions of the court of appeals to the circuit court to enter judgment in favor of Lands' End, Inc., the plaintiff, and against the City of Dodgeville, the defendant, for $724,292.68 “plus statutory interest and other interest or costs to which Lands' End may be entitled.”1

¶ 2 The issue before this court is what is the correct rate of statutory interest to apply to Lands' End's judgment against the City. More specifically, the issue is whether a party is entitled to interest at the statutory rate of interest in effect when an offer of settlement was made under Wis. Stat. § 807.01(4) (2009–10) or at the statutory rate of interest in effect when the party recovers a judgment under the amended version of the statute, Wis. Stat. § 807.01(4) (2013–14).2

¶ 3 We affirm the circuit court's judgment and order. The circuit court awarded Lands' End interest at the statutory rate of interest in effect when Lands' End recovered a judgment, namely at a rate of “1 percent plus the prime rate” under the amended version of Wis. Stat. § 807.01(4) (2013–14).

¶ 4 Lands' End appealed from the circuit court's order and judgment, arguing that the circuit court's application of the amended version of the statute, Wis. Stat. § 807.01(4) (2013–14), was retroactive, disturbed Lands' End's vested rights in the 12 percent interest rate in effect in Wis. Stat. § 807.01(4) (2009–10) at the time it made its offer of settlement, and violated Wis. Stat. § 990.04 (2013–14) and the Due Process and Equal Protection clauses of the federal and state constitutions.

¶ 5 For the reasons set forth, we affirm the circuit court's judgment and order awarding Lands' End interest at “1 percent plus the prime rate,”3 the rate in the amended version of the statute, Wis. Stat. § 807.01(4) (2013–14), which was in effect when Lands' End recovered its judgment against the City of Dodgeville.4

¶ 6 Awarding interest at “1 percent plus the prime rate” in the instant case is not a retroactive application of Wis. Stat. § 807.01(4) (2013–14) and Lands' End did not have a vested right in the 12 percent interest rate in effect in Wis. Stat. § 807.01(4) (2009–10) at the time Lands' End made its offer of settlement. The circuit court's judgment and order do not violate the Due Process clauses of the federal and state constitutions or Wis. Stat. § 990.04 (2013–14). Moreover, because the legislature had a rational basis for changing the applicable interest rate from 12 percent to “1 percent plus the prime rate” and did not create an irrational or arbitrary classification, awarding interest under the amended version of the statute, Wis. Stat. § 807.01(4) (2013–14), does not violate the Equal Protection clauses of the federal and state Constitutions.

¶ 7 Our decision in the instant case is contrary to the opinion of the court of appeals in Johnson v. Cintas Corp. No. 2, 2015 WI App 14, 360 Wis.2d 350, 860 N.W.2d 515.5 In Johnson, the court of appeals held that applying the amended version of the rate of interest to offers of settlement made prior to the effective date of the amended version would disturb a vested right to interest. Johnson is an officially published opinion of the court of appeals. “Officially published opinions of the court of appeals shall have statewide precedential effect.” Wis. Stat. § 752.41(2) (2013–14). We overrule the Johnson decision.

¶ 8 Accordingly, we affirm the judgment and order of the circuit court in the instant case.

I

¶ 9 The facts and procedural history of the instant case are not in dispute for the purposes of this appeal.

¶ 10 The instant case is one of several cases representing nearly a decade of litigation between Lands' End and the City challenging the City's appraisal of the fair market value (and resulting property tax assessments) of Lands' End's headquarters. We do not recite the entire procedural history of the litigation between Lands' End and the City. Instead, we refer to pertinent aspects of the procedural history.

¶ 11 Lands' End is a Delaware corporation with headquarters in the City of Dodgeville, Wisconsin, occupying six parcels of land. For ease of discussion, we will refer to these six parcels collectively as Lands' End's headquarters.

¶ 12 Prior to the instant case, in a case concerning the amount of property taxes assessed for 2005 and 2006, the circuit court for Iowa County, Edward Leineweber, Judge, ruled in Lands' End's favor, rejecting the City of Dodgeville's valuation methodology and concluding that the fair market value of Lands' End's headquarters was $25,000,000.

¶ 13 In the instant case, Lands' End challenged the 2008 property tax assessment on its headquarters and sought a refund of taxes. Lands' End argued that the City erroneously based its 2008 property tax assessment on the same valuation methodology rejected in the 2005 and 2006 tax assessment case.

¶ 14 On July 1, 2009, Lands' End made an offer of settlement in the instant case under Wis. Stat. § 807.01(4) (2009–10) for $724,000. The City rejected Lands' End's offer.

¶ 15 Lands' End subsequently moved for summary judgment, arguing that issue preclusion, together with the undisputed fact that the value of Lands' End's headquarters did not change between 2006 and 2008, entitled it to judgment as a matter of law. On April 19, 2010, the circuit court for Iowa County, William Dyke, Judge, denied Lands' End's motion for summary judgment and affirmed the City's valuation of Lands' End's headquarters.

¶ 16 Lands' End appealed the circuit court's denial of summary judgment. The court of appeals reversed the circuit court, holding that the circuit court erroneously denied Lands' End's motion for summary judgment. The court of appeals remanded the matter to the circuit court “with directions to enter judgment in favor of Lands' End in the amount of $724,292.68, plus statutory interest and any other interest or costs to which Lands' End may be entitled.”6

¶ 17 On remand, the parties disagreed regarding the applicable rate of statutory interest to which Lands' End was entitled. Lands' End moved for entry of judgment, arguing that it was entitled to interest at the 12 percent rate specified in Wis. Stat. § 807.01(4) (2009–10); this version of § 807.01(4) was in effect when Lands' End made its offer of settlement. In contrast, the City argued that Lands' End was entitled to interest at “1 percent plus the prime rate” as specified in the amended version of Wis. Stat. § 807.01(4) (2013–14); this version of § 807.01(4) was in effect when Lands' End recovered a judgment.

¶ 18 The circuit court agreed with the City, awarding interest at “1 percent plus the prime rate” as specified in the amended version of Wis. Stat. § 807.01(4) (2013–14). The circuit court concluded that “1 percent plus the prime rate” was, at the relevant time, 4.25 percent, a rate substantially less than the 12 percent interest provided for in Wis. Stat. § 807.01(4) (2009–10). Lands' End appealed. We granted the City's petition to bypass the court of appeals. See Wis. Stat. § (Rule) 809.60.

II

¶ 19 The instant case involves the interpretation of statutes and constitutional provisions and their application to undisputed facts. These are questions of law that we decide independently of the circuit court and the court of appeals while benefitting from their analyses. Milwaukee Journal Sentinel v. Wis. Dep't of Admin., 2009 WI 79, ¶ 14, 319 Wis.2d 439, 768 N.W.2d 700.

¶ 20 Lands' End challenges the constitutionality of Wis. Stat. § 807.01(4) (2013–14) as applied to it. Lands' End has the burden of proving beyond a reasonable doubt that Wis. Stat. § 807.01(4) is unconstitutional as applied to it. See Soc'y Ins. v. LIRC, 2010 WI 68, ¶ 27, 326 Wis.2d 444, 786 N.W.2d 385.

III

¶ 21 We first examine the texts of the statutes governing offers of settlement and the rate of interest to which a party is entitled if the party making the offer of settlement subsequently recovers a judgment for greater than or equal to the amount of the offer. We then turn to the court of appeals' decision in Johnson before addressing Lands' End's five legal arguments in support of its position.

¶ 22 Wisconsin Stat. § 807.01, entitled “Settlement offers,” provides that if a party makes an offer of settlement and subsequently recovers a judgment for greater than or equal to the amount of its offer, the offeror is “entitled” to interest on the amount recovered running from the date of its offer. See Wis. Stat. § 807.01(4) (2009–10) and Wis. Stat. § 807.01(4) (2013–14) for two versions of this statute.

¶ 23 The two versions of the statutes set forth two different rates of statutory interest. The dispute is about which version of the statute (and thus which rate of statutory interest) applies in the instant case.

¶ 24 Prior to 2011, Wis. Stat. § 807.01(4) (2009–10) provided that the party making an offer of settlement may be entitled to interest at the annual rate of 12 percent on the amount recovered from the date of the offer of settlement until the amount is paid.

¶ 25 Section 807.01(4) (2009–10) stated in relevant part as follows (with emphasis added):

If there is an offer of settlement by a party under this section which is not accepted and the party recovers a judgment which is greater than or equal to the
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