Racine County v. Oracular Milwaukee, Inc.

• Decision Date: 08 April 2009
• Docket Number: No. 2007AP2861.,2007AP2861.
• Citation: 2009 WI App 58,767 N.W.2d 280
• Parties: RACINE COUNTY, Plaintiff-Appellant, v. ORACULAR MILWAUKEE, INC., Oracular, Inc., Oracular of Minnesota, LLC and Oracular of Michigan, Inc., Defendants-Respondents.<SMALL><SUP>&#x2020;</SUP></SMALL>
• Court: Wisconsin Court of Appeals

767 N.W.2d 280

2009 WI App 58

RACINE COUNTY, Plaintiff-Appellant, v. ORACULAR MILWAUKEE, INC., Oracular, Inc., Oracular of Minnesota, LLC and Oracular of Michigan, Inc., Defendants-Respondents.^†

No. 2007AP2861.

Court of Appeals of Wisconsin.

Oral Argument October 21, 2008.

Opinion Filed April 8, 2009.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of and oral argument by Timothy S. Knurr of Schoone, Leuck, Kelley, Pitts & Knurr, S.C., Racine.

On behalf of the defendants-respondents, the cause was submitted on the brief of Jeffrey P. Aiken and Eric J. Meier of Whyte Hirschboeck Dudek S.C., Milwaukee. There was oral argument by Eric J. Meier.

Before BROWN, C.J., ANDERSON, P.J., and SNYDER, J.

¶ 1 ANDERSON, P.J

Racine County appeals from the circuit court's decision that its contract with Oracular Milwaukee, Inc., was a contract for "professional services"; to recover, the County had to prove professional negligence; and expert testimony was required "as a matter of law." We reverse, because Oracular does not possess the indicia of a "professional"; the contract between the parties was a simple contract for "services"; and expert testimony is not required when a party's conduct is within the realm of the ordinary experience of the average juror.

BACKGROUND

¶ 2 In November 2003, Racine County issued a Request for Proposal (RFP) to provide assistance in upgrading its "current Peoplesoft World system to Peoplesoft One 8.0 and install the same release of Peoplesoft One Human Resources and Payroll modules." Oracular Milwaukee submitted a proposal that the County ultimately accepted and the parties entered into a Consulting Service Agreement on February 2, 2004, that incorporated, by reference, the County's RFP and Oracular's proposal.

¶ 3 In the RFP, the County stated that "[c]ompletion of this project will result in a fully operational system tailored to the needs of Racine County." The County required both that a project manager be named and that included in the duties was the development of "a strategy to guide Racine County through the complete upgrade and implementation of the software, training and providing the technical resources necessary to successfully complete the project."

¶ 4 The RFP listed specific requirements for training:

[V.B.] 2. Training: The Project Manager will:

a. Identify, recommend and coordinate Racine County's training needs.

b. Specify the type —

i. Formal JDE training

ii. Internal workshops

iii. Web training

c. Assist in the proper training of the County's project team to gain the necessary understanding of the capabilities of the software.

d. Assist in understanding the software's rich functionality to better identify and establish accurate and realistic goals and objectives.

e. Provide effective communication and debriefing of the instructor(s) allowing the Project Manager to assist Racine County to refine the scope of business process analysis.

In its proposal, Oracular responded to the training requirements, "[a]ll core training will be conducted internally and delivered by the project consulting staff. Training is to include guidance to key users on set-up or end-user procedure and training manuals."

¶ 5 Vendors responding to the RFP were required to

[s]ubmit a proposed GANT[T] Chart¹ schedule listing all procedures including training for each phase of the project. Identify the task name, duration (no. of days), start date, finish date and party responsible for each task.

¶ 6 The RFP reminded vendors that time was of the essence. In its proposal, Oracular promised that "[w]e will combine the talents of our consulting organization with the talents of the Racine County staff in order to complete this project on time and on budget." (Emphasis added.) Oracular's Preliminary Project Plan included a specific proposal for a completion date, "a combined Go-Live date of September 1, 2004." The February 2, 2004 Consulting Service Agreement changed the Go-Live date to September 7, 2004, to conform to a GANTT Chart attached as Addendum A to Oracular's proposal.

¶ 7 For reasons we will visit later, the County terminated the contract with Oracular on February 16, 2006, and brought this lawsuit on February 15, 2008. The County pleads two causes of action against Oracular; first, a breach of the consulting service agreement, and second, a violation of WIS. STAT. § 100.18 (2007-08).² Oracular filed an answer and counterclaims; it alleged a breach of contract, quantum meruit and promissory estoppel.

¶ 8 Subsequently, Oracular brought a motion for summary judgment. In a supporting brief it argued:

Because the Agreement calls for software programming and training services, the U.C.C. and its remedy and warranty provisions do not apply. Similarly, there are no implied warranties of results under Wisconsin law. Consequently, Oracular has not breached the Agreement as a matter of law, it is entitled to retain the payments previously received, and it is entitled to dismissal of the County's breach of contract claim in its entirety.

Relying upon Hoven v. Kelble, 79 Wis.2d 444, 463, 256 N.W.2d 379 (1977), and Micro-Managers, Inc. v. Gregory, 147 Wis.2d 500, 513, 434 N.W.2d 97 (Ct.App.1988), Oracular argued that the agreement was a professional services contract and the County could not carry the day because it had not disclosed any expert witnesses on the standard of care owed by computer consultants.

¶ 9 The County responded that it had never asserted that the U.C.C. and its remedy and warranty provisions applied to this case. It pointed out that Hoven was a medical malpractice case and the language Oracular cited was in a portion of the decision discussing the application of a strict liability theory to medical services. The County contended that requiring expert testimony is an extraordinary step, to be taken only when the jury is facing unusually complex or esoteric issues. As an example, the County stated that the agreement required the software to convert data and it would present fact witnesses who would testify that, when Oracular abandoned the project, the software did not convert data. It suggests that whether or not the County got what it contracted for is not beyond the realm of experience of the ordinary juror.

¶ 10 In granting Oracular's summary judgment motion, the circuit court said it was persuaded that under Micro-Managers, the Agreement was a contract for professional services and the County had to prove negligence in order to recover. It said:

If that's the case, I believe the defense is correct here, you need an expert opinion as a matter of law. This is not something that an ordinary person off the street would have any way of knowing one way or another. It demands a level of expertise that is beyond what normally people would know.

....

[W]e're talking about using computers, and it's to the inth degree when we're talking about developing the underlying language, the underlying programming. It's incredibly esoteric. It's incredibly knowledge intensive, and without an expert telling us that Oracular didn't live up to the standard of care required in this consulting contract, I think that the claim fails.

¶ 11 The County immediately brought a motion for reconsideration, arguing that the circuit court erred when it held that, because this was a contract for services to install computer software, expert testimony was required as a matter of law. It pointed to several cases holding that in lawsuits involving professional services, expert testimony is only required if the issues are outside the common knowledge and ordinary experience of an average juror. The County put forward that the average juror could determine if Oracular breached the agreement by not providing competent trainers or failing to meet the Go-Live date of September 7, 2004.

¶ 12 The circuit court denied the County's reconsideration motion:

What it boils down to is how you view this claim. If you think it's simply a breach of contract, that it was time was of the essence at the end of the time frame the product was not there and it's a breach of contract and they're liable, that's one thing. If you're looking at it, however, in the context as Hoven and Micromanagers did, that this is a professional services contract involving complex computer programming, then we need the negligence or we need the expert testimony with regard to whether or not the consultant failed to live up to the standard of care that a computer consultant is required to live up to in providing the services.

¶ 13 The County appeals.

STANDARD OF REVIEW

¶ 14 We review summary judgment decisions de novo, using the same well-known methodology as the circuit court. See Lambrecht v. Estate of Kaczmarczyk, 2001 WI 25, ¶¶ 20-23, 241 Wis.2d 804, 623 N.W.2d 751. We will uphold the circuit court's summary judgment decision when the prevailing party is entitled to judgment as a matter of law and where no genuine issue of material fact exists. Id., ¶ 24.

¶ 15 The circuit court held that the County's failure to retain expert witnesses was the equivalent of a failure of proof and granted summary judgment to Oracular. "Whether expert testimony is necessary in a given situation is a question of law, which we decide without deference to the trial court's opinion." Grace v. Grace, 195 Wis.2d 153, 159, 536 N.W.2d 109 (Ct.App. 1995).

DISCUSSION

¶ 16 Because the circuit court relied upon Hoven and Micro-Managers to conclude the Consulting Service Agreement was a professional services contract and, as a matter of law, expert testimony on the standard of care was required, we will examine those cases in some detail. Hoven was a medical malpractice case in which the supreme court addressed several issues; of interest to us is the discussion on whether the theory of "strict liability" could be applied to medical services. Hoven, 79 Wis.2d at 446-47, 256 N.W.2d 379. After stating the standard of care in...