Trinity Petroleum v. Scott Oil Co.
| Citation | 2007 WI 88,735 N.W.2d 1 |
| Decision Date | 06 July 2007 |
| Docket Number | No. 2005AP2837.,2005AP2837. |
| Parties | TRINITY PETROLEUM, INC., Plaintiff-Respondent, v. SCOTT OIL COMPANY, INC., Defendant-Appellant-Petitioner. |
| Court | United States State Supreme Court of Wisconsin |
For the defendant-appellant-petitioner there were briefs by Alan H. Marcuvitz, Susan M. Sager, Juan S. Ramirez, Aaron H. Kastens, and Michael Best & Friedrich L.L.P., Milwaukee, and oral argument by Juan S. Ramirez.
For the plaintiff-respondent there was a brief by Douglas W. Rose and Rose & DeJong, S.C., Brookfield, and oral argument by Douglas W. Rose.
An amicus curiae brief was filed by William C. Gleisner, Milwaukee, and Lynn R. Laufenberg and Laufenberg & Hoefle, S.C., on behalf of the Wisconsin Academy of Trial Lawyers.
¶ 1
This is a review of a published decision of the court of appeals affirming the order of the circuit court for Waukesha County, James R. Keiffer, Judge.1 The circuit court denied Scott Oil Company, Inc.'s (the defendant's) motion for sanctions against Trinity Petroleum, Inc. (the plaintiff) for alleged frivolous commencement and maintenance of a lawsuit.
¶ 2 At issue in this case is the application of new Wis. Stat. § (Rule) 802.05 (2005-06) to the present litigation.
¶ 3 This court adopted new Wis. Stat. § (Rule) 802.05 (2005-06), pursuant to its rule-making authority under Wis. Stat. § 751.12 (2005-06), by Supreme Court Order 03-06 on March 31, 2005.2 Supreme Court Order 03-06 repealed both Wis. Stat. §§ 802.05 and 814.025 (2003-04), and recreated Wis. Stat. § (Rule) 802.05 (2005-06). The effective date of the new rule was July 1, 2005.3 On the effective date of the new rule the defendant's motion for summary judgment had not yet been decided by the circuit court. After the effective date of the new rule, the circuit court granted the summary judgment motion in favor of the defendant, and the defendant made oral and written motions to impose sanctions against the plaintiff for frivolous conduct, relying on former Wis. Stat. §§ 802.05 and 814.025 (2003-04).
¶ 4 We are asked to determine whether new Wis. Stat. § (Rule) 802.05 (2005-06) should be applied retroactively to the instant case. Inherent in this question are two issues: (1) whether the new rule has retroactive application, and (2) if the new rule has retroactive application, whether the instant case falls within an exception to retroactive application.
¶ 5 The circuit court in the instant case determined as a matter of law that the new rule, Wis. Stat. § (Rule) 802.05 (2005-06), had retroactive application, without exception, and further determined that because the defendant did not and could not comply with the "safe harbor" notice provision, no sanctions would be imposed. In light of its conclusion of law, the circuit court did not determine in the instant case whether retroactive application of the new rule impaired contract rights, disturbed vested rights, or imposed an unreasonable burden on a party in the instant case and did not make final and conclusive findings on whether the plaintiff had either commenced or maintained a frivolous action.
¶ 6 The court of appeals affirmed the order of the circuit court denying the defendant's motion for sanctions, based on similar reasoning.
¶ 7 For the reasons set forth, we hold, like the circuit court and the court of appeals, that new Wis. Stat. § (Rule) 802.05 (2005-06) is a procedural rule and that procedural rules generally have retroactive application. We conclude that new rule Wis. Stat. § (Rule) 802.05 (2005-06) is not to be applied retroactively when the new rule diminishes a contract, disturbs vested rights, or imposes an unreasonable burden on the party charged with complying with the new rule's requirements.
¶ 8 We therefore reverse the decision of the court of appeals and the order of the circuit court. These courts erred as a matter of law in holding that new rule Wis. Stat. § (Rule) 802.05 (2005-06) had retroactive application without exception. We remand the cause to the circuit court for further proceedings consistent with this opinion. The circuit court must determine whether retroactive application of new Wis. Stat. § (Rule) 802.05 (2005-06) imposes an unreasonable burden on a party who must comply with the procedural requirements of the new rule. After determining which provision — either Wis. Stat. § (Rule) 802.05 (2005-06) or §§ 802.05 and 814.025 (2003-04) — to apply using the unreasonable burden standard, the circuit court must determine under the applicable provision whether the plaintiff engaged in frivolous conduct in commencing or maintaining the lawsuit and what sanctions, if any, should be imposed on the plaintiff.
¶ 9 This review arises from the circuit court's order denying the defendant's motion for sanctions against the plaintiff for commencing and maintaining a frivolous lawsuit. The procedural posture of the case for purposes of deciding the issue on review, the retroactive application of Wis. Stat. § (Rule) 802.05 (2005-06), is set forth below and is not in dispute.
¶ 10 The parties entered into a five-year written contract pursuant to which the plaintiff would transport the defendant's petroleum products to the defendant's customers. According to contractual provisions, the defendant could terminate the contract with 60 days' notice if the plaintiff failed to perform to the "customer's satisfaction."
¶ 11 On February 6, 2004, the defendant formally notified the plaintiff that, pursuant to its rights under the contract, it was terminating the contract because it was not satisfied with the plaintiff's performance; the defendant explained that it had received several complaints from its customers about the plaintiff's poor service in delivering petroleum products.
¶ 12 On April 6, 2004, the plaintiff filed suit against the defendant alleging breach of contract. The parties disagreed about the meaning of the phrase "customer's satisfaction" in the contract. In its responsive pleadings, the defendant did not raise any issue of frivolousness. The defendant, however, contends that at subsequent stages of the proceeding it alerted the plaintiff of its belief that the commencement and maintenance of the action were frivolous.4
¶ 13 The defendant submitted interrogatories and document requests to the plaintiff, beginning in December 2004, to prove that even under the plaintiff's own contractual interpretation, the plaintiff did not have a viable case for breach of contract.
¶ 14 On April 5, 2005, the defendant moved for summary judgment against the plaintiff. The circuit court initially scheduled the hearing on the defendant's motion for summary judgment for June 6, 2005. This hearing was postponed, however, until July 5, 2005, in order to accommodate the receipt of transcripts from a deposition taken on May 27, 2005.5 The defendant blames the plaintiff for this delay. A letter submitted by the defense counsel to the circuit court states, however, that both parties requested this postponement.6
¶ 15 While the litigation in the instant case was before the circuit court, this court issued Supreme Court Order 03-06 on March 31, 2005, changing the rules governing sanctions for frivolous conduct. Effective July 1, 2005, Wis. Stat. §§ 802.05 and 814.025 (2003-04) were repealed and Wis. Stat. § (Rule) 802.05 (2005-06) was adopted.
¶ 16 At the conclusion of the summary judgment hearing on July 5, 2005, the circuit court granted summary judgment in favor of the defendant,7 and the defendant orally moved for costs and reasonable attorney fees, claiming that the plaintiff frivolously commenced and maintained its claim against the defendant. The circuit court refused to grant the defendant's oral motion, concluding that the motion was not properly before it. The circuit court, however, invited the defendant to file a written motion for sanctions. Specifically, the circuit court stated: "If Scott Oil [the defendant] wishes to renew that request saying that in its opinion it believes this action was a frivolous matter and they are then continuing to ask the court to impose costs, they can file that motion at the appropriate time . . . ."
¶ 17 The defendant filed a written motion for imposition of sanctions (costs and reasonable attorney fees) on July 21, 2005, after the effective date of new rule Wis. Stat. § (Rule) 802.05 (2005-06). The defendant argued that, in light of the contract's clear terms and the numerous customer complaints, the plaintiff frivolously commenced and maintained its lawsuit. The defendant grounded its written motion for sanctions on former Wis. Stat. §§ 802.05 and 814.025 (2003-04). The defendant's motion did not mention Supreme Court Order 03-06 repealing former §§ 802.05 and 814.025 (2003-04) and recreating Wis. Stat. § (Rule) 802.05 (2005-06).
¶ 18 The circuit court heard arguments on August 29, 2005 on the defendant's written motion for sanctions. The circuit court concluded that "the new 802.05 applied in this case" and that the defendant had to comply with the "safe harbor" notice provision. Because the defendant had not complied and could not comply with the "safe harbor" notice provision, the circuit court denied the defendant's motion for sanctions.
¶ 19 On appeal, the court of appeals affirmed the circuit court's order denying the defendant's motion for sanctions, holding that new Wis. Stat. § (Rule) 802.05 (2005-06) was a procedural rule with retroactive application and that sanctions could not be granted because the defendant had not complied and could not comply with its "safe harbor" notice provisions.8
¶ 20 Court of Appeals Judge Daniel P. Anderson dissented from the court of appeals decision. Judge Anderson agreed with the majority that new Wis. Stat. § (Rule) 802.05 (2005-06) is a procedural rule. He did "not agree that it is to be applied retroactively under the particular facts of this case."9 Judge Anderson concluded that the new rule's ...
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