BENCH BLOG: Court trims damage awards in small-claims case

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Issues concerning damages were front and center in a small-claims case that was successfully appealed.

Diane Storey was sued by the personal representative of the Estate of Stanley Miller. Storey was Miller’s niece who had become his caretaker when he was 86 years old.

An examination of bank records after Miller’s death alerted the personal representative that Storey may have misappropriated some of his money. A small-claims action was initiated for the statutory limit of $10,000 specified in sec. 799.01(1)(d).

Post-verdict judgment

Storey won in a trial before the court commissioner, leading the estate to ask for a de novo jury trial. After a two-day trial, a jury awarded $10,000 in compensatory damages to the estate.

Upon post-verdict motions, Marathon County Judge Jill Fallstad entered judgment in favor of the estate for nearly $52,000.

This surprising figure partly comprised the $10,000 jury award.

Fallstad doubled the taxable costs of $814.95 to $1,629.90 because Storey had rejected a statutory offer of settlement for $7,500. Since this amount was less than the jury had awarded, its rejection triggered double costs under sec. 807.01(3).

Fallstad then found that exemplary damages were indicated and awarded $20,000.

She also awarded attorney fees in the amount of $20,000.

Lastly, Fallstad designated the judgment as an award of restitution.

Storey appealed.

Appellate damages decision

Writing for the District 4 Court of Appeals, Judge Mark Seidl dealt with each of the damages issues separately.

Storey challenged the amount of the jury’s verdict. While it was consonant with one of the small-claims statute’s limits, she argued that the incorrect limit was being relied on in these circumstances.

Indeed, the heart of the estate’s claim concerned allegations over misappropriated money. It was therefore a civil theft claim, which is a tort. Sec. 799.01(1)(cr) of the small-claims statute governs tort claims and limits recovery to $5,000. The jury’s award therefore needed to be halved.

With the compensatory damages reduced by half, the amount of the statutory offer of settlement ($7,500) was now greater than the jury’s verdict. For that reason, Storey’s rejection of that offer could not be grounds for doubling the award of taxable costs. That award thus also needed to be reduced by 50 percent.

Another flaw was in the judge’s award of exemplary damages. Although the appellate court agreed that such damages could be awarded in this case, it took exception to how the amount was determined: The judge alone decided what was appropriate after the jury had rendered its verdict.

Damages, however, are uniquely within a jury’s province to decide. Here, there could have been a question on the verdict form concerning exemplary damages under sec. 895.446(3)(c). But there was none, and a judge can’t replace a jury by determining these damages post-verdict. Accordingly, that award needed to be vacated.

Next was the award of attorney fees. Fallstad had based the award on sec. 895.446(3)(b), which allows “all costs of … litigation that were reasonably incurred.”

But this subsection does not specifically mention attorney fees. Storey contrasted it with a later section, 895.446(3m)(b), which does specifically provide for attorney fees. She argued that this indicated a legislative intent to allow the fees to be awarded only under (3m)(b), not (3)(b).

The court found this argument “compelling under the rule of statutory interpretation that when the legislature uses similar but different terms in a statute, particularly within the same section, it is presumed that the legislature intended such terms to have different meanings.”

Consequently, the award of attorney fees needed to be vacated.

All told, more than $45,000 of the judgment was disallowed by the court’s opinion, and the matter was remanded for amendment of the judgment to $5,000 with costs of $814.95.

Restitution

Lastly, the court took up the issue of the judgment being designated “restitution.” Although Fallstad did not mention this in her decision, she apparently did so at the estate’s urging to prevent the judgment from being discharged in bankruptcy.

The court looked to the wording of sec. 895.446(4), which states “any recovery under this section shall be reduced by the amount recovered as restitution … for the same act” as a result of criminal or juvenile proceedings.

That “clearly means” reducing the amount of a civil recovery by the amount of restitution ordered in a criminal or juvenile proceeding related to the same act.

Here, there had been no criminal proceeding for theft against Storey and thus no restitution order. The designation of the civil judgment as restitution was therefore erroneous.

Commentary

One would like to have been a fly on the wall during the trial and post-verdict motions hearing to see what could have led a circuit judge to go so far astray in awarding damages and setting judgment amounts.

This decision is Judge Seidl’s third appellate opinion recommended for publication and he did a nice job of organizing the opinion so it is easily digestible.

The opinion is a handbook not only for small-claims limits but also for sec. 895.446, a not infrequently used civil-recovery statute.