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Issues for review must be specifically stated

Prosser

“On the facts presented here, Kolupar did not fully satisfy her burden to produce evidence of the hours worked, and Judge Cooper could have reduced her award, perhaps to a nominal amount, solely on that basis.”

Hon. David T. Prosser
Wisconsin Supreme Court

The Wisconsin Supreme Court held on July 13 that, when a prevailing plaintiff under a fee-shifting statute failed to specifically frame an issue for review, it would not review the reasonableness of the circuit court in reducing fees for overpleading and overtrying the case.

However, the court held that awarding no costs, without explanation, was not an appropriate exercise of discretion.

In doing so, the court affirmed in part, and reversed in part, a published decision of the court of appeals, Kolupar v. Wilde Pontiac Cadillac, Inc., 2003 WI App 175, 266 Wis.2d 659, 668 N.W.2d 798.

In March 1994, Tammy Kolupar bought a 1985 Mercedes Benz 190E, based on representations by Wilde Pontiac Cadillac, Inc. and a salesman, Randall Thompson, that the car was in good mechanical condition.

In March 2000, Kolupar sued Wilde and Thompson to recover damages, alleging that both Wilde and Thompson were liable for fraud, federal and state odometer tampering violations, breach of express and implied warranties, and violations of Wisconsin’s motor vehicle statute, sec. 218.01, now renumbered as sec. 218.0163(2).

Wilde responded to the complaint by denying any involvement in the transaction. In May 2001, Kolupar dropped the federal odometer claim — which permitted treble damages — when Wilde moved for summary judgment based upon the federal claim’s two-year statute of limitation.

In December 2001, Wilde and Kol-upar settled the underlying claim for $6,600 dollars plus taxable costs. In the interim, a discovery referee had been appointed.

By the time the parties settled, Kolupar had accumulated approximately $41,000 in attorney fees and almost $11,000 in litigation expenses. Since the $6,600, plus taxable costs for the underlying claim encompassed Kolupar’s sec. 218.01(9) claim, and since that section provides that a court has authority to award “actual costs, including a reasonable attorney fee,” Milwaukee County Circuit Judge Thomas R. Cooper, concluded that attorney fees were appropriate in the case.

On May 10, 2002, a hearing was scheduled for May 13, to determine attorney fees and costs. The same day, Kolupar submitted her invoice of fees and costs.

At the hearing, the court refused to consider the invoice, holding that Kolupar failed to comply with Milwaukee County Court Rule 365(a). The rule directs that a party who wishes to submit any documents in support of a motion (other than a motion for summary judgment or dismissal) must provide opposing counsel with the materials no later than 10 days before the hearing date.

Nevertheless, Judge Cooper awarded Kolupar $15,000 in fees and costs, stating that he was relying, at least in part, on the recommendation of the discovery master, Frank T. Crivello.

Crivello testified at the hearing: “In thirty years in [the] practice of law, as well as fifteen years as a circuit judge myself[,] I have never seen a $6,000 case grow barnacles the way this one has. … I have served as special master in cases on numerous occasions here in Milwaukee County since leaving the bench. The only case that I have ever seen that approached this magnitude was . . . a multi-million dollar insurance case with fifteen defendants, including one British defendant. … And I don’t think the case is worth much more than [$]15,000 in fees, frankly. Although I know both sides spent a lot more time than that. When lawyers decide to do that, then they bear the onus of that decision.”

Judge Cooper explained his decision as follows: “There is no question this case was over-tried. Discovery was over — well over-done. It was over-[pled] right from the get-go on the complaint. There was the shotgun pleading where everything was [pled] against Wilde short of conquering Europe during World War II. So that was the framework, and the daunting discovery mountain was created right from the get-go. And that was based upon the plaintiff’s pleading.”

Judge Cooper indicated that reasonable attorney fees in this case equated to $15,000.

When Kolupar asked Judge Cooper to clarify the issue of costs, he responded that $15,000 included both fees and costs.

After a motion for reconsideration was denied by the circuit court, Kolupar appealed. A divided court of appeals voted to uphold the circuit court’s determination in a published decision. The court concluded that Judge Cooper did not err by excluding Kolupar’s billing documentation for untimely filing, did not err by considering the recommendation of the discovery referee, applied the correct legal standard in reaching its conclusion as to attorney fees, and did not deny taxable costs. In dissent, Judge Ralph Adam Fine concluded that Judge Cooper did not consider the appropriate factors in reaching a reasonable attorney fee award, and the court should have relied on Kolupar’s billing documentation rather than the recommendation of the discovery referee.

The Supreme Court accepted review, and affirmed in part, in a decision by Justice David T. Prosser. Chief Justice Shirley S. Abrahamson dissented, in an opinion joined by Justice Ann Walsh Bradley. Justice Diane S. Sykes did not participate.

Standard

The court began by adopting the same standard for determining reasonable attorney fees as is used in federal courts.

The court noted that, Supreme Court Rule 20:1.5(a) lists “[t]he
factors to be considered in determining the reasonableness of a fee”: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent.

The court noted the subjectivity of the factors, stating, “The factors do not lead to a single unitary value as the only reasonable fee. They can justify a range of reasonable fees and different methods of calculating them. … conceptually speaking, the factors serve to ferret out unreasonable fees; they do not command the analytical precision to lead a user to a single reasonable figure.”

The court added, “when courts endeavor to determine a reasonable fee using the factors listed in SCR 20:1.5, variation is to be expected. To the extent that discretionary decision-making can be made more uniform and transparent by providing an objective framework to assess these factors, such a framework is desirable.”

What the court held

Case: Kolupar v. Wilde Pontiac Cadillac, Inc., No. 02-1915.

Issue: Was it an erroneous exercise of discretion to reduce attorney fees from $53,000 to $15,000 in a case authorizing fee shifting?

Was it an erroneous exercise of discretion to deny costs without explanation?

Holding: No. Because the court held the plaintiff’s itemization inadmissible, and the plaintiff failed to properly appeal this issue to the court, there was no erroneous exercise of discretion.

Yes. Without explanation of the decision to deny costs, it cannot be determined whether appropriate discretion was exercised.

Counsel: Paul M. Erspamer, Waukesha, for appellant; James W. Hammes, Kathryn Sawyer Gutenkunst, Waukesha, for respondent.

The court noted that the factors are similar to those adopted by the U.S. Supreme Court for awarding attorney fees under fee-shifting statutes in Hensley v. Eckerhart, 461 U.S.424 (1983), stating, “The obvious similarities between the [] factors and the factors enumerated in SCR 20:1.5 have their origin in the American Bar Association’s Code of Professional Responsibility, Disciplinary Rule 2-106 (1969). Hensley’s endorsement of a method to analyze the … factors under an objective framework is compelling. It reinforces the circuit court’s discretion to set an award within a range of reasonableness and at the same time injects the exercise of that discretion with objectivity and uniformity. These aspirations are so important and desirable that we adopt Hensley’s lodestar methodology and direct the circuit courts to follow its logic when explaining how a fee award has been determined.”

Application

Turning to the case at bar, the court observed, “With respect to Judge Cooper’s explanation for the fee award in this case, we note the dearth of hard facts available to the court. If Judge Cooper had relied on the Hensley lodestar approach that we adopt today, he would have been within his discretion to significantly reduce the attorney fee award to nothing or nearly nothing.”

The court noted that Judge Cooper sanctioned Kolupar for not complying Local Rule 365 by refusing to consider the invoice, and that Kolupar did not raise this issue in the petition for review. The court stated, “On the facts presented here, Kolupar did not fully satisfy her burden to produce evidence of the hours worked, and Judge Cooper could have reduced her award, perhaps to a nominal amount, solely on that basis.”

The court continued, “Judge Cooper nevertheless concluded that attorney fees were appropriate. The absence of billing documentation meant that he had few objective facts to rely upon in arriving at a figure for Kolupar’s fees. The testimony reiterated the total amount Kolupar sought in fees and costs was approximately $53,000, and the court accepted that this figure constituted Kolupar’s actual attorney fees and litigation expenses. Without the billing invoices, however, the court could not know how much time Kolupar’s attorney spent on particular tasks, and therefore could make no assessment as to whether the hours her attorney exercised in pursuing the claim were reasonable. This rendered any analysis under a lodestar approach impractical.

“With respect to an analysis using the SCR 20:1.5 factors outside the lodestar framework, which until today has been the accepted methodology, Kolupar stresses that Judge Cooper did not expressly mention the factors nor did he discuss the full array of factors in his analysis. Judge Cooper’s analysis is best explained by considering the amount and type of the information teased out at the hearing. The nature of the information did not lend itself to a factor-by-factor analysis because the lion’s share of the testimony and argument focused myopically on who was more at fault for certain delays in discovery rather than on what SCR 20:1.5 factors or other methodology should guide the court to an appropriate award.”

The court concluded, “In the end, although we agree with Kolupar that, ideally the court should discuss each of these factors, we cannot justify a finding that Judge Cooper erroneously exercised his discretion when Kolupar failed in her burden to provide the court with anything meaningful to discuss.”

Addressing the eight factors set out in SCR 20:1.5, the court noted “Judge Cooper’s explanation relied almost entirely on ‘the amount involved and the results obtained’ pursuant to paragraph (a)(4), and for good reason. In this case, the primary SCR 20:1.5 factor on which the court had objective and reliable information was paragraph (a)(4). The Hensley case discusses this ‘important’ factor at length, and directs that courts ask: &
#145;[D]id the plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award?’ 461 U.S. at 434. In evaluating this factor, the Court stated that ‘the most critical factor is the degree of success obtained.’ Id. at 436. ‘Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee.’ Id. at 435.”

The court upheld Judge Cooper’s finding that the case was over-tried and over-pled, noting that Kolupar asserted five claims, one of which was the federal claim that was barred, and eventually abandoned, because the statute of limitation had long passed.

The court noted that, when Kolupar first itemized her damages in August 2000, she was seeking $10,600 plus unspecified repair expenses, interest charges, and financing charges, which, with the potential for treble damages under the federal statute, presented Wilde with a claim of at least $31,800. At another point, she requested a total of over $50,000.

The court found that the $6,600 that Kolupar did settle for was only 32 percent of her lowest itemization of damages while the case was pending, and 13 percent of the highest itemization. The court held, “While we do not approve a bright-line rule under which courts simply apply a strict ratio of the amount claimed and the amount of settlement to arrive at a reasonable fee, we do find it significant that the fee in this case constituted a higher percentage of the total sought than the same ratio between the requested damages and the settlement.”

The court added, “Wilde was presented with a claim for over $50,000 in damages. The extent of Wilde’s exposure may have caused it to adopt an uncompromising attitude with respect to this claim. Thus, to some extent the court was hypothesizing that the over-pleading instigated the contentious litigation that was to follow. This cause-and-effect appears reasonably based, and, in any event, we owe Judge Cooper deference.”

Accordingly, the court affirmed the fee award.

Costs

However, the court reversed the decision in part, because the court refused to award costs, but aggregated the costs into the $15,000 award of attorney fees.

The court reasoned, “Section 218.01(9)(b) does not state that the court may award costs or attorney fees. Costs and attorney fees are linked; the court is authorized to award costs, including a reasonable attorney fee. While the court may retain discretion to award $0 in costs or nominal costs, a decision to do so must be explained. Here, the court offered no explanation. The court may have believed the party’s settlement for $6,600 plus taxable costs included the costs requested by Kolupar. Or perhaps the court believed the costs should not be awarded at all. An explanation is required. We therefore remand the matter of costs to the circuit court.”

The Dissent

Chief Justice Abrahamson dissented, in an opinion joined by Justice Bradley, asserting, “This is a consumer protection case under a consumer protection law. The consumer in this case has been victimized twice: once by the defendants, the second time by the legal system.”

Discussing the lack of documentation of her attorney’s time, the dissent wrote, “The majority shifts the blame to Ms. Kolupar for the low award, asserting that the record before the circuit court had a ‘dearth of hard facts.’ And whose fault was that?

“The dearth of hard facts was caused by the circuit court’s refusal to admit Ms. Kolupar’s documentation in support of her attorney’s fees. Why weren’t these documents admitted? Because the circuit court ruled that the submission was late under local court rules.”

The dissent iterated Judge Fine’s discussion in dissenting at the court of appeals level: “[Rule 365] governs ‘motions’; it does not apply to exhibits offered at trials or evidentiary hearings. Kolupar never filed a motion for attorneys fees; the statute permits them and she demanded them in her complaint. Indeed, the trial court sua sponte set the hearing on the attorney-fees matter.”

The dissent concluded that, even if the local rule applied, the sanction of refusing to admit the documents was too harsh, and an erroneous exercise of discretion.

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The dissent also found that Kolupar adequately preserved the issue for appeal, noting, “The petition for review presented the following issue: ‘Did the trial court erroneously exercise its discretion by failing to apply and consider the correct legal standard?’ Included within the stated issue is the question whether the local rule was correctly applied. The petitioner is not required to set forth in the petition for review every argument that she will make in this court.”

Finally, the dissent again quoted from Judge Fine’s dissent, calling it harsh, “but not without justification,” repeating, “the Majority defers to the unfocused musings by both a former judge, appointed to oversee a small part of the discovery disputes in this case, and the trial court. … The trial court here never considered on the record any of the factors [in determining attorney fees]. Rather, it deferred to the off-hand assessment of the former judge who, as the Majority notes, was only appointed to be a discovery master. The trial court’s
abdication of its responsibility was palpable, as reflected by the transcript in the record. … Wilde suggested the $15,000 figure, and the former judge adopted it without any analysis beyond his view that more was not warranted because, with Kolupar’s acceptance of the $6,600 offer of settlement, the case was ‘just barely above a small claims case.’”

The dissent concluded, “The discovery master erred in viewing the amount of recovery as determinative of reasonable attorney fees. The amount of the recovery is not a measure of what the fee-shifting award should be in consumer protection cases.”

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David Ziemer can be reached by email.

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