Costs Case Analysis

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The decision in this case is nothing short of tragic.

Admittedly, the court’s interpretation is reasonable, insofar as the omission of the word “actual” before “costs,” in this subsection, when the Legislature used the term “actual costs,” when referring to the recovery by a prevailing party in an earlier subsection, suggests legislative intent to limit the recovery to taxable costs.

Nevertheless, it is not the only reasonable interpretation; a case can be made that “costs” is ambiguous, notwithstanding the incongruity.

Nothing has changed with the renumbering of the statutes. The same distinction is continued in the current version of the statute, sec. 218.0163. Subsection (1) and (1m) both allow recovery that includes “actual costs including reasonable attorney fees” to licensees and dealers injured by unfair practices by licensors or other licensees.

Subsection (2) — governing injury to retail buyers or lessees — however, only allows recovery of “costs, including reasonable attorney fees.”

Notwithstanding the court’s finding of an absence of any indication the distinction was inadvertent, the fact is that there can be no plausible reason for the Legislature to make such a distinction.

The American Rule is that each party generally bears its own attorney fees and litigation costs, save for the token costs authorized in Rule 804.14(1). In many statutes, including this one, however, the Legislature authorizes fee-shifting: civil rights legislation, landlord-tenant law, and relevant to this case, consumer protection acts.

The underlying reason for all fee-shifting statutes is dual fold, and the same: to encourage private citizens to act as private attorneys general; and to make the aggrieved parties whole. However, if a prevailing party in a consumer fraud action is limited to damages, plus attorney fees, while denied recovery for actual reasonable litigation expenses, the fee-shifting provision wholly fails to fulfill its intended purpose.

The private attorney general can never be made whole, and private enforcement of the statute will not occur, if only partial fee-shifting of this sort is enacted.

The case at bar more than adequately demonstrates why. In 1994, Kolupar, then an 18-year old woman, was sold a car based on fraudulent misrepresentations.

The parties agreed to actual damages of $6,600 (although reading the facts in the case when this case was first heard by the court of appeals and the Supreme Court suggest damages are likely higher). Kolupar v. Wilde Pontiac Cadillac, Inc., 2003 WI App 175, 266 Wis.2d 659, 668 N.W.2d 798, affirmed in part, and reversed in part, 2004 WI 112, 275 Wis.2d 1, 683 N.W.2d 58.

The dealership then engaged in “scorched-earth Rambo-litigation policy” (in the words of Judge Fine the first time this case was before the court). As a result, by the year 2001, she had already incurred $41,000 in attorney fees, and $11,000 in actual litigation expenses.

Nevertheless, based on the recommendation of a discovery referee appointed only to oversee a small part of the litigation, the circuit court awarded only $15,000 combined, and the court of appeals affirmed (over Fine’s dissent). In the Supreme Court, she was denied attorney fees based on an overly restrictive standard for framing the issue in her petition for review, but the case was remanded for a determination of costs (over the dissent of Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley).

On remand, she was denied actual costs, based on an interpretation by the court that is patently contrary to the germane purpose of all fee-shifting statutes. It is noteworthy that, when this case was originally in the circuit court, the court concluded that it had authority to award “actual costs, including a reasonable attorney fee,” and that was not disputed in the first round of appeals. Kolupar, 683 N.W.2d at 62.

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Twelve years later, Kolupar has now spent her entire adult life pursuing justice for a motor-vehicle fraud that occurred when she was 18. She has been denied that justice, twice in the circuit court, once in the Supreme Court, and now twice in the court of appeals.

The most recent legislative session was the most active in recent memory. If this decision stands as precedent, there can be no excuse in the next term for this statute not being amended to include the word, “actual” before “costs” in subsec. (2).

And, while they are at it, they should also amend the word “may” to “shall” in subsec. (2). As the statute is currently written, it contains yet another ridiculous incongruity: a licensee injured by the unfair practices of another licensee or a licensor “shall recover [treble] damages” (plus actual costs and attorney fees), while a consumer “may recover damages” (plus only taxable costs and attorney fees).

If the court were to take its reasoning regarding incongruity in statutory language to its logical stopping point, a circuit court would not only be barred from awarding actual litigation expenses, it would have the discretion to deny even actual d
amages.

– David Ziemer

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David Ziemer can be reached by email.