Trinity Petroleum, Inc. v. Scott Oil Co.

2006 WI App 219, 724 N.W.2d 259, 296 Wis. 2d 666, 2006 Wisc. App. LEXIS 865
Court of Appeals of Wisconsin·Decided September 20, 2006·No. 2005AP2837·Published·Cited by 4 cases

Opinions

NETTESHEIM, J.

¶ 1. Wisconsin Stat. §§ 802.05 and 814.025 (2003-04),1 addressing frivolous claims, were repealed and § 802.05 was recreated effective July 1, 2005.2 This appeal requires that we address the impact of the new § 802.05 on litigation begun while the former statutes still were in effect.

¶ 2. After summary judgment was granted in its favor, Scott Oil Company moved for frivolousness sanctions against Trinity Petroleum, Inc., pursuant to Wis. Stat. §§ 802.05 and 814.025. The circuit court denied the motion because those statutes had been repealed by the time the motion for sanctions was filed and Scott Oil did not comply with the procedural mandates of newly recreated § 802.05. Scott Oil argues that the circuit court erred when it applied the new rule retroactively. We disagree. We conclude that the new § 802.05 is a procedural statute, giving it retroactive effect. We also hold that the new "safe harbor" provision of the rule precludes a party from serving its motion for sanctions postjudgment. We affirm.

[671] BACKGROUND

¶ 3. The facts relevant to the appeal are brief and undisputed. Scott Oil and Trinity had a contractual agreement under which Trinity would transport Scott Oil's petroleum products. Problems arose, Scott Oil terminated the contract and Trinity sued for breach of contract. On April 5, 2005, Scott Oil moved for summary judgment. The court granted the motion at a hearing on July 5.

¶ 4. At the conclusion of the summary judgment hearing, Scott Oil orally moved for attorney fees on the grounds that Trinity's action was frivolous. Scott Oil had not raised the issue of frivolousness in its pleadings or in its brief in support of summary judgment, although it had invoked Wis. Stat. § 814.025 in the last sentence of the "Conclusion" of its April 26, 2005 brief in response to Trinity's motion to quash and deny Scott Oil's summary judgment motion. The court denied the oral request, observing that because the matter never had been pled, it was not properly in front of the court. The court advised Scott Oil, however, that if it wished to renew the request it should file a motion in that regard. In this exchange, neither Scott Oil nor the circuit court referenced any specific statute in regard to attorney fees.3

¶ 5. On July 21, Scott Oil moved for attorney fees and costs under Wis. Stat. §§ 802.05 and 814.025. It did not serve upon Trinity a motion describing the specific conduct it considered impermissible. The circuit court [672] denied the motion because the supreme court had repealed the two statutes and recreated § 802.05 effective July 1. The circuit court observed that the supreme court's action had come about upon joint petition of the Civil Trial Counsel of Wisconsin, the Wisconsin Academy of Trial Lawyers, the Litigation Section of the State Bar and the Wisconsin chapter of the American Board of Trial Advocacy, and after a public hearing.

¶ 6. The circuit court acknowledged that the new rule did not explicitly state whether it was to be applied retroactively or prospectively only. It observed, however, that the petition proposing the changes had "been around and in the hopper for a long period of time" and that, while the order was effective July 1, it was "important to note" that actual passage of the rule announcing the change was on March 31, even before Scott Oil had filed its motion for summary judgment. The circuit court observed that, like Federal Rule of Civil Procedure 11 (Rule 11), the new law focuses on deterrence of frivolous claims and therefore mandates specific procedures to permit an offending matter to be withdrawn or corrected.

¶ 7. The circuit court then stated its belief that under "the old law . .. this was not an action that was well[-]grounded in fact or in law," but nonetheless denied Scott Oil's request for sanctions because it had failed to comply with the "very specific . .. safe harbor" procedural requirements of the new Wis. Stat. § 802.05. The court also expressed its belief that the supreme court intended the new rule to apply to "any and all actions whether in effect at that time or that would have been commenced after July 1, 2005." Scott Oil appeals.

[673] DISCUSSION

¶ 8. Neither the summary judgment nor the determination of frivolousness is challenged on appeal, leaving but one issue: what effect do the repeal of the prior frivolous action statutes and the recreation of a new one have on an action for sanctions filed after the statutes changed, but which relates to conduct predating the change? Scott Oil insists the new rule should not apply. It asserts that Wis. Stat. § 990.04 "unambiguously require[s]" using the repealed statutes, since the new Wis. Stat. § 802.05 lacks an express provision for retroactive application. Trinity responds that the new rule is a procedural statute and thus must be applied retroactively and that the old law is simply irrelevant because it no longer was in effect when Scott Oil moved for sanctions. Our task, therefore, is to answer whether the new § 802.05 is procedural or substantive such that the circuit court's retroactive application of it can be sustained. Whether a statute merits retroactive or prospective application is a question of law which we decide de novo. Modica v. Verhulst, 195 Wis. 2d 633, 639, 536 N.W.2d 466 (Ct. App. 1995).

Background of New Wis. Stat. § 802.05 4

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Trinity Petroleum, Inc. v. Scott Oil Co., 2006 WI App 219, 724 N.W.2d 259, 296 Wis. 2d 666, 2006 Wisc. App. LEXIS 865 (Wis. Ct. App. 2006).

2006 WI App 219 (Trinity Petroleum, Inc. v. Scott Oil Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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