Cytophil, Inc.
Creditor Health Policy Associates, Inc., objects that creditor Jansson Munger & McKinley Ltd.s claim for breach of contract is barred in substantial part by Wisconsins statute of limitations. Precedent demonstrates that the claim is timely.
I
A
In June 2015 Merz North America, Inc. (Merz) sued Cytophil, Inc., in the United States District Court for the Eastern District of North Carolina alleging that Cytophils Renú® Voice injectable vocal fold implant infringed Merzs patent. Merz N. Am., Inc. v. Cytophil, Inc., No. 5:15-cv-262, ECF No. 1 (E.D.N.C. June 18, 2015).1 In August 2015
In April 2016, Cytophil—represented by Jansson as part of the same engagement—filed a complaint against Merz and its parent company in the United States District Court for the Eastern District of Wisconsin alleging that those parties had engaged in false marking under the §292 of the Patent Act,
B
Although Cytophil made regular partial payments to Jansson through April 2018, Cytophil owed the firm more than $1.3 million when the litigation concluded in 2019. See Exs. 3 & 4. In April 2025, Jansson filed proof of claim number 10, alleging that Cytophil owed it $1,327,902.28 in unpaid legal fees. Claim No. 10-1. Jansson supported the claim with ledgers showing Cytophils indebtedness for services rendered in the Merz litigation and those ledgers reflect charges that the firm had invoiced from 2015 to 2019.4 Id. at Parts 5 & 6; Exs. 3 & 4. Cytophil does not contest Janssons claim. It scheduled Jansson as holding a nonpriority unsecured claim for $1,327,902.28 that is liquidated and undisputed. ECF No. 36, at 12.
Health Policy Associates, Inc. (HPA), which asserts a (roughly) $727 thousand default judgment claim against Cytophil, objects to the allowance of Janssons claim in its full amount, contending that Janssons alleged damages are mostly time-barred by Wisconsins six-year statute of limitations and thus are not allowable under
Jansson responds (among other things) that it holds a single claim for unpaid fees for representing Cytophil in the Merz litigation and that a total breach of the engagement agreement did not occur—thus its breach of contract claim did not accrue—until the representation ended in June 2019 and Cytophil failed to pay the amounts owed.5 ECF No. 240, at 7–8 & ECF No. 250. Therefore, Jansson argues, its claim—the validity of which is determined as of February 4, 2025, the date on which Cytophil filed its bankruptcy petition (see
II
Janssons claim arises under Wisconsin law. This courts task in applying Wisconsin law is to “make [its] best prediction of how the Wisconsin Supreme Court
A
Wisconsin law provides that, subject to inapplicable exceptions, “an action upon any contract, obligation, or liability, express or implied, including an action to recover fees for professional services, . . . shall be commenced within 6 years after the cause of action accrues or be barred.”
Wisconsin precedent appears to answer the question. In the venerable Lowe v. Ring, the Wisconsin Supreme Court ruled that an attorney s cause of action for unpaid legal services does not accrue until his representation of the client concludes: “The rule . . . is that the statute [of limitations] does not commence to run upon an attorney s claim for services and disbursements until the termination of the proceeding in which they were rendered, where his employment was to conduct such proceeding to its
HPA contends that Lowes accrual principle does not apply here because Janssons engagement agreement expressly required Cytophil to pay Janssons invoices immediately. See Ex. 101, at 2 (“Payment of our firm s monthly invoices for services and outlays is due upon receipt.”). HPA emphasizes that the Wisconsin Supreme Court declared in 1993, “[i]n Wisconsin, a 90–year line of precedent holds that ‘[i]n an action for breach of contract, the cause of action accrues and the statute of limitations begins to run from the moment the breach occurs.’” CLL Assocs. Ltd. P ship v. Arrowhead Pac. Corp., 497 N.W.2d 115, 117 (Wis. 1993) (quoting State v. Holland Plastics Co., 331 N.W.2d 320, 325 (Wis. 1983) (citations omitted)); see also ECF No. 251, at 4–7. Because Cytophils failure to pay the invoices immediately is a breach of the engagement agreement, HPA argues, CLL requires this court to conclude that Cytophil breached the agreement each time it failed to immediately pay an invoice in full—giving rise to a series of contract breaches, most of which arose more than six years before Cytophil filed its bankruptcy petition.
But neither CLL nor any other Wisconsin Supreme Court case purports to
No other case than this could be required to illustrate the propriety of this rule. Here was a suit pending in court for more than twelve years, during all of which time the defense was conducted by these solicitors, with great ability, and the most constant assiduity, requiring, at one time, an almost constant attendance before the master, for about nine months, in stating the accounts of a partnership involved in that suit. Did the statute of limitations commence running at the termination of each day, as to the services rendered on that day? Were the solicitors obliged to pause in their defense, within each period of five years, to commence a suit against their clients for the services already performed, or forfeit them? The very statement of the proposition shows how embarrassing, inappropriate, and indeed, impracticable, such a rule would be.
While of long lineage, the Lowe rule is no relic. In 2009 the Michigan Supreme Court held that in the context of an attorney having continuing duties to represent his client in litigation, the attorney s contract claim against the client for nonpayment of fees did not accrue until “the date that the attorney-client relationship was terminated”, even though contract-claim accrual under Michigan law, as under Wisconsin law, “generally begins to run on the date the breach occurs.” Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, P.C. v. Bakshi, 771 N.W.2d 411, 413, 418 (Mich. 2009). The Michigan Supreme Court reasoned that the lawyer s ethically imposed duties to continue representing the client justified applying the same end-of-representation exception to the general accrueupon-breach rule that Lowe recognized more than a century earlier:
Id. at 418–19 (emphasis added) (footnotes omitted). Appellate courts in other jurisdictions have reached the same conclusion. See Pellettieri, Rabstein & Altman v. Protopapas, 890 A.2d 1022, 1023 (N.J. Super. Ct. App. Div. 2006) (“[T]he statute of limitations for attorney fees arising from a retainer agreement, permitting periodic hourly billing, commences when the services are concluded or attorney-client relationship is ended, whichever occurs first.”); see also Mitchell v. Guardian Sys., Inc., 804 A.2d 1004, 1008 (Conn. App. Ct. 2002) (“When the claim for attorney[ s] fees is based upon continuous legal representation, the statute of limitations does not begin to run until the legal services are complete. . . . The statute of limitations is tolled during the pendency of the continuous representation.” (quoting Doe v. State, 579 A.2d 37, 41 (Conn. 1990))); Rosen Hagood, LLC v. Henson, No. 2022-001070, 2025 WL 1454472, at *3 (S.C. Ct. App. May 21, 2025) (nonprecedential) (“Claims by attorneys seeking unpaid fees differ from typical breach of contract claims that accrue at the moment of breach because attorneys owe a fiduciary duty to their clients and cannot unilaterally withdraw from representation without permission from the court, which could result in the attorney-client relationship continuing after the initial breach.”); Skiles DeTrude v. Dollar Gen. Stores, No. 1:07-cv-940, 2009 WL 499542, at *3 (S.D. Ind. Feb. 27, 2009) (“The general rule, in Indiana and elsewhere, has long been that ‘[t]he employment of an attorney to represent a party to an action is a single employment, and the statute of limitations does not begin to run against his claim for services until such action or suit has terminated-until judgment has been rendered in the cause in which he has been retained.’” (quoting Felt v. Mitchell, 88 N.E. 723, 723 (Ind. Ct. App. 1909))).A contract is breached when one party fails to perform its portion of the contract. Thus, under general contract principles, an attorney s cause of action to recover attorney fees would accrue on the date the client breached the parties agreement by failing to pay in accordance with its terms. We conclude that, in the context of litigation, the special features of the attorney-client relationship necessitate an exception to the general rule where the client breaches the agreement during the representation. Once litigation has commenced, an attorney cannot discontinue serving his or her client without an order of the court because an attorney s ability to terminate the representation may be limited by his or her responsibilities to the client. Although the client may have ceased making payments to the attorney, the attorney s representation of the client continues until the court has permitted the termination.
Judge Adelman, moreover, recently concluded that Wisconsin law continues to provide that an attorney s claim against his client for breach of contract does not arise until the attorney-client relationship ends:
Hudec v. Prpa, 820 F. Supp. 3d 786, 789 (E.D. Wis. 2026) (quoting Milwaukee” cite=“533 N.W.2d 780” pinpoint=“785” court=“Wis.” date=“1995“>Pritzlaff v. Archdiocese of Milwaukee, 533 N.W.2d 780, 785 (Wis. 1995)).A claim for breach of contract, like any claim, accrues when “there exists a claim capable of enforcement, a suitable party against whom it may be enforced, and a party with a present right to enforce it.” But an attorney cannot enforce a claim against his or her client until the attorney-client relationship ends, and attorneys are not free to withdraw from representation at will. See Wis. SCR 20:1.7 (conflicts of interest); 20:1.16 (terminating representation). Therefore, the earliest a breach-of-contract claim could be capable of enforcement is the date when the attorney-client relationship for a particular matter ends.
B
HPA would distinguish Lowe, Hudec, Lackner, and similar authorities as applicable only when there is “uncertainty over precisely when fees come due.” ECF No. 251, at 4. As mentioned above, HPA argues that because the Jansson-Cytophil agreement provides that fees were due when invoiced, Janssons claim to recover fees is limited to fee amounts that it first invoiced within the six-year limitations period. Id. at 5 (citing J.J. Marticelli, Annotation, When Statute of Limitations Begins to Run Against Action by Attorney, Not Employed on Contingent Fee Basis, for Compensation for Services, 60 A.L.R.2d 1008, §§1 & 3 (Originally Published in 1958)). “Attorneys fee claims”, says HPA, “are just like other contracts claims: they expire six years from accrual”, and CLL requires that “accrual occurs ‘at the moment the contract is breached[.]’” ECF No. 251, at 4 (quoting CLL, 497 N.W.2d at 116).
Even if Wisconsin law generally requires treating each unpaid invoice as giving rise to a distinct contract claim for statute of limitations purposes, Lowe and the other authorities discussed above show that courts have long applied a different accrual rule to attorneys agreements to represent clients in litigation. And the application of Lowe and the rest of those opinions cannot sensibly be limited to engagement agreements that do not specify when payment of fees is due—there certainly was no uncertainty about when fees came due in Pellettieri. Like Janssons engagement agreement, the attorney s original agreement in Pellettieri provided, “All bills which are submitted are due and payable when rendered.” 890 A.2d at 1024 (emphasis omitted). Later the attorney wrote the delinquent client, “This firm can no longer continue to represent you if you do not begin to make monthly payments to satisfy your bill. At a minimum, I will require you to make monthly payments of $4,000.00 starting on March 31, 1997 and continuing each month until the balance of the bill has been paid.” Id. Even though both the original agreement and subsequent dealings specified payment deadlines, the appellate court
Similarly, Cytophils engagement of Jansson to represent it in the Merz litigation was a singular undertaking that gave rise to a continuing duty on Janssons part to represent Cytophil in the related patent and antitrust cases until the representation ended. See Ex. 101, at 1 (Jansson engagement letter governing “[r]epresentation by Jansson Munger McKinley & Shape Ltd. in connection with Merz North America, Inc. v. Cytophil, Inc. d/b/a Regenscientific”); see also Evidentiary Hr g Test., ECF No. 245.
Janssons agreement to represent Cytophil in the Merz litigation thus resulted in a continuing engagement by its terms (since it provided generally for Janssons representation of Cytophil “in connection with” that litigation), by the intent of its parties, and because the Rules of Professional Responsibility required Jansson to continue providing legal services until the representation was concluded. Ex. 101, at 1; Evidentiary Hr g Test., ECF No. 245. One consequence of the agreement s continuing nature is that, unlike most commercial contracts, Jansson could not unilaterally declare Cytophil in material breach, discontinue its representation, and sue Cytophil for unpaid invoices. The Rules of Professional Responsibility and the local rules of the courts in which the litigation was pending required Jansson to continue its representation of
The continuing nature of Janssons duties to represent Cytophil reconciles Lowes century-old rule (that claims for unpaid litigation services accrue when the representation ends) with CLLs pronouncement that “a 90-year line of precedent holds that ‘[i]n an action for breach of contract, the cause of action accrues and the statute of limitations begins to run from the moment the breach occurs.’” 497 N.W.2d at 117 (quoting State v. Holland Plastics Co., 331 N.W.2d 320, 325 (Wis. 1983), and citing, among other authorities, Segall v. Hurwitz, 339 N.W.2d 333, 342–43 (Wis. Ct. App. 1983)). Segall, one of the precedents on which CLL relies, involves a breach of a covenant not to compete in the railroad salvage business. In that context, Segall observes that “[c]ontracts requiring continuous performance for a specified period of time” may endure serial “‘“partial” breaches, as well as of a single total breach by repudiation or by such a material failure of performance when due as to go “to the essence” and to frustrate substantially the purpose for which the contract was agreed to by the injured party.’” Segall, 339 N.W.2d at 343 (quoting 4 Corbin on Contracts §956 at 841 (1951)). Segall instructs about the commercial context, “if the promisor has a continuing duty to perform, generally a new claim accrues for each separate breach . . . The injured party may assert a claim for damages from the date of the first breach within the period of limitation.” Id. (citation omitted). But Segall acknowledges that continuing contracts—contracts requiring enduring performance, such as continuing not to compete in a particular business—may also give rise to an action for “total breach” that arises “by
C
Janssons representation of Cytophil ended no earlier than June 6, 2019, the date the District Court for the Eastern District of North Carolina dismissed the Merz case with prejudice. That date is less than six years before Cytophil filed its bankruptcy petition, giving rise to Cytophils bankruptcy estate from which Jansson seeks payment by filing a proof of claim. Under Lowe, Janssons claim is not barred or limited by the applicable statute of limitations,
HPA has shown no persuasive reason to predict that the Wisconsin Supreme Court would overrule Lowe or hold it inapplicable to Janssons cause of action against Cytophil. In refusing to modify a century-old accrue-on-breach rule, CLL suggests that the Legislature is ordinarily better positioned to adjust when claims are deemed to accrue for statute of limitations purposes. CLL, 497 N.W.2d at 119 (“If the general rule that we uphold today creates unjust results in specific situations not now before this court, i.e. in the consumer context where contracting consumers have limited bargaining power, the legislature, with its greater resources for weighing policy, is best equipped
For the reasons stated, IT IS ORDERED that Health Policy Associates objection to allowance of Jansson Munger & McKinley Ltd.s claim is overruled, and Jansson Munger & McKinley Ltd.s claim (claim number 10) is allowed as a non-priority unsecured claim in the amount of $1,327,902.28.
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G. Michael Halfenger
United States Bankruptcy Judge