John D. HESS, Joan M. Hess, Adrienne V. Hess, and Emily M. Hess, a minor, by William Smoler, her Guardian ad Litem, Plaintiffs-Respondents-Cross-Appellants, WAUSAU INSURANCE COMPANIES, Subrogated-Plaintiff, v. Juan FERNANDEZ III, M.D., Defendant-Appellant-Cross-Respondent, WISCONSIN PATIENTS COMPENSATION FUND, Defendant-Co-Appellant-Cross-Respondent.
No. 03-0327
Supreme Court of Wisconsin
February 25, 2005
Motion for reconsideration filed March 9, 2005
2005 WI 19 | 692 N.W.2d 655
N. PATRICK CROOKS, J.
For the defendant-co-appellant-cross-respondent there were briefs by Jon G. Furlow, Mary C. Turke and Michael Best & Friedrich, LLP, Madison, and oral argument by Jon G. Furlow.
For the plaintiffs-respondents-cross-appellants there were briefs by William Smoler and Smoler Law Office, LLC, Monona, and oral argument by William Smoler.
¶ 1. N. PATRICK CROOKS, J. This case is before us on certification from the court of appeals pursuant to
circuit court, relying on
¶ 2. We conclude that the circuit court erroneously exercised its discretion by granting the motion to amend the pleadings to include Hess‘s new claim. In doing so, we determine that there was no express or implied consent by Fernandez or the Fund to try the issues raised by the
¶ 3. Additionally, we hold that, irrespective of the amendment, the Fund cannot be liable for costs and reasonable actual attorney fees under
I
¶ 5. Joan Hess‘s condition continued to deteriorate throughout 1992, forcing her to be hospitalized on five separate occasions. In May 1992, Fernandez diagnosed her with multiple personality disorder. In addition, Fernandez agreed that she should undergo a hysterectomy because she suffered anxiety at the sight of blood.
¶ 6. In July 1994, Joan Hess ended her care with Fernandez. Over the next couple of years, she came to realize that her memories, and the diagnosis of multiple personality, were false and caused by Fernandez. In March 1995, Hess filed a claim under
Joan Hess‘s psychiatric treatment. They named the Fund as a defendant pursuant to
¶ 7. Hess retained an attorney for the malpractice claim, but did not contract with him on an hourly basis. Instead, they agreed to pay him on a contingent fee basis, which would amount to thirty-three and one-third percent (33 1/3%) of any “lump sum amount” recovered after the commencement of trial. Fernandez and Decker each obtained separate representation. However, nearly 18 months into the lawsuit, Fernandez‘s counsel assumed additional representation for the Fund.
¶ 8. On September 2, 1999, a jury returned a verdict for Hess on the medical malpractice claims, finding that Fernandez had negligently treated Joan Hess and failed to obtain informed consent for her treatment. The jury awarded plaintiffs $861,538.46 in damages, including $450,000 for Joan Hess. The remainder was awarded to her husband and children for derivative claims.
¶ 9. After the verdict, Hess moved to amend the pleadings to recover costs and reasonable actual attorney fees under
they qualified to receive payment under
¶ 10. After the circuit court granted the post-verdict motion, it awarded Hess $911,409.81 in reasonable actual attorney fees under
¶ 11. Fernandez and the Fund were unsuccessful
II
¶ 12. The first issue that we address is whether the circuit court erred in allowing Hess to amend the original pleadings to include a claim for costs and reasonable actual attorney fees under
¶ 13. When reviewing the legal standard in this case, we look first to
If issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to so amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice such party in maintaining the action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.
¶ 14. The first part of subsection (2) addresses a scenario where the unpleaded issues are tried by the express or implied consent of the parties. Zobel v. Fenendael, 127 Wis. 2d 382, 387, 379 N.W.2d 887 (Ct. App. 1985). We have interpreted this first section of the subsection to be mandatory. Peterson, 104 Wis. 2d at 629. If there is a determination that the issue was tried by the express or implied consent of the parties, the court must amend the pleadings to conform with the proof presented at trial. Id. To determine implied consent, the court must use the test of actual notice, and if it finds no actual notice, it should find no implied consent to try the unpleaded issue. Id. at 634. If, on the other hand, the circuit court finds that there was no consent to the trial of the unpleaded issue, it must apply a balancing test and make an “interests of justice” determination. Zobel, 127 Wis. 2d at 390.
¶ 15. The second part of the statute addresses a scenario where the evidence presented at trial was objected to for failing to be included in the original pleadings. Id. at 388. This section of the statute grants the circuit court discretion to allow amendments. See
¶ 16. The second part of
case must be resolved under the first part of the subsection, as well as under
¶ 17. Hess makes three arguments as to why the circuit court correctly granted its motion for costs and reasonable actual attorney fees. First, Hess argues that the complaint was sufficient as drafted. Because Wisconsin is a notice pleading state, Hess argues that there was no requirement to set forth specifically each claim in the original complaint, but rather that a complaint requires only one cause of action.11 Second, Hess relies on the circuit court‘s decision that Fernandez and the Fund had given implied consent, as the elements of the
¶ 18. Fernandez and the Fund, on the other hand, urge us to follow the interpretation of both Peterson and Zobel, and hold that the circuit court applied the wrong legal standard in allowing the amendment of the complaint. They first argue that the circuit court erred in finding implied consent. Specifically, they argue that because they did not receive actual notice that evidence was being presented on the unpleaded issue, there could not have been implied consent. Next, Fernandez
and the Fund argue that the circuit court focused on whether they met their burden on prejudice, and neglected to consider, among other matters, why Hess delayed bringing a claim under
¶ 19. In our analysis of
¶ 20. As stated above, the determination of whether a case was tried by implied consent is to be made by the circuit court. In this case, the circuit court held that there was implied consent, because the elements of the
because the jury found negligence based on Fernandez‘s failure to exercise reasonable care. Thus, the court was satisfied that the elements, at least as to the violation of the standard of care, were “fully aired” during the trial, and the amendment satisfied
¶ 21. From our review of the record, we disagree with the circuit court and conclude as a matter of law that there was no implied consent, since Fernandez and the Fund did not have actual notice of the unpleaded issue. For support on this conclusion, we look to Peterson. In that case, we held that implied consent exists where there is no objection to the introduction of evidence on the unpleaded issue and where the party not objecting is aware that the evidence goes to the unpleaded issue. Peterson, 104 Wis. 2d at 630. Thus, actual notice to the parties is the key factor in determining if there was implied consent. Id. Because we assume that relevant evidence was admitted here without timely objection, we must review the record to determine if Fernandez and the Fund had actual notice that the claim by Hess for costs and reasonable actual attorney fees was being raised during trial. See id.
¶ 22. We cannot conclude that, because the jury found negligence as to the standard of care, Fernandez and the Fund were fully aware that Hess was also trying a claim under
implied consent without considering actual notice, pointed out matters that clearly lead to a determination of no actual notice: “[T]here was no specific prayer for relief under
¶ 23. Although we conclude that Fernandez and the Fund did not give any consent to trial of the unpleaded issue, our analysis of
Zobel, 127 Wis. 2d at 891. Therefore, the circuit court has to determine if such an amendment is in the “interests of justice.” Such analysis of the “interests of justice” often involves consideration of prejudice. Peterson, 104 Wis. 2d at 635. However, the United States Supreme Court in Foman v. Davis, 371 U.S. 178 (1962), held that the balancing test also can take into account a variety of factors including undue delay, motive, and prejudice. Foman, 371 U.S. at 182.
¶ 24. When determining the “interests of justice,” we agree with the court of appeals’ decision in Zobel that such a review presents a question of law.13 Zobel, 127 Wis. 2d at 391. We therefore review the decision of the circuit court de novo, although benefiting from its analysis. Meriter Hosp., Inc. v. Dane County, 2004 WI 145, ¶ 12, 277 Wis. 2d 1, 689 N.W.2d 627.
¶ 25. Here, the circuit court concluded that Fernandez and the Fund did not meet the burden of proof as to prejudice. The court denied the argument that there was prejudice because of the lack of notice of the remedy sought. It reiterated that because the claim was “fully aired” during trial, Fernandez and the Fund could not prove prejudice as to the lack of notice. On appeal, Hess seeks to uphold this ruling.
¶ 26. Fernandez and the Fund, on the other hand, make multiple arguments in opposition to the circuit court‘s holding that the pleadings could be amended in the “interests of justice.” They argue that the circuit court erred by focusing almost exclusively on prejudice. While prejudice is clearly a factor to be considered in applying this standard, they claim that the court should also look to other factors, such as undue delay and improper motive, and “balance the interests of the party benefiting by the amendment and those of the party objecting to the amendment.” Peterson, 104 Wis. 2d at 634. They conclude that while no one factor is dispositive in this balancing test, the circuit court erred in failing to apply the “interests of justice” standard properly.
¶ 27. In Peterson and Zobel, the courts held that the party objecting to the amendment could not claim prejudice if the circuit court offered an opportunity to offer additional evidence. Id. at 639; Zobel, 127 Wis. 2d at 391 n.8. In regard to the motion for costs and reasonable actual attorney fees under
¶ 28. Furthermore, we are not blind to the unfairness inherent in permitting an amendment at such a late hour. See DRR, L.L.C. v. Sears, Roebuck & Co., 171 F.R.D. 162, 168 (Del. 1997). We agree with Fernandez and the Fund that in order to determine the “interests of justice,” we must consider in the balance several more factors. In Peterson, we were able to make our “interests of justice” determination without much difficulty, because the court amended the complaint sua sponte, and did not give the objecting party any time to respond.14 However, we did not hold that this was the only situation in which a court can find that an amendment is not within the “interests of justice.” Thus, when we balance the interests of both parties, as Peterson requires, we agree with Fernandez and the Fund that the circuit court should have considered such factors as undue delay and the motive of the moving party, as well as whether prejudice resulted for the Fund and Fernandez.
¶ 29. We find support for this approach from federal cases. Under the
ing “when justice so requires.”16 Courts have expanded the interpretation of “interests of justice” beyond prejudice, however, and held that among the adequate reasons for denying leave to amend under such circumstances are “undue delay, bad faith or dilatory motive on the part of the movant. . . .” Foman, 371 U.S. at 182; Viernow v. Euripides Dev. Corp., 157 F.3d 785, 799 (10th Cir. 1998) (“we ‘have often found untimeliness alone a sufficient reason to deny leave to amend‘“) (citation omitted); DRR, L.L.C., 171 F.R.D. at 167 (“a movant who offers no adequate explanation for its delay will ordinarily be denied leave to amend“); Zahra v. Town of Southold, 48 F.3d 674, 686 (2d. Cir. 1995) (“It was entirely reasonable for the district court to deny a request to amend a complaint that was filed two and one-half years after the commencement of the action“); Perrian v. O‘Grady, 958 F.2d 192, 194 (7th Cir. 1992) (“‘the longer the delay, the greater the presumption against granting leave to amend‘“) (citations omitted). We see no reason not to extend this rationale to cases requiring “interests of justice” determinations under
¶ 30. It is also argued that Hess had a dilatory motive in moving for amendment of the complaint. Hess did not move to amend the claim for costs and actual attorneys fees until after the jurors determined their award. Hess‘s motion requested $1,052,426.17, which is considerably more than the sum of $149,985, which was the amount that Hess‘s attorney had agreed to accept based on the contingent fee agreement.
¶ 31. Although Hess attempts to refute any allegation of improper motive, the argument seems to be of questionable merit. Hess contends that because a post-verdict motion for attorney fees was allowed in Gorton v. American Cyanamid Co., 194 Wis. 2d 203, 232, 533 N.W.2d 746 (1995), that the motion here should not be considered untimely and, thus, improper. In that case, we allowed a post-verdict motion for attorney fees under
¶ 32. Fernandez and the Fund argue that the plain language of
¶ 33. We conclude that the circuit court erroneously exercised its discretion in granting Hess‘s motion to amend the pleadings under either the theory of implied consent or the balancing test related to the “interests of justice.” The circuit court should have considered factors other than just prejudice and should have given much more weight, in applying the balancing test, to the delay in bringing the motion to amend, the motive of the moving party, as well as the prejudice to Fernandez and the Fund, resulting from the hourly fee claim, and the lack of opportunity to present their positions at trial. It appears obvious that Fernandez and the Fund had relied on the fact that there was a contingent fee agreement involved here.
III
¶ 34. In light of our holding above, there is no need to address the remaining issues certified by the court of appeals, except the question of the Fund‘s liability in regard to future claims for costs and reasonable actual attorney fees under
¶ 35. The legislature established the Fund when it enacted
¶ 36. In order to determine if the Fund‘s financing applies to claims brought under
¶ 37. Our main objective in statutory interpretation “is to determine what the statute means so that it may be given its full, proper, and intended effect.” State ex rel. Kalal v. Circuit Court, 2004 WI 58, ¶ 44, 271 Wis. 2d 633, 681 N.W.2d 110. As a result, the court‘s analysis should begin with the plain language of the statutory text. Id., ¶ 45. If the language of the statute is clear on its face, then we should apply the statute using the common and generally accepted meanings of the terms. Meriter, 277 Wis. 2d 10, ¶ 13. Thus, with an unambiguous statute, we need not consult any extrinsic sources. Id. (citing Kalal, 271 Wis. 2d 633, ¶ 46).
¶ 38. In addressing
¶ 39. We disagree with the circuit court‘s interpretation and its application of
¶ 40. In so holding, we must clarify the court of appeals’ decision in Wright, even though the chief holding in that case can be distinguished. While the hospital implied that no
¶ 41. As previously noted, the liability of the Fund does not extend to
¶ 42. Because we determine that the motion to amend was erroneously granted and that Fernandez and the Fund are not subject to an award of costs and reasonable actual attorney fees, we need not address the question of interest on such an award.
IV
¶ 43. In sum, we conclude that the circuit court erroneously exercised its discretion by granting the motion to amend the pleadings to include Hess‘s new claim. In doing so, we determine that there was no express or implied consent by Fernandez or the Fund to try the issues raised by the
By the Court. — The judgment of the circuit court is reversed, and the cause is remanded for further proceedings consistent with this opinion.
¶ 44. ANN WALSH BRADLEY, J., did not participate.
¶ 45. SHIRLEY S. ABRAHAMSON, C.J. (dissenting). I would affirm the judgment of the circuit court.
The plaintiffs’ complaint requested an award of costs and fees and such further relief as the court may find proper. The complaint did not set forth a specific prayer for relief under
¶ 46. I conclude that the circuit court properly exercised its discretion in granting the post-trial motion to amend the pleadings to include a claim for fees and costs. The burden of proof was on the defendants to show prejudice. They have not carried their burden.
¶ 47. We held in State v. Peterson, 104 Wis. 2d 616, 634, 312 N.W.2d 784 (1981), that the circuit court has “wide discretion regarding amendment of the pleadings to ensure that the entire controversy is presented and to ensure that the party opposing the amendment is not unfairly deprived of the opportunity to meet the issue created by the amendment.”
¶ 48. The majority opinion fails to allow the circuit court any discretion, let alone wide discretion, regarding the post-trial amendment of the pleadings. Furthermore, the majority opinion does not determine prejudice but rather decides the case in “the interests of justice,” thus looking far afield for indicia of prejudice. The most important factor in deciding when leave to amend may be denied in both pre- and post-trial motions to amend is whether the opposing party will be prejudiced.1
¶ 49. As the Peterson court explained, prejudice does not mean that the party suffers a substantive harm but rather means that the party “was deprived of an opportunity to defend against the amended charge.”2 The majority opinion ignores the facts and the circuit
court‘s decision that the defendant had a full opportunity to defend against the amended charge, which had the same elements and proof as the original charge. Instead, the majority opinion stresses that here the defendants did not know they could be liable for over $1 million in costs and reasonable actual attorney fees.3
¶ 50. The majority opinion despairs that attorney fees and costs were not presented to the jury.4 Yet attorney fees are determined only after a successful termination of the underlying claim.5 And here the parties had the opportunity to brief the issue of fees and costs, take depositions, and retain experts.6
¶ 51. The circuit court carefully explored the facts and law applicable to the issue. The circuit court concluded that the standard of care applicable to both the allegations in the complaint and the amended pleadings was fully aired and that the defendants made no offer of proof that additional evidence could have been presented had they been aware of the amended pleadings. Accordingly, the defendants were not prejudiced.
¶ 52. Try as the majority might,7 the majority opinion cannot distinguish Gorton v. American Cyanamid Co. from the present case. Gorton was a negligent misrepresentation case tried before a jury. The court permitted the pleadings to be amended post-verdict to add a statutory misrepresentation claim pursuant to
¶ 53. For the reasons set forth, I conclude that the circuit court judgment should be affirmed. The circuit court did not erroneously exercise its discretion.
¶ 54. I do not join the majority opinion regarding the Fund‘s liability for costs and reasonable actual attorney fees because the majority has delivered an unnecessary advisory opinion.
Notes
Majority op., ¶ 22.Amendments to conform to the evidence. If issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to so amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice such party in maintaining the action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.
See Gorton v. Am. Cyanamid Co., 194 Wis. 2d 203, 230, 533 N.W.2d 746 (1995).Any patient whose rights are protected under this section who suffers damage as the result of the unlawful denial or violation of any of these rights may bring an action against the person. . . . The individual may recover any damages as may be proved, together with exemplary damages of not less than $100 for each violation and such costs and reasonable actual attorney fees as may be incurred.
Majority op., ¶ 27.[h]ave a right to receive prompt and adequate treatment, rehabilitation and educational services appropriate for his or her condition, under programs, services and resources that the county board of supervisors is reasonably able to provide within the limits of available state and federal funds and of county funds required to be appropriated to match state funds.
Amendments. A party may amend the party‘s pleading once as a matter of course at any time within 6 months after the summons and complaint are filed or within the time set in a scheduling order under s. 802.10. Otherwise a party may amend the pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given at any stage of the action when justice so requires.
(a) Amendments. A party may amend the party‘s pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party‘s pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.