*1 legislature misdemeanors; can then and the which as accordingly. respectfully I recom- amend the statutes legislature. to the this solution mend Plaintiff, Wisconsin, State v. foreign Casualty Company, Farm Fire &
State Defendant, corporation, Gregory Gillmeister, Carpet Service, Custom d/b/a
Defendant-Respondent, Company, Carpet Robert National W. Johnson, d/b/a Third-Party Plaintiff-Appellant, Defendant and Associates, Bosshard, John & Sundet Bosshard, d/b/a Appellant-Respondent, Rug Mills, Carpet and Diamond & Distributors Inc., Third-Party Defendants-Respondents.
Supreme Court Argued January 5, No. March 1981. Decided 1981. 79-1492. (Also reported 827.) in 302 N.W.2d *2 appellant by Janet A. For there were briefs Crosse, Bosshard, Jenkins Associates & of La Sundet argument by Janet A. Jenkins. oral respondents joint by For the there was a brief John Steele, Crosse, Flynn H. Drew and Klos & of La for Distributors; Gregory Crosse, John J. Perlich of La for Gillmeister; Langer, Richard Richard Newman J. L. Langer Koritzinsky, Neider, Roberson Madi- & son, Rug Carpet Mills, Inc., for Diamond oral & argument Drew, by John H. John Richard Perlich and J. Langer.
COFFEY, appeal part J. This is an from that judgment of the circuit county, court for La Crosse HON. presiding, awarding PETER G. PAPPAS, costs attorneys’ Gregory Gillmeister, fees to Custom d/b/a Carpet Service, Lowy Rug Distributors and Diamond & Carpet Mills, (respondents), against Inc. Robert W. Johnson, Carpet Company National (defendant) d/b/a Attorney Bosshard, John Bosshard of the law firm Associates, jointly severally, Sundet & under statute, 814.025, frivolous claims and counterclaims sec. claima of a of con- Stats. case out of breach This arose contracted tract of Eobert Johnson who on the W. University carpeting certain on the to sell and install campus court on certi- and is before this Wisconsin-Stout appeals. the court of fication from February 6, 1975, Johnson, proprietor On sole Wisconsin, Company Carpet Crosse, in La the National engaged carpeting and in the retail sale of sub- carpeting at and installation of mitted bid the sale University of halls on the Wisconsin-Stout four residence campus. the contract Johnson awarded provided The contract the low bidder. completely Mark furnish and install “Diamond Eug manufactured & Diamond V”1 Carpet (Diamond), Mills in various of certain areas *3 specifications in accordance with the residence halls drawings. carpet plan type carpet- floor This location ing represented by Diamond to meet the state’s specifications.2 specifications The contract detailed the procedures for the as well as the installation in as follows: 1 agreement originally specified type known by
as “Sensation Diamond, 64” also manufactured but “Diamond by agreement Mark later V” was substituted the consent purchaser type carpet for “Sensation 64” as the latter ing longer no available. following specifications: The contract set forth the relevant “Carpet Specifications: Type: by Sensation Carpet 64 [Diamond Mark Diamond V] Eug Mills Space-dyed superior Color: color fastness Width: 12 ft. Primary Backing: polyproplene 3.8 oz. ofefin [sic] Secondary Backing: High Density 38 oz. rubber Weight: (FHA Yarn type 28 oz. minimum area) for this type Adhesive: To by be carpet recommended manfacturer used.” materials, items, provide all “1. The contractor shall specified, operations, listed, herein or methods and/or including sary equipment materials, neces- all incidentals required installation. completion of this for the ultimately Any furnished “2. General: material opinion equal approved in the of the owner is not samples, rejected promptly replaced will be shall be cost no additional owner. . . “. recommendation for use of seam manufacturer’s by strictly cement must be followed. Adhesive furnished waterproof carpet approved manufacturer must latex be type completely compression base bond and must be used to length. all in their full seams continuous “4. Installation: Carpeting: using speci- “A. To be adhesive installed by fied and as recommended adhesive manufacturer. Use Vs" Vs" trowel, by gauge, apply notched adhesive. Cap Strips: cap strips “B. Use where floor material strips directly comes under door. Locate under doors. Install as recommended manufacturer. “D. any There no shall be end seams of the cube living areas; minimum of end seams will be allowed where cube areas hallways) public room [student meet lounges. area floor “E. moldings presently Where areas are carpeted, old are to be carpet compression removed and new is to be carpet. seamed to old Such seams are to run the same direction carpet (see of the old diagram). attached Regarding “G. lounge (Rooms 102, the main floor diagram) carpet seams. On 118 on is to run in an east-west direction; exposed maximum of 5 carpet edges steps, doorways, areas such as entryways, etc. *4 edges capped to molding be with as in B. described “H. . . . All seams shall practical be butted as far as so done without equivalent to Trimming as be fitting unnoticeable. and shall be sprouts. piece revels or No smaller than (1) square to yard permitted one will in be this work. Workmanship: “J. by Installation to be skilled work- good inmen workmanlike up highest manner and to the Layers Carpet standards of the Any Union. in defect workmanship which year occurs within one of the com- pletion expense the suc- date must corrected at the be cessful bidder.” square 2,266 purchase
Johnson submitted a order for yards Lowy quality carpeting of Diamond Mark to V Enterprises, Inc., Minneapolis, (Lowy) Minnesota assigned proceeds the as of the contract security payment. Gregory for Johnson hired Gill- meister, Carpet to install the Service, Custom d/b/a carpet. carpeting completed in Installation of the was early August payment 1975 and the made state Lowy, assignment. pursuant to the Johnson’s involve- carpeting in ment the installation of of a was that general only sporadically supervised contractor as he Gillmeister’s work.
Shortly job completed, after the Hous- U.W.-Stout ing problems Director Allen Klink observed several i.e., dye bubbling carpeting, lots, mismatched seams up, separating pulling apart, carpeting well as coming up Klink, edges. from the floor at the corners upon completion August through of the work following February, attempts made several unsuccessful reaching and, finally him, to contact Johnson after ad- problems concerning vised him of the persuade steps prob- tried to him to take to correct the lems, time, but failed Johnson to do so. At this Johnson bidding carpeting jobs on other with the State Uni- versity System specifically had submitted bids carpeting jobs campuses on the at River Falls and U.W. Superior. though Even had submitted the low job, rejected on the bid River Falls his bid was University System’s purchasing agent, Hickox, Allen who rejection detailed his reason a letter dated August 27,1975:
“Dear Mr. Johnson: sorry you “I am your inform that we cannot award company resulting the River Falls contract *5 your Inquiry quota- from Bid our Sealed #HA-6441 August 11,1975. tion dated detailing complaints to a letter “Due recent several against your telephone two company, and calls from irritating problem, in the others with an we feel it is University Falls best interest of Wisconsin-River to award this contract to the next low bid. your competence question integrity, do “We not but you your company beyond feel that overextended have its capability. Further consideration for future contracts dependent upon will completion be the successful through follow with National pending on those contracts which are now
Carpet Company.” August 28, 1975, In a letter dated Hickox returned John- U.W.-Superior job stating: on unopened, son’s bid “Dear Mr. Johnson: returning your “I am apparent quotation herewith to Inquiry
our envelope Bid Sealed Please note that #HA-6456. opened. attached has not been my “As I you August 27th, indicated letter to dated we your shall not award further contacts [sic] company existing successfully until contracts are completed.” Despite the (the University’s statement in Hickox’s purchasing agent) letters that Johnson’s bids on and Superior carpeting jobs U.W-.-River Falls re- were jected because of failure successfully Johnson’s com- plete existing state, contracts with the con- Johnson ignore requests tinued to problems to rectify the Subsequently, Klink, Stout. 1975, 31, December re- quested Myrle Lehman’s, purchasing the U.W.-Stout agent, resolving aid in carpeting problem. Lehman, 3, on March advised letter in follows: “Judging past performances appears it me you intend to nothing correcting do prob- about *6 attempting Mr. to contact either
Iems HKMC3 or even compromise if kind of Klink or Albrecht to see some Mr. I, regarding can be worked out this bad situation. Purchasing Agent, you remedy this situa- can’t to force I have to action, tion without so will recourse of Court step take the tion to recommenda- next which will be a fervent you requesting the Bureau of Purchases your company and barred be removed from our bid list by from all awards of future contract the State Wiscon- sin.” copy
A of to Johnson was forwarded Lehman’s letter Hickox, University System’s purchasing agent, to the urged by who take action likewise Johnson to remedial 9,1976: letter dated March say, you quickly expect “. . . Needless to we do to favorably respond many reported problems. to correct the you satisfactorily fail “Should to take care of these complaints, we will no than refer have recourse other to legal department.”
the entire matter to our Shortly thereafter, arranged meeting a be Clinton, tween Klink and the other Stout officials and Pat representative Lowy, inspect carpet to sales the ing at the four residence halls. Johnson testified that at separation, inspection, the the he observed seam time pilling,4 sprouting5 opinion and delamination.6 Johnson’s quality was that the inferior the the separation, cause of the seam delamination and other carpeting problems. parties Johnson and the other agreed having carpet to the tested as he believed the carpet purchase specifications. did meet not order 3 Hansen, Keith, halls, to four residence refers “HKMC” on the installed Chinnock, where Milnes campus. U.W.-Stout 4 yarn joining in the Pilling separation a strand is causing “pill yarn ball.” of another strand 5 carpet. loop in a Sprouting unlevel tufts condition of level is a separation of the refers to the in this context Delamination carpet’s backing surface. from the rubber nothing prob- carpet Johnson did further to resolve the setting in a Klink lems forth reasons letter to dated 1,1976: June Carpet Company pay “National must refuse (installation) replacement carpet labor which would given by Mills-Lowy Carpet
be Diamond Distributors problem following repair basically at HKMC two reasons: “(1) writing cannot this We be assured of the quality existing carpet i.e. installed HKMC specifications. “ (2) negligent analysis If there is in the final instal- seriously doubt, lation —which I I’m afraid will re- it quire resolve this (which unfortunate) action state is *7 problem.” The state was unable to convince to the Johnson solve carpeting problems and was thus forced to hire another carpet repair seams, pilling, sprouting installer to the carpeting. 9, 1978, delamination of the On June the state against Johnson, commenced action his insurance car- rier, and $3,656.12, Gillmeister to recover the asserted repair. cost of the complaint alleged
The that Johnson breached his con- in respects: (1) by failing tract provide qual- five the ity carpeting specified; (2) failing sealer; of seam use using (3) areas; provid- excessive in (4) seams certain ing dye lots; failing (5) mismatched to correct in workmanship year defects that occurred within one completion complaint alleged date. The further negligent installing carpeting that Gillmeister in was the in that he failed good, to install it in a workmanlike manner.
Attorney Kenneth Peterson on of answered behalf denying responsibility Johnson damages for the state’s against seeking and cross-claimed Gillmeister contribu- tion or cross-complaint, indemnification. In his Johnson alleged negligence installing also that Gillmeister’s 590 includ-
carpeting losses caused Johnson to suffer business ing reputation carpeting his On credit business.7 his party 13, com- filed a third Johnson November they alleging against that plaint and Diamond carpeting to meet and failed furnished defective specifications, purchase order quality described in the purpose for the carpeting was not fit therefore the (residence halls). i.e., place intended, public use in a Lowy negligently alleged failed Further, that Johnson or not it inspect to determine whether in the contract as set forth fit for the use intended complaint order).8 party also asked third (purchase state be or indemnification should for contribution damages the amount of successful, requested allegation business, etc., in the cross-claim The loss follows: selling, following manufacturing, and installation “That complaints location, were at the aforementioned said noted and Johnson, job opportunities which, no Robert W. further time, period coming; Robert forth since that relied were that rating substantially; has suffered W. Johnson credit [sic] defendant, negligence Gregory Gillmeister, . . because of of . profession to abandon chosen Robert W. of the sale and was forced damage carpeting, all to installation $200,000.00.” Johnson in Robert W. the sum Lowy provided: against Johnson’s claims Diamond and Party Defendant, Lowy Third “The said “a. Distributors: Carelessly negligently furnished, knowledge *8 ultimately public carpeting place, it would be used in a which was purpose and unsafe when used for the for which defective it was intended. Carelessly negligently inspect “b. failed and and examine carpeting said to determine whether or not it was defective and for the use unsafe for which it was intended. Party carpeting “The Third Plaintiff was furnished distributed by Party Lowy Defendant, Third Distributors and manufactured Party Carpet Defendant, Rug Mills, Diamond Third & Inc. question The was found to be defective and did not specifications quality represented by meet the and the Third Defendant, Party requested by Party Distributors and Third Plaintiff, Robert W. Johnson.” $200,000 reputa- for of loss business and loss of credit tion.9 January just 8, 1979,
On six weeks trial and before some party two months after complaint third was filed, Bosshard, Bosshard, John of the firm of law Sundet Associates, & substituted Kenneth for Peterson as attorney Bosshard, Johnson’s of time, record. At this recognizing immediacy requested date, of the trial grant adjournment, the.court but the court denied January 22, pre-trial On same. the court held a granted conference Diamond’s motion to dismiss party complaint third Johnson’s failure to state reciting against cause of action a claim Diamond. At time, Jeffrey Attorney this of Knickmeier the law firm Bosshard, Associates, acting Johnson, of Sundet & (Attorney asked for leave to Peterson’s) amend his party complaint granted third request. and the court this During pre-trial of conference, the course this the trial party court was advised that the third defendants and Gillmeister offered settle the state’s claim without payment Johnson, of upon conditioned agreement that Johnson dismiss his action cause of against business, and claim profits, them for loss of credit general standing community. in the Johnson refused though attorneys urged to dismiss this claim even acceptance recommended they of the settlement allegation of third-party complaint loss business in the substantially allega identical to Johnson’s loss business against tion in his cross claim Gillmeister: following manufacturing, selling “That installation location, complaints aforementioned said were job opportunities further which noted no Robert Johnson W. on, forthcoming; time, period relied that since that were Robert rating substantially; credit has W. Johnson’s suffered that because negligence Party Party Defendants, both Third Third Plaintiff, Johnson, Robert W. was forced to abandon his chosen profession carpeting, of the salé and installation all to the damage $200,000.00.” Robert the sum of W. *9 action and claim him that his cause of
further advised question- reputation business, and were for credit loss able. conference, re-
Shortly pre-trial the after hearing permit, tax deposition sales vealed at a his engaging retail sales prerequisite in the business of as a Wisconsin,10 in 1977 carpeting in was revoked $5,000 record pay a sales tax. failure to result represent- Knickmeier, Attorney Jeffrey establishes that hearing, the ing deposition was aware of Johnson at the permit in sales 1977. revocation of his conference, pre-trial amend- Johnson filed After the containing following party addi- complaint, ed third reducing allegations against al- Diamond and tional damages leged $200,000 $50,000: Rug Carpet Mills, Defendant, & Diamond “That carpeting, and Inc. manufacture the aforesaid known did carpet- V”, and that “Diamond Mark said referred manufactured, quality, ing defectively was of inferior was carpet proper specifications. meet That said and failed to weight, improperly dyed, did not was of insufficient wearing, subject rapid pile, ply have sufficient strength. inadequate and was of lamination carpet “That manufacture and distribution of said expressed implied and war- a breach of that constitutes ranties, and its both carpet not meet did the advertised standards; carpet guaranteed was unfit that said purpose, and meet and intended did not foreseeable recognized industry. standard of the express warranties, implied, “That extended said Party Johnson, Plaintiff, to Third Robert W. negligent carpet the did manufacture distribution of said great foreseeably proximately and sub- result damage Party Plaintiff, Robert stantial Johnson, to Third W. including profits, loss of business and loss standing general community, credit and in the and caused said Robert Johnson to be sued of Wis- W. State replacement repair consin and necessitated 77.52(1) (7)-(13), 10 See: see. Stats. *10 carpeting, defective all to aforesaid Robert Johnson’s W.
great damage.” and substantial trial, Before the court denied motion Diamond’s to dis- party complaint miss the amended third and the ordered proceed case to trial. jury trial, Systems
At (University purchas- the Hickox ing agent), Lowy’s (housing director) Klink and the representative carpeting opined sales examined the and problems faulty, that the seam resulted substandard poor and workmanlike installation. Klink further ex- plained that the for reason the color variation was that dye order (different second came from a different lot production by run) which caused was insufficient carpeting yardage original specified amount of in the order. Klink also testified that the ex- reason the prop- cessive amount of seams was failure to Johnson’s erly lay carpeted out and measure the area to be consequently carpet pieced. the had to be manager Cooley, Diamond,
John national sales carpet problems the stated seam at Stout were by faulty, poor unacceptable caused installation and further that no seam sealer had been used of the inspected. job seams He also testified that laid the poorly necessitating pieces out in that small seams were high pattern causing areas, used in traffic thus seam separation. Cooley problems further stated that the not if properly would have occurred the area had been diagramed, carpet properly measured and laid out properly adequate seaming, edging installed with sealing. original testimony
Johnson confirmed Klink’s that his purchase only 2,266 square yards carpeting order for yards square job required was 19 2,285 short as the area square yards. However, Johnson denied that the seam problems by faulty lay were caused out, measurement installation, they (seam problems) but claimed that were caused the delamination of the seam bond poor quality carpet. testimony, In his comply stated that he did not state’s demands problems to correct of an because results inde- pendent carpet performed request test re- the state’s specifications vealed that the did not meet the purchase recited in the order11 and he believed specifications failure of the to meet the underlying problems. However, cause of the John- produced qualified support son theory no witness *11 carpet problems the cause of the and thus held the court the test results because: inadmissible been, “. testimony . . there has based which point, been has adduced at least to this there is no relationship testing between the and so far the claims any cause and the State’s cause action, nor is there allegation relationship party to the made the third com- plaint. for that it So reason becomes irrelevant.” relating testimony alleged damages The to Johnson’s given by and his removal from state’s bid list was Johnson and Mr. Hickox. Hickox testified that he re- jected Johnson’s for the low bid River Falls contract and Superior job did not even consider Johnson’s bid on the problems experienced because of the he Stout which faulty understood were caused installation. Addition- ally, informing Hickox’s letters Johnson of these decisions 11 pertinent carpeting test results revealed the did not ply pile carpet weight specifications: meet the Requirements Test Results as to Recited Carpet Test Conducted Color in Purchase Order Orange Blue Ply of 1 1 Pile Weight-ozs./sq. yd. Total 81.2 78.3
Pile 23.0 23.0 28.0 Foam 27.2 29.2 38.0 Rubber any that he award stated would not future con- following language: in the tracts . . we shall not award further contact [sic] your existing successfully company until the are contracts completed.” action, As a result of the state’s Johnson testified that rejection $1,000 he suffered an estimated loss of from the of the River bid. Falls He further testified that the rea- son for financial failure his business inability working capital to maintain sufficient due to his loss of the state’s business. The record demonstrates majority supplying that a of Johnson’s business involved (February, At trial the state. the time of why 1979), selling carpeting, when asked he not permit Johnson answered that his sales had been revoked pay delinquent in 1977 as a result of his failure to sales lien, years tax some two after he lost the state’s business August of 1975. evidence, granted theAt close of Johnson’s the court Lowy’s Diamond and motion for third dismissal of the grounds party complaint on insufficiency of evi- Lowy, dence. Counsel for (re- Diamond and Gillmeister spondents) judgment then moved for costs and *12 attorneys’ fees, pursuant 814.025, Stats., claiming to sec. party complaint that Johnson’s cross-claim and third for profits, general “loss of business and of loss credit and standing community,” in the were frivolous under subsec. (3) (b) Counsel for of statute. Gillmeister and the party third limited defendants their motion for costs attorneys’ fees to the of defense Johnson’s loss profits claim, business but admitted that Johnson’s against claims them for contribution were not frivolous. court, listening arguments The circuit after granted counsel, 814.025, Stats., the sec. motion for costs attorneys’ fees, ruling Bosshard jointly severally were liable the same. Subse- quently, the state’s breach of contract claim settled $2,300 Lowy, Diamond, Johnson, Gillmeister and paying each $500.00, contributing and Johnson’s insurer $300.00. trial,
After 7,1979, hearing on June the court held a determine the attorneys’ amount costs and fees to be awarded and ruled as follows: right, recovery “All on behalf of the defendants against doing will be John Bosshard business as Boss- hard, Associates, Johnson, Sundet & and Robert W. jointly, Gregory in favor of Gillmeister the total $1,167.02, amount of with interest from this date. “Against doing John Bosshard, Bosshard business as Associates, Sundet & Johnson, jointly, and Robert W. favor of Distributors, $2,005.36, with interest from this date. “Against doing Bosshard, John Bosshard business as Associates, Sundet & Johnson, and Robert W. in favor Distributors, Diamond $2,856.95, with interest this date.” subsequent A motion to vacate the court’s assessment attorneys’ costs fees, was denied and the court ruling reaffirmed (June 7th) its earlier and entered judgment August 15,1979 consistent therewith. John- appealing son and Bosshard in judgment from this raise a number of appeals issues and the court of certified this case to this court. We limit our discussion ato considera- following tion of the issue of the frivolous claims and counterclaims statute which disposi- we determine to be tive.
Issue
Did the trial court concluding err in that Johnson and attorneys knew or should have known that Johnson’s cross-claim and party complaint third for “loss of busi- and profits, ness standing loss credit and in the com- *13 any in law or munity,” basis without reasonable was (b), (3) 814.025 equity under sec. and thus frivolous ? Stats was statute claims and counterclaims
The frivolous 7, April by effective created ch. 209 of the Laws of provides: 1978. It or or proceeding “(1) special commenced If an action or counterclaim, by defense plaintiff or a
continued a by de- commenced, a complaint continued used or cross during any proceedings or found, at time fendant is court, the court upon judgment, shall under to be frivolous party determined costs award to the successful attorney fees. 814.04 and reasonable s. may “(2) (1) and fees awarded under sub. The costs bringing against party fully either the be assessed action, special proceeding, complaint, defense or cross party attorney representing or counterclaim or the may pay portion party attorney each and the so that the be assessed the costs and fees. action, special “(3) proceeding, In order find an counterclaim, complaint or to be frivolous defense cross (1), find one or more of the under sub. the court must following: “ (a) special counterclaim, action, proceeding, de- The commenced, complaint used or con- fense or cross harassing faith, solely purposes or tinued bad maliciously injuring another. “ (b) party party’s attorney knew, or the or should action, known, special proceeding, have counter- claim, sonable basis ported cation complaint defense cross without rea- sup- equity in law or and could not be by good or argument extension, faith modifi- existing 814.025, reversal of law.” Stats. Sec. noted, respondents, Diamond, As Gill- meister, attorneys’ moved for an award of costs and claiming under the cross-claim fees statute that Johnson’s party complaint profits third for loss of business and against them was frivolous as that term is defined sub. (3) (b). They claimed that of business Johnson’s loss profits reasonably supportable in law claim was not *14 equity or as a his business failed result because Further, in permit 1977. revocation his sales they rejection Falls bid asserted the of Johnson’s River profits any re- and of the state’s or that loss business carpeting problems sulted from the at was due Stout solely when to failure to take remedial action Johnson’s requested by the Stout officials. findings it that
The circuit court’s of fact demonstrate arguments agreed Lowy, Diamond with the advanced regard and to the frivolousness of John- Gillmeister with profits claim. It stated: son’s loss business conclusively that “The trial established evidence University contacted John- after the officials at Stout absolutely meeting them, who, than with did son nothing other deficiencies; demand he made no correct cause; work, to correct the if that was the on Gillmeister get anyone in to correct the deficien- he made cies effort to no system University why that was Wisconsin University him work for the refused allow to bid on system. “Nothing doing prevented from Johnson business people millions of Wisconsin or thousands of business concerns except or elsewhere for his loss his sales permit.” tax
Thus, findings, on the of these the court con- basis January 22, 1979, cluded that as at- Johnson his torneys claim knew or should have known that Johnson’s profits for loss of was without rea- business equity. in law in at- sonable basis court awarded torneys’ January 22, 1979, incurred after because fees contract claim date the state’s breach of agreed could have been settled had to dismiss his Johnson profits claim and the that John- loss of business date son, permit deposition, disclosed that his sales revoked in 1977.
Initially support we note that the record does not findings “nothing prevented trial court’s doing except people from . . . with millions of business permit” his sales could loss of this revocation only doing prevented have him after the business Thus, any date of the revocation in of business 1977. loss profits during period he suffered this of time could permit. not be attributed the revocation of his sales Further, party’s note that a we refusal to settle law- *15 suit legally is irrelevant to show that a claim or defense is frivolous and should not be continued. Refusal probable settle does not make it more or less that proceed and, decision to is unreasonable therefore, only fact of refusal to settle irrelevant. is relevant fact is that a conscious decision has made to con- been tinue to assert the claim or defense.
In argument court, Diamond, their and brief this Lowy and that Gillmeister contend Johnson’s claim for profits loss of business it frivolous as was with- making argu- out in reasonable basis fact. In this ment, they characterize claim for loss Johnson’s of busi- profits possessing (1) ness and as three that elements: Diamond, Lowy engaged wrongful and Gillmeister (breach warranty quality conduct of as to the of the negligent inspection and the and installation carpeting); (2) wrongful of the that such conduct was profits; cause of Johnson’s loss of business claimed, i.e., (3) damaged that Johnson was fact as he profits. Diamond, suffered loss of business and attempt then Gillmeister to draw a distinction types (1) between two of claims: claims that are unsuc- proof, (2) cessful as a result of a failure of claims that, by very nature, incapable proof. They their are only type assert claims of the latter are frivolous request damages and that Johnson’s for loss of busi- was, profits very incapable ness and nature, its proof. However, Diamond, Lowy and Gillmeister do not assert that all three elements Johnson’s claim for loss fact, profits incapable proof. of business and In they quite possibly concede that have Johnson could alleged wrongdoing established on their as well damages stating: “As to the element claim that loss first of Johnson’s [for profits] appellants business it is conceivable produced negli- could have evidence that there was some gence (al- part had respondents. on They did not though they every so) opportunity to do and this negli- proof constitutes a failure of on the element of gence forth brought Conceivably, appellants .. could have . economist, regarding returns, tax or evidence profits However, except Johnson’s loss of and business. unsupported for the statements himself, of Johnson there proof damages.” Resp. was a failure of on the item of Br. at 53.
The trial court found cause Johnson’s loss was his failure to fulfill terms of the contract with obligations U.W.-Stout as to “his under that contract signed responsible which he had to be for the mainten- repairs necessary carpet- ance and whatever were this *16 ing period year” failing for a pay of one and in to sales permit. findings tax to so as lose his seller’s These have challenged. standing However, alone, not been without proof, findings support other these do not the conclusion that claim Johnson’s was without a in reasonable basis equity. proof, holding law or This other under our Carr, v. 789, (1980), Sommer 99 299 856 Wis.2d N.W.2d “knowledge knowledge” imputed is or a on the of party attorney, 798). knowledge (p. or his is be This to by objective tested standard: being attorney “That standard whether the or knew position should have known the taken was frivolous as determined attorney what a reasonable would have known or should have known under the same or similar circumstances.
601 objective applied test can to a be 'jaarty’ “This same party’s attorney, parties all the not as to be since will companies experienced person insurance with trained (p.799). nel.” Thus, Diamond, Lowy it was the burden of Gill- pursue to meister show decision to that Johnson’s the objectively claim light unreasonable facts that were known or known at the have time should been they decision to the claim was made. This continue failed do. to
Knowledge permit Johnson that had lost his seller’s standing knowledge of a fact to is not sufficient alone Carr, supra. v. objective Sommer support the standard only Lowy Diamond, required not and Gillnleister were permit, that had lost his seller’s but show Johnson to if had to also allowed to business that continue do he been University System he State have been would pay produce unable to him sufficient allow revenues permit. evidence retain the No deficiencies remaining only Therefore, this offered. nature was question Diamond, is car whether and Gillmeister proof that their burden of to demonstrate a reasonable ried attorney that their were would have actions concluded bidding causing loss of not a factor in substantial he was privileges removed that suffered when University System list. bid question a attorney whether reasonable litigant particular should or would have concluded equity pre in law claim is without reasonable basis question question law and not a mixed fact sents a Corp., v. Exxon Department Revenue In fact alone. (1979), com 90 281 this Wis.2d N.W.2d court analysis it must such undertake mented when presented: questions are presented fact questions mixed “When of law are court, component really questions two this are there *18 602 question what, which must be The answered. first is actually question fact, those happened; the second is whether facts, law, meaning par- matter as a of have aas legal Scope concept. Comment,
ticular The Judicial of Review sin, whether the itself a 21 Agency Administrative Decisions in Wiscon- question (1973). 1973 Wis. L. Rev. legal particular fulfill a is facts standard question Comm., of law. See Cheese v. Industrial 8, Wis.2d (1963).” N.W.2d 553 Id. at 713. In the case, context of this the determination of what attorney litigant a reasonable would should have regard required known with to the facts of the case trial court to determine a are, what those facts thus question fact; legal significance but find- those ings knowledge high- terms whether of the facts lighted by the circuit court would lead at- reasonable torney litigant the claim is is conclude frivolous question law, question not a of fact.
Diamond, argue Lowy and Gillmeister the cause of Johnson’s removal from the list bid was his failure make effort to correct problems despite U.W.-Stout, provisions the contract that ob- *19 ligated remedy any him to workmanship defect in year occurred completion within one after the carpeting argument ignores installation. This the fact given that Johnson was notice than less a month after completion (August of the contract August 27 and 1975) outstanding that his two at bids Superior campuses U.W.-River Falls and would not be nothing considered. There is in the record to show that repudiated obligation Johnson had his contractual to cor- problems rect installation U.W.-Stout, only at three date, weeks after the installation the time those letters satisfy objective were written. In order to the standard proof Carr, of mandated Sommer supra, v. it was necessary Diamond, Lowy and Gillmeister to show if Johnson had corrected the deficiencies at U.W.- Stout, bidding privileges his full would have re- been testimony stored. received; fact, No such question contents of the purport letters in do not to as- bidding sure privileges Johnson that his full would be satisfying continued University’s even after com- plaints. August opinion letter of 27th states the Hickox company beyond that Johnson had extended his capability. attorney might its A reasonable have con- cluded questions that even if the Stout contract were longer resolved, large Johnson would no be considered for Thus, contracts with only the state. evi- bearing subject dence problems shows that occurring University’s purchas- U.W.-Stout caused the ing agent question capability perform Johnson’s carpeting job objectively of that size. It was reasonable question to assume that capability this as to Johnson’s persist satisfactory would notwithstanding resolution specific complaints fact, job. in the U.W.-Stout In Diamond, Lowy argued and Gillmeister never that John- capability performance. son lacked Therefore, such if negligence Johnson’s claim that on the of Dia- mond, Lowy and prob- Gillmeister was the cause of the capable proof, lems at U.W.-Stout was his cause of against action meaning them was not frivolous within the (3) (b), Stats., of sec. 814.025 as construed in Sommer supra. Carr, quoted v. have opinion We earlier in this Diamond, the admission in the brief and Gill- negligence meister that Johnson’s claim as to was not incapable proof, but rather failed for a lack of suf- proof. ficient
Wisconsin is committed to the “substantial factor” negligence test of i.e., causation in actions, whether the alleged negligence is a producing substantial factor in injury damage. claimed See: Clark v. Vehicles, Leisure *20 Inc., 607, 617, 96 Samp- Wis.2d 292 (1980); N.W.2d 630 Laskin, (1975), 318, 325,
son v. 66 Wis.2d N.W.2d 594 Civil, and No. and comment thereto. The Wis. JI — alleged question wrongdoing part of whether the on the Diamond, of and was a Gillmeister substantial influencing reject in factor the state to Johnson’s River list, and remove him from under Falls bid its bid case, legitimate question facts this is a of about which attorneys litigants competent reasonably can dis- agree. proceed The decision to this claim was legal judgment dependent upon matter the credible attorneys they evidence that Johnson’s believed could and introduce marshal into evidence at trial. refuse We say under in the facts this case that a reasonable at- torney litigant would should have or concluded that they any would be unable under circumstances elicit testimony including witnesses, Hickox, prove negligent installation Stout supply meeting specifica- the failure to causing tions was a substantial the removal of factor Johnson from the state’s bid list refusal to ac- cept Thus, his River Falls bid. we hold that Johnson’s profits claim for loss business and was not frivolous so be indefensible as to without reasonable equity (3) basis in law or (b), under 814.025 sec. Stats. Therefore, a attorney litigant very reasonable could well possible determine that it was to establish a causal alleged wrongdoing connection between on the Diamond, Lowy and Gillmeister and Johnson’s loss the state’s business. reviewing
In case, this we note that the trial court ruled that jointly Johnson and Bosshard were and sev- erally respondents’ attorneys’ liable for the fees. The appellants argue that the trial court abused its discretion ruling 814.025, so because Stats., sec. does not autho- imposition joint rize the liability. several We are agree inclined to appellants (2) with the 814.025 sec.
605 may attorneys’ provides that the court assess costs attorney pay party and the each fees “so that the portion language expressly of the and fees.” This costs portion, provides specified for assessment of a or a attorneys’ against party sum, of the costs and fees attorney impose not allow the does court joint liability and several for the same.
By portion judgment the Court. —That of the awarding attorneys’ circuit under court costs and fees 814.025, Stats., sec. is reversed. J., part. took no
Heffernan, ABRAHAMSON, (concurring). SHIRLEY S. J. In ruling 814.025, on motion for fees under sec. Stats. 1979-80, “completely the trial court found that Johnson ignored obligations under that contract which he had signed responsible to be what- maintenance and necessary repairs ever were for a on this period year.” majority of one find- *22 similarity policy, purpose, language in between the attorney’s duties, responsibilities and liabilities under 1979-80, 814.025, (1) (a) sec. DR 7-102A Stats. Attorneys Responsibility, Code of Professional 43 Wis.2d (1970), attorneys oath, xi (1980), and SCR 20.36 sec. 757.27, points Stats. 1979-80. This case out another rela- attorney’s obligations tion between the under the Code 814.025, liability and his under 2-409 and sec. Stats. DR 2-110, (1970), 20.15, DR xxx Wis.2d SCR 20.16 govern (1980), lawyer’s acceptance and withdrawal provide employment from as follows: Acceptance “DR Employment. 2-109 “ lawyer (A) A accept employment shall not behalf person of a if he knows or it is obvious such person wishes to:
“(1) Bring legal action, defense, a conduct a or position litigation, a assert in or otherwise steps him, merely have purpose taken for for the harassing maliciously injur- ing any person. Present a claim or “ (2) litigation defense existing law, is not warranted under unless supported by good it can argument be faith extension, modification, or reversal existing law. “DR 2-110 Employment. Withdrawal from “ general. (A) In
“(1) permission If employ- withdrawal from required by ment is tribunal, the rules of a lawyer a shall not employ- withdraw from proceeding ment before that tribunal permission.
without its “(2) any event, lawyer In shall not withdraw employment he until has taken rea- steps prejudice sonable to avoid foreseeable rights giving client, including to the of his client, allowing due notice to his time for employment delivering counsel, of other papers property the client all to which entitled, complying the client is applicable laws rules. “ (3) lawyer A shall employment who withdraws from promptly any refund of a fee paid in advance that not has been earned. “(B) Mandatory withdrawal. lawyer “A representing a client before a tri-
bunal, permission required by with its if its rules, shall employment, withdraw from and a lawyer representing a client in other matters shall withdraw from if: employment, “ (1) He *23 or it knows is that obvious his client is bringing legal action, conducting defense, asserting position or a in the liti- gation, having steps or is taken otherwise him, merely purpose for for the of haras- sing maliciously injuring any or person. “(2) He knows or it is obvious that his con- employment tinued of a in violation will result Disciplinary Rule. “(3) physical His mental or renders condition unreasonably carry it him difficult for to employment effectively. out the “ (4) discharged by He is his client. “(C) Permissive withdrawal. If may DR (B) lawyer 2-110 applicable, is not a request
not permission matters to withdraw pending before tribunal, may a not with- draw in other matters, request or unless such such withdrawal is because: “(1) His client: “ (a) upon presenting a claim defense Insists existing law that is not under warranted by good supported faith cannot be and argument or reversal extension, modification, an existing law. illegal
“(b) Personally pursue seeks to an course of conduct. lawyer “(c) pursue course of that the a Insists illegal prohibited conduct that is under the or that is Disciplinary Rules. By unreasonably “(d) other it conduct renders lawyer carry difficult for the employment effectively. to out “(e) Insists, tribunal, pending in a matter not before lawyer engage in con- udgment contrary j duct that is advice of the lawyer prohibited not but Disciplinary under the Rules. “(f) disregards agreement Deliberately or or obligation lawyer expenses to the fees. “ (2) employment likely His continued re- is Disciplinary in a sult violation of a Rule. “(3) inability His to work co-counsel in- dicates that the best interests of the client likely will be served withdrawal. “(4) physical His mental or it difficult condition renders carry him to out em- ployment effectively. “ (5) knowingly freely His client termination of his He assents to employment. “ (6) good faith, proceeding believes in a pending tribunal, before tri- good bunal will find the existence of other
cause for withdrawal.”
See also EC
2-32,
2-30 and EC
Linda Miller,
v. Appellant. Treasurer, Charles P. State Smith, Supreme Court Argued February 3, 1981. March No. 1981. Decided 80-264.
(Also reported 468.) in 302 N.W.2d notes this ing challenged appeal. finding is not This raises the majority consider, fully I issue which think the not does attorney” “the reasonable whether “the reasonable party” would have concluded that claim for Johnson’s profits loss of was foreclosed under the doctrine of con- negligence tributory or the doctrine of avoidable losses. Prosser, 65, pp. Law (4th See Torts sec. 422-424 ed. 1971). Under these doctrines Johnson can denied be recovery profits failed loss because he to exercise protect due care to his own interests. The reasonable record, record, I inference from the read the is bidding privileges could have if avoided loss of obligations, he had fulfilled his contract the cost which compared potential was minor to the harm and the cost of which Johnson could have recovered from the other parties involved. 606 profits I believe claim for on a Johnson’s loss rests very Nevertheless, applying objective weak basis. Carr, standard forth in set Sommer v. Wis.2d case, (1981), N.W.2d 856 to the facts in this I concur majority. decision Carr, pointed In Sommer v. supra, the court out a