TRINITY PETROLEUM, INC., Plaintiff-Respondent, v. SCOTT OIL COMPANY, INC., Defendant-Appellant-Petitioner.
No. 2005AP2837
Supreme Court
Oral argument April 11, 2007. Decided July 6, 2007.
2007 WI 88 | 735 N.W.2d 1
For the plaintiff-respondent there was a brief by Douglas W. Rose and Rose & DeJong, S.C., Brookfield, and oral argument by Douglas W. Rose.
An amicus curiae brief was filed by William C. Gleisner, Milwaukee, and Lynn R. Laufenberg and Laufenberg & Hoefle, S.C., on behalf of the Wisconsin Academy of Trial Lawyers.
¶ 1. SHIRLEY S. ABRAHAMSON, C.J. This is a review of a published decision of the court of appeals affirming the order of the circuit court for Waukesha County, James R. Kieffer, Judge.1 The circuit court denied Scott Oil Company, Inc.‘s (the defendant‘s) mo-
¶ 2. At issue in this case is the application of new
¶ 3. This court adopted new
¶ 4. We are asked to determine whether new
¶ 5. The circuit court in the instant case determined as a matter of law that the new rule,
¶ 6. The court of appeals affirmed the order of the circuit court denying the defendant‘s motion for sanctions, based on similar reasoning.
¶ 7. For the reasons set forth, we hold, like the circuit court and the court of appeals, that new
¶ 8. We therefore reverse the decision of the court of appeals and the order of the circuit court. These courts erred as a matter of law in holding that new rule
I
¶ 9. This review arises from the circuit court‘s order denying the defendant‘s motion for sanctions against the plaintiff for commencing and maintaining a frivolous lawsuit. The procedural posture of the case for purposes of deciding the issue on review, the retroactive application of
¶ 10. The parties entered into a five-year written contract pursuant to which the plaintiff would transport the defendant‘s petroleum products to the defendant‘s customers. According to contractual provisions, the defendant could terminate the contract with 60 days’ notice if the plaintiff failed to perform to the “customer‘s satisfaction.”
¶ 11. On February 6, 2004, the defendant formally notified the plaintiff that, pursuant to its rights under the contract, it was terminating the contract because it was not satisfied with the plaintiff‘s performance; the defendant explained that it had received several complaints from its customers about the plaintiff‘s poor service in delivering petroleum products.
¶ 12. On April 6, 2004, the plaintiff filed suit against the defendant alleging breach of contract. The parties disagreed about the meaning of the phrase “customer‘s satisfaction” in the contract. In its respon-
¶ 13. The defendant submitted interrogatories and document requests to the plaintiff, beginning in December 2004, to prove that even under the plaintiff‘s own contractual interpretation, the plaintiff did not have a viable case for breach of contract.
¶ 14. On April 5, 2005, the defendant moved for summary judgment against the plaintiff. The circuit court initially scheduled the hearing on the defendant‘s motion for summary judgment for June 6, 2005. This hearing was postponed, however, until July 5, 2005, in order to accommodate the receipt of transcripts from a deposition taken on May 27, 2005.5 The defendant blames the plaintiff for this delay. A letter submitted by the defense counsel to the circuit court states, however, that both parties requested this postponement.6
¶ 15. While the litigation in the instant case was before the circuit court, this court issued Supreme Court Order 03-06 on March 31, 2005, changing the rules governing sanctions for frivolous conduct. Effective July 1, 2005,
¶ 16. At the conclusion of the summary judgment hearing on July 5, 2005, the circuit court granted summary judgment in favor of the defendant,7 and the defendant orally moved for costs and reasonable attorney fees, claiming that the plaintiff frivolously commenced and maintained its claim against the defendant. The circuit court refused to grant the defendant‘s oral motion, concluding that the motion was not properly before it. The circuit court, however, invited the defendant to file a written motion for sanctions. Specifically, the circuit court stаted: “If Scott Oil [the defendant] wishes to renew that request saying that in its opinion it believes this action was a frivolous matter and they are then continuing to ask the court to impose costs, they can file that motion at the appropriate time....”
¶ 17. The defendant filed a written motion for imposition of sanctions (costs and reasonable attorney fees) on July 21, 2005, after the effective date of new
¶ 18. The circuit court heard arguments on August 29, 2005 on the defendant‘s written motion for sanctions. The circuit court concluded that “the new 802.05 applied in this case” and that the defendant had to comply with the “safe harbor” notice provision. Because the defendant had not complied and could not comply with the “safe harbor” notice provision, the circuit court denied the defendant‘s motion for sanctions.
¶ 19. On appeal, the court of appeals affirmed the circuit court‘s order denying the defendant‘s motion for sanctions, holding that new
¶ 20. Court of Appeals Judge Daniel P. Anderson dissented from the court of appeals decision. Judge Anderson agreed with the majority that new
II
¶ 21. We begin our inquiry with a review of the provisions governing sanctions for frivolous claims. When the plaintiff commenced its action for breach of contract in April 2004, two provisions governed sanctions for commencing and maintaining frivolous actions:
¶ 22.
¶ 23. This provision also authorized a circuit court to order sanctions for a violation of any of these
¶ 24.
¶ 25. As we explained previously, effective July 1, 2005, Supreme Court Order No. 03-06 repealed
¶ 26. The new rule,
¶ 27. First, new
A motion for sanctions under this rule shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate sub. (2). The motion shall be served as provided in s. 801.14, but shall not be filed with or presented to the court unless, within 21 days after service of the motion or such other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.
¶ 28. Second, sanctions, including costs and reasonable attorney fees, are no longer mandatory upon a circuit court‘s finding of frivolousness.18 Former
¶ 29. Several other aspects of new rule
¶ 30. We turn next to examine whether the new rule,
III
¶ 31. The central issue before the court is the application of new
¶ 32. The interpretation of a statute promulgated under this court‘s rule-making authority presents a question of law, which this court reviews independently, but benefiting from the analyses of the circuit court and the court of appeals.19 Whether a statute promulgated under this court‘s rule-making authority merits retro-
¶ 33. The defendant insists that new
¶ 34. In contrast, the plaintiff asserts that new
¶ 35. We do not agree completely with either party. The plaintiff errs in asserting that retroactive application is an absolute rule applying tо all procedural rules. The defendant errs in applying the Chevron/Kurtz factors to gauge whether retroactive
¶ 36. We begin by examining whether the text of the new rule and the order adopting it hold the answer to this dispute about the retroactive application of the new rule. They do not.
¶ 37. The text of the new rule is silent about its prospective or retroactive application to conduct occurring prior to the effective date of the rule.
¶ 38. Supreme Court Order 03-06, which recreated new
¶ 39. In the absence of any help from the text of the new rule or the order, we turn to the cases that govern retroactive application of a statute (including one adopted by the court through its rule-making authority). The cases require us to determine whether the newly adopted rule is procedural or substantive.
¶ 40. The general, well-recognized rule in Wisconsin jurisprudence is that “if a statute is procedural or
¶ 41. The definitions of “substantive” and “procedural” arе relatively easy to state but are not always easy to apply. Indeed, the procedural/substantive dichotomy depends on the context of the analysis. It is often written that if a statute creates, defines, and regulates rights and obligations, it is substantive. If a statute prescribes the method, that is, the legal machinery, used in enforcing a right or remedy, it is procedural.25 “Procedural statutes have as their primary purpose the provision of expeditious means whereby someone who has a claim against someone else may apply for the assistance of the government to enforce it, and the means whereby the other party, against whom the claim is made, may interpose his defenses.”26 In
¶ 42. In adopting new rule
¶ 43. The new rule was adopted pursuant to the rule-making authority of this court under
¶ 44. In Supreme Court Order 03-06, the court stated that “[t]he court‘s intent is to simplify and harmonize the rules of pleading, practice and procedure, and to promote the speedy determination of litigation on the merits.”31 With the new rule, “the court intends to provide Wisconsin courts with additional tools to deal with frivolous filing of pleadings and other papers.”32 The court stated that it did “not intend to deprive a party wronged by frivolous conduct of a right to recovery.”33
¶ 46. First,
¶ 47. Second, the same procedural purposes underlie former and new
¶ 49. Third, when it first drafted
¶ 50.
¶ 51. For these reasons, we reaffirm our decision that new
¶ 52. Because we characterize new
¶ 53. Retroactive application of procedural rules is not, however, an absolute rule. For example, a procedural statute will not have retroactive application if it impairs contracts or disturbs vested rights. The court has stated that “it is a fundamental rule of statutory construction that a retroactive operation is not to be given so as to impair an existing right or obligation otherwise than in matters of procedure....”41 Furthermore, retroactive application of a procedural rule must not “impose[] an unreasonable burden” upon the party attempting to comply with the procedural requirements of the rule.42
¶ 54. This court‘s analysis in Mosing v. Hagen, 33 Wis. 2d 636, 148 N.W.2d 93 (1967), is particularly instructive in teaching that retroactive application of
¶ 55. In Mosing, the new statute at issue provided that service of summons is invalid if the summons is not filed with the clerk of the circuit court within one year of service. The effective date of the statute establishing the filing requirement fоr a summons was May 1, 1965 (although the statute had been adopted January 20, 1964).
¶ 56. The summons was served in Mosing on November 20, 1964, but it was not filed with the circuit court until January 20, 1966. If service was void in Mosing because the summons was not filed within the one-year period, the plaintiff could not reinstitute the suit because the statute of limitations had run. The plaintiff argued that the statute affected a vested right of the plaintiff and was therefore substantive in effect and should not be applied retroactively. According to the plaintiff, he acquired a vested right to pursue his personal injury action on November 12, 1964, when he served the summons, and on that date he had no obligation to file his summons with the circuit court within one year in order for the summons to be valid.
¶ 57. The Mosing court examined whether the statute‘s “application affects any substantive rights [a phrase that is used in the cases interchangeably with “vested rights“]” and whether the statute “imposes an unreasonable burden upon the plaintiff as to its procedural requirements.”43
¶ 59. The Mosing court further concluded that the statute did not impose an unreasonable burden on the party charged with complying with the procedural requirements because the court had given notice of the statute and delayed the effective date of the statute. In short, the party serving the summons was aware of the new requirement and could have complied with it. The Mosing court held that the new procedural statute should therefore be applied retroactively to the summons served before the effective date of the statute at issue.44
¶ 60. The court should adhere to the teachings of Mosing to determine whether new
¶ 61. No contract right is disturbed in the present case if new
¶ 62. No substantive vested right is disturbed in the present case. As we discussed earlier, until a circuit court made a finding of frivolousness under
¶ 63. Our analysis is also guided by the federal court‘s application of
¶ 64. Accordingly, we conclude that the court did not modify or eliminate any vested rights belonging to any party when it repealed
¶ 65. We therefore turn to the question whether, in the words of the Mosing court, the retroactive application of
¶ 67. We do not agree with the plaintiff. Mosing has never been overturned. It is good law, and it is supported by federal
¶ 68. The federal standard for retroactive application of
¶ 70. We summarize three federal cases to illustrate the approaches taken by federal courts in determining whether the retroactive application of
¶ 71. First is a federal case involving a situation parallel to the instant case, that is, a case in which the conduct at issue occurred prior to the effective date of the amended version of
¶ 72. The second federal case involves a motion for sanctions that was filed before the effective date of the amended
¶ 74. These three cases are not the only examples of how federal courts have examined whether it would be “just and practicable” to apply an amended version of
¶ 75. As mentioned earlier, the defendant has proposed the court apply the Chevron/Kurtz factors in determining whether new
¶ 76. In Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), the Supreme Court established three factors to consider in determining whether the presumption of retroactivity for a judicial holding is overcome such that
¶ 77. The Chevron/Kurtz standard sets forth three factors a court considers in determining whether a new judicial holding should be applied retroactively or prospectively. These factors are:
- Does the judicial holding “establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed?”
- Will retroactive operation further or retard the operation of the judicial holding in question?
- Will retroactive application produce substantial inequitable results?52
If these factors are met, the judicial holding in question should not be applied retroactively.
¶ 78. The Chevron test is not applicable to the present case. The Chevron test for determining prospectivity or retroactivity was adopted for application to judicial holdings, that is, to judicial declarations of the
¶ 79. Cases involving the retroactive application of a statute or a rule, however, do not apply the Chevron/Kurtz factors. For instance, in Snopek v. Lakeland Medical Center, 223 Wis. 2d 288, 293, 588 N.W.2d 19 (1999), a case decided after Chevron and Kurtz, this court concluded that “[g]enerally, statutes are applied prospectively,” but that a statute may be applied retroactively if the statute is “remedial or procedural rather than substantive.”53 The Snopek court restated the test enunciated in numerous cases, that if a statute is remedial or procedural, it nonetheless cannot be applied retroactively if the legislature clearly expressed its intent that it be applied prospectively only or if retroactive application would impair contracts or vested rights.54 The Snopek court never mentioned the Chevron/Kurtz factors.
¶ 80. In asking this court to apply Chevron/Kurtz, the defendant relies on State ex rel. Brown v. Bradley, 2003 WI 14, 259 Wis. 2d 630, 658 N.W.2d 427. In Brown, the court spoke specifically of rules of civil procedure adopted by this court: “The standards for civil procedural rules differ [from criminal procedural rules] in
¶ 81. At issue in Brown was the retroactive application of a judicial holding, not the retroactive application of a procedurаl statute adopted by the court as part of its rule-making authority and codified in the statutes.57 Brown did not apply Chevron/Kurtz to statutes or rules. Brown is thus inapposite. This court has not extended Chevron/Kurtz to determine whether statutes or rules (in contrast to judicial holdings) should have retroactive or prospective application.
¶ 82. We conclude that the Chevron/Kurtz test does not come into play when determining the retroactive application of a statute. Rather, a circuit court should adhere to the teachings of Mosing and the federal cases applying
IV
¶ 83. The defendant‘s motion for sanctions alleges that the plaintiff engaged in frivolous conduct, both in
¶ 84. Because it determined as a matter of law that new
¶ 85. The defendant provides several reasons why retroactive application of new
¶ 86. The defendant also contends that it has complied with the substance of the “safe harbor” notice provision. The defendant insists that throughout the course of the litigation, it put the plaintiff on notice that it believed the plaintiff‘s lawsuit was frivolous, and that the plaintiff did not withdraw its lawsuit.
¶ 87. The defendant asserts that the plaintiff‘s frivolous conduct occurred before the effective date of the new rule and that applying the new rule retroactively would give the plaintiff a “free pass,” allowing it to escape any form of sanction for its frivolous conduct.
¶ 88. The defendant also insists that it was the plaintiff‘s fault that the hearing on summary judgment (and subsequent motion for sanctions) did not occur before the effective date of the new
¶ 89. The plaintiff offers reasons why retroactive application of new
¶ 90. Further, the plaintiff contends that the defendant had numerous opportunities to bring a motion for sanctions if it believed that the plaintiff had commenced or continued a frivolous action; it did not have to wait until after summary judgment was granted and the new rule went into effect.
¶ 91. The plaintiff also disputes that it was at fault for the delay that resulted in the hearing on summary judgment occurring after the effective date of new rule
¶ 92. As this brief recitation of some of the parties’ arguments illustrates, the question remains whether it is an unreasonable burden to apply new
¶ 93. In addition to deciding which provisions governing sanctions for frivolous conduct—either the new
¶ 94. In the instant cаse, the circuit court only ruminated about whether the plaintiff‘s conduct might be found frivolous were the former provisions,
¶ 95. Several isolated statements of the circuit court can be read to suggest that it found that the plaintiff commenced or continued a frivolous lawsuit according to the former provisions. For instance, the circuit court announced that:
So I conclude on that at least on the basis of fact and at law that the continuation of this lawsuit by Trinity [the plaintiff], along with the multitude of documents that they had gotten clearly showing dissatisfaction with Trinity‘s actions in this case, that there was probably more than ample material available to Trinity that they should have realized that the continuation of this case would have been fruitless and it should have been terminated at an earlier time and fashion, but it didn‘t. It continued on.
I believe that, in summary, if we were using the old law under 802.05 and 814.025, that this was not an action that was well grounded in fact or in law.
The defendant points to these statements and insists that the circuit court indisputably found frivolousness.
¶ 96. Some of the circuit court‘s statements suggesting that the plaintiff maintained a frivolous action, however, are ambivalent. For instance, the circuit court stated in equivocal terms that “there was probably more
¶ 97. Other comments of the circuit court undermine our confidence that the circuit court clearly concluded that the plaintiff commenced a frivolous lawsuit.
¶ 98. For instance, the circuit court described how the plaintiff‘s arguments that an objective standard must be used to gauge the “customer‘s satisfaction” for purposes of contract termination were “somewhat arguable” and “possibly” could “carry weight with a different court.” This language definitely is not a clear finding that the plaintiff‘s commencement of the action was not “warranted by existing law or a good faith argument for the extension, modification or reversal of existing law.”59 The circuit court stated in pertinent part:
And then I turn to whether the position taken by Trinity [the plaintiff] on the objective versus subjective standard was a position that they could argue asking for some change in Wisconsin law or an extension of Wisconsin law. I guess that might be somewhat arguable. I concluded that Wisconsin law was very clear that we don‘t follow an objective standard and I wasn‘t necessarily convinced at all, my remarks clearly show that, that Trinity‘s argument for an objective standard just didn‘t carry any weight with the court.
Could that carry weight with a different court? Possibly....
The circuit court seemingly recognized that, even if not justified by current law, the plaintiff‘s argument for a modification of the law had some merit.
* * * *
¶ 100. For the reasons set forth, we hold, like the circuit court and the court of appeals, that new
¶ 101. We therefore reverse the decision of the court of appeals and the order of the circuit court. These courts erred as a matter of law in holding that new rule
¶ 102. By the Court.—The decision of the court of appeals is reversed and the cause remanded.
¶ 103. PATIENCE DRAKE ROGGENSACK, J. (concurring in part and dissenting in part). While I agree with the majority‘s decision to reverse and remand to the circuit court because the court was not required to apply
¶ 104. The majority opinion‘s analysis omits three necessary determinations: (1) it fails to analyze and
¶ 105. Because I conclude that: (1) Scott‘s claim for relief under
I. BACKGROUND
¶ 106. Scott and Trinity had a contractual relationship wherein Trinity agreed to deliver petroleum products to Scott‘s customers for a period of five years. The terms of the contract permitted cancellation if Trinity did not perform to the “customer‘s satisfaction.” After Scott received several complaints from its customers about the poor delivery services Trinity was providing, Scott gave notice to Trinity that it was terminating the contract.
¶ 107. On April 6, 2004, Trinity commenсed an action against Scott for breach of contract. It is out of Trinity‘s lawsuit for breach of contract that Scott‘s claim under
¶ 108. On May 5, 2005, Scott moved for summary judgment of dismissal. A hearing was set for June 6, 2005, but was postponed until July 5, 2005, because certain deposition transcripts could not be made available in sufficient time for Trinity to reply to Scott‘s motion.
¶ 109. On July 5, 2005, the circuit court granted Scott summary judgment of dismissal, and Scott orally moved for costs and fees, claiming Trinity commenced and continued a frivolous action. The circuit court asked that Scott place its motion in writing, which it did on July 21, 2005, alleging violations of
¶ 110. During the course of Trinity‘s lawsuit against Scott, this court engaged in rule-making under the authority granted in
¶ 112. Thomas S. Hanson, who was a member of the Wisconsin State Assembly in 1978 when the legislature enacted
¶ 113. This court did as requested by the lawyer-petitioners. In Supreme Court Order 03-06, it “repealed”
¶ 114. In deciding Scott‘s motion alleging that Trinity commenced and continued a frivolous action, the circuit court concluded that it could not award sanctions because
II. DISCUSSION
A. Standard of Review
¶ 115. Deciding when a claim for relief accrues based on undisputed facts is a question of law. See Meracle v. Children‘s Serv. Soc. of Wis., 149 Wis. 2d 19, 25-26, 437 N.W.2d 532 (1989). Whеther a statute is procedural or has substantive components is also a question of law for our independent review. See Matthies v. Positive Safety Mfg. Co., 2001 WI 82, ¶¶ 15, 21, 244 Wis. 2d 720, 628 N.W.2d 842; Schulz v. Ystad, 155 Wis. 2d 574, 596, 456 N.W.2d 312 (1990).
¶ 116. The interpretation of
¶ 117. Whether a judicial holding, such as Supreme Court Order 03-06, should be applied retroactively or prospectively is a question of policy for our independent review. Kurtz, 91 Wis. 2d at 108.
B. Scott‘s Claim
¶ 118. The majority opinion spends most of its energy addressing whether
¶ 119.
It provided substantive rights and remedies that should be held to apply to Scott‘s claim because Scott had a claim capable of present enforcement (that TrinityIf an action or special proceeding commenced or continued by a plaintiff or a counterclaim, defense or cross complaint commenced, used or continued by a defendant is found, at any time during the proceedings or upon judgment, to be frivolous by the court, the court shall award to the successful party costs determined under s. 814.04 and reasonable attorney fees.
¶ 120. Determining whether a statute is procedural or has substantive components can have profound implications. See Snopek v. Lakeland Med. Ctr., 223 Wis. 2d 288, 294, 588 N.W.2d 19 (1999); State ex rel. Schmidt v. Dist. No. 2, Town of Red Springs, 237 Wis. 186, 190, 295 N.W. 36 (1941). Substantive statutes create, define or regulate rights or obligations. Betthauser v. Med. Protective Co., 172 Wis. 2d 141, 147-48, 493 N.W.2d 40 (1992) (citing City of Madison v. Town of Madison, 127 Wis. 2d 96, 102, 377 N.W.2d 221 (Ct. App. 1985)). A statute cannot be procedural if it takes away “vested rights.” Id. A vested right can be a remedy that is available, but not yet awarded, to a party who could successfully petition the court for the remedy. See Schulz, 155 Wis. 2d at 598.
¶ 121. We discussed this concept in Schulz when we considered
¶ 122. The majority asserts that Scott had no “vested right” under
¶ 123. In Matthies, we reviewed whether a statute on comparative negligence that was amended after Matthies was injured, but before he filed his lawsuit, applied to limit the damages he could collect to an amount representative of each tortfeasor‘s causal negligence. Matthies, 244 Wis. 2d 720, ¶ 1. In our analysis of the question presented, we first determined when Matthies’ claim for relief accrued. Id., ¶¶ 21-22.
¶ 124. Matthies asserted his claim accrued at the time of his injury, and the tortfeasors asserted “Matthies ha[d] no vested or accrued right in a particular remedy” until a final judgment. Id., ¶ 21. We disagreed with the tortfeasor‘s contention. Id. And even though Matthies had not yet filed his lawsuit when the law was changed from joint and several liability for negligence to comparative negligence, we held that “Matthies d[id] have a vested right to recover all of his damages that are adjudged due to him from any defendant that may be jointly and severally liable for his injuries.” Id.
¶ 125. We reasoned that “Matthies ha[d] a vested right in his claim for negligence” because his claim “accrued on the date of his accident and injury” and it
¶ 126. Applying Matthies to the question of whether Trinity has a claim to a substantive remedy under
¶ 127. My conclusion that the circuit court should apply
¶ 128. We concluded that Niesen‘s claim for relief arose prior to the effective date of the new statute because the State‘s negligent conduct preceded the effective date of the statutory change. Id. at 493. We also concluded that there was no statement in the new statute that the legislature intended by the repeal of
¶ 129. Here, Scott‘s right to make a claim under
Wisconsin Stat. § 990.04
¶ 130. The majority opinion discards Scott‘s claimed application of
As I have explained above, Trinity‘s allegedly frivolous acts occurred before the “repeal” ofThe repeal of a statute hereafter shall not remit, defeat or impair any civil or criminal liability for offenses committed, penalties or forfeitures incurred or rights of action accrued under such statute before the repeal thereof, whether or not in course of prosecution or action at the time of such repeal; but all such offenses, penalties, forfeitures and rights of action created by or founded on such statute, liability wherefore shall have been incurred before the time of such repeal thereof, shall be preserved and remain in force notwithstanding such repeal, unless specially and expressly remitted, abrogated or done away with by the repealing statute.
¶ 131. We construed and applied
¶ 132. As was the case in Jackson County Iron, Scott‘s right of action against Trinity arose before
D. The Chevron/Kurtz Standards
¶ 133. The majority opinion repeatedly focuses on whether
¶ 134. In my view, Supreme Court Order 03-06 is not a judicial holding such that the Chevron/Kurtz test applies, nor do any of the order‘s conclusions about
¶ 135. However, one must note that it was Supreme Court Order 03-06 that eliminated the rights established by
¶ 136. In Kurtz, this court analyzed how to decide whether a “judicial holding” should or should not be applied retroactively. Kurtz, 91 Wis. 2d at 108-09. The court quoted and then applied a three-factor test em-
Id. at 109 (quoting Chevron Oil, 404 U.S. at 106-07) (further citations omitted). When the court applied the Chevron test, it concluded that the judicial holdings then under consideration did not satisfy the test‘s three factors and therefore they were applicable to the claims before the court. Id.First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second,... “we must... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” Finally, we... weigh[] the inequity imposed by retroactive application, for “[w]here a decision of the Court could produce substantial inequitable results if applied retroactively, [we avoid] ‘injustice or hardship’ by a holding of nonretroactivity.”
¶ 137. If Supreme Court Order 03-06 is a “judicial holding,” then we should analyze it under the Chevron/Kurtz test. In applying the Chevron/Kurtz test to the court‘s 03-06 Order, I conclude that it should not be applied to preclude the application of
¶ 138. The “repeal” of
¶ 139. In addition, under the second Chevron/Kurtz factor, there are significant demerits in applying Supreme Court Order 03-06 to preclude the use of
¶ 140. Finally, under the third Chevron/Kurtz factor, applying Supreme Court Order 03-06 to preclude Scott‘s claim under
III. CONCLUSION
¶ 141. Because I conclude that: (1) Scott‘s claim for relief under
¶ 142. For the foregoing reasons, I concur in part and dissent in part.
¶ 143. I am authorized to state that Justices JON P. WILCOX and DAVID T. PROSSER join this concurrence/dissent.
Notes
The state supreme court shall, by rules promulgated by it from time to time, regulate pleading, practice, and procedure in judicial proceedings in all courts, for the purposes of simplifying the same and of promoting the speedy determination of litigation upon its merits. The rules shall not abridge, enlarge, or modify the substantive rights of any litigant.
Legislative Reference Bureau Analysis of 2005 S.B. 501. Both houses of the legislature passed 2005 S.B. 501 and presented it to the governor for his signature; however, he vetoed it. The senate could not muster the two-thirds majority needed to override the governor‘s veto. Bill history for 2005 S.B. 501.requires a court to award a successful party the actual costs of the action, including reasonable attorney fees, if the court finds that the action is frivolous. The bill uses the same standards for determining if an action is frivolous as were used in the law before July 1, 2005.
Id.Costs and reasonable attorney fees must be awarded [] if the court is satisfied that the [law] firm knew or should have known that its allegation of causation was “without any reasonable basis in law or equity.”
Every pleading, motion or other paper of a party represented by an attorney shall contain the name, state bar number, if any, telephone number, and address of the attorney and the name of the attorney‘s law firm, if any, and shall be subscribed with the handwritten signature of at least one attorney of record in the individual‘s name. A party who is not represented by an attorney shall subscribe the pleading, motion or other paper with the party‘s handwritten signature and state his or her address. Except when otherwise specifically provided by rule or statute, pleadings need not be verified or accompanied by affidavit. The signature of an attorney or party constitutes a certificate that the attоrney or party has read the pleading, motion or other paper; that to the best of the attorney‘s or party‘s knowledge, information and belief, formed after reasonable inquiry, the pleading, motion or other paper is well-grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law; and that the pleading, motion or other paper is not used for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If the court determines that an attorney or party failed to read or make the determinations required under this subsection before signing any petition, motion or other paper, the court may, upon motion or upon its own initiative, impose an appropriate sanction on the person who signed the pleading, motion or other paper, or on a represented party, or on both. The sanction may include an order to pay to the other party the amount of reasonable expenses incurred by that party because of the filing of the pleading, motion or other paper, including reasonable attorney fees.
If the court determines that an attorney or party failed to read or make the determinations required under this subsection before signing any petition, motion or other paper, the court may, upon motion or upon its own initiative, impose an appropriate sanction on the person who signed the pleading, motion or other paper, or on a represented party, or on both.
If an action or special proceeding commenced or continued by a plaintiff or a counterclaim, defense or cross complaint commenced, used or continued by a defendant is found, at any time during the proceedings or upon judgment, to be frivolous by the court, the court shall award to the successful party costs determined under s. 814.04 and reasonable attorney fees.
Supreme Court Order 03-06, 278 Wis. 2d at xiii-xiv.In response to the concerns regarding our decision to repeal s. 814.025, we note that in April 1988, the legislature adopted subsection (4) to s. 814.025 to explicitly provide that, “to the extent s. 802.05 is applicable and differs from this section, s. 802.05 applies.” As we revise s. 802.05, we heed the legislative directive; the differences between these two provisions have engendered confusion. The legislature has indicated that to the extent the two provisions differ, Wis. Stat. (Rule) § 802.05 should control. Therefore, in order to prevent confusion for litigants and the courts, as we repeal and recreate s. 802.05, we also repeal s. 814.025. We conclude that this repeal is in keeping with the legislative directive set forth in s. 814.025(4).
This sanction may include attorneys fees: “[T]he sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorney fees and other expenses incurred as a direct result of the violation....”
Three Justices (Wilcox, Prosser, and Roggensack) dissented from Supreme Court Order 03-06, on the ground that
For further discussion of this court‘s adoption of Supreme Court Order 03-06, see Janine P. Geske & William C. Gleisner III, Frivolous Sanction Law in Wisconsin, Wisconsin Lawyer, Feb. 2006, at 16.
The state supreme court shall, by rules promulgated by it from time to time, regulate pleading, practice, and procedure in judicial proceedings in all courts, for the purposes of simplifying the same and of promoting the speedy determination of litigation upon its merits. The rules shall not abridge, enlarge, or modify the substantivе rights of any litigant.
The repeal of a statute hereafter shall not remit, defeat or impair any civil or criminal liability for offenses committed, penalties or forfeitures incurred or rights of action accrued under such statute before the repeal thereof, whether or not in the course of prosecution or action at the time of such repeal; but all such offenses, penalties, forfeitures and rights of action created by or founded on such statute, liability wherefore shall have been incurred before the time of such repeal thereof, shall be preserved and remain in force notwithstanding such repeal, unless specially and expressly remitted, abrogated or done away with by the repealing statute.
Substantial scholarly commentary exists on Rule 11 of the Federal Rules of Civil Procedure. Most agree that the overriding purpose of Rule 11 is to deter baseless filings and improve the litigation process. Several commentaries, however, have been critical of Rule 11, especially as amended in 1983. For a discussion of whether the 1983 amendments to Rule 11 were beyond the Supreme Court‘s power, see Steven B. Burbank, Comment, Sanctions in the Proposed Amendments to the Federal Rules of Civil Procedure: Some Questions About Power, 11 Hofstra L. Rev. 997 (1983). For a summary of the criticisms of the 1983 amendments, see Carl Tobias, The 1993 Revision of Federal Rule 11, 70 Ind. L.J. 171 (1994) (explaining that mаny view Rule 11 as amended in 1983 as a fee-shifting statute that provided compensation to aggrieved parties).
Although the court did not formally adopt the 1993 Federal Advisory Committee Notes to Rule 11 of the Federal Rules of Civil Procedure, the court included them in the Order for “information purposes.” Id.
Other federal courts apply the same version of Rule 11 to determine both whether sanctions were warranted and what kind of sanctions to impose. See, e.g., Runfola & Assocs., Inc. v. Spectrum Reporting II, Inc., 88 F.3d 368, 373 (6th Cir. 1996).
If new