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COURT
OF APPEALS DECISION DATED AND FILED November 19, 2013 Diane M. Fremgen Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL from an order of the circuit court for Milwaukee
County:
jane v. carroll, Judge. Affirmed.
Before Curley, P.J., Fine and Brennan, JJ.
¶1 PER CURIAM. Timothy J. Dixon and Cornerstone Property Development, LLC (collectively,
Cornerstone), appeal an order that dismissed their various claims against Linda
Peterson upon the parties’ stipulation that Cornerstone had no damages. We affirm.
BACKGROUND
¶2 In
2006, the Commerce Bluff One Condominium Association and some of its individual
condominium owners (collectively, Commerce Bluff), sued Cornerstone, alleging
defects in a condominium building that Cornerstone developed. In 2008, Cornerstone filed a third-party
claim against Peterson, who had purchased an unfinished unit in the building. Cornerstone alleged that Peterson modified her
unit in ways that damaged the overall structure of the building.
¶3 Cornerstone
eventually settled the lawsuit with Commerce Bluff. Most of the settlement was covered by
Cornerstone’s insurer, but Cornerstone itself paid $25,000, including $10,000 as
compensation for Cornerstone’s intentional conduct. Peterson then offered to settle the
third-party suit against her by paying Cornerstone $15,000 plus costs.[1] Cornerstone rejected the offer.
¶4 At
a hearing on May 22, 2012, the parties notified the trial court that the matter
would proceed to trial as scheduled on July 9, 2012, and Peterson asked that
Cornerstone file an itemization of damages.
Cornerstone first responded by noting its legal theories, stating that it
had “a claim for contribution and a claim for indemnification” and an
additional “tort-like claim” under Wis.
Stat. § 893.89
(2011-12).[2] Cornerstone then said that, in addition to
the $15,000 paid to Commerce Bluff, Cornerstone sought to recover “at least a
quarter of a million dollars in legal fees” and, for the claim under
§ 893.89, a further amount that the jury would ultimately determine. Cornerstone concluded, however, that if
Peterson “would like to see a piece of paper that says ‘itemization of damages’
to which a number is attached,” Cornerstone would be “more than happy” to
satisfy the request.
¶5 The
trial court agreed that Peterson’s request for an itemization of damages was
reasonable. Cornerstone offered to file
the itemization the next day, and the trial court adopted the proposed
deadline.
¶6 On
May 23, 2012, Cornerstone filed a document entitled “Defendants/Third Party
Plaintiffs Timothy J. Dixon and Cornerstone Property Development, LLC’s
Itemization of Damages.” The document,
signed by Cornerstone’s counsel, provides in its entirety: “Defendants/Third Party Plaintiffs, Timothy J.
Dixon and Cornerstone Property Development LLC’s damages, currently, are in the
amount of $333,000.27, not including taxable costs and/or interest. This also does not include all damages
pursuant to Wis. Stat. § 893.89.”
¶7 Peterson
moved for relief on June 19, 2012, asserting that the document entitled
“itemization of damages” did not, in fact, itemize Cornerstone’s damages. She asked the trial court either to dismiss
the third-party complaint against her or, alternatively, to adjourn the trial
to permit discovery as to the particulars of the damages claimed. Cornerstone filed a response that same day. In the response, Cornerstone contended that
it had done all that the trial court’s order required, and Cornerstone requested
sanctions against Peterson for filing a baseless motion.
¶8 The
parties argued Peterson’s motion on the day of trial. The trial court agreed with Peterson that the
document entitled “itemization of damages” did not itemize Cornerstone’s alleged
damages. The trial court therefore ruled
that Cornerstone had violated the pretrial order, and the trial court found that
the violation was egregious. As a
sanction, the trial court dismissed Cornerstone’s claim for attorney’s
fees. The trial court then called for a
jury array.
¶9 Cornerstone
immediately declared that it would appeal the trial court’s decision. Cornerstone next asserted that a jury trial
under the circumstances “ma[de] no sense” and that Cornerstone would “stipulate
to zero damages.” Peterson interposed
that she would object to entry of any judgment against her, and Cornerstone
clarified its position that “the court will dismiss the case finding that there
are no damages.” Peterson joined that
proposal. The trial court responded,
“[a]ll right. Based on the agreement
between the parties that there are zero damages, at this point the case is
dismissed.” Cornerstone appeals.
DISCUSSION
¶10 Cornerstone
contends that the trial court erroneously dismissed the claim for attorney’s
fees. In Cornerstone’s view, the document
filed on May 23, 2012, satisfied the trial court’s order for an itemization of
damages and, even if the document was inadequate, the trial court nonetheless erred
by imposing too harsh a sanction. We
conclude, however, that Cornerstone is not entitled to attorney’s fees,
regardless of whether the trial court properly imposed sanctions: the claim for attorney’s fees arises under a contract
that requires proof of damages before Cornerstone may obtain relief, but
Cornerstone stipulated that it has no damages.
¶11 No
dispute exists that Cornerstone’s claim for attorney’s fees is based on the
contract between Peterson and Cornerstone for the sale to Peterson of a
condominium unit. Interpretation of a
contract is a question of law for this court’s de novo review. See Deminsky
v. Arlington Plastics Mach., 2003 WI 15, ¶15, 259 Wis. 2d 587, 657
N.W.2d 411.
¶12 The
contract provides, in pertinent part, that Peterson will:
indemnify and hold harmless the seller and its agents and employees from and against claims, damages, losses and expense, including but not limited to attorney’s fees arising out of or resulting from any item of construction performed by persons other than seller ... but only to the extent caused in whole or in part by negligent acts or omissions of the Buyer or another directly or indirectly employed by her.
(Emphasis added.) The parties
agree that the contract requires a negligent act or omission on the part of
Peterson (or someone she employed) before Cornerstone can pursue Peterson for
relief under the contract’s terms. We
agree as well. See State v. Peppertree Resort
Villas, Inc., 2002 WI App 207, ¶14, 257 Wis. 2d 421, 651 N.W.2d
345 (“When the terms of a contract are plain and unambiguous, we will construe
the contract as it stands.”).
¶13 Cornerstone,
however, cannot prove a negligent act, because a negligence claim cannot
proceed absent damages. A cause of
action for negligence requires:
“(1) [a] duty of care on the part of the defendant; (2) a breach of that duty;
(3) a causal connection between the conduct and the injury; and (4) an actual
loss or damage as a result of the injury.”
Rockweit v. Senecal, 197 Wis. 2d 409, 418, 541 N.W.2d 742
(1995). Further, “[i]t is fundamental
that actual damage is an essential element of a cause of action based on
negligence.” Schweiger v. Loewi & Co.,
65 Wis. 2d 56, 61, 221 N.W.2d 882 (1974).
¶14 Cornerstone
stipulated that it has no damages.
Therefore, it cannot prove negligence.
Absent negligence, Peterson has no contractual obligation to indemnify
Cornerstone or hold it harmless. Thus,
Cornerstone cannot pursue her for attorney’s fees.
¶15 Cornerstone
responds that it did not waive either its claim for attorney’s fees or its
right to appeal. Cornerstone reminds us
that it declared before pretrial proceedings ended that it would appeal the
decision barring the claim for attorney’s fees, and Cornerstone asserts that it
therefore did not “intentionally relinquish” its right to pursue the
issue. See State v. Ndina, 2009 WI 21, ¶29, 315 Wis. 2d 653, 761
N.W.2d 612 (stating that “‘waiver is the intentional relinquishment or
abandonment of a known right’”) (citation omitted). Cornerstone’s argument is misplaced. We do not hold that Cornerstone waived its
claim for attorney’s fees. Rather, we conclude
that Cornerstone’s stipulation that it has no damages disposes of its claim for
attorney’s fees under the contract Cornerstone acknowledges is “the basis for
the suit.”
¶16 We
need consider this appeal no further. See Farmers Auto. Ins. Ass’n v. Union Pac. Ry.
Co., 2008 WI App 116, ¶34, 313 Wis. 2d 93, 756 N.W.2d 461 (we may
affirm a correct trial court decision for reasons other than those relied upon
by trial court). Both parties, however,
have addressed at some length whether the trial court properly exercised its
discretion by sanctioning Cornerstone, and we choose to consider the issue for
the sake of completeness.
¶17 A
trial court may impose a sanction for failing to obey a court order. Hefty v. Strickhouser, 2008 WI 96, ¶71,
312 Wis. 2d 530, 752 N.W.2d 820. We
review a trial court’s decision to impose sanctions and the appropriateness of
the sanctions chosen under an erroneous exercise of discretion standard. See Industrial Roofing Servs., Inc.
v. Marquardt, 2007 WI 19, ¶41, 299 Wis. 2d 81, 726 N.W.2d 898. We will uphold the trial court’s
discretionary decision ‘“if the [trial] court has examined the relevant facts,
applied a proper standard of law, and, using a demonstrated rational process,
reached a conclusion that a reasonable judge could reach.’” Id. (citation omitted).
¶18 Cornerstone
maintains that sanctions of any kind are unwarranted here because, it argues,
it complied with the trial court’s order to itemize damages. We reject this contention.
¶19 As
the trial court accurately explained, the word “itemize” has a clear and common
meaning. “In respect to ‘itemize,’
Webster’s Third New International Dictionary provides this definition: ‘1a (1):
to set down item by item.... (2):
to specify the separate items of: list of each item of....’ Black’s defines ‘itemize’ as: ‘To set down by items. To state each item or article separately....’” Figgs v. City of Milwaukee, 121
Wis. 2d 44, 52, 357 N.W.2d 548 (1984) (ellipses in original). The supreme court long ago took judicial
notice of these definitions. See id. Thus, to “itemize” damages, Cornerstone was
required to list with specificity each component that comprised the totality of
the damages sought. The record indicates
that the itemization should have separately identified, at a minimum: (1) the amounts paid to resolve the dispute
with Commerce Bluff and the basis for any such amounts, including amounts claimed
as costs; (2) the amount of attorney’s fees that Cornerstone claimed it
incurred in resolving the dispute with Commerce Bluff and the basis for those
claimed amounts; and (3) the amounts claimed for the alleged violation of Wis. Stat. § 893.89 and the basis
for the amount sought.[3] The document that Cornerstone filed on May
23, 2012, fell well short of providing this information.
¶20 Cornerstone
nonetheless insists that it satisfied the trial court’s order to file an
itemization of damages because, according to Cornerstone, the May 23, 2012 document
“identified that Cornerstone would seek a specific dollar amount as its
damages, i.e. the legal fees incurred by Cornerstone having to defend itself in
the underlying litigation.” Cornerstone reads
far more into the document than appears on the page. The document states a dollar amount but
discloses no basis at all for the amount stated. Moreover, the document explicitly provides that
the amount set forth is less than the undisclosed total amount of Cornerstone’s
alleged damages.
¶21 Cornerstone
next argues that it did nothing wrong because it had no obligation to provide
any specifics about the damages sought.
In support of this theory, Cornerstone reminds us that “Wisconsin is a
notice pleading state.” Cornerstone
fails to show, however, that an itemization of damages constitutes a
“pleading.” A “pleading” is defined in Wis. Stat. § 802.01(1) as a
complaint, an answer, a reply to counterclaim, an answer to a cross-claim, a
third-party complaint, and a third-party answer. The trial court did not order Cornerstone to
file any of the documents listed as pleadings in § 802.01(1). Accordingly, Cornerstone does not show that
principles of “notice pleading” apply.
¶22 Equally
unavailing is Cornerstone’s suggestion that it did not violate the trial court’s
order because Wis. Stat. § 910.06
provides, in part: “[t]he contents of
voluminous writings ... which cannot conveniently be examined in court may be presented
in the form of a chart, summary or calculation.” This provision of the Wisconsin rules of
evidence has no bearing on the issue here.
The trial court did not order Cornerstone to prepare an evidentiary
document for trial but rather ordered Cornerstone to file a pretrial
itemization of damages. Moreover, as
Peterson aptly points out, the trial court ordered Cornerstone to itemize, not
summarize, its damages. We fully agree
with the trial court’s conclusion that Cornerstone “essentially ignored” that
order.
¶23 Cornerstone
contends, however, that, even assuming it failed to comply with the order to
itemize damages, the trial court should not have imposed any sanctions because it
did not pair the order with warnings that noncompliance could lead to harsh
penalties. We disagree. Wisconsin
Stat. § 805.03 warns litigants that failure to obey any order of the
trial court may result in sanctions. No
additional notice is required. See Buchanan v. General Cas. Co., 191 Wis. 2d
1, 12, 528 N.W.2d 457 (Ct. App. 1995).
¶24 We
turn to Cornerstone’s argument that, assuming Cornerstone deserved a sanction
of any kind, the trial court selected too harsh a penalty. In addressing this contention, our inquiry “is
not whether we, as an original matter, would have imposed the same sanction as
the [trial] court; it is whether the [trial] court exceeded its discretion in
imposing the sanction it did.” Schultz v. Sykes, 2001 WI App 255, ¶8, 248 Wis. 2d
746, 638 N.W.2d 604.
¶25 A
trial court may dismiss a claim as a sanction for noncompliance with a court
order if the party’s conduct is egregious. See Buchanan,
191 Wis. 2d at 7-8. Conduct is
“egregious” if it is “‘extraordinary in some bad way; glaring, flagrant.’” East Winds Props., LLC v. Jahnke, 2009
WI App 125, ¶15, 320 Wis. 2d 797, 772 N.W.2d 738 (citation and two sets of
quotation marks omitted). When we assess
whether the trial court properly ordered dismissal as a sanction for egregious
conduct, “we examine the reasons given by the trial court for its decision.” Buchanan, 191 Wis. 2d at
9. We are bound by the trial court’s
factual findings “unless they are ‘clearly erroneous.’ We will reverse a [trial] court’s imposition
of a sanction ‘for noncompliance with a court order only when a party shows a
clear and justifiable excuse’ for the noncompliance.” Jahnke, 320 Wis. 2d 797, ¶13
(citations and one set of quotation marks omitted).
¶26 Here,
Cornerstone sought to excuse its noncompliance by suggesting that it
misunderstood the requirements of the order for an itemization of damages and,
relatedly, that the order did not sufficiently explain the disclosures required. The trial court found, however, that the words
of its order are “commonly used,” “specific,” and “readily understood.” The trial court also noted that it ordered an
itemization of damages in response to a complaint from Peterson that she had
“one number [she was] working with and didn’t know where that came from.” The trial court therefore did not agree that
Cornerstone reasonably misunderstood what an “itemization” entailed in this
context.
¶27 Cornerstone nonetheless believes that the trial court’s rationale was inadequate to support the sanction chosen. Cornerstone asserts that the trial court “never made a finding or determination that Cornerstone had done anything else during the course of the 71 months that the case was pending to require such a sanction.”
¶28 We
do not agree that Cornerstone could not earn a sanction as severe as dismissal
of a claim unless Cornerstone did “[some]thing else” in addition to the conduct
that the trial court deemed egregious in this case. A failure to comply with a court’s pretrial
order, particularly when that failure persists over time without correction or
adequate excuse, may support the trial court’s conclusion that a party’s
behavior reflects a “disregard of responsibilities” and warrants dismissal of the
party’s action in its entirety. See
Trispel v. Haefer, 89 Wis. 2d 725, 734-35, 279 N.W.2d 242 (1979)
(citation and two sets of quotation marks omitted). In Trispel, the trial court dismissed the
plaintiff’s case as a sanction when the plaintiff failed to meet a ten-week
deadline for complying with a pretrial order, and the supreme court upheld the
dismissal as a proper exercise of discretion. See id. at 735. As the Trispel court noted, “‘[s]ome means
must be available to enable the trial judge to rein in uncooperative
parties.’” Id. (citation
omitted).
¶29 Moreover, we reject
Cornerstone’s intimation that the trial court imposed a sanction for an
isolated act. Rather, the trial court
sanctioned Cornerstone for a course of uncooperative conduct. That conduct began, but did not end, with
Cornerstone’s failure to comply with the trial court’s order to provide an
itemization of damages within the deadline Cornerstone selected. Thereafter, Cornerstone neither remedied its
error nor sought clarification of its obligations—despite an opportunity to do
so when Peterson moved for relief in light of Cornerstone’s inadequate
disclosure. Cornerstone instead filed a
memorandum in opposition to Peterson’s motion, asserting that she had asked for
a document “entitled ‘itemization of damages’” and had received “exactly what
she requested.” This response, echoed in
Cornerstone’s later courtroom argument, suggested a determined disregard of
Cornerstone’s responsibilities: for
reasons that are too obvious to state, an obligation to provide a document entitled
“itemization of damages” also includes an obligation to provide the itemization
heralded by the title.
¶30 Further,
Cornerstone coupled its opposition to Peterson’s motion with a request that the
trial court punish Peterson for seeking relief.
Maintaining that the motion was groundless and unsupported, Cornerstone
contended that the order to itemize damages imposed no obligation “to set forth
with any specificity the basis on which [Cornerstone is] claiming that [it] is
entitled to $333,000.27.” And finally, as
the trial court noted when dismissing the action, Cornerstone persisted in
violating the court order up to the moment when “the Court and the parties were
prepared to commence a week long jury trial, with all of the attendant costs
and obligations of the court, witnesses, and counsel.”
¶31 We
conclude that the trial court examined the relevant facts, applied a proper
standard of law, and used a demonstrated rational process to reach a conclusion
that a reasonable judge could reach. See Marquardt, 299 Wis. 2d 81, ¶41.
Given the totality of the circumstances,
we cannot say that the trial court erroneously deemed Cornerstone’s course of
conduct “egregious,” that is, extraordinarily bad. See Jahnke, 320 Wis. 2d 797, ¶15. Accordingly, the trial court appropriately
exercised its discretion when it dismissed the claim for attorney’s fees as a
sanction in this case. We affirm.
By
the Court.—Order affirmed.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
[1] Cornerstone did not seek to recover from Peterson the $10,000 attributable to Cornerstone’s intentional conduct.
[2] Cornerstone did not identify the version of the statutes supporting the claim under Wis. Stat. § 893.89, but the statute has not been amended since 1993, so we cite the current version. All subsequent references to the Wisconsin Statutes are also to the 2011-12 version unless otherwise noted.
[3] Cornerstone alleged that it had a “tort-like” claim arising under Wis. Stat. § 893.89. “[Section] 893.89 constitutes a statute of repose in actions for injury resulting from improvements to real property.... [A] statute of repose limits the time period in which an action may be brought.” Hocking v. City of Dodgeville, 2010 WI 59, ¶19, 326 Wis. 2d 155, 785 N.W.2d 398 (footnote omitted). The purpose of § 893.89 is ‘“to provide protection from long-term liability for those involved in the improvement to real property.’” Kalahari Dev., LLC v. Iconica, Inc., 2012 WI App 34, ¶6, 340 Wis. 2d 454, 811 N.W.2d 825 (citation and emphasis omitted). In light of the purpose and function of § 893.89, an itemization of the damages allegedly arising under this statute would likely have been useful to both Peterson and the trial court.