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COURT OF APPEALS
DECISION
DATED AND FILED
December 29, 2010
A.
John Voelker
Acting 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 No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT II
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Ann Moore,
Plaintiff-Appellant,
v.
Mary Dougherty,
Defendant-Respondent.
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APPEAL
from an order of the circuit court for Waukesha County: Donald
j. hassin, jr., Judge. Affirmed.
Before Brown, C.J., Neubauer, P.J., and Anderson, J.
¶1 PER CURIAM. This appeal arises from Ann
Moore’s claimed future interest in a cottage owned by her mother, Mary
Dougherty. Moore appeals from the part of an order granting
Dougherty’s motion for sanctions against her for violating Wis. Stat. § 802.05 (2007-08). We affirm the order. In addition, we deny Dougherty’s motion to
find this appeal frivolous because we conclude that Moore had a right to challenge the amount of
the fees.
¶2 Although Moore raises a narrow issue, some background is
necessary to put it in context. The
material facts are not in dispute. Robert
Dougherty and his sisters, Alice and Jane, each inherited a one-third interest
in a cottage on Pewaukee
Lake. Robert married Mary and they had nine
children, one of whom is Moore. Decades passed. Robert, Alice and Jane died. By the time the complaint was filed in June
of 2009, Robert’s widow, Mary (“Dougherty”), and Alice’s daughter, Suzanne Greiten, each owned
a half interest. Dougherty and Greiten
had equal responsibility for the cottage’s upkeep, maintenance and taxes.
¶3 As the Dougherty children each reached the age of eighteen,
they were expected to contribute to the Dougherty family share of the duties. In exchange, they enjoyed unlimited free use of
the cottage. According to the complaint,
the siblings were promised that their contributions would result in an equal interest
in the property through inheritance, other devise or sale of the property. Anyone could withdraw from this agreement by
voluntarily abandoning his or her interest without reimbursement.
¶4 In August 2008, Moore
and six of her siblings still participated in the arrangement. They and Dougherty met to discuss Greiten’s
desire to either sell the property or be bought out. The Doughertys wanted to keep the property in
the family. The siblings considered forming
a corporation, each initially contributing $6000, to purchase Greiten’s
interest and to fund the cottage’s upkeep and taxes.
¶5 After several family meetings, conflict developed between
Moore and her siblings. The corporation
idea was abandoned. Moore claims Dougherty asked that she bow out
to keep peace, but she refused because she was willing to keep up her
obligations and wanted to continue using the cottage. She alleges the family returned her $6000 and
“summarily ousted” her from further financial participation and use of the
cottage. Dougherty bought out Greiten’s
interest and is the sole owner. Moore’s six siblings
continue with the cottage as before.
¶6 Moore
commenced this action against her mother.
She claimed that Dougherty breached an oral contract to convey to her a
one-seventh interest in the real property; breached a fiduciary duty by forcing
her out of the arrangement; and was unjustly enriched by Moore’s monetary contributions without providing
compensation, usage rights or an interest in the property.
¶7 Dougherty moved for summary judgment, supported by Moore’s responses to interrogatories, on grounds that none
of Moore’s
causes of action had any legal basis. Dougherty
argued that Moore’s complaint was fatally defective because, contrary to the
statute of frauds, it referenced no written documents showing an ownership
interest; it stated no facts or law demonstrating that familial ties and a
hoped-for inheritance gives rise to a fiduciary relationship; and it alleged no
facts showing that Moore conferred some benefit on Dougherty which Dougherty
unfairly retained without payment. In
opposition to the motion, Moore’s
attorney filed her own affidavit, unsupported with any documents, and a brief
which for the first time broached a theory of constructive trust.
¶8 Dougherty also moved for sanctions against Moore under Wis.
Stat. § 802.05(3) for filing an action comprising claims not based on
any reasonable interpretation of existing law or a nonfrivolous argument for its
extension when, despite proper notice, Moore did not withdraw the action. See
§ 802.05(3)(a)1. Moore acknowledged at the summary judgment
hearing that she submitted nothing that arguably could place any one of the
issues in dispute. She contended,
however, that the allegations in the complaint and concededly inadmissible
e-mails in her file between herself and Moore’s
siblings gave rise to a claim for which a constructive trust could be
imposed. The court granted Dougherty’s
essentially unopposed summary judgment motion and adjourned the hearing on the
sanctions motion.
¶9 The sanctions hearing was held nine weeks later. In the meantime, Moore moved for reconsideration of the
summary judgment decision. Moore’s and
Dougherty’s motions were heard together.
Moore had
pursued no discovery in the interim and offered no new evidence at the hearing. The court reiterated that Moore’s claim that
she was promised an eventual share in the cottage if she contributed to the
upkeep and taxes was not a material issue of fact in the causes of action
brought in the complaint. This colloquy
ensued:
MS. POULOS [Moore’s counsel]: That is—That is—All the Complaint is seeking
is an equitable interest in the property as a result of behavior for a period
of 30 years.
THE COURT: And what law supports that theory?
MS. POULOS: Constructive trust.
THE COURT: Why didn’t you allege that in the Complaint?
MS. POULOS: I do allege that.
THE COURT: Where?
MS. POULOS: Unjust enrichment and breach of a fiduciary
duty, parent child relationship. It’s
throughout my brief.
THE COURT: I don’t see anything about a constructive
trust in the pleadings whatsoever unless I’m missing something. There is no words regarding—there is nothing
here asking the Court—
MS. POULOS: Well, I—
THE COURT: Let me just point for the record.
MS. POULOS: All right.
THE COURT: There nothing in the relief being sought that
seeks the imposition of a constructive trust.
MS. POULOS: There are two elements to constructive thrust. One is unjust enrichment which I pled and
two, a confidential relationship of some kind.
THE COURT: Where do you plead unjust enrichment?
MS. POULOS: I didn’t bring my Complaint.
THE COURT: I can’t help you.
MS. LAFLEUR [Dougherty’s
counsel]: There is one paragraph.
MS. POULOS: I pled unjust enrichment.
MS. LAFLEUR: There is one paragraph that’s pled unjust
enrichment. They’re not set forth in separate paragraphs in the Complaint.
Your Honor, if I might clarify
something. We served our sanction motion
on October 4th of 2009. After serving
that motion, which made it clear that we did not believe that there was a case
either for purposes of sanctions or summary judgment, not one telephone call
was made to ask me for any depositions in October or in advance of the summary
judgment motion. Not one call was made to
my office asking me to adjourn the motion to allow any discovery to take place.
THE COURT: All right.
Any comment on that, Ms. Poulos?
MS. POULOS: Yes.
THE COURT: Is that true?
MS. POULOS: Yes.
THE COURT: Okay. I don’t know what else to do at this point
in time. It was an opportunity, you’re
never precluded from conducting discovery, that was in October. We’re in
January. We’ve still at this point in
time where there has been—there is no affidavit—even if it were somehow to
change the Court’s opinion, there is nothing here to indicate that any effort
has been made in support of the Plaintiff’s case by way of an affidavit or
documents that would somehow bolster the argument that a reconsideration
decision is appropriate here in favor of the Plaintiff.
That issue is now moot. We’re pas[t] all that and we’re now on to the
issue of whether or not this is a sanctionable case.
¶10 The circuit court concluded that Moore had neither commenced
nor maintained the case in good faith because she brought it without a proper
understanding of the law and, despite ample notice and opportunity to right the
boat, she continued sailing the same course and arguing the same facts, even
providing the court with an unpublished opinion, ostensibly to demonstrate that
she had done legal research.
¶11 Dougherty requested $11,000 in costs and attorneys’ fees she
claimed she incurred in defending the frivolous lawsuit. Moore
challenged the reasonableness of the amount.
The court instructed Dougherty to submit support for the amount sought, to
which Moore
would have an opportunity to object. The
court indicated that the award would be determined after its “scrutiny of the
bills.”
¶12 Dougherty’s counsel submitted an affidavit documenting the work
performed and corresponding fees charged.
Moore objected on the basis that the sanctions statute is meant to
deter, not compensate; that the court awarded actual attorney fees without
considering other options, explaining the offending conduct or making a finding
that the litigation was frivolous or brought for an improper purpose; that the bills
in the fee request were insufficiently supported and their reasonableness and
necessity were unsubstantiated.
¶13 The court denied Moore’s motion
for reconsideration and granted Dougherty’s motion for sanctions against Moore in “an amount up to
$11,000.00 and as determined by the Court in its discretion.” Moore
appeals the award.
¶14 Moore’s
appellate issue is narrow but it is intertwined with the underlying finding of
frivolousness. As to whether an action
was commenced frivolously, our review of a circuit court’s decision made pursuant
to Wis. Stat. § 802.05 is
deferential. Storms v. Action Wisconsin, Inc., 2008 WI 56, ¶34, 309 Wis. 2d 704, 750 N.W.2d
739. The nature and extent of the prefiling
investigation actually undertaken is a question of fact and we are bound by
those findings unless they are clearly erroneous. See
id. How much investigation should have been done,
however, is a matter within the circuit court’s discretion because the amount
of research necessary to constitute an “inquiry reasonable under the
circumstances” may vary. See Jandrt v. Jerome Foods, Inc., 227 Wis. 2d 531, 548-49, 597
N.W.2d 744 (1999); see also Wis. Stat. § 802.05(2). We will sustain a discretionary act if the
circuit court examined the relevant facts, applied a proper standard of law
and, using a demonstrated rational process, reached a conclusion a reasonable
judge could reach. Jandrt, 227 Wis. 2d at 549.
¶15 With respect to whether an action was maintained frivolously,
what an attorney knew or should have known is a question of fact. Storms, 309 Wis. 2d 704, ¶35. Whether those underpinnings support a finding
of no basis in law or fact, however, presents a question of law which we review
independently. Id.
¶16 An attorney who files and advocates a pleading is certifying
that, to the best of his or her knowledge, information and belief formed after
an inquiry reasonable under the circumstances, the filing is not for an improper
purpose, such as to harass; the legal contentions are warranted by either
existing law or a nonfrivolous argument for a change in it; and the allegations
either have or, after investigation, are likely to have evidentiary
support. See Wis. Stat. § 802.05(2)(a)-(c).
¶17 As the circuit court noted, Moore’s complaint set forth three claims for
relief: a demand for an ownership interest in Dougherty’s real estate, a breach
of fiduciary duty and a claim for unjust enrichment. The complaint did not seek the remedy of a
constructive trust. A constructive trust
is an equitable device created by law to prevent unjust enrichment, which
arises when one party receives and unjustly retains a benefit. See
Wilharms
v. Wilharms, 93 Wis.
2d 671, 678, 287 N.W.2d 779 (1980).
Further, the legal title must be held by someone who obtained it by
means of actual or constructive fraud, duress, abuse of a confidential
relationship, mistake, commission of a wrong, or by other unconscionable
conduct and who in equity and good conscience should not be entitled to
beneficial enjoyment. See id. at 679.
¶18 The question is not whether constructive trust might have been
a viable theory and remedy but whether it was pled. The complaint failed to allege its
elements. Moore did not allege any facts that can be interpreted
as unconscionable conduct on the part of her mother. On this record, Dougherty had no obligation,
legal or otherwise, to bequeath any interest in the cottage to Moore or to any other of
her children in her will. Furthermore, Moore’s acknowledged three
decades of unfettered access to a lakefront cottage for a little over $9000
cannot be construed under any view as unjustly enriching Dougherty. A claim cannot be made reasonably or in good
faith, even though possible in law, if there is no set of facts which could
satisfy the elements of it. Stern
v. Thompson & Coates, Ltd., 185 Wis. 2d 220, 244, 517 N.W.2d 658 (1994).
¶19 Moore
argues that the prayer for relief asking for “such other relief as the court
deems just and equitable” was sufficient to permit the circuit court to
construct an appropriate remedy—here, constructive trust. We disagree in this instance. The prayer for relief may help clarify the
nature of the allegations, see Baumann
v. Elliott, 2005 WI App 186, ¶¶14-16, 286 Wis. 2d 667, 704 N.W.2d 361, but it cannot
cure a complaint’s insufficiencies.
¶20 Besides the wanting complaint, Moore failed to oppose the summary judgment. Dougherty supported her motion for summary
judgment with Moore’s
responses to interrogatories. The
response to Interrogatory 1 demonstrates the baselessness of Moore’s central claim:
Beyond any problems the Dead
Man’s statute might pose, there also is nothing here that presents any legally
cognizable claim. Yet Moore responded with nothing but her
counsel’s affidavit asserting only undocumented facts. This is an utter failure of proof. We agree with the circuit court that Moore’s counsel brought
and maintained a frivolous suit.
¶21 We finally turn to the focus of the appeal. Moore
objects to the $11,000 sanction imposed on Dougherty’s motion. After determining that Wis. Stat. § 802.05(2) has been
violated, the circuit court “may” impose an appropriate sanction. See
Wis. Stat. § 802.05(3). The statute limits a sanction to what the
court deems sufficient deterrence.
Options include “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.” Sec. 802.05(3)(b).
¶22 Moore argues that actual attorneys’ fees inappropriately exceed
what is sufficient for deterrence of further or comparable conduct and do not
reflect any consideration of alternative sanctions. See
Wis. Stat. § 802.05(3)(b); see also Zuk v. Eastern Pa. Psychiatric
Inst., 103 F.3d 294, 301 (3d Cir. 1996) (discussing Federal Rule of
Civil Procedure 11, the federal analogue to § 802.05).
¶23 The court was aware that, before Moore ever filed her lawsuit, Dougherty’s
prior attorney had cautioned Moore that none of her information “even suggest[ed]
that [she] ha[d] a legally binding claim to an interest in the cottage or any
monetary compensation on any contract theory or on any legally recognized
equitable theory,” and that Moore had rejected Dougherty’s offer to reimburse
her the $9301 she had contributed over the years. Moore
nonetheless pressed forward, forcing her elderly mother to either capitulate or
finance a defense. Moore also failed to avail herself of the
twenty-one-day “safe harbor” Wis. Stat. § 802.05
provides. These lesser steps did not
deter Moore’s
march to the courtroom. We therefore see
no erroneous exercise of discretion in the court ordering actual attorney fees.
¶24 Moore
also objects to the reasonableness and necessity of the fee request Dougherty’s
attorneys submitted. The amount of
attorney fees awarded by a circuit court will be sustained absent an erroneous
exercise of discretion. See Standard Theatres, Inc. v. DOT, 118 Wis. 2d 730, 747, 349
N.W.2d 661 (1984). The circuit court’s
determination of the amount of attorney fees is a finding of fact that we will
sustain unless the court erroneously exercised its discretion. Lucareli v. Vilas County, 2000 WI
App 157, ¶13, 238 Wis.
2d 84, 616 N.W.2d 153. A hearing on fees
generally is not necessary; an itemized bill submitted by affidavit may be
sufficient. See id., ¶12.
¶25 The affidavits counsel tendered here detail the time spent, the
work performed, the hourly rate requested, the basis for that hourly rate and
specifics of the costs incurred. The
circuit court, presided over by an experienced judge, supervised the handling
of this case from the beginning. It was
well-situated to evaluate the reasonableness and necessity of the services
provided, the quality of services provided, the attorneys’ expertise in this
area and local billing rates. See Standard Theatres, 118 Wis. 2d at 747. We take the court at its word that it would
scrutinize the bills before determining an amount. The record before us supports the award.
¶26 As a final matter, Dougherty moved by separate motion for a
finding that Moore’s
appeal violates Wis. Stat. Rule 809.25(3)(c)2. See
Howell
v. Denomie, 2005 WI 81, ¶19, 282 Wis.
2d 130, 698 N.W.2d 621. Whether an
appeal is frivolous is solely a question of law.
Id.,
¶9.
¶27 A claim correctly adjudged to be frivolous in the circuit court
is frivolous per se on appeal. Riley
v. Isaacson, 156 Wis.
2d 249, 262, 456 N.W.2d 619 (Ct. App. 1990).
Moore
did not directly challenge the denial of the summary judgment, however. She had a right to appeal the reasonableness
and necessity of the sanctions imposed. To
award costs and fees on appeal, we must determine that the entire appeal was
frivolous. Denomie, 282 Wis. 2d 130, ¶9. It was not. We deny the motion.
By the Court.—Order
affirmed.
This
opinion will not be published. See Wis.
Stat. Rule 809.23(1)(b)5.