'Costs'
includes 'reasonable costs'
Defrauded
auto buyer can recover reasonable costs
By
David Ziemer
david.ziemer@wislawjournal.com
July
23, 2007
| What
the court held Case:
Kolupar v. Wilde Pontiac Cadillac, Inc., No. 2005AP935. Issue:
Can a retail buyer alleging fraud by a motor vehicle dealer recover actual costs
or only taxable costs? Holding:
A buyer can
recover “reasonable costs.” Otherwise, the fee-shifting provision would fail to
accomplish its intended purpose of making the party whole. Attorneys:
For Appellant:
Erspamer, Paul M.; Lisko, David J.; For Respondent: Gutenkunst, Kathryn S.; Brejcha,
Brian M. |
The
buyer of a motor vehicle who is the victim of fraud can recover reasonable litigation
expenses, not just statutory costs, the Wisconsin Supreme Court held on July 12.
The
decision reverses a published decision of the court of appeals, Kolupar v. Wilde
Pontiac Cadillac, Inc., 2006 WI App 85, 293 Wis.2d 265, 716 N.W.2d 547 (Kolupar
II).
In
1994, Tammy Kolupar bought a used Mercedes based on representations by Wilde Pontiac
Cadillac, Inc., and a salesman, Randall Thompson, that the car was in good mechanical
condition. In 2000, she sued Wilde and Thompson, alleging a number of federal
and state claims, including violations of Wisconsin’s motor vehicle statute,
sec. 218.01 (1993-94), now renumbered as sec. 218.0163(2).
In
2001, the claim was settled for $6,600, plus costs. By that point, Kolupar had
accumulated approximately $41,000 in attorney fees and almost $11,000 in litigation
expenses.
At
a hearing to determine the reasonableness of the fees and costs, Milwaukee County
Circuit Court Judge Thomas R. Cooper awarded only $15,000 in fees and costs combined.
A divided court of appeals affirmed in a published decision, Kolupar v. Wilde
Pontiac Cadillac, Inc., 2003 WI App 175, 266 Wis.2d 659, 668 N.W.2d 798.
The
Supreme Court accepted review, and affirmed in part, and reversed in part. 2004
WI 112, 275 Wis.2d 1, 683 N.W.2d 58 (Kolupar I). The court held that Kolupar failed
to properly appeal the issue of whether the reduction in attorney fees was appropriate.
However, the court remanded the case to the circuit court to award costs.
Back
in circuit court, Judge M. Joseph Donald awarded only taxable costs, not actual
litigation expenses. Kolupar appealed, but the court of appeals affirmed (Kolupar
II).
The
Supreme Court accepted review, and reversed, in a decision by Justice Louis B.
Butler, Jr. Justice Jon P. Wilcox dissented, in an opinion joined by Justice David
T. Prosser Jr.
Section
814.04 sets forth the limited items of costs that must be awarded to a prevailing
party in a civil lawsuit generally.
Section
218.0163(2) provides that “[a]ny retail buyer ... suffering pecuniary loss
because of a violation by a licensee of [subsections of sec. 218.0116] may recover
damages for the loss in any court of competent jurisdiction together with costs,
including reasonable attorney fees.”
The
court rejected the argument of Wilde — accepted by the court of appeals —
that the Legislature’s use of the word “costs,” while allowing
for “actual costs” in other statutes (including another paragraph within
the same statute), meant that the Legislature intended to allow only the statutory
costs provided in sec. 814.04.
The
majority acknowledged the soundness of this argument, under general rules of statutory
construction. Nevertheless, it concluded that, while the statute and the rules
of statutory construction do preclude the award of “actual costs,” they
do not preclude the recovery of “reasonable costs.”
The
majority also concluded that a denial of reasonable costs would conflict with
the purpose of the fee-shifting statute. As a remedial, consumer protection statute,
the court concluded that sec. 218.0163(2) “should be liberally construed
to suppress the mischief and advance the remedy that the statute intended to afford.”
The
court concluded, “In this case, recovery of only Wis. Stat. Sec. 814.04 enumerated
costs would discourage litigants with legitimate claims from seeking relief, and
thus undermine the statute’s effectiveness in suppressing the prohibited
‘mischief.’”
Because
the cost of litigation may reduce or even eliminate recovery altogether, “costs”
must include “reasonable costs,” the court concluded, lest retail buyers
have no incentive to enforce their rights when defrauded.
Finally,
the court noted that attorney fees are a subcategory of costs, and that sec. 218.0163(2)
provides for an awarded of “costs, including reasonable attorney fees.”
The
court concluded that a limitation of “costs” to only those enumerated
in sec. 814.04 would directly conflict with sec. 814.04, which allows for only
token attorney fees. Accordingly, the court interpreted “costs” to mean
“reasonable costs” to harmonize the two statutes.
Before
concluding, the court emphasized that the pecuniary value of the action is irrelevant
to the reasonableness of an award of costs, stating, “Providing for reasonable
attorney fees and costs ensures that individuals will enforce the rights provided
to them under the statute by the legislature, even when the costs of litigation
exceed the value of the action.”
The
dissent rejected the majority’s creation of a category of “reasonable
costs,” as an alternative to statutory “costs” or “actual
costs” as “contorted interpretation.”
The
dissenters wrote, “Why did the legislature not modify the word ‘costs’
with the word ‘reasonable’? Likely because the word ‘costs’
unmodified has meaning in the statutes. Specifically, it means that sec. 814.04
will apply.
“The
majority has inflated the scope of sec. 218.0163(2) by arbitrarily inserting ‘reasonable’
as a modifier of the word ‘costs.’”
Click
here for Case Analysis.
David
Ziemer can be reached by email.
