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Wisconsin Enacts Second Round of 2011 Tort Reform

November 29, 2011

In a September 2011 Special Session, the Wisconsin Legislature passed several bills that Governor Scott Walker has signed or will sign into law, further changing the landscape of civil litigation in Wisconsin. These laws will supplement the tort reform legislation that became effective on February 2, 2011. Please reference the January 2011 alert. The applicability of three new reform measures to Wisconsin litigation and judgments varies, as explained below.

Attorney Fee Awards - Factors for Determining Reasonableness and Caps

Former Law: Wisconsin did not have a statutory cap on reasonable attorney fees or mandatory criteria for evaluating the reasonableness of attorney fee awards, although certain statutes provided their own suggested factors for courts to consider in determining the amount of reasonable attorney fees, e.g. Wis. Stat. §425.308. In determining the reasonableness of attorney fee awards, courts primarily considered whether the award was sufficient to compensate attorneys. Wisconsin courts particularly looked to Wisconsin Supreme Court Rule ("SCR") 20:1.5, which prohibits the imposition of unreasonable fees and enumerates eight factors in determining the reasonableness of a fee. In Stuart v. Weisflog's Showroom Gallery, Inc., the Wisconsin Supreme Court held that a circuit court applying the SCR 20:1.5 factors must first multiply the reasonable hours expended by a reasonable rate, and then make adjustments based on the factors. 2008 WI 22 ¶ 45, 308 Wis. 2d 103.

New Law: The new statute - Section 814.045 - mandates that a court consider 14 enumerated factors in determining the reasonableness of any award of attorney fees, along with any "other factors the court deems important or necessary to consider under the circumstances of the case." The new law codifies all of the SCR 20:1.5 factors with the addition of the following factors: whether the fee is fixed or contingent; the complexity of the case; awards of costs and fees in similar cases; and the legitimacy or strength of any defense or affirmative defenses asserted in the action.

The new law also sets a statutory cap on attorney fee awards of three times the amount of compensatory damages awarded. The cap does not apply to actions where compensatory damages are not awarded but other equitable relief, such as injunctive or declaratory relief, rescission or modification, or specific performance, is ordered. In those cases, a court must apply the statutory factors discussed above but need not limit the award. In cases where compensatory damages are awarded and declaratory or other equitable relief is ordered, the new law imposes a statutory presumption that reasonable attorneys' fees do not exceed three times the amount of compensatory damages awarded. The presumption may be overcome if, after considering the new reasonableness factors, the court concludes a greater amount is reasonable. Finally, the new law preserves the right of parties to enter into agreements that shift attorneys' fees, which are presumptively reasonable.

The new law is silent on its initial applicability, leaving open the question of retroactive application to pending cases where an award of reasonable attorneys' fees is in play.

Liability to Trespassers Limited and Codification of the Attractive Nuisance Doctrine

Former law: Wisconsin had no statute limiting the duty of care owed to trespassers, but courts consistently held that land owners owed a lesser duty of care to trespassers than to those who enter property with the owner's consent. Landowners had a duty only to refrain from willful and intentional injuries to trespassers, and trespassers had no cause of action where injury or death arose from a failure to keep property reasonably safe. Similarly, "trespasser" was not a statutorily defined term, but was typically defined by courts as "one who enters another's premises without an express or implied invitation from the other person, and solely for his own pleasure, advantage, or purpose." Verdoljak v. Mosinee Paper Corp., 192 Wis. 2d 235, 243 (Ct. App. 1995). Wisconsin law also had no codification of the attractive nuisance doctrine, which imposes liability on owners who maintain a condition on their property inherently dangerous to children where the owner knew or should have known children were likely to trespass and become injured and where no reasonable safeguards are provided, e.g. Schilz v. Walter Kassuba, Inc., 27 Wis. 2d 390, 393 (1965).

New law: The new law codifies the well-settled case law limiting the duty owed to trespassers, as well as the attractive nuisance doctrine. The new law - Section 895.529 - defines "trespasser" as "a natural person who enters onto the property of another without the express or implied consent of the private property owner." It generally provides that private property owners owe no duty of care to trespassers on their property and that owners may not be found liable for an act or omission relating to a condition on the property that causes injury or death to a trespasser.

There are exceptions to the general provision. First, owners may be liable if they intentionally caused the injury or death of the trespasser - but not if the death resulted from the use of necessary and reasonable force for the purpose of self-defense or protection of the property. Second, the statute codifies the attractive nuisance doctrine by providing that the owner may be liable if the trespasser injured or killed was a child and the injury resulted from an "artificial condition" on the property that the owner knew or should have known was unreasonably dangerous and knew or should have known it was likely that a child would trespass near the property. The child also must have failed to discover the artificial condition or realize the risk involved with it after the child entered the dangerous area. In this situation, there must also be a showing that the owner acted unreasonably in failing to prevent the harm as measured by the utility to the owner of maintaining the artificial condition and the relative burden of eliminating the danger.

The new statute also codifies mandatory factors to be considered in determining whether a person has implied consent to enter onto private property: whether the owner acquiesced to previous entries under similar circumstances; the customary use, if any, of the property by others; whether the property owner represented to the public that the land may be entered for particular purposes; and the general arrangement or design of any buildings or improvements on the property. The new statute expressly states that it does not create or increase liability for property owners under any other circumstances, nor does it affect immunities or other defenses available to private property owners under other statutes. The new statute specifically contemplates the newly passed, but not yet signed, Castle Doctrine.

The statute will apply to any action filed on or after its effective date.

Reduction of Interest Rates on Civil Judgments, Verdicts, and Statutory Settlement Offers

Former Law: Interest on money judgments accrued at a rate of 12% from the date of entry of judgment until judgment was satisfied. Interest on verdicts also accrued at a rate of 12% per year running from the date of verdict, decision, or report until judgment was entered. Similarly, when a party extended a statutory offer of settlement and ultimately recovered a judgment greater than or equal to the amount specified in the offer, the party was entitled to interest at the 12% rate.

New Law: The new law sets the interest rate for money judgments, verdicts, and statutory offers of settlement at an annual rate of 1% plus the prime rate in effect on January 1 of the year in which the judgment is entered if entered on or before June 30 of that year, or the prime rate on June 30, if the judgment entered after June 30 of that year. The new law applies to judgments entered on or after the December 2, 2011 effective date. The current rate of prime plus 1 percent is 4.25 percent. Therefore, for any judgment entered from December 2, 2011 through December 31, 2011, the interest rate will be 4.25 percent.

 


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