A case that started in small claims and is now before the Wisconsin Supreme Court could have a big impact on claims for theft by contractor.
In Estate of Miller v. Storey, 2016 WI App 68, 371 Wis. 2d 669, 885 N.W.2d 787, pet. for review granted, 2017 Wisc. LEXIS 11 (Jan. 9, 2017), the Court of Appeals held that the phrase “all costs of . . . litigation” recoverable for statutory theft claims under Wis. Stat. section 895.446(3)(b) does not include actual reasonable attorney fees.
Although Estate of Miller involves a claim for theft under Wis. Stat. section 943.20 – rather than theft by contractor under Wis. Stat. section 779.02(5) – the damages available for both causes of action are set forth in Wis. Stat. section 895.446.1 Thus, the Court of Appeals’ holding that actual attorney fees are not recoverable applies to theft by contractor claims.
Historically, most construction lawyers have taken the position that attorney fees are recoverable for theft by contractor. As a result, fee shifting often factors into decisions about litigation strategy, whether to file motions, and settlement. Thus, the Supreme Court’s decision in Estate of Miller will have important ramifications for clients involved in theft by contractor litigation.
Facts of the Case
Estate of Miller was a small claims action brought by the Estate of Stanley Miller (Miller). The defendant, Diane Storey (Storey), was Miller’s niece. When Miller was eighty‑six years old in 2010, Storey moved in with him to serve as his caretaker. Among other things, Storey helped Miller with his checkbook and paying bills.
Miller passed away in 2011. His sister took on the role of personal representative of the Estate. Information then came to light that raised questions about Storey’s handling of Miller’s finances. This included large amounts withdrawn from Miller’s bank accounts during the year Storey stayed with Miller, suspicious checks payable to “cash” and to a collection agency, payment of Storey’s property taxes from Miller’s checking account, and Miller being signed up for online banking even though he did not have Internet access.
The Estate filed suit against Storey alleging misappropriation of funds. At trial, the Estate was able to correlate several of the checks written from Miller’s account with funds deposited into Storey’s own bank account.
The jury returned a verdict finding Storey had wrongfully taken $10,000 from Miller prior to his death. On motions after the verdict, the circuit court held the Estate had successfully presented a case for civil liability theft with damages available under section 895.446.
The circuit court awarded the Estate attorney fees in the amount of $20,000 under Wis. Stat. section 895.446(3)(b), which provides: “If the plaintiff prevails in a civil action under sub (1), he or she may recover all of the following: . . . (b) all costs of investigation and litigation that were reasonably incurred, including the value of the time spent by any employee or agent of the victim.”
Storey appealed and argued, among other things, that the circuit court erred by awarding attorney fees under section 895.446(3)(b).
Court of Appeals Decision
The Court of Appeals framed the issue on appeal as whether “[a]ll costs of . . . litigation” includes actual attorney fees incurred by the Estate.
In deciding the issue, the Court of Appeals noted that Wis. Stat. section 895.446(3m)(b) specifically provides that “the court may award a prevailing plaintiff the reasonable attorney fees incurred in litigating the action.” In contrast, section 895.446(3)(b) does not make any specific reference to recovery of attorney fees.
Thus, the Court of Appeals reasoned, the legislature intended to make recovery of “attorney fees” available for the subset of theft claims under (3m)(b), but not for claims under (3)(b) – notably, the subsection that governs theft by contractor claims.
The Court of Appeals noted that statutes should be construed so that no word or clause is rendered surplusage and every word, if possible, is given effect. In addition, where the legislature uses similar but different terms in a statute, particularly in the same section, the Court of Appeals presumes the legislature intended the terms to have different meanings.
Applying these rules, the Court of Appeals found that claimants under subsection (3m)(b) already may receive the “costs of . . . litigation” pursuant to subsection (3)(b). Thus, it follows that parties asserting claims under subsection (3m)(b) may receive attorney fees in addition to litigation costs pursuant to subsection (3)(b) – not in place of them. According to the Court of Appeals, “[i]t would be superfluous to say that all claimants may receive attorney fees as part of the costs of litigation, and then specifically provide for their recovery in a few limited cases as well.”
The Court of Appeals agreed with Storey that, if the legislature intended for attorney fees to be available to a prevailing plaintiff under section 895.446(3)(b), it would have used the same language included in subsection (3m)(b), just as it did under other statutes that provide for recovery of attorney fees (e.g., Wis. Stat. § 943.51 (retail theft), Wis. Stat. § 943.212 (fraud on certain service providers) and Wis. Stat. § 134.93 (payment of commissions to independent sales representatives).
The Court of Appeals rejected the Estate’s argument that Stathus v. Horst, 2003 WI App 28, 260 Wis. 2d 166, 659 N.W.2d 165 is controlling. Stathus involved interpretation of former Wis. Stat. section 895.80, which provided that successful plaintiffs could recover “all costs of investigation and litigation that were reasonably incurred.”
According to the court, Stathus did not address whether attorney fees would be awarded. Rather, the decision addressed how to calculate attorney fees. Moreover, the predecessor statute did not contain the different subsections as to damages that now exist in Wis. Stat. sections 895.446(3) and 895.446(3m), with the specific allowance for attorney fees for the group of subsection (3) claims that also fall under subsection (3m). The legislature also renumbered the statute and amended it substantially. As a result, Stathus was not applicable.
In sum, the Court of Appeals concluded that the express statutory language and structure, standard rules of statutory interpretation, and the absence of controlling case law, supported its holding that “costs of . . . litigation” does not include actual reasonable attorney fees.
Petition for Review
The Wisconsin Supreme Court granted a petition for review. The case has been fully briefed and oral argument and a decision are forthcoming.
The Court of Appeals’ decision in Estate of Miller is at odds with the commonly-stated position that actual reasonable attorney fees are recoverable for theft by contractor. As such, construction lawyers should be aware of this case and its potential ramifications for their clients.
Stay tuned – a follow-up post will discuss the Supreme Court’s decision.
This article was originally published on the State Bar of Wisconsin’s Construction and Public Contract Law Section Blog. Visit the State Bar sections or the Construction and Public Contract Law Section web pages to learn more about the benefits of section membership.
1 The theft by contractor statute (section 779.02(5)) cross-references the theft statute (section 943.20), which in turn provides remedies under Wis. Stat. section 895.446.