author: ANN WALSH BRADLEY, J. SHIRLEY S. ABRAHAMSON, C.J. DAVID T. PROSSER, J. PATIENCE D. ROGGENSACK, J.

text:
    Village of Lannon, Plaintiff-Respondent, v. Wood-Land Contractors, Inc., Defendant-Appellant-Petitioner, Mary L. Barnekow, Defendant.
    Supreme Court

      No. 02-0236.

      Oral argument September 11, 2003.—

      Decided December 4, 2003.

    2003 WI 150
    (Also reported in 672 N.W.2d 275.)

      For defendant-appellant-petitioner there were briefs by Robert F. Klaver, Jr., James J. Carrig and Niebler, Pyzyk, Klaver & Wagner LLP, Menomonee Falls, and oral argument by James J. Carrig.

    For the plaintiff-respondent there was a brief by Mark G. Blum and Hippenmeyer, Reilly, Moodie & Blum, S.C., Waukesha, and oral argument by Mark G. Blum.

   ANN WALSH BRADLEY, J.

¶ 1. In this action to collect unpaid personal property taxes, Wood-Land Contractors, Inc., (Wood-Land) seeks review of a court of appeals' decision that affirmed the circuit court's grant of summary judgment in favor of the Village of Lannon (Lannon). It contends that its equipment is tax exempt under Wis. Stat. § 70.111(20) (1999-2000).

¶ 2. Specifically, Wood-Land argues that the court of appeals erred in applying the "primary purpose" of the business test rather than the use of the equipment test. We agree, and conclude that neither the language of the statute nor our prior cases supports the adoption of the "primary purpose" of the business test here. Rather, the use of the equipment test should be applied in determining whether this equipment is exempt from taxation. Accordingly, we reverse the court of appeals and remand to the circuit court.

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¶ 3. Wood-Land is a closely held family corporation'headquartered in Lannon, Wisconsin. It contracts to cut and clear trees on the property of its customers. As part of its operations, Wood-Land removes all of the timber from the site and produces forest products, such as saw logs, wood chips, and firewood. Wood-Land advertises both its land clearing services and sale of firewood and wood chips to the general public.

¶ 4. Wood-Land owns approximately 1.3 million dollars in equipment. The most expensive item is a Timbeo T-425 Feller Buncher machine. The Timbco's cost to Wood-Land was approximately $210,000, plus $127,000 for its specialized tractor and transport trailer. Wood-Land uses the Timbeo to cut trees with girths up to 33 inches, which are generally of a height 80 feet or greater.

¶ 5. For smaller trees, Wood-Land uses more conventional timbering machinery, including skidsters with grappling attachments, brush hogs, and chain saws. In addition to this type of equipment, Wood-Land also claimed an exemption for several of its office items including a typewriter, copier, telephones, calculators, and carpeting.

¶ 6. After Wood-Land cuts a tree, it either chips it on-site or loads it onto log racks. Wood-Land cuts desirable trees to lengths as saw logs and sells them to mills. It processes less desirable trees for wood chips and firewood that it sells to the public. Wood-Land maintains an eight-acre property where it prepares and sells firewood and wood chips.

¶ 7. In 2000, Wood-Land had a total revenue of $749,678.90. Of this total, $72,655.85 came from the sale of saw logs, wood chips, and firewood. Thus, Wood-Land's sale of "forest products" represented nearly ten percent of its revenue that year.

¶ 8. Lannon commenced an action in May 2001.to collect unpaid personal property taxes on Wood-Land's equipment. Wood-Land brought a counterclaim seeking a declaratory judgment action with respect to its exemption rights under Wis. Stat. § 70.111(20). Both sides moved for summary judgment, and the circuit court concluded that the material facts were not in dispute.

¶ 9. In its decision, the circuit court recognized that the commercial use of forest products was a "substantial purpose" of Wood-Land's operations. It further acknowledged that it was "beyond dispute that much of Wood-Land's equipment was used to 'cut trees,' to 'transport trees in logging areas,' or to 'clear land of trees.'" The court refused to grant the exemption, however, because Wood-Land's "primary purpose" was not to harvest forest products, but rather to clear land for its customers. Accordingly, it granted judgment to Lannon based on the "primary purpose" of Wood-Land's business and never addressed the use of the office equipment or any other specific piece of equipment.

¶ 10. The court of appeals affirmed the circuit court's decision. It acknowledged that "there are no prior cases in Wisconsin adopting the 'primary purpose' test." Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI App 7, ¶ 17, 259 Wis. 2d 879, 659 N.W.2d 95. Nevertheless, it concluded that it should adopt the test here. Id., ¶ 16. The court reasoned: .

We are convinced that the legislature crafted a narrow exemption for the logging industry whose existence is based upon cutting forest products in logging areas or cutting and clearing land in forests so that it can use the fruits of its labor for some commercially viable use. The legislature did not intend to grant this exemption to businesses outside the logging industry.

Id.

¶ 11. Applying the "primary purpose" of the business test, the court of appeals determined that WoodLand did not qualify for the exemption. Id., ¶ 17. It explained, "Any incidental value [Wood-Land] gets from commercially selling the felled trees it carries from developers' property is collateral to its main occupation. Wood-Land is not engaged in the systematic occupation of logging." Id., ¶ 13.

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¶ 12. Our essential inquiry in this case is one of statutory interpretation. The interpretation of a statute presents a question of law subject to independent appellate review. Meyer v. School Dist. of Colby, 226 Wis. 2d 704, 708, 595 N.W.2d 339 (1999).

¶ 13. When interpreting a statute, our purpose is to discern legislative intent. State ex rel. Angela M.W. v. Kruzicki, 209 Wis. 2d 112, 121, 561 N.W.2d 729 (1997). To this end, we look first to the language of the statute as the best indication of legislative intent. Id. Additionally, we may examine the statute's context and history. Id.

¶ 14. Because exemption from the payment of taxes is an act of legislative grace, the party seeking the exemption bears the burden of proving entitlement. Deutsches Land, Inc. v. City of Glendale, 225 Wis. 2d 70, 80, 591 N.W.2d 583 (1999). Exemptions "shall be strictly construed ... with a presumption that the property in question is taxable . . . ." Wis. Stat. § 70.109. In interpreting tax exemption statutes, we apply a "strict but reasonable construction." Deutsches Land, 225 Wis. 2d at 80.

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¶ 15. The issue in this case is whether the court of appeals erred in applying the "primary purpose" of the business test to Wis. Stat. § 70.111(20). We conclude that it did, as neither the language of the statute nor our prior cases supports the adoption of that test.

¶ 16. Lannon maintains that Wood-Land is not entitled to the tax exemption under the subsection's plain language. It contends that the legislature incorporated a "use" component that specifically qualifies the exempt equipment "for the commercial use of forest products." According to Lannon, Wood-Land does not clear the land to sell and process the trees that it cuts; rather, it clears the land for the development of property. As a result, Wood-Land's ancillary sales cannot transform its equipment into tax-exempt property.

¶ 17. The problem with Lannon's reading, as adopted by the court of appeals, is that it shifts the focus of the statute from the use of the equipment to the nature of the business seeking the exemption. We believe that such a reading runs contrary to legislative intent.

¶ 18. We begin our analysis with an examination of the statute. Wis. Stat. § 70.111 describes personal property that is exempted from general property taxation. It consists of 25 total subsections reflecting various public policy considerations made by the legislature. The statute provides in relevant part:

The property described in this section is exempted from general property taxes:
(20) LOGGING EQUIPMENT. All equipment used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products.

¶ 19. Both parties agree that the phrase, "commercial use of forest products," modifies each of the three types of logging equipment specified in the statute. We too subscribe to this construction. To read the phrase as modifying only equipment used to clear land would render an exemption for nearly every saw in this state. Accordingly, we conclude that the legislature intended no such construction.

¶ 20. Where the parties disagree is whether the "primary purpose" of Wood-Land's business is a proper test for determining the tax exempt status of its equipment. We believe it is not under Wis. Stat. § 70.111(20). On its face, the statutory exemption contains no language that the equipment be used by a certain business model or industry. Moreover, the exemption contains no language that the user's "primary purpose" is to harvest forest products.

¶ 21. We read the focus of the exemption to be solely on the use of the equipment. Thus, the relevant inquiry is whether the equipment is used: (1) to cut trees for the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) to clear land of trees for the commercial use of forest products.

¶ 22. If the legislature had intended to narrow the exemption in the way that Lannon suggests, it could have easily done so. In looking at this exemption in the context of the whole statute, we note that several of the 24 other subsections in the statute contain examples of qualifying language. Such limiting language is not found in the exemption at hand.

¶ 23. For example, in the subsection entitled "TOOLS AND GARDEN MACHINES," the legislature chose to narrow the exemption to equipment "used in" or "used by" a particular business model or industry. Wis. Stat. § 70.111(9). Under it, "tools" are exempt if they are "kept and used in the mechanic's trade." Id. (Emphasis added.) Moreover, "garden machines," are exempt if they are "owned and used by any person in the business of farming or in the operation of any orchard or garden." Id. (Emphasis added.) The "used by" qualifier is also employed in Wis. Stat. §§ 70.111(14), 70.111(24), and 70.111(25).

¶ 24. The legislature adopted a variation of this language in the subsection entitled, "FARM MACHINERY AND EQUIPMENT." Wis. Stat. § 70.111(10). Below its definition of "Machine," the exemption specifies, "Tractors and machines; including accessories, attachments, fuel and repair parts for them; whether owned or leased, that are used exclusively and directly in farming . . . ." Id. (Emphasis added.)

¶ 25. Finally, the legislature provided yet another example of limiting language in the subsection entitled "CAMPING TRAILERS AND RECREATIONAL MOBILE HOMES." Wis. Stat. § 70.111(19)(b). It states, "Mobile homes, as defined in s. 66.0435, that are no larger than 400 square feet and that are used primarily as temporary living quarters for recreational, camping, travel or seasonal purposes." Id. (Emphasis added.)

¶ 26. Clearly the legislature has demonstrated an ability to use qualifying language which limits an exemption, as evidenced by these different subsections. Therefore, what Wis. Stat. § 70.111(20) does not say is also significant when interpreting its meaning.

¶ 27. We consider next the subsection's legislative history. Admittedly, the history of § 70.111(20) is silent on the policies underlying the exemption. Nevertheless, we find support for our interpretation.

¶ 28. We note that an earlier draft of the exemption, 1983 A.B. 38 states: "All equipment used to cut trees for lumber, to transport trees in logging areas or to clear land of trees in lumbering." (Emphasis added.) The phrase "in lumbering" was removed in the later draft and replaced with the phrase "for the commercial use of forest products." We do not view the subsequent change as still referring exclusively to the lumbering or logging industry. Rather, we view the new language as removing the industry component from the subsection altogether.

¶ 29. In sum, we find nothing in the exemption's language, context, or history to support Lannon's construction. To the contrary, such an examination reveals that the use of the equipment test is applied under Wis. Stat. § 70.111(20) when determining whether the equipment is exempt from taxation.

¶ 30. A review of the relevant cases also supports our interpretation. The court of appeals acknowledged that, "there are no prior cases in Wisconsin adopting the 'primary purpose' test." Wood-Land, 259 Wis. 2d 879, ¶ 17. It found support, however, in the logic of Village of Menomonee Falls v. Falls Rental World, 135 Wis. 2d 393, 400 N.W.2d 478 (Ct. App. 1986). Id., ¶¶ 15-16. The court also cited as foundation for its conclusion the "function or use" cases of Ladish Malting Co. v. DOR, 98 Wis. 2d 496, 297 N.W.2d 56 (Ct. App. 1980), and DOR v. Greiling, 112 Wis. 2d 602, 334 N.W.2d 118 (1983). Id., ¶ 17.

¶ 31. What the court of appeals failed to address, however, was its decision in Owens-Illinois, Inc. v. Town of Bradley, 132 Wis. 2d 310, 392 N.W.2d 104 (Ct. App. 1986). That case was decided after both Ladish and Greiling and rejected the application of the "primary purpose" test.

¶ 32. In Owens-Illinois, the Wisconsin Department of Revenue advanced an argument very similar to Lannon's. It claimed that Owens-Illinois' boiler and power house were not entitled to tax-exempt status because their "primary purpose" was to produce steam and heat for use in industrial production rather than to eliminate pollution. Id. at 315. The exemption in dispute was Wis. Stat. § 70.11(21)(a), "TREATMENT PLANT AND POLLUTION ABATEMENT EQUIPMENT." Id. It required two things: "(1) that all exempt property be purchased or constructed as a waste treatment facility; and (2) that exempt property be approved by the department of revenue for the purpose of abating or eliminating pollution." Id.

¶ 33. The court of appeals concluded that nowhere in the language of the exemption was there a requirement that "the primary purpose of a waste facility be pollution abatement in order to qualify for exemption." Id. Accordingly, it rejected the application of the "primary purpose" test. Id.

¶ 34. We find Owens-Illinois instructive in the present case. As with Wis. Stat. § 70.111(20), the exemption in Owens-Illinois focused on the use of equipment and not the "primary purpose" of its user. As a result, the court of appeals determined that Owens-Illinois' motivation or purpose for using the equipment was irrelevant in evaluating the exemption claim. See id. at 315-316. We believe that Wood-Land's motivation or purpose for using its logging equipment is similarly irrelevant here. All the subsection requires is that the equipment be "used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products." Wis. Stat. § 70.111(20).

¶ 35. In adopting the "primary purpose" of the business test, the court of appeals relied on the logic of Falls Rental World. Wood-Land, 259 Wis. 2d 879, ¶¶ 15-16. The sole issue on appeal in that case was whether goods held out for rent could he classified as "merchants' stock-in-trade," thereby qualifying it as tax exempt under § 70.111(17). Falls Rental World, 135 Wis. 2d at 395. Falls Rental World based its claim on the fact that it occasionally removed property from its rental group and sold it. Id. The court concluded that the property at issue was not "stock-in-trade" under the plain meaning of the statute. Id.

¶ 36. The court of appeals' reliance on Falls Rental World is misplaced. Nothing about that decision supports the adoption of the "primary purpose" of the business test in the present case. Indeed, the focus of Falls Rental World was the property held out for rent. Id. To the extent that the court examined the nature of the business, it did so only to give meaning to the entity described in the statute, that is, "merchant." Id. at 398. Here, the subsection at issue contains no corresponding business entity. It is a different exemption with a focus on the use of equipment.

¶ 37. Likewise, we believe neither Ladish nor Greiling supports the adoption of the "primary purpose" test here. In Ladish, a malting company contended that its attemporators, kilns, and malt elevators were exempt under the so-called "M&E" exemption. 98 Wis. 2d at 498. The "M&E" exemption applied to "[m]anufactur-ing machinery and specific processing equipment, exclusively and directly used by a manufacturer in manufacturing tangible personal property." Id. It excluded, however, "materials, supplies, buildings or building components." Id. The department of revenue argued that Ladish was not entitled to the exemption because its structures were not "machines" but rather "buildings." Id. at 499. The court of appeals disagreed, applying the "function or use" test over the more narrow "physical appearance" test. Id. at 510.

¶ 38. In Greiling, this court faced a similar issue involving a greenhouse. A taxpayer claimed that his greenhouse was a "machine" used in floriculture, thereby qualifying its components for an exemption. 112 Wis. 2d at 605. The court agreed, noting that, "a greenhouse such as the one in this case does not function simply as a shelter or storage area for plants. Instead, it actively produces the artificial environment necessary to produce plants for commercial use and as such could be considered a machine." Id. at 606. The court cited Ladish and stated, "We believe that the ['function or use'] test should be determinative when resolving use tax exemption issues." Id. at 607.

¶ 39. We fail to see how either Ladish or Greiling provides foundation for the court of appeals' decision in the present case. The issue in both cases was whether a disputed structure or structures could be considered "machines" for the purposes of tax exemption. Accordingly, the court's focus was on the "function or use" of the property, not the "primary purpose" of the business or taxpayer claiming the exemption.

¶ 40. In sum, we do not find support in our prior case law for the application of the "primary purpose" of the business test here. To the contrary, the case of Owens-Illinois, in interpreting a similar exemption, rejected such an approach.

¶ 41. In addition to the above discussion of the statutory language and our prior case law, we note the difficulty in the practical application of the "primary purpose" test. Because the test is subjective in nature, it places an enormous burden on assessors or courts applying the exemption. First, they must ascertain whose "purpose" they are to consider. In a case involving two companies — one logging and one processing — this could be a troublesome task. Second, they must determine the individual business' "primary purpose" for each taxable year. We can imagine scenarios in which fluctuating markets could alter Wood-Land's percentage of forest products sales and transform otherwise non-exempt equipment into exempt equipment. We conclude the legislature did not intend such a result.

¶ 42. Having established that § 70.111(20) requires a use of the equipment test, we consider next the application of that test in this case. In its decision, the circuit court recognized that "much" of Wood-Land's equipment met the requirements of the statute. Nevertheless, it applied the "primary purpose" test and rejected the claimed tax exemption because it determined that Wood-Land's "primary purpose" was clearing land for its customers. Accordingly, the circuit court granted summary judgment without addressing which pieces of equipment met the statutory use requirements.

¶ 43. On remand, the circuit court should consider what equipment of Wood-Land's is used: (1) to cut trees for the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) to clear land of trees for the commercial use of forest products. Wood-Land will bear the burden of proving entitlement to the exemption. Deutsches Land, 225 Wis. 2d at 80.

¶ 44. At oral argument, both parties advanced a "strict but reasonable" standard for applying tax exempt statutes. They relied upon Deutsches Land in support of this standard.

¶ 45. In Deutsches Land, we considered whether property owned by benevolent associations devoted to the preservation of German culture was entitled to exemption from property taxes under § 70.11 (1995-96). Id. at 76. In construing the statute, we rejected the notion that the term "exclusively" brooked no exceptions. Id. We explained that such an inflexible and strict interpretation would frustrate the intent of the statute. Id. at 83. In essence, we recognized that "inconsequential or incidental uses of the property for gain" by a benevolent organization did not destroy an exemption calling for "exclusive" use. See id. at 83.

¶ 46. Although Deutsches Land involved the exemption of real property, we nevertheless find it useful in the present case. The personal property exemption at issue is subject to the same "strict but reasonable" construction. See id. at 80. Without such a construction, we believe that the exemption would invite subterfuge or sham in claims involving de minimis use. Accordingly, we recognize the corollary to the above principle here: de minimis uses of the property are not sufficient to invoke this exemption.

¶ 47. We are mindful that our holding today may appear to run contrary to the legislative directive that exemptions "shall be strictly construed . . . with a presumption that the property in question is taxable . . . ." Wis. Stat. § 70.109. However, we are impelled to our conclusion by the language of the statute. We believe that if the legislature intended to limit Wis. Stat. § 70.111(20) to the logging industry, it would have explicitly said so, as it has done in several of the other subsections. Indeed, if the legislature still wishes to narrow the exemption, it can amend it at any time by adding a few words to identify a specific business model or, if it so chooses, a "primary purpose."

¶ 48. In sum, we determine that the court of appeals erred in adopting the "primary purpose" of the business test. We agree with Wood-Land that § 70.111(20) is defined by the use of the equipment. Accordingly, we reverse the court of appeals and remand to the circuit court to determine what equipment is entitled to a tax exemption under the statutory provision.

By the Court. — The decision of the court of appeals is reversed and the cause is remanded.

SHIRLEY S. ABRAHAMSON, C.J.

¶ 49. {concurring). I agree with Judge Nettesheim's dissent that summary judgment is not appropriate in the present case. I, like Judge Nettesheim, agree with the test set forth by the court of appeals. He and I conclude that competing reasonable inferences can be drawn on the question of whether Wood-Land's primary business activity is logging or whether it is the clearing of land with timbering as an ancillary activity. Like Judge Nettesheim, I would remand the cause to the circuit court for trial on that question.

¶ 50. Wisconsin Stat. § 70.111 provides a conglomeration of numerous tax exemptions. The statute does not set forth a seamless web of tax exemptions. The exemptions do not divulge a pattern or theme. Subsection (20) of § 70.111 provides a personal property tax exemption for "[a] 11 equipment used to cut trees, to transport trees in logging areas or to clear land of trees for the commercial use of forest products."

¶ 51. The statutory language to be interpreted in the present case is the phrase "for the commercial use of forest products." The phrase "for the commercial use of forest products" modifies each of the three uses of equipment specified in the statute: cutting trees, transporting trees in logging areas, and clearing land of trees. Wood-Land focuses on the phrase "to clear land of trees for the commercial use of forest products."

¶ 52. The sole issue before the court is whether "for the commercial use of forest products" means that the primary business purpose of the entity claiming the exemption is cutting, transporting or clearing land of trees for the commercial use of forest products or whether, as the majority opinion puts it, the entity merely utilizes its equipment for some commercial use of forest products.

¶ 53. That the statute requires equipment to be used for the commercial use of forest products rather than a commercial use of forest products suggests that the first, highest, or foremost purpose of the business using the equipment, or of the use of the equipment itself, is for the commercial use of forest products. Use of the definite article in the statute rather than the indefinite article, coupled with the various references to "logging" in both the title and body of the statute, and general rules of interpreting tax exemptions lead me to believe that the legislature sought to craft a very narrow exemption limiting the business entities capable of claiming an exemption to those that are part of the logging industry.

¶ 54. The court of appeals read the title of the statute, which refers to "logging equipment," along with the text, including the provision referring to the transport of trees in logging areas, and concluded that the legislature intended that the exemption apply to entities involved in the logging industry. The court of appeals concluded on review of a summary judgment that the primary purpose of Wood-Land was to clear the land for development, not to make commercial use of forest products. The dissent in the court of appeals agreed with the test expressed by the majority but concluded that the summary judgment record supported competing inferences drawn by both parties as to whether Wood-Land is engaged in the logging business and urged that the matter should go to trial.

¶ 55. I agree with the court of appeals that the legislature crafted a narrow exemption for those in the business of clearing forest land for the express purpose of using the fruits of their labor for eventual commercial use. The legislature did not intend to grant the exemption to businesses outside the logging industry. The question for me, then, is whether Wood-Land is engaged in the systematic business of logging and using this equipment in that business.

¶ 56. The majority opinion rejects this approach, concluding that the statute need not consider Wood-Land's motivation or purposes for using its logging equipment and looks only to determine whether the use of the equipment is for a commercial use of forest products.

¶ 57. The majority opinion states it is-adopting a "use of equipment test" but never explains the test. It remands the matter to the circuit court to decide the exemption but merely reiterates the words of the statute in instructing the circuit court on remand. According to the majority opinion, on remand the circuit court should consider "what equipment of Wood-Land's is used: (1) to cut trees for the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) to clear land of trees for the commercial use of forest products."

¶ 58. The only guidance the majority opinion gives to the circuit court in applying the statute on remand is that sham claims involving de minimis use of equipment for commercial use of forest products are not sufficient to sustain an exemption. The majority opinion thus interprets the statute to exclude from the exemption inconsequential uses of the designated equipment for the commercial use of forest products.

¶ 59. In doing so, the majority opinion injects a quantity element into § 70.111(20) at the same time as it objects to the court of appeals' insertion of a quantity element into the statute. The majority opinion carefully avoids commenting on how de minimis is de minimis and how equipment used for dual purposes should be treated. Indeed, this case may very well present a case in which much of Wood-Land's equipment is used for dual purposes. If one of the majority's criticisms is that the court of appeals decision is difficult to apply, the same criticism can be levied against the majority opinion's interpretation.

¶ 60. Perhaps the tests set forth in the majority opinion and in the decision of the court of appeals are distinctions without a difference. Regardless of whether courts are required to determine whether an entity is a logging enterprise and has as its primary business purpose cutting, transporting, or clearing land of trees for the commercial use of forest products, or whether courts must evaluate whether the equipment is used solely, partly, or de minimis for a commercial use of forest products, the tests ultimately require a determination of how much use must be for commercial use of forest products in order to qualify for a tax exemption.

¶ 61. Having concluded that both tests introduce a quantity element into the statutory language, I am not persuaded that the "use" interpretation adopted by the majority opinion is any better than the "primary purpose" interpretation adopted by the court of appeals. Indeed I think the majority opinion may be more difficult to apply.

¶ 62. To determine under the "primary purpose" test whether a business entity is in the logging industry will require consideration of several factors. These factors include, but are not limited to, whether an entity holds itself out as being a logging business and the amount or percentage of revenue generated from the entity's cutting trees, transporting trees in logging areas, and clearing of land for commercial use of forest products.

¶ 63. The majority opinion acknowledges that its holding "may appear to run contrary to the legislative directive." In light of the legislature's explicit command in Wis. Stat. § 70.109 that exemptions "shall be strictly construed. . . with a presumption that the property in question is taxable," and our interpretive rule that tax exemption statutes be given a strict but reasonable interpretation, I conclude that the majority opinion is contrary to the legislature's intent and our interpretive rule.

¶ 64. The burden is on the taxpayer to show that its construction is supported by clear evidence of legislative intent; "any doubt under the 'strict but reasonable' construction rule must be resolved against the party seeking the exemption." The court of appeals' interpretation of § 70.111(20) to include a "primary purpose" of the business test more accurately effectuates the language of the statute and the intent of the legislature than does the majority opinion's. Accordingly, I concur and would, for the reasons set forth by Judge Nettesheim, remand the cause to the circuit court for trial.

DAVID T. PROSSER, J.

¶ 65. (concurring). I join the majority opinion with reservation because of the statutory directive that property tax exemptions "shall be strictly construed in every instance." Wis. Stat. § 70.109. This directive, which was inserted into the statutes in 1998, is even more pointed than the modern formulation of the strict construction rule. See Sisters of St. Mary v. City of Madison, 89 Wis. 2d 372, 379, 278 N.W.2d 814 (1979); Friendship Village of Greater Milwaukee, Inc. v. City of Milwaukee, 181 Wis. 2d 207, 220, 511 N.W.2d 345 (Ct. App. 1993).

¶ 66. The concurrence of the Chief Justice asserts that the majority opinion never explains the "use of equipment" test. Concurrence, ¶ 57. There is some legitimacy in this criticism. In the wake of the court's decision, a property owner may be able to secure a property tax exemption for- certain equipment merely by demonstrating that the equipment is used to cut trees for the commercial use of forest products, to transport trees for the commercial use of forest products, or to clear land for the commercial use of forest products, so long as use of the equipment for one or more of these purposes is not de minimis. This may be a broader exemption than the legislature intended.

¶ 67. On the other hand, the problem with the "primary use" test is that it could nullify the exemption on logging equipment under Wis. Stat. § 70.111(20) if less than 50 percent of the income generated by the equipment in the previous year came from cutting trees for the commercial use of forest products, transporting trees for the commercial use of forest products, or clearing land for the commercial use of forest products. As a result, the viability of a taxpayer's exemption could depend upon the fluctuating market value of forest products or the varying and unpredictable utilization of logging equipment as new work becomes available.

¶ 68. Wisconsin Stat. § 70.111 contains multiple exemptions for personal property, including horses, tools and garden machines, and rented personal property. Wisconsin Stat. § 70.112(5) contains an exemption for motor trucks, truck tractors, similar motor vehicles, and trailers used in connection with these vehicles. These exemptions overlap the exemption for logging equipment, regardless of how the exemption for logging equipment is construed.

¶ 69. Thus, even if the court of appeals' interpretation of § 70T11(20) were affirmed, a person who used a horse or motor truck to clear land for development would have a property tax exemption for the horse or truck, irrespective of whether any affected forest products had commercial value. Similarly, "logging equipment" for rental would normally be exempt for the rental business, no matter how the equipment was used. This would produce an inexplicable patchwork of exemptions for identical "logging equipment," with potentially inequitable consequences.

¶ 70. Against this background, I conclude that the majority opinion represents the proper interpretation of the exemption. The legislature is entitled to clarify its intent.

PATIENCE D. ROGGENSACK, J.

¶ 71. (concurring). I agree with the conclusions reached in the majority opinion. However, I write separately to point out that the majority opinion's statutory analysis of Wis. Stat. § 70.111(20) is a departure from that which has been this court's mode of statutory analysis and that it is not one that the court has discussed and decided to adopt.

¶ 72. Our jurisprudence has repeatedly explained that the interpretation of a statute is a question of law that we review de novo. State ex rel. Angela M.W. v. Kruzicki, 209 Wis. 2d 112, 121, 561 N.W.2d 729 (1997); Stockbridge Sch. Dist. v. DPI, 202 Wis. 2d 214, 219, 550 N.W.2d 96 (1996). Our goal in statutory interpretation is to ascertain and give effect to the legislature's intent. Angela M.W., 209 Wis. 2d at 121; Ball v. Dist. No. 4, Area Bd. of Vocational, Technical and Adult Educ., 117 Wis. 2d 529, 537-38, 345 N.W.2d 389 (1984). We begin our interpretation with the language the legislature has chosen to use in the statute. Angela M.W., 209 Wis. 2d at 121. We give that language its plain and ordinary meaning. Id. at 121; Bruno v. Milwaukee County, 2003 WI 28, ¶ 20, 260 Wis. 2d 633, 660 N.W.2d 656. If the language is clear on its face, we need go no further and we simply apply it. Bruno, 260 Wis. 2d 633, ¶ 20. As a general rule, we do not review extrinsic sources unless there is an ambiguity in the statute. However, if the language is ambiguous, we consult the "scope, history, context, subject matter and object of the statute" in order to ascertain legislative intent. Ball, 117 Wis. 2d at 537-38. A statute is ambiguous if it is susceptible to two or more reasonable interpretations. Angela M.W., 209 Wis. 2d at 121.

¶ 73. The majority opinion employs the analytic framework for a statute that is ambiguous, while purposely not analyzing whether Wis. Stat. § 70.111(20) is ambiguous. This is a change in our traditional analysis, which is set out above. I offer no opinion about whether our mode of statutory analysis ought to be changed. However, when we change the statutory analysis in a majority opinion without explaining that the majority of the court has not decided to change its analysis, we lead our readers to conclude that we have changed. This can cause confusion among those we write to assist and make our opinions less useful to the public. Accordingly, I respectfully concur.

¶ 74. I am authorized to state that Justices JON E WILCOX and N. PATRICK CROOKS join this concurrence.

        Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI App 7, 259 Wis. 2d 879, 659 N.W.2d 95 (affirming a decision of the circuit court for Waukesha County, J. Mac Davis, Judge).

       All references are to the 1999-2000 version of the Wisconsin Statutes unless otherwise noted.

       Wisconsin Stat. §70.111(14) entitled "MILKHOUSE EQUIPMENT" provides, "Milkhouse equipment used by a farmer ...." Wisconsin Stat. § 70.111(24) entitled "MOTION PICTURE THEATER EQUIPMENT" provides, "Projection equipment, sound systems and projection screens that are owned and used by a motion picture theater." Wisconsin Stat. §70.111(25) entitled "DIGITAL BROADCASTING EQUIPMENT" provides, "Digital broadcasting equipment owned and used by a radio station or a television station ...."

       As the court explained in Columbus Park Housing Corp. v. City of Kenosha, 2003 WI 143, ¶ 35, 267 Wis. 2d 59, 671 N.W.2d 633, chapter 70 "is not a comprehensive, perfectly woven web of tax exemptions ... rather it represents a conglomeration of exemptions granted to specific and well-delineated entities and property used in a certain fashion." The majority opinion's or the concurring opinion's comparison of this exemption with other statutory exemptions and other tax cases is not persuasive.

        See Wis. Stat. § 70.111(20).

       Majority op., ¶ 19.

       The court of appeals concluded that "the statute was designed to give an exemption for those systematically involved in the logging business, not to those who incidentally cut logs and sell the products as a small part of an altogether different kind of business." Village ofLannon v. Wood-Land Contractors, Inc., 2003 WI App 7, ¶ 1, 259 Wis. 2d 879, 659 N.W.2d 95.

        See Bluebird Partners, L.P. v. First Fid. Bank, N.A., 731 N.E.2d 581 (N.Y. 2000).

       The title of a statute may be persuasive of the interpretation to be given the statute and legislative intent. Mireles v. LIRC, 2000 WI 96, ¶ 60 n.13, 237 Wis. 2d 69, 613 N.W.2d 875 (quoting Pure Milk Prods. Coop. v. Nat'l Farmers Org., 64 Wis. 2d 241, 253, 219 N.W.2d 564 (1974)).

        Wood-Land, 259 Wis. 2d 879, ¶¶ 13, 16.

       The income Wood-Land derived from the sale of forest products in the present case was less than 10% of its business revenue.

        Wood-Land, 259 Wis. 2d 879, ¶ 20 (Nettesheim, J., concurring).

       Majority op., ¶ 34.

       The tax cases the majority opinion relies on and distinguishes do not interpret the tax exemption in the present case. All the cases the majority opinion cites, including Owens-Illinois, Inc. v. Town of Bradley, 132 Wis. 2d 310, 392 N.W.2d 104 (Ct. App. 1986), which reject a "primary purpose" test, relate to different exemptions with different focuses.

       Majority op., ¶ 43.

       Majority op., ¶¶ 45-46.

       Wood-Land's equipment is, at best, used for a dual purpose: to clear land at the request of persons who hire it and to obtain forest products for commercial use. Brief and Appendix of Defendant-Appellant-Petitioner Wood-Land Contractors, Inc., at 22.

       Majority op., ¶ 47.

        See Wis. Stat. § 70.109.

        Deutsches Land, Inc. v. City of Glendale, 225 Wis. 2d 70, 80, 591 N.W.2d 583 (1999).

        Deutsches Land, 225 Wis. 2d at 80-81.

       Wis. Stat. § 70.111(7).

       Wis. Stat. § 70.111(9).

       Wis. Stat. § 70.111(22).


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    In the Matter of Disciplinary Proceedings Against Lauren R. Brown-Perry, Attorney at Law. Office of Lawyer Regulation, f/k/a Board of Attorneys Professional Responsibility, Complainant, v. Lauren R. Brown-Perry, Respondent.
    Supreme Court

      No. 00-3048-D.

      Decided December 12, 2003.

    2003 WI 151
    (Also reported in 672 N.W.2d 287.)
   PER CURIAM.

¶ 1. This case is before us under SCR 22.14(2) and SCR 22.17(2) on a stipulation between the parties, Attorney Lauren R. Brown-Perry, and the Office of Lawyer Regulation (OLR). The stipulation consists of her no contest plea to the allegations of misconduct in the OLR complaint. The referee, David R. Friedman, has issued a report based upon this stipulation.

¶ 2. We accept the stipulation and the referee's report and determine that the seriousness of Attorney Brown-Perry's misconduct warrants the imposition of the recommended retroactive one-year suspension.

¶ 3. Attorney Brown-Perry was admitted to the practice of law in Wisconsin in 1980. This is her first disciplinary matter.

¶ 4. The nine counts against her in the OLR complaint, which the referee found to be supported by the evidence, consisting of the complaint itself pursuant to the stipulation, arise out of her representation of a client between 1997 and 1999.

¶ 5. The client was a member of a legal services plan of which Attorney Brown-Perry was a provider. She retained Attorney Brown-Perry for $250 either to force a closing or to file suit against a potential purchaser of the client's real estate. Before that was completed the client located another potential buyer and paid Attorney Brown-Perry $140 to complete the new closing. She did not have a client trust account and put both the $250 and the $140 into her business account.

¶ 6. The new closing never took place and under the terms of the legal services plan the client was entitled to a refund of the $140. However, Attorney Brown-Perry did not repay that sum. Instead, she and the client entered into a new fee agreement under which the client would pay her an additional $1250 to sue the first potential buyer. Pursuant to the legal services plan, Attorney Brown-Perry was to bill her services at a rate of $70 per hour. Once again, the $1250 went into the business account rather than a trust account.

¶ 7. Attorney Brown-Perry sued the first buyer and the matter was settled for $4000. She told her client that the total $1500 retainer would cover all of her legal fees when, in fact, at the $70 rate the fee should only have been $749. When Attorney Brown-Perry received the $4000 in settlement she again deposited it into her business account.

¶ 8. Within a short time the balance in the business account was down to nothing and the client did not receive her $4000. Eventually Attorney Brown-Perry issued a check to her for $2028 but the client refused to cash it, instead demanding all of the $4000 settlement. Numerous entreaties by the client to Attorney Brown-Perry went unheeded and she eventually filed a complaint with the OLR's predecessor, the Board of Attorneys Professional Responsibility (BAPR).

¶ 9. The client also retained another attorney for $800 to commence an action against Attorney Brown-Perry for $5640 (representing the $250, the $140, the $1250, and the $4000). That matter was settled with Attorney Brown-Perry paying the client $5000.

¶ 10. During the BAPR's investigation Attorney Brown-Perry failed to respond to various requests for her accounting records. She also made various misrepresentations to the BAPR concerning her representation of the client. Finally, she admitted to the BAPR that she had not filed any personal state or federal income tax returns since 1995.

¶ 11. The OLR then filed a complaint. While it was pending Attorney Brown-Perry claimed a medical incapacity to proceed. As a result, by order of this court, her license to practice law was suspended between April 26, 2001, and April 27, 2003. Ultimately, the medical incapacity proceeding was resolved against her.

¶ 12. The nine counts against Attorney Brown-Perry, to which she has pled no contest, are as follows:

1. Count One alleges a violation of SCR 20:1.15(a) and arises out of the failure to place the client's funds into a trust account.
2. Count Two alleges a violation of SCR 20:1.15(d) and also arises out of the trust fund deficiency.
3. Count Three alleges a violation of SCR 20:1.16(d) and arises out of the failure to return the unearned retainer.
4. Count Four alleges a violation SCR 20:1.15(b) and arises out of the failure to forward the settlement funds to the client.
5. Count Five alleges a violation of SCR 20:1.4(a) and arises out of the failure to provide the client with a billing statement.
6. Count Six alleges a violation of SCR 20:8.4(c) and arises out of the use of client funds for personal purposes and misrepresenting the fees earned.
7. Count Seven alleges violations of former SCR 21.03(4) and former SCR 22.07(2) and (3) and arises out of the failure to cooperate with the BAPR.
8.. Count Eight alleges a violation of SCR 20:1.15(f) and similarly arises out of the failure to cooperate with the investigation.
9. Count Nine alleges a violation of SCR 20:8.4(f) and arises out of Attorney Brown-Perry's failure to file income tax returns, deemed unprofessional conduct by State v. Roggensack, 19 Wis. 2d 38, 119 N.W.2d 412 (1963).

¶ 13. The referee has adopted the stipulation with respect to sanctions. He therefore recommends a one-year suspension retroactive to April 26, 2001, which was the starting date for the two-year suspension due to the pendency of the medical incapacity proceedings. The referee believes a prospective suspension would be unfair and not provide any additional protection to the public. He notes that Attorney Brown-Perry has not practiced for at least two years, a period which exceeds the stipulated suspension. He submits that under the circumstances there is no need for a prospective sanction.

¶ 14. In conclusion, we accept the stipulation of the parties and the resulting report of the referee. Attorney Brown-Perry's misconduct represents a serious failure to comply with the specified Rules of Professional Conduct. Furthermore, the level of discipline requested by the OLR, stipulated to by her and adopted by the referee, is appropriate for this misconduct.

¶ 15. Furthermore, under these circumstances, a retroactive suspension is reasonable. Attorney Brown-Perry has already served a two-year suspension arising out of the same set of circumstances that prompted the one-year suspension recommendation. To impose a prospective one-year suspension at this time would be excessive.

¶ 16. IT IS ORDERED that the license of Attorney Brown-Perry to practice law in Wisconsin is suspended for a period of one-year commencing on April 26, 2001.

¶ 17. IT IS FURTHER ORDERED that within 60 days of the date of this order Attorney Brown-Perry shall pay $6740.53 to the OLR representing the costs of these proceedings. If these costs are not paid within the time specified, and absent a showing to this court of an inability to pay the costs within that time, the license of Attorney Brown-Perry to practice law shall be suspended indefinitely until further order of the court. The date of commencement of any suspension for nonpayment shall be set by the court upon motion of the OLR.

¶ 18. SHIRLEY S. ABRAHAMSON, C.J., did not participate.

       SCR 22.14(2) provides:
      (2) The respondent may by answer plead no contest to allegations of misconduct in the complaint. The referee shall make a determination of misconduct in respect to each allegation to which no contest is pleaded and for which the referee finds an adequate factual basis in the record. In a subsequent disciplinary or reinstatement proceeding, it shall be conclusively presumed that the respondent engaged in the misconduct determined on the basis of a no contest plea.

       SCR 22.17(2) provides:
      (2) If no appeal is filed timely, the supreme court shall review the referee's report; adopt, reject or modify the referee's findings and conclusions or remand the matter to the referee for additional findings; and determine and impose appropriate discipline. The court, on its own motion, may order the parties to file briefs in the matter.

       SCR 20:1.15(a) provides:
      (a) A lawyer shall hold in trust, separate from the lawyer's own property, that property of clients and third persons that is in the lawyer's possession in connection with a representation or when acting in a fiduciary capacity. Funds held in connection with a representation or in a fiduciary capacity include funds held as trustee, agent, guardian, personal representative of an estate, or otherwise. All funds of clients and third persons paid to a lawyer or law firm shall be deposited in one or more identifiable trust accounts as provided in paragraph (c). The trust account shall be maintained in a bank, savings bank, trust company, credit union, savings and loan association or other investment institution authorized to do business and located in Wisconsin. The trust account shall be clearly designated as "Client's Account" or "Trust Account" or words of similar import. No funds belonging to the lawyer or law firm, except funds reasonably sufficient to pay or avoid imposition of account service charges, may be deposited in such an account. Unless the client otherwise directs in writing, securities in bearer form shall be kept by the attorney in a safe deposit box in a bank, savings bank, trust company, credit union, savings and loan association or other investment institution authorized to do business and located in Wisconsin. The safe deposit box shall be clearly designated as "Client's Account" or "Trust Account" or words of similar import. Other property of a client or third person shall be identified as such and appropriately safeguarded. If a lawyer also licensed in another state is entrusted with funds or property in connection with an out-of-state representation, this provision shall not supersede the trust account rules of the other state.

       SCR 20:1.15(d) provides:
      (d) When, in the representation, a lawyer is in possession of property in which both the lawyer and another person claim interests, the property shall be treated by the lawyer as trust property until there is an accounting and severance of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall continue to be treated as trust property until the dispute is resolved.

       SCR 20:1.16(d) provides:
      (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by other law.

       SCR 20:1.15(b) provides:
      (b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person in writing. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall render a full accounting regarding such property.

       SCR 20:1.4(a) provides: "(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information."

       SCR 20:8.4(c) provides: "It is professional misconduct for a lawyer to: (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation."

       Former SCR 21.03(4) provided: "(4) Every attorney shall cooperate with the board and the administrator in the investigation, prosecution and disposition of grievances and complaints filed with or by the board or administrator."

       Former SCR 22.07(2) and (3) provided:
      (2) During the course of an investigation, the administrator or a committee may notify the respondent of the subject being investigated. The respondent shall fully and fairly disclose all facts and circumstances pertaining to the alleged misconduct or medical incapacity within 20 days of being served by ordinary mail a request for response to a grievance. The administrator in his or her discretion may allow additional time to respond. Failure to provide information or misrepresentation in a disclosure is misconduct. The administrator or committee may make a further investigation before making a recommendation to the board.
      (3) The administrator or committee may compel the respondent to answer questions, furnish documents and present any information deemed relevant to the investigation. Failure of the respondent to answer questions, furnish documents or present relevant information is misconduct. The administrator or a committee may compel any other person to produce pertinent books, papers and documents under SCR 22.22.

       SCR 20:1.15(f) provides:
      (f) Upon request of the office of lawyer regulation, or upon direction of the Supreme Court, the records shall be submitted to the office for its inspection, audit, use, and evidence under such conditions to protect the privilege of clients as the court may provide. The records, or an audit thereof, shall he produced at any disciplinary proceeding involving the attorney wherever material. Failure to- produce the records shall constitute unprofessional conduct and grounds for disciplinary action.

       SCR 20:8.4(f) provides: "It is professional misconduct for a lawyer to: (f) violate a statute, supreme court rule, supreme court order or supreme court decision regulating the conduct of lawyers."


author: FINE, J.

text:
    Wisconsin Bell, Inc., (d/b/a Ameritech Wisconsin), a Wisconsin corporation, Petitioner-Respondent-Cross-Appellant, v. Public Service Commission of Wisconsin, Respondent-Appellant-Cross-Respondent, MCI Telecommunications Corporation, WorldCom Technologies, Inc., AT&T Communications of Wisconsin, L.P and TCG Milwaukee, d/b/a AT&T Local Services, Co-Appellants-Cross-Respondents.
    Court of Appeals

      No. 02-2783.

      Oral argument August 5, 2003.—

      Decided August 19, 2003.

    2003 WI App 193
    (Also reported in 670 N.W.2d 97.)

      On behalf of the respondent-appellant-cross-respondent, the cause was submitted on the briefs of Michael S. Varda of Public Service Commission of Wisconsin, Madison. There was oral argument by Michael S. Varda.

    On behalf of the co-appellants-cross-respondents, the cause was submitted on the briefs of Anne E. Rea and Sherry A. Knutson of Sidley Austin Brown & Wood, Chicago, Illinois; Niles Berman and Janet Kelly of Wheeler, Van Sickle & Anderson, S.C., Madison; Clark M. Stalker and Douglas W. Trabaris of AT&T Communications, Chicago, Illinois; William Single, IV and Brian J. Leske of WorldCom, Inc., Washington, DC; and
      John R. Harrington of Jenner & Block, LLC, Chicago, Illinois. There was oral argument by Niles Berman and Douglas W. Trabaris.

    On behalf of the petitioner-respondent-cross-appellant, the cause was submitted on the briefs of John E. Flanagan and Jordan J. Hemaidan oí Michael Best & Friedrich LLP, Madison; Theodore A. Livingston, John E. Muench and Demetrios G. Metropoulos of Mayer, Brown, Rowe & Maw, Chicago, Illinois; Steven R. Beck of Ameritech Wisconsin, Milwaukee; and John T. Lenahan of Ameritech Corporation, Chicago, Illinois. There was oral argument by Demetrios G. Metropoulos and John E. Flanagan.

    Before Wedemeyer, EJ., Fine and Curley, JJ.
   FINE, J.

¶ 1. AT&T Communications of Wisconsin, L.E, TCG Milwaukee (d/b/a AT&T Local Services), MCI Telecommunications Corporation, WorldCom Technologies, Inc., and the Public Service Commission of Wisconsin appeal from a modified trial-court judgment vacating part of an order issued by the Commission. Wisconsin Bell, Inc. (d/b/a Ameritech Wisconsin), cross-appeals from the same judgment. The sole issue on this appeal is whether the Commission acted within its statutory authority when it imposed what it characterizes as a "remedy plan" to ensure that Wisconsin Bell will make its facilities available fairly and efficiently to its competitors. The trial court, in a well-written and carefully reasoned decision, held that the remedy plan was structured as a prohibited penalty. We agree and affirm.

I.

¶ 2. The monopoly days of the Ma Bell of either our youth or of our institutional memory are gone. The old American Telephone and Telegraph Company spawned not only a gaggle of multi-generational offspring but its once ubiquitous Bakelite black telephones have given way to marvels beyond the dreams of most, even a bare decade ago. And competition among Ma Bell's progeny and others seeking a slice from the telecommunications pie is fierce. Congress passed the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996), to, as phrased by the Act's preamble, "promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." Among the ways to achieve these goals is to have so-called "incumbent local exchange providers" (companies like Wisconsin Bell, who own the telephone infrastructure in a community, see 47 U.S.C. § 251(h)(1)), share their facilities with their competitors. See generally AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371-373 (1999). The Federal Communications Commission has called the Act a "momentous step of requiring that the incumbent [local exchange providers] open the traditionally non-competitive local exchange and exchange access markets to competition in order to foster the entry of alternative service providers." Matter of Application by Bell Atlantic New York, 15 F.C.C.R. 3953, 3956 (1999). Once they do so, the Act allows the incumbent local exchange providers to expand beyond their communities and enter the lucrative long-distance market. Ibid.; 47 U.S.C. § 271. The trial court characterized the prospect of entry into the long-distance market as Congress's "carrot" — the incentive for incumbent local exchange providers to eliminate the historical barriers to competitive local exchange service.

¶ 3. As noted, Wisconsin Bell, a Ma Bell descendant, is an incumbent local exchange provider. By virtue of that incumbency, it controls the infrastructure necessary for the provision of telecommunications services in the relevant area, which the Commission decision characterizes only as "many major urban areas of Wisconsin." The new folks on the block, those who want a piece of the action without having to build or provide their own facilities, are known as "competitive local exchange carriers." The corporate co-appellants are "competitive local exchange carriers," and they need access to Wisconsin Bell's facilities — designated as "operational support systems." Under the law, Wisconsin Bell has to share these services, and it must share fairly — it may not relegate the dregs to its competitors or the retail customers of those competitors. See 47 U.S.C. § 251(a)-(e),(g), & (h); and 47 U.S.C. § 259.

¶ 4. Congress recognized the important role state regulatory bodies, like the Commission, have in fulfilling the Congressional mandate for deregulation, technical growth, and consumer benefit, and gave them broad berth within their respective areas of responsibilities. See 47 U.S.C. § 251(c)(4)(B), (c)(6) & (d)(3); and 47 U.S.C. § 252(a), (b)(4), & (d)-(f). The main Wisconsin statute governing the Commission's responsibilities in connection with the issue presented by this appeal is Wis. Stat. § 196.219, the "Protection of Telecommunications Consumers" law. Section 196.219 "was part of 1993 Wis. Act 496, the 'Information Superhighway Act,' taken up by the legislature in special session to partially deregulate the telecommunications utilities and encourage development of a competitive 'telecommunications marketplace.'" Public Serv. Comm'n v. Wisconsin Bell, Inc., 211 Wis. 2d 751, 759 n.4, 566 N.W.2d 496, 500 n.4 (Ct. App. 1997). As we will see, other provisions of Wis. Stat. ch. 196 apply as well.

¶ 5. This case flows from, as phrased by its Final Decision, the Commission's sua sponte decision "to investigate and determine whether or not [Wisconsin Bell's operational support systems] for wholesale transactions with its competitors operate without discriminatory impact upon the competitors and provide access to [Wisconsin Bell]'s network." As the Commission's decision relates, most of the complex issues surrounding its investigation were resolved either by the Commission or by "extensive negotiations" by the parties assisted by the Commission's staff and a "consulting facilitator," and that this cooperation enhanced "the public interest in maximum competition" by having "fair 'rules of engagement'" developed by "the market place participants themselves." Cooperation and negotiation are consistent with the Congressional goal of having incumbent local exchange providers attempt to work out fair and reasonable terms with their new competitors, the competitive local exchange carriers, under which the incumbents will supply the necessary operational support systems to the competitors. See 47 U.S.C. § 252(a). Congress also wanted the state regulatory bodies to help the negotiation process by either mediation, 47 U.S.C. § 252(a)(2), or compulsory arbitration, 47 U.S.C. § 252(b). There was one major issue, however, that the parties were not able to resolve, and, ultimately, was imposed by the Commission on its own: how to ensure that Wisconsin Bell does not discriminate against the competitive local exchange carriers in their access to the operational support systems.

II.

¶ 6. As noted, the Commission set the parameters of an operational-support-systems plan under which Wisconsin Bell would supply support services to the competitive local exchange carriers and this plan was based partly on the parties' agreements and partly on the Commission's dictates. None of the parties on this appeal challenges that plan. Rather, Wisconsin Bell contends that the Commission did not have authority to impose what it calls its "remedy plan," which the Commission hoped would make the support-systems plan self-enforcing.

¶ 7. In its findings of fact underlying its decision to impose its remedy plan, the Commission determined:

• "All parties agree that there should be a remedy plan"; and
• "It is reasonable to base a remedy plan on the performance measurements standards and benchmarks adopted earlier [by the Commission in the case]."

None of the parties disputes these findings. Indeed, both sides, Wisconsin Bell on the one hand, and the competitive local exchange carriers on the other hand, submitted proposed remedy plans. The Commission rejected those plans, and, as noted, imposed one of its own, which is the subject of this appeal. Portions of the Commission's plan were based on Wisconsin Bell's proposal.

¶ 8. The Commission's core finding in support of its remedy plan is:

A reasonable remedy plan will encourage [Wisconsin Bell] to provide nondiscriminatory wholesale service comparable to its own retail service and impose a monetary disincentive upon [Wisconsin Bell] if it fails to deliver that quality of service.

(Emphasis added.) Wisconsin Bell contends that the "monetary disincentive" imposed by the Commission is really a penalty because it is not tied to any actual damage or harm that might be suffered by either the competitive local exchange carriers or their retail customers, and, as such, it was beyond the Commission's power. We agree.

III.

A.

¶ 9. Applying Occam's razor, we focus on the heart of the dispute and cut away the technical-specifications arcana. Simply put, the Commission's remedy plan lumps together all the transactions that comprise Wisconsin Bell's obligations to supply operational support systems to competitive local exchange carriers, and, after balancing those transactions where Wisconsin Bell complied with the applicable benchmarks against those transactions where Wisconsin Bell did not comply, it decided that whenever Wisconsin Bell is out-of-compliance "at a 95 percent confidence level," Wisconsin Bell must make "remedy payments" on every transaction — even those that complied with the benchmarks. The Commission's decision explained:

The Commission finds that once it has been determined at a 95 percent confidence level that discrimination has occurred, every transaction that a [competitive local exchange carrier] conducted with [Wisconsin Bell] that was included in that measure of performance should be subject to remedy payments. Reaching a finding that discrimination has occurred means that the very process [Wisconsin Bell] uses for providing service to the [competitive local exchange carrier] must be discriminatory. Accordingly, it is reasonable for a plan to make remedy payments on all transactions that were subjected to that discriminatory process. All transactions, which were subjected to that discriminatory process, consist of all transactions that were included in that measure of performance that was found to be discriminatory.

The trial court showed how, in simplified form, the Commission's remedy plan would work: "For example, if [Wisconsin Bell] was in the process of filling a transaction of 1000 orders [for a competitive local exchange carrier] and missed the due date on 70 of them, the Commission would require [Wisconsin Bell] to make remedy payments [on] all 1000 [competitive local exchange carrier] transactions in the entire order, even to the [competitive local exchange carriers] whose orders were filled on time."

¶ 10. As we see from both the Commission's decision and the trial court's explanation, the Commission's remedy plan is not compensatory; the Commission does not contend that making Wisconsin Bell pay assessments on those transactions that complied with the applicable operational-support-systems standards, because other transactions that did not comply exceeded a base number, is tied to any actual damage or harm suffered by either the competitive local exchange carriers or their retail customers. The Commission and the competitive local exchange carriers argue, however, that the Commission's remedy plan is nevertheless authorized by Wis. Stat. §§ 196.02(1) and 196.37(2). These grants of general authority provide:

Wisconsin Stat. § 196.02(1):
JURISDICTION. The commission has jurisdiction to supervise and regulate every public utility in this state and to do all things necessary and convenient to its jurisdiction.
Wisconsin Stat. § 196.37(2):
If the commission finds that any measurement, regulation, practice, act or service is unjust, unreasonable, insufficient, preferential, unjustly discriminatory or otherwise unreasonable or unlawful, or that any service is inadequate, or that any service which reasonably can be demanded cannot be obtained, the commission shall determine and make any just and reasonable order relating to a measurement, regulation, practice, act or service to be furnished, imposed, observed and followed in the future.

The Commission submits that it has the power to impose what it calls the "[r]emedy assessments" because they "are 'necessary and convenient'" to the jurisdiction of the Commission, Wis. Stat. § 196.02(1), and constitute a "just and reasonable order," even though those assessments are not tied to actual harm or damage. We disagree.

B.

¶ 11. Unlike situations where a state agency resolves issues within its statutory authority, to which we give varying degrees of deference, we give no deference to the initial question of whether the agency's action is within its statutory authority. Wright v. Labor & Indus. Review Comm'n, 210 Wis. 2d 289, 293, 565 N.W.2d 221, 222-223 (Ct. App. 1997). We also review de novo the trial courts decision whether the agency is acting within its authority. See Wisconsin Bell, 211 Wis. 2d at 753, 566 N.W.2d at 498.

¶ 12. "As a creature of the legislature, the commission has only such powers as the legislature expressly confers upon it, or those that are 'necessarily implied' by the statutes under which it operates, specifically, chapter 196 Stats." Wisconsin Bell, 211 Wis. 2d at 754, 566 N.W.2d at 498 (quoted source omitted). But this does not mean that the Commission has carte blanche. To the contrary: " 'Any reasonable doubt as to the existence of an implied power in an agency should be resolved against the exercise of such authority.'" Id,., 211 Wis. 2d at 756, 566 N.W.2d at 499 (quoted source and alteration omitted). Wisconsin Bell is central to our analysis.

¶ 13. In Wisconsin Bell, the Commission sought to punish Wisconsin Bell for allegedly violating "various service quality standards" by seeking, in the Commission's own name, forfeitures from Wisconsin Bell. Id., 211 Wis. 2d at 753-754, 566 N.W.2d at 498. The Commission based its authority on Wis. Stat. § 196.219(4), which provides:

Enforcement, (a) On the commissions's own motion or upon complaint filed by the consumer, the commission shall have jurisdiction to take administrative action or to commence civil actions against telecommunications utilities or providers to enforce this section.
(b) The commission may, at its discretion, institute in any court of competent jurisdiction a proceeding against a telecommunications utility or provider for injunctive relief to compel compliance with this section, to compel accounting and refund of any moneys collected in violation of this section or for any other relief permitted under this chapter.

Wisconsin Bell, 211 Wis. 2d at 754-755, 566 N.W.2d at 498-499. The Commission conceded, however, that Wis. Stat. § 196.219(4)(a) did not authorize it to seek forfeitures. Wisconsin Bell, 211 Wis. 2d at 755, 566 N.W.2d at 498-499. It thus focused on the words "any other relief permitted under this chapter" in § 196.219(4)(b), and contended that it could seek such "relief under Wis. Stat. § 196.66 (the general forfeiture statute) and under Wis. Stat. § 196.44(3) (chapter 196's general enforcement provision). Wisconsin Bell, 211 Wis. 2d at 755, 566 N.W.2d at 499.

¶ 14. Wisconsin Stat. § 196.44(3), however, requires that actions to recover "[a]ny forfeiture, fine or other penalty" under chapter 196 be "brought in the name of the state" and Wisconsin Bell refused to expand the statutory limitation by applying notions of implied powers so as to include the Commission's action as one being brought "in the name of the state." Wisconsin Bell, 211 Wis. 2d at 756-762, 566 N.W.2d at 499-501. Further, and with special significance here, Wisconsin Bell held that although under Wis. Stat. § 196.219(4)(b) the Commission could seek "relief authorized by chapter 196, the Commission could not seek either "penalties" or "punitive sanctions" because the statute does not give it that power. Wisconsin Bell, 211 Wis. 2d at 757-758, 566 N.W.2d at 499-500. The Commission does have the authority, however, to tie a utility's noncompliance with either the applicable statutes or Commission rules to the utility's future revenues if that tying is proportional to the harm and structured so as to be compensatory rather than punitive. See Wisconsin Power & Light Co. v. Public Serv. Comm'n, 181 Wis. 2d 385, 394-395, 511 N.W.2d 291, 294-295 (1994); CenturyTel of the Midwest-Kendall, Inc. v. Public Serv. Comm'n, 2002 WI App 236, ¶¶ 25-42, 257 Wis. 2d 837, 852-862, 653 N.W.2d 130, 138-143. The Commission may also order compensatory refunds for at least some past unlawful charges, GTE North Inc. v. Public Serv. Comm'n, 176 Wis. 2d 559, 567, 500 N.W.2d 284, 287-288 (1993), under circumstances the boundaries of which we need not survey here, see State v. Blalock, 150 Wis. 2d 688, 703, 442 N.W.2d 514, 520 (Ct. App. 1989) (cases should be decided on the "narrowest possible ground"). The Commission's remedy plan does not fall within either grant of authority, irrespective of how broad those grants may be.

¶ 15. The Commission's remedy plan, albeit prospective, is not compensatory. Additionally, the remedy plan's underlying rationale: namely, that specific instances where Wisconsin Bell would not meet the benchmark goals by the pre-set minimum level "means that the very process [Wisconsin Bell] uses for providing service to the [competitive local exchange carrier] must be discriminatory" is flawed.

¶ 16. As the trial court recognized, under the Commission's remedy plan one miss over the minimum level of permitted misses triggers assessments for all transactions, including all the transactions that complied with the Commission's standards for the sharing of operational support services. At the very least, therefore, assessments levied on compliant transactions have no relation to any losses that might be incurred by either the competitive local exchange carriers or their retail customers. Stated another way, Wisconsin Bell is not discriminating against a competitive local exchange carrier or its customers when Wisconsin Bell gives them the level of service mandated by the Commission. Assessments that are not related to harm or damage are penal, not compensatory. See Kernz v. J.L. French Corp., 2003 WI App 140, ¶¶ 28-30, 266 Wis. 2d 124, _, 667 N.W.2d 751, 760-761 (stipulated or liquidated damages unrelated to actual harm is a penalty); Priebe & Sons, Inc. v. United States, 332 U.S. 407, 411-413 (1947) ("liquidated damages" provision that was inserted in a contract in order to give government contractor incentive to meet contractual deadlines was a nonenforceable penalty when the liquidated damages were not related to, the government's actual damage). As Wisconsin Bell tells us, imposition of non-compensatory sanctions is beyond the Commission's power. Wisconsin Bell, 211 Wis. 2d at 757-758, 566 N.W.2d at 499-500.

¶ 17. We affirm the trial court's judgment as modified.

By the Court. — Judgment affirmed.

       As we see from the caption to this case, Wisconsin Bell, Inc., does business under the trade name of Ameritech Wisconsin. Although the parties refer to Wisconsin Bell as "Ameritech," we see no reason not to use the name under which the company is incorporated.

       Wisconsin Bell's cross-appeal asks us to "modify the Circuit Court Decision to include instructions that the Commission not impose any remedy plan other than through the federally mandated interconnection agreement process, and that it may impose remedy payments only after conducting the required notice and hearing process," which it contends is mandated by state law. The modified judgment we affirm, however, vacated the remedy plan, and remanded the matter to the Commission for whatever further procedures it deemed appropriate. We decline Wisconsin Bell's invitation to provide the Commission with a detailed road map to guide a journey the Commission may or may not take. First, giving advisory opinions is beyond the scope of legitimate appellate review. State v. Robertson, 2003 WI App 84, ¶ 32, 263 Wis. 2d 349, 368-369, 661 N.W.2d 105, 114. Second, we assume that the Commission will not knowingly venture beyond the boundaries of its authority. See Ashleson v. Labor & Indus. Review Comm'n, 216 Wis. 2d 23, 34, 573 N.W.2d 554, 562 (Ct. App. 1997) (agency procedures are clothed with presumption of regularity). Further, insofar as Wisconsin Bell's arguments provide alternate bases to affirm the trial court's modified judgment, we do not address them. Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W. 663, 665 (1938) (only dispositive issue need be addressed); State v. Blalock, 150 Wis. 2d 688, 703, 442 N.W.2d 514, 520 (Ct. App. 1989) (cases should be decided on the "narrowest possible ground").

       Alexander Graham Bell may or may not have "invented" the telephone. Telephone Tribute, at http://telepb.one tribute.com/timeline.html (last modified May 21,2003). He was, however, awarded its patent in 1876. Ibid. He offered his invention to the telecommunications giant of his era for a one-time fee of $100,000, but was rebuffed:
      In 1876, Alexander Graham Bell and his financial hacker, Gardiner G. Hubbard, offered Bell's brand new patent (No. 174,466) to the Telegraph Company - the ancestor of Western Union. The President of the Telegraph Company, Chauncey M. DePew, appointed a committee to investigate the offer. The committee report has often been quoted. It reads in part:
      "The Telephone purports to transmit the speaking voice over telegraph wires. We found that the voice is very weak and indistinct, and grows even weaker when long wires are used between the transmitter and receiver. Technically, we do not see that this device will be ever ■ capable of sending recognizable speech over a distance of several miles.
      "Messer Hubbard and Bell want to install one of their 'telephone devices' in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?"

        Ibid, (quoting Warren Bender, A.D. Little, Inc.). As Winston S. Churchill reflected in his 1930 reminiscence of his first thirty years, from 1874 to 1904: "Everything I was sure or taught to be sure was impossible, has happened." Winston S. Chuechill, My Eaely Life 67 (Simon & Schuster 1996) (1930). Of course, there are infinitely more "impossible" things yet to happen.

       The Commission decision describes "operational support systems" as "generally referring] to systems by which an incumbent local exchange provider makes wholesale service available to competitive local exchange carriers []. These systems may have a combination of manual and electronic interfaces. Major system components may include pre-ordering; ordering and provisioning; maintenance and repair; network performance; unbundled elements; operator services and directory assistance; system performance; service center availability and billing." (Acronym omitted.) The specifics of the complex components of what makes up operational support systems and how they are implemented are not material to our decision.

       WISCONSIN Stat. § 196.66 reads in full:
      General forfeiture provisions. (1) General Forfeiture; failure to OBEY. If any public utility violates this chapter or ch. 197 or fails or refuses to perform any duty enjoined upon it for which a penalty has not been provided, or fails, neglects or refuses to obey any lawful requirement or order of the commission or the governing body of a municipality or a sanitary commission or any judgment or decree of any court upon its application, for every violation, failure or refusal the public utility shall forfeit not less than $25 nor more than $5,000.
      (2) Each day separate offense. Every day during which any public utility or any officer, agent, as defined in sub. (3) (a), or employee of a public utility fails to comply with any order or direction of the commission or to perform any duty enjoined by this chapter or ch. 197 shall constitute a separate and distinct violation under sub. (1). If the order is suspended, stayed or enjoined, this penalty shall not accrue.
      (3) Considerations in setting forfeitures, (a) In this subsection, "agent" means an authorized person who acts on behalf of or at the direction of the public utility. "Agent" does not include a director, officer or employee.of a public utility.
      Ob) A court imposing a forfeiture on a public utility or an agent, director, officer or employee of a public utility under this chapter shall consider all of the following in determining the amount of the forfeiture:
      1. The appropriateness of the forfeiture to the volume of business of the public utility.
      2. The gravity of the violation.
      3. Any good faith attempt to achieve compliance after the public utility, agent, director, officer or employee receives notice of the violation.
      (4) Treble maximum forfeitures, (a) If an act or omission causes death or a life-threatening or seriously debilitating injury, and is subject to a forfeiture proceeding under this chapter, the maximum forfeiture that may be imposed shall be trebled.
      Ob) If a public utility fails to comply with any rule, order or direction of the commission after actual receipt by the public utility of written notice from the commission specifying the failure, the maximum forfeiture under sub. (1) shall be $15,000.
      Wisconsin Stat. § 196.44 reads in full:
      Law enforcement. (1) Duty of commission. The commission shall inquire into the neglect or violation of the laws of this state by public utilities, or by their officers, agents or employees or by persons operating public utilities, and shall enforce all laws relating to public utilities, and report all violations to the attorney general.
      (2) Duties of attorney general and district attorneys. Upon request of the commission, the attorney general or the district attorney of the proper county shall aid in any investigation, hearing or trial had under this chapter, and shall institute and prosecute all necessary actions or proceedings for the enforcement of all laws relating to public utilities or telecommunications providers, and for the punishment of all violations.

        (3) Actions, chaeacteb, venue. Any forfeiture, fine or other penalty under this chapter may be recovered as a forfeiture in a civil action brought in the name of the state in the circuit court of Dane County or in the county that would be the proper place of trial under s. 801.50.

       Both the Commission and the competitive local exchange carriers contend that Wisconsin Bell either waived its right to contest the Commission's plan or is judicially estopped from doing so because Wisconsin Bell participated in the proceedings and the Commission's plan was based in part on the proposal submitted to it by Wisconsin Bell. Although it is true that Wisconsin Bell agreed that some remedy plan was appropriate, it certainly did not agree that a plan imposing a non-compensatory "monetary disincentive" trigger penalty was either appropriate or lawful. Thus, assuming without deciding that judicial estoppel applies to proceedings before administrative agencies, Wisconsin Bell has not asserted inconsistent positions and, therefore, the prerequisites to' the application of judicial estoppel are not present here. See State v. Petty, 201 Wis. 2d 337, 347, 548 N.W.2d 817, 820 (1996) (’’[Jjudicial estoppel... is intended to protect against a litigant playing fast and loose with the courts by asserting inconsistent positions.") (internal quotation marks and quoted source omitted). Moreover, we reject out of hand the Commission's contention that the mere fact that Wisconsin Bell participated in the proceedings that led to the Commission's adoption of its remedy plan waived Wisconsin Bell's right to complain that the plan exceeded the Commission's statutory authority; unsurprisingly, the Commission gives us no authority for this unique proposition, and we have found none.
      We also do not decide the Commission's challenge to the trial court's entry of preliminary injunctive relief. That issue is moot in light of our affirmance of the trial court's modification of the Commission's order, and we see no compelling circumstances that warrant reviewing the trial court's exercise of its discretion.


author: HOOVER, PJ.

text:
    State of Wisconsin, Plaintiff-Respondent, v. Jonathon R. Torres, Defendant-Appellant.

    Court of Appeals

      Nos. 03-0233-CR through 03-0236-CR.

      Submitted on briefs August 5, 2003.

    Decided August 19, 2003.

    2003 WI App 199
    (Also reported in 670 N.W.2d 400.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Jack E. Schairer, assistant state public defender, of Madison.
    On behalf of the plaintiff-respondent, the cause was submitted on the briefs of Peggy A. Lautenschlager, attorney general, and David J. Becker, assistant attorney general, of Madison.
    Before Cane, C.J., Hoover, PJ., and Peterson, J.

       Petition to review denied 11-17-03.

   HOOVER, PJ.

¶ 1. Jonathon Torres appeals an order denying his motion for sentence modification, as well as the underlying judgments of conviction. We conclude that Torres has not demonstrated a "new factor" warranting sentence modification and therefore affirm the judgments and order.

Background

¶ 2. The key case in this appeal is No. 00-CF-000219, where Torres was convicted of operating a motor vehicle without the owner's consent, contrary to Wis. Stat. § 943.23(3) (1999-2000). He was sentenced on that charge to two years' initial term of confinement with two years' extended supervision. In the other three cases, he was convicted of four misdemeanors and was given two six-month jail terms and two ninety-day jail terms, all concurrent with the felony sentence.

¶ 3. When Torres committed the offense in 2000, operating a motor vehicle without the owner's consent was a Class- E felony with a maximum imprisonment term of five years. Wis. Stat. §§ 943.23(3) (1999-2000) and 939.50(3)(e) (1999-2000). These were the same classifications in effect in 2002 when Torres was convicted and sentenced. Wis. Stat. §§ 943.23(3) (2001-02) and 939.50(3)(e) (2001-02).

¶ 4. In 2001, however, the legislature created new classifications to take effect February 1, 2003. It reworked the statutory classifications of felonies, creating nine classes (A-I) where there were six previously (A, B, BC, C, D, and E). 2001 Wis. Act 109 §§ 545-559. Certain felonies, including operating a motor vehicle without the owner's consent, were reclassified. Torres' crime became a Class I felony. 2001 Wis. Act 109 § 747. A Class I felony is punishable by a maximum imprisonment term of three years and six months. Wis. Stat. § 939.50(l)(3)(i) (2003). In October 2002, Torres asked the trial court for sentence modification in a Wis. Stat. § 809.30 (2001-02) postconviction motion, calling the pending change of classification a new factor warranting modification. The trial court denied the motion. Torres appeals.

Discussion

¶ 5. A defendant seeking modification based on a new factor must show that (1) the new factor exists and (2) it justifies modification of the sentence. State v. Champion, 2002 WI App 267, ¶ 4, 258 Wis. 2d 781, 654 N.W.2d 242. A "new factor" is

a fact or set of facts highly relevant to the imposition of sentence, but not known to the trial judge at the time of original sentencing, either because it was not then in existence or because, even though it was then in existence, it was unknowingly overlooked by all of the parties.

Rosado v. State, 70 Wis. 2d 280, 288, 234 N.W.2d 69 (1975). A new factor must be a development that frustrates the purpose of the original sentence, and must be proved by clear and convincing evidence. Champion, 258 Wis. 2d 781, ¶ 4.

¶ 6. Whether something constitutes a new factor is a question of law we review de novo, without deference to the trial court. State v. Michels, 150 Wis. 2d 94, 97, 441 N.W.2d 278 (Ct. App. 1989). However, the existence of a new factor does not automatically entitle the defendant to relief. State v. Hegwood, 113 Wis. 2d 544, 546, 335 N.W.2d 399 (1983). Whether a new factor, if there is one, warrants sentence modification is left to the trial court's discretion. Id.

¶ 7. First, we conclude that a change in the classification of a crime, which would result in a shorter sentence if the defendant were convicted under the new classification, is not a "new factor" under our traditional model for sentence modification. This is because as part of 2001 Wis. Act 109, the law created Wis. Stat. § 973.195, which provides the procedure for judicial review of a sentence when the law relating to sentencing changes.

¶ 8. Under the new Wis. Stat. § 973.195(a), an "inmate who is serving a sentence imposed under s. 973.01 [the bifurcated sentence statute] . . . may petition the sentencing court to adjust the sentence if the inmate has served at least the applicable percentage [as specified in s. 973.195(lg)] of the term of confinement in prison portion of the sentence." Torres contends this shows the "legislature wanted persons on the window from December 31, 1999 to February 1, 2003, to be covered where the maximum penalty had been reduced" and that the reduction in the maximum possible confinement for his felony "constitutes a new factor which the court can and should consider in this case as a basis for a reduction of sentence." We disagree.

¶ 9. Wisconsin Stat. § 973.195 reflects the legislature's intent to create a separate and specific statutory procedure for requesting a sentence reduction that should be used in place of Wis. Stat. § 809.30 (2001-02) whenever "a change in law or procedure related to sentencing . . . effective after the inmate was sentenced that would have resulted in a shorter term of a confinement" is the basis for the modification. Wis. Stat. § 973.195(lr)(b)(3). Torres' October 2002 filing of a § 809.30 motion based on the pending February 2003 change cannot be used to defeat the purpose of § 973.195. If Torres wanted to avail himself of the 2003 sentence change as a basis for his sentence change, he was required to follow the § 973.195 procedure, which he could not do until February 1.

¶ 10. Even with the creation of Wis. Stat. § 973.195, modification of Torres' sentence would not have been guaranteed. The legislature did not intend that individuals like Torres always receive a downward modification on their sentence. Wisconsin Stat. § 973.195(lr)(c) states that upon receipt of a petition, the sentencing court may deny the petition or hold it for further consideration. In other words, the legislature does not expect that all individuals "in the window" from 1999-2003 will have their sentences reduced, nor has it mandated such a result.

¶ 11. Second, in Hegwood, the supreme court concluded that a reduction in the maximum penalty does not constitute a new factor and is therefore not a proper basis for modifying a sentence. Hegwood, 113 Wis. 2d at 548. Hegwood filed a motion for sentence modification claiming a reduction in the maximum penalty for sexual assault was a "new factor." Id. at 545-46. The court disagreed, pointing out that retroactive application of the penalty was precluded, making the change irrelevant to the imposition of sentence. Id. at 547.

¶ 12. Torres attempts to distinguish Hegwood by explaining the history of truth-in-sentencing legislation. He contends that the legislature really intended the February 1, 2003, penalty structure to go into effect on December 31, 1999, when our truth-in-sentencing framework first took effect. If this were true, however, the legislature could have directed the courts to always retroactively apply the new 2003 penalties. It did not. Torres is in the same situation as Hegwood — there is no mandatory retroactive application of the lower penalty — so the Hegwood rule applies and the change in penalty is not a new factor.

¶ 13. In any event, it also appears that the trial court assumed for argument's sake that this change in sentence structure was a new factor and still decided not to modify the sentence. The court heard arguments and concluded:

[A]s far as the new law is concerned, that doesn't change my mind. I still think he got a just and fair sentence under the laws that existed at that time. And as pointed out, it could have been longer [if the sentences were set consecutively]. ... I don't believe it was unduly harsh. I don't believe there is a new factor that changes The Court's mind, and so the motion will be denied. The sentence will stand.

¶ 14. Although the court did not explicitly brand the change in the law a new factor, it is evident to us that the court at least implicitly considered whether a change in the law would cause it to render a new sentence. Indeed, it stated that, "as far as the new law is concerned, that doesn't change my mind." Sentence modification upon showing a new factor is left to the trial court's discretion. Hegwood, 113 Wis. 2d at 546. The trial court concluded that Torres presented no evidence that would change the court's mind on the sentence, even though Torres had explained the new law for the court's consideration. Thus, the trial court concluded that even if the change in sentencing structure were a new factor, it did not warrant modification of the sentence. Thus, the trial court did not erroneously exercise its discretion.

By the Court. — Judgments and order affirmed.

       The Wisconsin Statutes are published biennially; thus, we have no 2003-04 compilation to cite containing this text. We include the 2003 notation to indicate the statutes that became effective February 1, 2003, and all additional statutory references are to the 2003 version unless otherwise noted.

       The motion in this case also alleges the trial court erroneously believed at sentencing that Torres was in a gang, although that issue is not before us. However, we note that where there are other grounds for requesting modification, or where there are other new factors separate from the Wis. Stat. § 973.195 grounds, a defendant is not precluded from filing a Wis. Stat. § 809.30 motion in addition to a § 973.195 petition. The grounds upon which a § 973.195 petition is based are specific and limited.