author: CURLEY, J.

text:
    Richard J. Snyder and Carol J. Snyder, Plaintiffs-Appellants-Cross-Respondents, v. Badgerland Mobile Homes, Inc., and Timothy St. Peter, Defendants-Respondents-Cross-Appellants.
    Court of Appeals

      No. 02-0714.

      Submitted on briefs January 7, 2003.

    Decided February 11, 2003.

    2003 WI App 49
    (Also reported in 659 N.W.2d 887.)

      On behalf of the plaintiffs-appellants-cross-respondents, the cause was submitted on the briefs of George W. Love of Love, Voss, Murray & Goeschko of Waukesha.

      On behalf of the defendants-respondents-cross-appellants, the cause was submitted on the brief of S. A. Schapiro of Milwaukee.
    Before Wedemeyer, EJ., Schudson and Curley, JJ.
   CURLEY, J.

¶ 1. Richard and Carol Snyder appeal from the trial court's order granting the defendants' motion for summary judgment and dismissing their unfair business practice claims against the defendants, Badgerland Mobile Homes, Inc. and Timothy St. Peter. The Snyders contend that, under Wis. Stat. § 100.20(5) as well as Wis. Admin. Code §§ ATCP 110.05(2) and 110.07(1)-(2), the home improvement contract at issue violated the code in two respects: (1) by failing to list the address of the sales representative who negotiated the contract; and (2) by failing to specify start and completion dates for the improvements. Thus, they conclude that the contract was void. Badgerland and St. Peter cross-appeal from that part of' the trial court's order denying their request for attorney's fees pursuant to Wis. Stat. § 802.05.

¶ 2. With respect to the alleged failure to list the address of the sales representative, the Snyders have failed to satisfy the statutory prerequisites of Wis. Stat. § 100.20(5) and Wis. Admin. Code § ATCP 110.05(2)(a). Additionally, with respect to the contract's failure to provide the dates or time period within which the work was to begin and be completed, we conclude that the Snyders have failed to meet the requirements of Wis. Admin. Code §§ATCP 110.05(2)(d) and 110.07(1), and have also failed to establish any loss as required by § 100.20(5). Accordingly, the trial court properly granted summary judgment. Finally, because we cannot conclude that the Snyders knew, or should have known, that the action was without any reasonable basis in law, we also affirm the trial court's denial of the defendants' request for attorney's fees.

I. Background.

¶ 3. On October 15, 2000, the Snyders entered into a home improvement contract with Badgerland for installation of a bathtub in their mobile home residence. They negotiated the contract with Badgerland's vice president, Timothy St. Peter. At the time they executed the agreement, the Snyders made a down payment of $2,200. The total cost under the contract was $2,323.20.

¶ 4. Before the agreement was signed, St. Peter informed the Snyders that they would have to leave their mobile home for one or two days while the bathtub was installed because, during installation, there would be no running water in the mobile home. Because the Snyders indicated they were unsure when they would be able to vacate their home, the contract failed to specify start and completion dates.

¶ 5. Before Badgerland could begin construction, the Snyders refused to allow performance under the contract. After allegedly hearing rumors of Badgerland's unreliability and deciding that they did not want to vacate their home for two nights, the Snyders sent Badgerland a letter declaring the contract void and requesting return of their down payment. Badgerland refused to return the down payment and offered to perform the construction. The Snyders again refused and, on January 5, 2001, filed a complaint alleging unfair business practices against Badgerland and St. Peter and requesting double damages and attorney's fees.

¶ 6. On October 12, 2001, the defendants moved for summary judgment. On November 26, 2001, the defendants also filed a motion for attorney's fees pursuant to Wis. Stat. § 802.05(1), alleging that the Sny-ders' claims were frivolous. On January 22, 2002, the trial court granted the defendants' motion for summary judgment, but denied their request for attorney's fees.

II. Analysis.

¶ 7. This appeal involves issues decided pursuant to summary judgment. Our review of the circuit court's decision to grant summary judgment is de novo. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315-16, 401 N.W.2d 816 (1987).

¶ 8. Summary judgment must be granted if the evidence demonstrates "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wis. Stat. Rule 802.08(2). Our methodology is the same as the trial court's. Preloznik v. City of Madison, 113 Wis. 2d 112, 116, 334 N.W.2d 580 (Ct. App. 1983). We must first determine whether the complaint states a claim. Green Spring Farms, 136 Wis. 2d at 315. If the plaintiff has stated a claim and the pleadings show the existence of factual issues, then we must examine whether the moving party has presented a defense that would defeat the claim. Preloznik, 113 Wis. 2d at 116. If the defendant has made a prima facie case for summary judgment, the court examines the pleadings, affidavits, depositions, answers to interrogatories, and admissions on file to determine whether a genuine issue exists as to any material fact, or whether reasonable conflicting inferences may be drawn from undisputed facts, therefore requiring a trial. Green Spring Farms, 136 Wis. 2d at 315.

¶ 9. The present dispute centers on the home improvement contract between the Snyders and Bad-gerland. The Snyders claim the contract is void for failing to comply with Wis. Stat. § 100.20(5) and Wis. Admin. Code §§ATCP 110.05(2) and 110.07(1). First, the Snyders claim that the contract violated § 100.20(5) and § ATCP 110.05(2)(a) by failing to list the address of Timothy St. Peter, who negotiated the contract. Second, they allege that that the contract violated § 100.20(5) and § ATCP 110.05(2)(d) and 110.07(1) by failing to specify start and completion dates for the improvements. However, because the contract sufficiently listed St. Peter's name and Badgerland's address, we conclude that § ATCP 110.05(2)(a) was not violated. Further, because the start and completion dates were omitted for the Snyders' benefit and they have failed to prove that they "suffer[ed] pecuniary loss" as required by § 100.20(5), we conclude that they have failed to establish the statutory prerequisites for a claim of an unfair business practice against Badgerland.

¶ 10. In unfair trade practices or unfair competition actions, the plaintiff has the burden of establishing a statutory violation to a reasonable certainty by clear, satisfactory and convincing evidence. See State v. Fonk's Mobile Home Park and Sales, Inc., 133 Wis. 2d 287, 301, 395 N.W.2d 786 (Ct. App. 1986). In such a case, we first turn to the administrative regulation. See Jackson v. DeWitt, 224 Wis. 2d 877, 887, 592 N.W.2d 262 (Ct. App. 1999).

The interpretation of a regulation is a question of law that we review de novo. We are to give effect to the intent of the regulation. In determining the intent, we look first to the plain meaning of the regulation. If it clearly and unambiguously sets forth the intent, it is our duty to merely apply that intent to the facts and circumstances of the question presented.

Id. (citations omitted).

¶ 11. Therefore, with respect to the Snyders' claims, we must first examine Wis. Stat. § 100.20(5) in conjunction with Wis. Admin. Code §§ ATCP 110.05(2) and 110.07(1). Then we must apply this language to the facts of the case. Section 100.20(5) states:

100.20 Methods of competition and trade practices.
(5) Any person suffering pecuniary loss because of a violation by any other person of any order issued under this section may sue for damages therefor in any court of competent jurisdiction and shall recover twice the amount of such pecuniary loss, together with costs, including a reasonable attorney's fee.

The Snyders also brought their claims under two sections of the Wisconsin Administrative Code. Under the heading of Agriculture, Trade and Consumer Protection, § 110.05(2) states, in relevant part:

ATCP 110.05 Home improvement contract requirements.
(2) If sub. (1) requires a written home improvement contract or the buyer signs a written contract, the written contract shall be signed by all parties and shall clearly, accurately and legibly set forth all material terms and conditions of the contract, including:
(a)The name and address of the seller, including the name and address of the sales representative or agent who solicited or negotiated the contract for the seller.
(d) The dates or time period on or within which the work is to begin and be completed by the seller.

Finally, § ATCP 110.07(1) & (2) state:

ATCP 110.07 Contract cancellation; return of payments.
(1) Conditions WARRANTING exercise of buyeR's remedies. If, under a home improvement contract, a buyer pays a seller for any home improvement materials or services before the seller provides those materials or services to the buyer, the buyer may proceed under sub. (2) if any of the following occurs:
(a) The seller fails to provide the materials or services by a deadline specified in the home improvement contract.
(b) The seller fails to give buyer notice of an impending delay as required under s. ATCP 110.02 (7) (c), or fails to obtain the buyer's agreement to a new performance deadline.
(c) The buyer believes that the seller has failed to provide the materials or services in a timely manner, and the home improvement contract specifies no deadline for the seller to provide the materials or services.
(2) BuyeR's Remedies. If the conditions under sub. (1) are met, the buyer may do all of the following:
(a) Cancel the contract.
(b) Demand return of all payments which the seller has not yet expended on the home improvement.
(c) If the seller has used any of the buyer's payments to purchase materials for the home improvements, demand delivery to the home improvement site of those materials which have not yet been used for the home improvement or delivered to the site.
(d) Demand a written accounting for all payments that the buyer made to the seller. The written accounting shall detail how all payments were used by the seller.

¶ 12. With respect to the Snyders' first claim, the contract listed the following information: "Badgerland Mobile Home Inc ... 7160 S. 27th . . . Oak Creek[,] Wi [sic] 53154." The contract was also signed, "Tim St. Peter." The Snyders claim that the contract is in violation of Wis. Admin. Code § ATCP 110.05(2) (a) by failing to list an "address for Timothy St. Peter, either separately or by explicit cross reference to Badgerland's stated address." We disagree.

¶ 13. As noted, interpretation of a regulation is a question of law, which we decide independently of the trial court. See Moonlight v. Boyce, 125 Wis. 2d 298, 303, 372 N.W.2d 479 (Ct. App. 1985). Wisconsin Admin. Code § ATCP 110.05(2)(a) requires the contract to include "[t]he name and address of the seller, including the name and address of the sales representative or agent who solicited or negotiated the contract for the seller." We conclude that the unambiguous language of §ATCP 110.05(2)(a) requires the listing of separate addresses for both the seller and the sales representative only where the address for the seller and the sales representative are different. However, where the sales representative is an agent of the seller and may be reached through the seller, the requirement to list a separate address for each would be redundant and unnecessary. Moreover, the goal of § ATCP 110.05(2)(a) has been satisfied where the sales representative provides an address to the consumer where he or she can be reached. Because the Snyders have failed to establish that St. Peter could not be reached at Badgerland's address, they have failed to establish a prerequisite to a violation of § ATCP 110.05(2)(a).

¶ 14. Next, the Snyders argue that the omission of start and completion dates violated Wis. Stat. § 100.20(5) and Wis. Admin. Code § ATCP 110.05(2)(d). The defendants respond that although the contract omitted "[t]he dates or time period on or within which the work [was] to begin and be completed by the seller" as required by § ATCP 110.05(2)(d), this was so because these dates were omitted at the request of and for the benefit of the Snyders. Thus, such an omission did not void the contract. We agree.

¶ 15. "[I]t is 'grave error' to assert that all contracts in violation of a statute are unenforceable." Baierl v. McTaggart, 2001 WI 107 ¶ 19, 245 Wis. 2d 632, 629 N.W.2d 277. "The controlling analysis in determining whether a statutory or regulatory violation renders a contract unenforceable is the intent underlying the provision that was violated." Id. It is ultimately the intent underlying the regulation that dictates whether the omission of the start and completion dates renders the entire contract unenforceable. See id. at ¶ 21.

¶ 16. We first look to the language of Wis. Admin. Code § ATCP 110.05(2)(d) to determine whether the regulatory violation renders the entire contract unenforceable. See id. at ¶ 22. Section 110.05(2)(d) of the Wisconsin Administrative Code under the heading of Agriculture, Trade and Consumer Protection requires "a written home improvement contract. . . [to] clearly, accurately and legibly set forth all material terms and conditions of the contract, including. . . [t]he dates or time period on or within which the work is to begin and be completed by the seller." We conclude that this requirement is intended to protect consumers from home improvement contractors who "take the money and run," i.e., execute contracts through face-to-face, telephone or mail solicitation away from the regular place of business of the seller, and then fail to show up to begin construction or fail to complete construction in a timely manner. See §§ ATCP 110.05(l)(b) and 110.07(1).

¶ 17. However, in such an unfortunate situation, § ATCP 110.05 does not provide a remedy. Rather, the remedy can be found in Wis. Admin. Code § ATCP 110.07(2), which provides that a buyer's remedies include canceling of the contract and demanding the return of all payments. But these remedies are only triggered if "a buyer pays a seller for any home improvement materials or services before the seller provides those materials or services to the buyer," and either (1) "[t]he seller fails to provide the materials or services by a deadline specified in the home improvement contract," as required by § ATCP 110.07(l)(a), or (2) "[t]he buyer believes that the seller has failed to provide the materials or services in a timely manner, and the home improvement contract specifies no deadline for the seller to provide the materials or services," as required by § ATCP 110.07(l)(c). Here, because the contract failed to specify a deadline, §ATCP 110.07(l)(a) is inapplicable. Thus, the question becomes whether Bad-gerland failed to provide the materials or services in a reasonably timely manner pursuant to § ATCP 110.07(l)(c).

¶ 18. Here, the Snyders have made no such allegation. Instead, they admit that they wanted to terminate the contract because, after executing the contract, they decided that they didn't want to vacate their mobile home while construction took place. As Mrs. Snyder explained in her deposition:

[Counsel FOR Badgeeland]: So the reason that .you didn't want Badgerland to do the work is because you didn't want to go to a motel overnight, right?
[MRS. Snyder]: Right.
[Counsel FOR BadgeRland] : That's why you canceled the contract?
[MRS. Snyder]: Well, I don't know if I canceled it.
[Counsel FOR Badgerland]: Is that why you didn't want [Badgerland] to do the work . . . because he wanted you out when the repairs were being done?
[MRS. Snyder]: Yes.
[Counsel for Badgerland]: Any other reason?
[MRS. Snyder]: No.

Thus, despite having full knowledge that they would have to vacate their mobile home when the construction was to take place, and despite the fact that the start and completion dates were omitted from the contract for the convenience of the Snyders to allow them flexibility in choosing when to vacate their home, they now wish to benefit from such an omission. This is outside the scope of the protections afforded by Chapter ATCP 110. We cannot allow the Snyders to profit from the omission of a requirement that was eliminated for their benefit.

¶ 19. The language of the enabling statute, Wis. Stat. § 100.20, also provides a remedy for a violation of the prohibitions in Wis. Admin. Code §§ ATCP 110.05 and 110.07. See Baierl, 2001 WI 107 at ¶ 23. Section 100.20(1) generally prohibits "[u]nfair methods of competition in business and unfair trade practices in business." However, in order to sue for double damages, costs and attorney's fees pursuant to § 100.20(5), a party must establish a "pecuniary loss because of a violation by any other person of any order issued under this section." Because the Snyders have failed to allege any pecuniary loss due to the failure to include start and completion dates, they are also barred from recovery under § 100.20(5). Thus, because the Snyders have failed to satisfy the statutory prerequisites to recovery under § 100.20 and §§ ATCP 110.05 and 110.07, the trial court's grant of summary judgment is affirmed.

¶ 20. Finally, the defendants contend that the trial court erred in refusing to award them their attorney's fees pursuant to Wis. Stat. § 802.05. Wisconsin Stat. § 802.05(1)(a) states, in relevant part:

The signature of an attorney or party constitutes a certificate that the attorney or party has read the pleading, motion or other paper; that to the best of the attorney's or party's knowledge, information and belief, formed after reasonable inquiry, the pleading, motion or other paper is well-grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law ....
If the court determines that an attorney or party failed to read or make the determinations required under this subsection before signing any petition, motion or other paper, the court may, upon motion, or upon its own initiative, impose an appropriate sanction on the person who signed the pleading, motion or other paper, or on a represented party, or on both. The sanction may include an order to pay the other party the amount of reasonable expenses incurred by that party because of the fifing of the pleading, motion or other paper, including reasonable attorney fees.

Wisconsin Stat. § 814.025 also provides, in relevant part:

(1) If an action or special proceeding commenced or continued by a plaintiff... is found, at any time during the proceedings or upon judgment, to be frivolous by the court, the court shall award to the successful party costs determined under s. 814.04 and reasonable attorney fees.
(3) In order to find an action... to be frivolous under sub. (1), the court must find one or more of the following:
(a) The action, special proceeding, counterclaim, defense or cross complaint was commenced, used or continued in bad faith, solely for purposes of harassing or maliciously injuring another.
(b) The party or the party's attorney knew, or should have known, that the action, special proceeding, counterclaim, defense or cross complaint was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law.
(4) To the extent s. 802.05 is applicable and differs from this section, s. 802.05 applies.

Thus, the question we must resolve is whether the Snyders "knew, or should have known, that the action .. . was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law." Wisconsin Stat. § 814.025(3)(b); see also Stern v. Thompson & Coates, Ltd., 185 Wis. 2d 220, 244, 517 N.W.2d 658 (1994) ("[A] claim cannot be made reasonably or in good faith ... if there is no set of facts which could satisfy the elements of the claim, or if the party or attorney knows or should know that the needed facts do not exist or cannot be developed.").

¶ 21. "The question of whether a reasonable attorney and litigant would or should have concluded that a particular claim is without a reasonable basis in law or equity presents a mixed question of law and fact and not a question of fact alone." State v. State Farm Fire & Cas. Co., 100 Wis. 2d 582, 601, 302 N.W.2d 827 (1981). "When mixed questions of law and fact are presented to this court, there are really two component questions which must be answered. The first question is what, in fact, actually happened; the second question is whether those facts, as a matter of law, have meaning as a particular legal concept." Wisconsin DOR v. Exxon Corp., 90 Wis. 2d 700, 713, 281 N.W.2d 94 (1979).

¶ 22. Based on the lack of case law interpreting Wis. Stat. § 100.20(5) in conjunction with Wis. Admin. Code §§ ATCP 110.05 and 110.07, we cannot conclude that the Snyders should have known that their claims were without any reasonable basis in law. Accordingly, we affirm the trial court's denial of the defendants' motion for attorney's fees.

¶ 23. Based on the foregoing reasons, the trial court is affirmed.

By the Court. — Order affirmed.

       All references to the Wisconsin Statutes and the Wisconsin Administrative Code are to the 1999-2000 versions unless otherwise noted.

       This provision is intended to protect consumers from sales representatives who solicit business on behalf of a company, but who are merely independent contractors unaffiliated with the seller and who cannot be reached or located through the seller, or who solicit business door-to-door without providing a legitimate address. See Wis. Admin. Code § ATCP 110.05(1).

       The record is completely devoid of any evidence that Timothy St. Peter could not be located at Badgerland's address. Because the Snyders have failed to develop these facts, we decline to address the issue any further. See Pension Mgmt., Inc. v. DuRose, 58 Wis. 2d 122, 128, 205 N.W.2d 553 (1973) (stating that we will not decide issues that are based on undeveloped or hypothetical facts).


source: Caselaw Access Project

author: BROWN, J.

license: Public Domain

text:
    Kelly Brown, Plaintiff-Appellant, v. Labor and Industry Review Commission, Schultz Sav-o-Racine, and Reliance Insurance Company, Defendants-Respondents.

    Court of Appeals

      No. 02-1429.

      Submitted on briefs December 12, 2002.

    Decided February 12, 2003.

    2003 WI App 56
    (Also reported in 659 N.W.2d 918.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of John A. Becker and Thomas IV Durkin of Becker; French and DeMatthew of Racine.
    On behalf of the defendant-respondent Labor and Industry Review Commission, the cause was submitted on the brief of James E. Doyle, attorney general, and Lowell E. Nass, assistant attorney general.
    On behalf of the defendants-respondents Schultz Sav-o-Racine and Reliance Insurance Company, the cause was submitted on the brief of Michael S. Frohman of Kasdorf, Lewis & Swietlik S.C. of Milwaukee.
    Before Nettesheim, RJ., Brown and Snyder, JJ.

       Petition to review granted.

   BROWN, J.

¶ 1. Kelly Brown appeals from a circuit court order affirming an order of the Labor and Industry Review Commission (LIRC), which held that Reliance Insurance Company had not acted in bad faith pursuant to Wis. Stat. § 102.18(l)(bp) (1999-2000), and Wis. Admin. Code § DWD 80.70(2) when it discontinued payment on Brown's temporary total disability benefits prior to the termination of his healing period. We conclude that Reliance failed to properly investigate and develop the facts necessary to evaluate Brown's claim and, as a result, had no reasonable basis for terminating Brown's benefits. We also conclude that LIRC misapplied the law of bad faith to the facts of this case. We therefore hold that LIRC's conclusion that Reliance did not violate § 102.18(l)(bp) and § DWD 80.70(2) is unreasonable and reverse the order of the circuit court and remand the cause to the circuit court for remand to LIRC.

¶ 2. The relevant facts are as follows. In 1993, Brown, a butcher at a grocery store owned by Schultz Sav-o-Racine, suffered a compensable back injury while lifting items at work. Brown continued working while under the treatment of a physician. In April 1995, Brown reinjured himself and this time he could not return to work. Brown underwent surgery in August 1995 and Schultz and Reliance concede that his healing period continued through August 1996, when Brown's doctor gave him permission to return to work.

¶ 3. Schultz began temporary total disability (TTD) benefit payments on April 6, 1995. In October 1995, an employee of the Worker's Compensation Division Fraud Investigation Unit received an anonymous phone call. The caller indicated that Brown was working full time selling insurance while on worker's compensation and was bragging about it. The employee informed Reliance about the call. John Thome, an employee at a claims adjusting agency, assumed responsibility for the claim of fraud.

¶ 4. Thome contacted Brown's supervisor at the grocery store, who informed him that he had heard from the meat department workers that Brown was selling insurance and did not plan to return to work as a butcher. Thome then hired a private investigation firm to conduct surveillance on Brown. In December 1995, the investigation firm conducted surveillance of Brown and produced a narrative report describing the findings of its investigation. The report indicated that Brown was seen dressed in a business suit on a weekday and that he had been a licensed insurance agent since October 1994. The investigation firm also provided a videotape that showed Brown dressed in a business suit and carrying a box into a day-care facility in the middle of the week and then leaving carrying an empty box.

¶ 5. On January 26,1996, Schultz suspended payments of Brown's TTD benefits and a flurry of correspondence between the parties ensued. On February 1, Thome sent a letter to Brown indicating that the TTD benefits were being discontinued because Brown was violating his doctor's restrictions and Brown had not reported to Reliance the outside income from his insurance business, which could be used to offset some of the TTD benefits owed. Brown sent Thome a letter dated Februaiy 6, explaining that while he had a business, it had yet to show a profit. On February 16, Brown filed a request for a worker's compensation hearing. On Feb-ruaiy 20, Thome sent Brown a letter requesting Brown's attorney to supply documentation from Brown's business showing that he was not making a profit. Brown responded in a letter dated February 22, alleging that Thome's conduct constituted bad faith and advising Thome that he would be willing to provide Thome with any documentation Thome requested.

¶ 6. In November 1996, a hearing was held before an administrative law judge to determine Brown's eligibility for TTD benefits. At the hearing, Brown responded to questions concerning the income he had earned and the expenses he had incurred as an insurance agent. However, at the conclusion of the hearing, Schultz and Reliance could not provide the administrative law judge with the amount of the offset it was asking the judge to apply. The administrative law judge concluded that Schultz and Reliance had failed to meet their burden of proof of showing any income, which would form the basis for reduction of the stipulated period of TTD, and ordered a payment of the additional TTD. Schultz and Reliance appealed and LIRC affirmed.

¶ 7. Brown then filed a claim for a penalty award pursuant to Wis. Stat. § 102.18(l)(bp), alleging that Reliance had acted in bad faith when it terminated his TTD benefit payments. At a hearing before an administrative law judge in March 2001, Thome testified that he terminated Brown's benefits as of January 26, 1996, in spite of the fact that he had not asked Brown if he was working or how much money he was making as an insurance salesman. He testified that he had not attempted to secure information regarding Brown's earnings up to that point in time. The administrative law judge concluded that Reliance had a reasonable basis for terminating Brown's TTD benefits when it did and dismissed Brown's bad faith claim. Brown appealed and LIRC affirmed and adopted as its own, with certain modifications, the findings and order of the administrative law judge. In its order, LIRC explained the reasons for its decision:

There are a number of reasons for my decision. First, the respondent received word from the state of Wisconsin that the applicant might have been involved in insurance fraud. There are fraud provisions in the Worker's Compensation statute to protect the employer, the insurance carrier and the system itself. Second, the insurance carrier then received word from the employer that the applicant indicated he was going to sell insurance on a full time basis and would not return to work. Even though the applicant had sold insurance on a part time basis before, it appears that he was making this a full time occupation and therefore the insurance carrier may have been entitled to an offset. Third, the insurance carrier did not cut off benefits at that time. They hired a surveillance company to determine if the applicant was indeed selling insurance on a full time basis .... The report noted that applicant had been an independent insurance agent since October 1994 selling products for a number of companies. The applicant had an agent license number with the state. Fourth, it wasn't until after these three factors were known that the carrier sent their letter of February 1,1996. In that letter they indicated that their investigation showed that the applicant may be working outside his restrictions and was performing additional work. In that letter they clearly were seeking wage information so that they could receive credit against that paid. It appears that they had sufficient information to initially cut off benefits at that time. Fifth, it appears that the full matter could have been taken care of relatively easily if the applicant would have simply provided detailed wage information at that time. No information was provided regarding income earned diming the 1996 temporary total disability period. The respondent was unable to get wage information from the applicant or World Marketing Alliance. When the applicant failed to provide wage information in February 1996 he was simply re-enforcing the respondent's beliefs that he was working full time. Finally, a section on fraud was placed in the Worker's Compensation Act to prevent fraud on the system. There is a realization that if fraud is involved, and the temporary disability money is paid under mistake of fact, there is no way of getting it back from the person who committed the fraud. (Emphasis omitted).

The circuit court affirmed LIRC's findings of fact and conclusions of law and Brown now appeals.

¶ 8. Wisconsin Stat. § 102.18(1)(bp) and Wis. Admin. Code § DWD 80.70(2) set forth the procedure for assessing a claim of bad faith. Section 102.18(l)(bp) provides, in pertinent part, that the "department may include a penalty in an award to an employee if it determines that the employer's or insurance carrier's suspension of, termination of or failure to make payments or failure to report injury resulted from malice or bad faith." Pursuant to the power conferred by the last clause of § 102.18(l)(bp), LIRC promulgated § DWD 80.70(2), which defines bad faith and malice as follows:

An insurance company or self-insured employer who, without credible evidence which demonstrates that the claim for the payments is fairly debatable, unreasonably fails to make payments of compensation or reasonable and necessary medical expenses, or after having commenced those payments, unreasonably suspends or terminates them, shall be deemed to have acted with malice or in had faith.

Therefore, an insurance company is deemed to have acted in bad faith and must pay a penalty if it unreasonably fails to make payments of compensation without credible evidence which demonstrates that the claim for payment is "fairly debatable."

¶ 9. The question of whether Reliance's actions constitute bad faith pursuant to Wis. Stat. § 102.18(l)(bp) and Wis. Admin. Code § DWD 80.70(2) presents a mixed question of law and fact. Kimberly-Clark Corp. v. LIRC, 138 Wis. 2d 58, 66, 405 N.W.2d 684 (Ct. App. 1987). The conduct of the parties presents a question of fact and the meaning of the statutes is a question of law. Applied Plastics, Inc. v. LIRC, 121 Wis. 2d 271, 276, 359 N.W.2d 168 (Ct. App. 1984). Whether the facts fulfill a particular legal standard is also a question of law. See id. It is axiomatic that an agency's findings of fact are conclusive on appeal so long as they are supported by substantial and credible evidence and that any legal conclusion drawn by the agency from its findings of fact is subject to judicial review. Nottelson v. DILHR, 94 Wis. 2d 106, 114-15, 287 N.W.2d 763 (1980).

¶ 10. While we have often repeated the proposition that the interpretation of statutes and their application to found facts is a question of law for the courts, not for administrative agencies, an equally important principle of administrative law is that, in recognition of the expertise and experience possessed by agencies, courts will defer to their interpretation and application of statutes in certain situations. Barron Elec. Coop. v. PSC, 212 Wis. 2d 752, 760, 569 N.W.2d 726 (Ct. App. 1997). Where a legal question calls for value and policy judgments that tap into the expertise and experience of the agency, as is the case here, the agency's decision, although not controlling, is given great deference. See Kimberly-Clark, 138 Wis. 2d at 64. LIRC has developed extensive experience and expertise in applying the law of bad faith and the criteria for determining when a claim is "fairly debatable" as articulated in the statutes and case law, and its decisions on such matters should be given great weight on review. We will thus defer to LIRC's legal conclusions if they are found to be reasonable, even if we would not have reached the same conclusions. See Nigbor v. DILHR, 120 Wis. 2d 375, 384, 355 N.W.2d 532 (1984). Bearing, this deferential standard of review in mind, we turn to Brown's claim that Reliance acted in bad faith when it terminated his TTD benefits.

¶ 11. Brown claims that when Reliance terminated his benefits it did not have credible evidence demonstrating that his claim was "fairly debatable" as that term has been defined in the law. He argues that Reliance failed to properly investigate his claim. He contends that Reliance had never asked for any information from Brown and had no proof that Brown earned any money as an insurance salesman and thus did not have a reasonable basis for terminating his benefits.

¶ 12. In Kimberly-Clark, we set forth the test for determining whether a claim is "fairly debatable" pursuant to Wis. Stat. § 102.18(1)(bp) and Wis. Admin. Code § DWD 80.70(2). Kimberly-Clark, 138 Wis. 2d at 65-66. In order to demonstrate a claim for bad faith, a claimant must show the absence of a reasonable basis for denying benefits of the policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. Id. at 65.

¶ 13. Thus, before an insurance company terminates a claimant's benefits it must have a reasonable basis for doing so; it must have some information that would lead a reasonable insurer to conclude that it need not make payment on the claim — i.e., something making the claim fairly debatable. Id. at 64. In deciding whether the employer's or insurer's actions are reasonable, it is necessary to determine whether the claim was properly investigated and if the results of the investigation were subject to a reasonable evaluation and review. Id. at 65. This determination must be based on information or data the insurer had in its possession at the time the claim for benefits was denied and on how that information was used. Id. at 65-66.

¶ 14. Here, upon receiving word of the anony- , mous call to the fraud investigation unit in October 1995 indicating that Brown was working as an insurance agent, Reliance proceeded to contact Brown's supervisor and to hire a private firm to conduct surveillance on Brown's activities. Brown's supervisor informed Reliance that he had heard that Brown was planning to sell insurance on a full-time basis and would not return to work. The private firm noted in its report that Brown had been a licensed independent insurance agent since 1994. Based on this information, on January 26,1996, Reliance discontinued payment on Brown's TTD benefits. On February 1, Reliance sent Brown a letter informing him that Reliance was discontinuing his benefits because its investigation indicated both that he was violating his doctor's restrictions and that he was currently employed and had not reported any income. LIRC concluded that at this time Reliance had sufficient information to withhold Brown's benefits, reasoning that Reliance's investigation had provided it with a reasonable basis for believing that Brown was engaged in wage-earning services.

¶ 15. While Reliance did follow up on the call to the fraud line, its preliminary investigation only revealed that Brown was licensed and possibly planned to work as an insurance agent full time. However, merely knowing that Brown might be working is not a sufficient justification for terminating his benefits. As Brown points out, in order for Reliance to be entitled to an offset on its payments, it would need information establishing that Brown was earning a profit as an insurance salesman during the time he was receiving benefits.

¶ 16. When Reliance terminated Brown's benefits, it did so without having obtained any information indicating that Brown was earning a profit at all. Reliance had never even contacted Brown to request that he provide it with documentation of his reportable income. Thome testified to these facts at the bad faith hearing. He testified that he wrote the letter on February 1, which accused Brown of making a profit, without knowing Brown was earning any reportable income that would entitle Reliance to an offset and without having taken any steps to secure such information from Brown. Thus, at the time Reliance terminated Brown's benefits, it had no reasonable basis for believing that it would be entitled to any offset, much less the offset it took — the entire amount of Brown's salary as a butcher.

¶ 17. Whether a claim is "fairly debatable" implicates the question of whether the facts necessary to evaluate the claim are properly investigated and developed or recklessly ignored and disregarded. Id. at 69. The record demonstrates that Reliance's limited investigation did not provide it with any information that could have possibly led it to conclude that it need not make payment on Brown's claim, and as is evidenced by Thome's testimony, it knew as much when it discontinued Brown's benefits. Had Reliance at least attempted to contact Brown or otherwise obtain income information prior to withholding payment, the outcome of this case may have been quite different. However, in the absence of a proper investigation and under the facts of this case, we hold that Brown's entitlement to a continuation of his benefits was not rendered "fairly debatable" within the meaning of the law.

¶ 18. LIRC concluded, and Reliance now asserts on appeal, that in its February 1 letter, Reliance was clearly seeking wage information from Brown and that because Brown failed to provide it with detailed income information, Brown simply reinforced Reliance's reasonable belief that he was engaged in wage-earning services. The law, however, is not that a worker's compensation insurance carrier can "shoot first and ask questions later." First, by February 1, the actions constituting bad faith had already occurred. As we previously discussed, Reliance had already terminated Brown's benefits without having a reasonable basis for doing so. It was not until after discontinuing payment on his benefits that Reliance purportedly began its investigation into whether Brown earned a profit. Further, Reliance acknowledged at the bad faith hearing that it thought an offset was an affirmative defense. To allow Reliance to first terminate Brown's benefits and then require Brown to prove that he is not earning a profit improperly shifts to Brown the burden of disproving Reliance's entitlement to an offset. Finally, it is well settled that the basic purpose of the Worker's Compensation Act is to give prompt relief to injured employees who are entitled to compensation and it must be liberally construed to effectuate that policy. Nigbor, 120 Wis. 2d at 382.

¶ 19. Reliance argues that given our deferential standard of review, we must uphold LIRC's determination that Reliance had a reasonable basis for discontinuing Brown's benefits and thus it did not act in bad faith. However, as we observed earlier, LIRC's decision, while entitled to great deference, is not controlling. We will sustain an agency's decision as long as it is reasonable. An agency's interpretation and application of a statute are reasonable if they accord with the language of the statute, the statute's legislative history, and the legislative intent; if the interpretation and application are consistent with the constitution, the statute read as a whole, and the purpose of the statute; and if the interpretation and application are consistent with the judicial analysis of the statute. Barron Elec. Coop., 212 Wis. 2d at 766. LIRC's interpretation and application of Wis. Stat. § 102.18(1)(bp) and Wis. Admin. Code § DWD 80.70(2) are inconsistent with our own interpretation and application of the term "fairly debatable" as set forth in Kimberly-Clark and directly contravene the basic purpose behind the Worker's Compensation Act. For these reasons, we hold that LIRC's determination was unreasonable and we reverse and remand to the circuit court for remand to LIRC for a determination of the amount of the penalty award.

By the Court. — Order reversed and cause remanded with directions.

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

       Thome later testified that although he had stated in the letter that Reliance was terminating Brown's benefits because Brown was in violation of his doctor's restrictions, the sole basis for discontinuing payment on Brown's benefits was the fact that Brown was working another job.

       As LIRC explained in its order requiring Reliance and Schultz to pay Brown the additional TTD benefits:
      If an applicant is able to work and earn wages while he is still healing from his work injury, the wages are applied against the applicant's temporary total disability rate according to a proportional formula. Wis. Stat. § 102.43(2). In cases of self-employment, the commission usually bases the proportional reduction on pretax earnings (revenues minus expenses) from the self-employment. (Citations omitted.)

       The text of the letter in its entirety reads:
      We received a medical report from your treating physician dated 1/23/96. This report indicated you were limited in your activity. Based on Dr. Platley's restrictions you are not able to bend, lift or push. Our investigation indicates you are violating your doctors restrictions. In addition our investigation indicates you are currently employed and you have not reported any income to our office so that we could calculate the offset due.
      Based on this lack of income information we are discontinuing disability benefits.
      Because we conclude that the law does not permit Reliance to terminate Brown's benefits and then conduct an inquiry into its entitlement to an offset, we need not address Reliance's argument, and LIRC's conclusion, that the letter represents a request for detailed wage information. We do say, however, that nowhere in the letter does Reliance actually ask Brown to provide it with documentation of the wages he earned as an insurance salesman. The letter merely informs him that his benefits were being terminated because he was exceeding his doctor's restrictions, which Thome later testified was not the basis for the termination, and accuses Brown of earning income that he was not reporting. We realize that if there is "substantial and credible" evidence, a low standard, the facts found by LIRC are conclusive. Here, however, there is no evidence whatsoever that the letter from Reliance asked Brown to provide documentation and no reasonable person would read the letter and have implicitly understood there to be such a request. We also note that on February 6, Brown did respond with a letter advising the company that he was not earning a profit as an insurance salesman and requesting that it provide him with a basis for its assertions.


author: FINE, J.

text:
    State of Wisconsin, Plaintiff-Respondent, v. Olayinka Kazeem Lagundoye, Defendant-Appellant.

    Court of Appeals

      Nos. 02-2137, 02-2138 and 02-2139.

      Submitted on briefs February 4, 2003.

    Decided February 12, 2003.

    2003 WI App 63
    (Also reported in 659 N.W.2d 501.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Godfrey Y Muwonge of Godfrey Y. Muwonge's Law Office, Milwaukee.

      On behalf of the plaintiff-respondent, the cause was submitted on the brief of James E. Doyle, attorney general, and James M. Freimuth, assistant attorney general.
    Before Wedemeyer, EJ., Fine and Curley, JJ.

       Petition to review granted.

   FINE, J.

¶ 1. Olayinka Kazeem Lagundoye appeals a circuit-court order denying his postconviction motions seeking vacatur of judgments entered on his guilty pleas in three Milwaukee County circuit-court criminal cases:

• 98CF001261 (two counts of forgery in violation of Wis. Stat. § 943.38(l)(a)) (appeal number 02-2137);
• 96CF966266 (burglary in violation of Wis. Stat.
§ 943.10(l)(a)) (appeal number 02-2139); and
• 2-614344 (misdemeanor theft in violation of Wis. Stat. § 943.20(l)(b) & (3)) (appeal number 02-2138).

In each of the cases, the trial courts that accepted Lagundoye's guilty pleas did not comply with Wis. Stat. § 971.08(1), which provides:

Before the court accepts a plea of guilty or no contest, it shall... (c) Address the defendant personally and advise the defendant as follows: "If you are not a citizen of the United States of America, you are advised that a plea of guilty or no contest for the offense with which you are charged may result in deportation, the exclusion from admission to this country or the denial of naturalization, under federal law."

This mandate is enforced by Wis. Stat. § 971.08(2), which provides, as material here:

If a court fails to advise a defendant as required by sub. (1) (c) and a defendant later shows that the plea is likely to result in the defendant's deportation, exclusion from admission to this country or denial of naturalization, the court on the defendant's motion shall vacate any applicable judgment against the defendant and permit the defendant to withdraw the plea and enter another plea.

Sections 971.08(l)(c) and 971.08(2) were created by 1985 Wis. Act 252, and became effective April 24, 1986, the day after its publication. See Wis. Stat. § 991.11 (unless otherwise specified in act, act is effective day after publication).

¶ 2. On June 19, 2002, the Wisconsin Supreme Court ruled that a defendant is entitled to automatic vacatur of any judgments of conviction imposed on guilty pleas (or their equivalent) if a trial court does not orally tell the defendant about the immigration consequences of the pleas, even though the defendant knew what those consequences were. State v. Douangmala, 2002 WI 62, ¶¶ 17-42, 253 Wis. 2d 173, 180-190, 646 N.W.2d 1, 4-9. By June 19, 2002, Lagundoye had exhausted his direct-appeal rights in each of the cases (and, indeed, had already been discharged from his sentences in the burglary and misdemeanor theft cases).

¶ 3. The trial court denied Lagundoye relief. We affirm, and hold that Douangmala does not apply to defendants who, like Lagundoye, exhausted their direct-appeal rights before Douangmala was issued.

I.

¶ 4. On February 6, 1997, Lagundoye pled guilty to the burglary (96 CF 966266 — appeal number 02-2139) and to the misdemeanor theft (2-614344 — appeal number 02-2138). Lagundoye signed a guilty-plea questionnaire and waiver-of-rights form acknowledging that he had read "this entire questionnaire, and I understand its contents." By signing the questionnaire, Lagundoye acknowledged:

If I am not a citizen of the United States of America, I know that upon a plea of guilty or no contest and a finding of guilty by the Court for the offense with which I am charged in the criminal complaint or information, I may be deported, excluded from admission to this country or denied naturalization under federal law.

The trial judge did not orally tell Lagundoye about the consequences for non-citizens of his guilty pleas, as required by Wis. Stat. § 971.08(1).

¶ 5. On April 24, 1998, Lagundoye pled guilty to the two counts of forgery (98CF001261 — appeal number 02-2137). As with the February 6, 1997, pleas, Lagundoye signed a guilty-plea questionnaire and waiver-of-rights form acknowledging that he had read "this entire questionnaire, and I understand its contents." By signing this questionnaire, Lagundoye again acknowledged:

If I am not a citizen of the United States of America, I know that upon a plea of guilty or no contest and a finding of guilty by the Court for the offense with which I am charged in the criminal complaint or information, I may be deported, excluded from admission to this country or denied naturalization under federal law.

The trial judge did not orally tell Lagundoye about the consequences for non-citizens of his guilty pleas, as required by Wis. Stat. § 971.08(1).

¶ 6. By showing that the trial judges did not tell him of the immigration consequences of his guilty pleas, Lagundoye has satisfied the first requirement for relief under Wis. Stat. § 971.08(2). Additionally, the State does not dispute that Lagundoye is subject to the adverse immigration consequences set out in § 971.08(2). Thus, he also has satisfied the second requirement. The question remains, however, whether Lagundoye is entitled to vacatur of the judgments even though he does not contest that he knew the consequences of his guilty pleas without having them orally spelled out by the trial court. We hold that he is not.

II.

¶ 7. Douangmala overruled a long line of court of appeals's decisions that held that a non-citizen defendant was not entitled to vacatur under Wis. Stat. § 971.08(2) if he or she knew what might happen to his or her immigration status upon conviction even though the trial court did not orally explain it, as required by Wis. Stat. § 971.08(l)(c). See, e.g., State v. Chavez, 175 Wis. 2d 366, 370-371, 498 N.W.2d 887, 888 (Ct. App. 1993) (applying harmless-error test in Wis. Stat. § 971.26); Douangmala, 2002 WI 62 at ¶¶ 37-40, 253 Wis. 2d at 187-188, 646 N.W.2d at 8 (collecting and analyzing court of appeals' decisions). Whether Douangmala should be applied retroactively to defendants, like Lagundoye, who have already exhausted their direct appeals is an issue of law that we decide de novo. State v. Howard, 211 Wis. 2d 269, 276, 564 N.W.2d 753, 757 (1997).

¶ 8. There are two aspects of retroactive-analysis applicable to criminal cases. The first is where a new judicial decision vindicates either rights that go to the heart of the "factfinding process" or recognizes, albeit belatedly, that certain conduct "is constitutionally immune from punishment." United States v. United States Coin and Currency, 401 U.S. 715, 723-724 (1971). See also Williams v. United States, 401 U.S. 646, 653 (1971) ("Where the major purpose of new constitutional doctrine is to overcome an aspect of the criminal trial that substantially impairs its truth-finding function and so raises serious questions about the accuracy of guilty verdicts in past trials, the new rule has been given complete retroactive effect.").

¶ 9. The second aspect is where the new judge-created rule is one of procedure and does not affect either the integrity of the factfinding process or the government's attempt to penalize conduct that, as phrased by the United States Coin and Currency quote in the preceding paragraph, is "constitutionally immune from punishment." If the new rule is of this type, it will not be applied retroactively to affect cases where the direct-appeal rights were exhausted before the rule was announced:

New rules merit retroactive application on collateral review only in two instances. In the first instance, a "new rule should be applied retroactively if it places certain kinds of primary, private individual conduct beyond the power of the criminal law-making authority to proscribe." [Quoted source omitted.] "Second, a new rule should be applied retroactively if it requires observance of those procedures that are implicit in the concept of ordered liberty." [Quoted source omitted.]

Howard, 211 Wis. 2d at 282, 564 N.W.2d at 760 (applying retroactively the requirement announced in State v. Peete, 185 Wis. 2d 4, 18-19, 517 N.W.2d 149, 154 (1994), that there be a nexus between a defendant's possession of a dangerous weapon and the defendant's drug-crime conduct before the defendant could be convicted of a drug crime while possessing a dangerous weapon).

¶ 10. The new rule announced by Douangmala did not either, in the words of Howard, put previously declared criminal conduct "beyond the power of the criminal law-making authority to proscribe" or require "observance of those procedures that are implicit in the concept of ordered liberty." Howard, 211 Wis. 2d at 282, 564 N.W.2d at 760. Rather, Douangmala is a simple statutory construction case, applying the clear language of Wis. Stat. § 971.08(2) to carry out the provision's mandate. Douangmala, 2002 WI 62 at ¶¶ 18-31, 253 Wis. 2d at 181-186, 646 N.W.2d at 5-7. Accordingly, it did not adopt the type of new rule that is applied retroactively to defendants who have exhausted their direct appeals. See Howard, 211 Wis. 2d at 282, 564 N.W.2d at 760. Thus, the pre-Douangmala law applies to Lagundoye's motion to withdraw his guilty pleas.

¶ 11. Unlike the situation in State v. Issa, 186 Wis. 2d 199, 519 N.W.2d 741 (Ct. App. 1994), where we remanded for an evidentiary hearing on Issa's claim that he did not know about the adverse immigration consequences of his guilty pleas even though he signed an attestation that he did know, id., 186 Wis. 2d at 204, 211, 519 N.W.2d at 743, 745-746, Lagundoye does not contend that he did not know the immigration consequences of his guilty pleas when he entered them. Thus, as we explained in Chavez, to vacate the judgments merely because the trial courts did not recite orally what Lagundoye already knew is not only not required by any conceivable concept of "ordered liberty" but would also give to Lagundoye an unwarranted "windfall." See Chavez, 175 Wis. 2d at 371, 498 N.W.2d at 889 ("[T]he legislature did not intend a windfall to a defendant who was aware of the deportation consequences of his plea."). We affirm the trial court's order denying Lagundoye's motion for postconviction relief.

By the Court. — Order affirmed.

       There is no evidence in the record that Lagundoye ever appealed from the judgments in the burglary and theft cases. He did appeal his forgery convictions, and we affirmed by summary order on July 25, 2000. State v. Lagundoye, No. 99-0364, unpublished slip op. (Wis. Ct. App. July 25, 2000). The August 29, 2000, remittitur was received by the clerk of the circuit court in Milwaukee County on September 9, 2000.

       The Honorable Victor Manían decided the postconviction motions and was not the trial judge in any of the cases. The postconviction court denied relief on two grounds. First, in connection with the cases where Lagundoye had already been discharged from his sentences, the postconviction court held, inter alia, that there was no mechanism for relief because Wis. Stat. § 974.06 only permits, in essence, collateral challenge of judgments of conviction by persons seeking release from "custody under sentence of a court." Wis. Stat. § 974.06(1). Second, in connection with the remaining case (the forgery), the post-conviction court held that retroactive relief was barred. Given the State's concession that Lagundoye's request for relief should "probably" (emphasis by the State) be considered timely, and our resolution of this appeal on retroactivity grounds, we do not discuss the postconviction court's first rationale. See 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"); State v. Holt, 128 Wis. 2d 110, 124, 382 N.W.2d 679, 687 (Ct. App. 1985) (trial court may be affirmed for a reason other than that on which it relied).

       In United States v. United States Coin and Currency, 401 U.S. 715 (1971), the government sought the forfeiture of money belonging to Donald J. Angelini because, it alleged, he was using the money in a "bookmaking operation in violation of the[ ] internal revenue laws." Id., 401 U.S. at 716. Angelini claimed that he had a Fifth Amendment privilege against the type of self-incrimination that he claimed would result from his compliance with the registration and gambling-tax-payment requirements under the statutory scheme pursuant to which the forfeiture was sought. Id., 401 U.S. at 716-717. Decisions by the Supreme Court extant when some of Angelini's property was seized had upheld the challenged requirements. Id., 401 U.S. at 722-723. Subsequent decisions by the Court struck them down. United States Coin and Currency applied those later decisions retroactively because the "conduct being penalized [Angelini's assertion of his Fifth Amendment rights] is constitutionally immune from punishment." Id., 401 U.S. at 724. Oddly, although Angelini had not yet exhausted his direct appellate rights before the later decisions were issued, only one of the five justices in the majority would have relied on that fact in defeating the government's argument that those decisions should not be applied retroactively to Angelini. Id., 401 U.S. at 724 n.13.


author: DYKMAN, J. LUNDSTEN, J.

text:
    In the Matter of the Separate Trusts: John J. McGuire Marital Trust, John J. McGuire Marital Trust No. 2, John J. McGuire Family Trust established under the John J. McGuire Revocable Trust dated July 2, 1984: Theresa McGuire, Appellant, v. James P. McGuire, J. P. Cullen, Alfred P. Diotte, and Mary McGuire, Respondents.
    Court of Appeals

      No. 02-0390.

      Submitted on briefs November 11, 2002.
    Decided February 13, 2003.

    2003 WI App 44
    (Also reported in 660 N.W.2d 308.)

      On behalf of the appellant, the cause was submitted on the briefs of Douglas D. Hahn of Menu, Teetaert & Beisenstein, Ltd., Appleton.
    On behalf of the respondents, the cause was submitted on the brief of Kathy L. Nusslock, Dianne S. Cauble, and Daniel J. Borowski of Davis & Kuelthau, S.C., Milwaukee; and George K. Steil, Sr., oí Brennan, Steil, Basting & MacDougall, S.C., Janesville.

      Before Dykman, Roggensack and Lundsten, JJ.

       Petition to review denied 7-9-03.

   DYKMAN, J.

¶ 1. Theresa McGuire appeals from an order granting the petition filed by the trustees of two family trusts and denying her motion to have a guardian ad litem appointed for her minor children. She argues that the trial court erred in finding that Article X of the John J. McGuire Revocable Trust is valid under Wisconsin law. She also asserts that it was an erroneous exercise of discretion for the trial court to approve the trust accountings from January 1, 1993, to December 31, 1999, thereby releasing the trustees of any further liability related to those accountings. Because we conclude that Article X is not contrary to Wisconsin law and the trial court properly exercised its discretion when it approved the trust accountings and denied the motion for appointment of a guardian ad litem, we affirm.

BACKGROUND

¶ 2. On July 12,1984, John J. McGuire executed a revocable trust (the Trust) for the benefit of himself, his wife, Mary, and their four daughters, Therese, Patricia, Maureen and Megan. At his death in 1987, three new trusts were created by operation of Articles V and VI of the revocable trust: the John J. McGuire Marital Trust, the John J. McGuire Marital Trust No. 2 (the Marital Trusts) and the Family Trust. The current Trustees are James McGuire (John's brother), Mary McGuire, J.E Cullen, and Alfred E Diotte.

¶ 3. In 2000, the Marital Trusts had assets valued in excess of $7,500,000. Mary receives all the income generated by these assets. In addition, she has access to the principal of the Marital Trusts if the criteria of Article V-B are met:

If the aforesaid payments of income from this Trust together with Donor's wife's income from all other sources shall not be sufficient, in the discretion of the Trustees, to provide for her reasonable support, care and comfort according to her standard of living during Donor's lifetime, the Trustees may pay to her or apply for her benefit so much of the principal of this Trust as the Trustees may deem proper or necessary for that purpose.

¶ 4. Mary also is entitled to the net income earned by the Family Trust. However, if the total of this and her other income is deemed by the Trustees to be more than sufficient to maintain her standard of living at the level she enjoyed when her husband was alive, Article VI provides:

[T]he Trustees may either accumulate such excess or distribute such excess in such shares, as they shall deem appropriate, to those of Donor's children who are under the age of twenty-eight (28) years, and whom my Trustees shall determine require funds for their support, maintenance and education (including post-high school education, not to exceed eight (8) years).
.... In exercising their discretion hereunder, the Trustees shall keep in mind that the Donor's primary purpose in establishing the Family Trust is to provide adequately for his wife during her lifetime, and after her death, to provide adequately for the support, main-tenanee and education of any of Donor's children who are under the age of twenty-eight (28) years.

¶ 5. Upon Mary's death, the principal is to be divided equally into four separate trusts, one for each of John and Mary's daughters. The income from these trusts will then be distributed to Therese, Patricia, Maureen and Megan during their lifetimes, or, if these funds are not required for their support, the income will be accumulated in the respective trusts. Ultimately, the principal and income of each trust will go to John and Mary's grandchildren.

¶ 6. When ascertaining whether a beneficiary has a need that warrants making a distribution from the principal of a trust, Article VI directs that:

[T]he Trustees shall bear in mind that it is not Donor's intention to preserve principal for subsequent generations if the use of the principal for any current income beneficiary seems wise. The Trustees shall also take into account other resources available to the beneficiaries of which they have knowledge. Donor suggests, but does not require, that no distribution of principal shall be made to Donor's wife until the principal of the Martial Deduction Trust and Donor's wife's other assets, excluding any residence owned by Donor's wife, have been exhausted.

¶ 7. In February 2000, as part of her estate planning, Mary's attorney suggested that she transfer assets to her children to minimize the impact of the federal estate tax on her estate. By divesting her assets Mary would also enable the Trustees to exercise their discretion and distribute principal from the Marital Trusts to her, because she would no longer have sufficient assets of her own to provide for her support. Because these gifts would have to be substantial to realize the desired savings in estate tax, Mary's attorney sent releases to the contingent beneficiaries. The effect of the releases is to relieve the Trustees of any liability to the contingent beneficiaries that might arise from the distribution of trust principal to Mary. Although she is one of the Trustees, under Article VIII of the Trust, Mary is precluded from taking part in any discretionary decision to make distributions from the principal of a trust of which she is a beneficiary.

¶ 8. Therese McGuire, John and Mary's eldest daughter, has been estranged from her mother for several years and refused to sign the release because she was concerned that she might not receive a gift equal to those given to her sisters. Instead, Therese requested additional information from the Trustees regarding the amount and management of the Trust assets, including whether Mary had already made gifts to other family members. She also asked for copies of the accountings the Trustees provided to her mother. The Trustees denied much of Therese's request, but did provide her with .an accounting of the. Trust administration for the years 1993-99.

¶ 9. The Trustees then petitioned the trial court for a finding that Article X of the revocable trust was valid, that the Trustees had fulfilled their obligations under Article X, and that they were released from liability to any beneficiary for the administration of Trust property for the period of January 1, 1993, through December 31, 1999. Further, with respect to future accounts, the Trustees asked to be discharged of any liability to the beneficiaries, present or contingent, if no current or permissive income beneficiary submitted an objection to the accountings within six months of presentation. Therese opposed the petition, arguing that Article X was ambiguous and asking that the court appoint a guardian ad litem to represent the interests of her minor children. She also requested a protective order prohibiting the Trustees from making distributions of the Trust assets until the guardian ad litem had completed an investigation of the administration of the Trust. The trial court granted the Trustees' petition and denied Therese's motions. Therese appeals.

ANALYSIS

I. Application of Article X

¶ 10. The construction of a testamentary document presents a question of law, which we review de novo. Furmanski v. Furmanski, 196 Wis. 2d 210, 214, 538 N.W.2d 566 (Ct. App. 1995). The same principles of construction, which are applicable to wills and testamentary trusts, also apply to inter vivos trusts. Id. Our obligation is to discern and uphold the settlor's intent. Weinberger v. Bowen, 2000 WI App 264, ¶ 12, 240 Wis. 2d 55, 622 N.W.2d 471. We determine the intent from the language of the document itself, considered in light of the circumstances surrounding the settlor at the time the document was executed. If there is no ambiguity in the language of the document, there is no need to look further to determine the testator's actual intent. Furmanski, 196 Wis. 2d at 215.

¶ 11. Trustees owe a duty to all trust beneficiaries, including contingent beneficiaries. See Wisconsin Acad. v. First Nat'l Bank of Madison, 142 Wis. 2d 750, 758-59, 419 N.W.2d 301 (Ct. App. 1987). At issue here is whether the Trust provisions can limit the parties entitled to an accounting. Article X addresses the Trustees' obligations with respect to accountings:

After the death of Donor, the Trustees shall deliver copies of accounts at regular intervals to the beneficiaries then eligible to receive the income. If all of these beneficiaries execute a written instrument approving a particular account or if any of them fail within six (6) months after delivery of such account to them to object in writing to such account, the account shall stand approved and the Trustees shall he completely released and discharged with respect to the administration of the Trust property for the period covered by such an account, and neither the Trustees nor any successor shall have any responsibility for such account. If any of the beneficiaries be under a legal disability, the guardian or conservator of his estate or either of the parents of a minor beneficiary for whose estate no guardian has been appointed, may act on his behalf in approving such accounts, and delivery of the accounts to such guardian, conservator or parent, followed by the passage of six (6) months without written objections, shall similarly operate to release and discharge the Trustee.

¶ 12. The effect of Article X is to give Mary, the sole current income beneficiary, unilateral authority to approve the Trustees' accountings. Thus, if the Trustees make a good-faith determination that Mary should be given a distribution of the Trust principal, and shé approves the accounting, the contingent beneficiaries have no right to object to the distribution or to pursue the Trustees for damages. The trial court found Article X unambiguous and valid under Wisconsin law. In doing so it stated:

Now, it's clear to the Court that John McGuire prepared an extensive and very precise trust document, as part of his estate. It is also clear to the Court that John McGuire was a very able attorney and businessman and was very experienced in these types of affairs.
It's also clear to the Court that for that reason [John] decided that he would have family members and friends be the trustees. Now, John McGuire from- — -in reading the trust documents it's clear that he knew that there was going to be some tensions here, and he resolved those tensions quite clearly in favor of the income beneficiaries, Mary McGuire, and anybody else that was receiving income under the trust.
Now, I find that in reviewing this that Article X is clear. It's unambiguous. It is valid. I don't have any evidence or any indication that it's not valid. The only way that I would know that this was not valid would be if John McGuire was not competent to [execute] this document which I have no evidence of that, or if the document was contrary to law in some way, and there is no argument about that.

¶ 13. Wisconsin law is silent as to whether a settlor of an inter vivos trust can give one class of beneficiaries sole authority to receive and approve the trust accounting. If this were a testamentary trust, the trustees would be statutorily required to file a verified account annually with the court. Wis. Stat. § 701.16(4) (2001-02). There is no similar requirement in the statutes for the trustees of an inter vivos trust. In fact, the legislature has given a settlor of an inter vivos trust broad discretion to control the administration of the trust. Wis. Stat. § 701.07(l)(a)4. Further, inter vivos trusts are not subject to the continuing jurisdiction of the court, Wis Stat. § 701.01(6), although a court retains "the general equitable power... to modify or terminate a trust in whole or in part.". Wis. Stat. § 701.13(6). However, "[a]s long as trustees act in good faith, from proper motives, and within the bounds of reasonable judgment under the trust's terms and conditions, the court has no right to interfere." In Matter of Uihlein Trust, 142 Wis. 2d 277, 286, 417 N.W.2d 908 (Ct. App. 1987) (citing Filzen v. Headley, 252 Wis. 322, 326, 31 N.W.2d 520 (1948)).

¶ 14. Therese argues that, as a contingent beneficiary, she has a right to have the Trustees perform their fiduciary duty, which she interprets as providing ac-countings to the contingent beneficiaries and giving them the opportunity to file objections. At the hearing, Therese expressly denied that she was making any argument that Article X was invalid. She stated to the trial court that "I am not saying that Article X is invalid" and then argued that the provision was ambiguous, because it was not clear regarding the rights of contingent beneficiaries to object to an accounting, or whether the Trustees would be released from liability to the contingent beneficiary for accountings approved by the current income beneficiary.

¶ 15. Therese asserts, for the first time on appeal, that Article X contravenes Wisconsin law. We will not consider this argument because it was waived. When she argued against the Trustees' petition, Therese told the trial court that "I am not saying that Article X is invalid." Thus she expressly denied that she was challenging the legal validity of Article X. Instead, she contended that Article X was ambiguous as to the rights of the contingent beneficiaries regarding accountings made by the Trustees to the current income beneficiary. Accordingly, this issue regarding the . legal validity of Article X has been raised for the first time on appeal and we decline to address it. See Wirth v. Ehly, 93 Wis. 2d 433, 443-44, 287 N.W.2d 140 (1980) (generally, an appellate court will not review an issue raised for the first time on appeal).

¶ 16. The trial court found that the language of Article X is unambiguous. We agree.

¶ 17. Therese does not argue on appeal that Article X is ambiguous. We agree with the trial court that Article X's direction that the Trustees "shall deliver copies of accounts at regular intervals to the beneficiaries then eligible to receive the income" on its face requires only that accounts be provided to the current permissive income beneficiaries. There is no provision in the Trust entitling contingent beneficiaries to accounts.

¶ 18. Therese contends that the intent of the Trust is not only to ensure Mary's care and support, but to preserve as much principal as possible for the contingent beneficiaries, John and Mary's grandchildren. If Article X is read to give Mary sole authority to approve the accounts, thereby precluding any action by the contingent beneficiaries against the Trustees with respect to the accounting, the effect of Article X is inconsistent with the basic structure of the Trust, that being to distribute the Trust income to Mary during her lifetime and then to her daughters with the Trust principal ultimately going to the grandchildren. The express language of the Trust, however, refutes this argument. When ascertaining whether a beneficiary has a need that warrants making a distribution from the principal of a trust, Article VI provides as follows:

[The Trustees] shall bear in mind that it is not Donor's intention to preserve principal for subsequent generations if the use of the principal for any current income beneficiary seems wise. The Trustees shall also take into account other resources available to the beneficiaries of which they have knowledge. Donor suggests, but does not require, that no distribution of principal shall he made to Donor's wife until the principal of the Marital Deduction Trust and Donor's wife's other assets, excluding any residence owned by Donor's wife, have been exhausted.

(Emphasis added.)

¶ 19. This is a clear statement of the settlor's intent, which we are bound to uphold. Weinberger, 2000 WI App 264 at ¶ 12. Thus, while there is the expectation in the Trust provisions that Mary and her daughters will only receive payments of Trust income while they are primary beneficiaries, and the grandchildren will eventually receive the principal of the Trusts, that outcome is not guaranteed nor is it identified as the prime interest the Trustees are to protect. While Therese might prefer otherwise, the terms of the Trust clearly demonstrate a preference for the income beneficiaries over the contingent beneficiaries. Accordingly, the application of Article X, giving Mary sole authority to approve or object to the accounts during her lifetime, is not inconsistent with the other Trust provisions.

II. Approval of 1993-1999 Trust Accountings

¶ 20. Therese also appeals from the trial court's approval of the trust accounts for the period January 1, 1993, to December 31, 1999, and releasing the Trustees of liability for future accounts if no objection is made by the income beneficiary. She argues that the trial court erred when it approved the accounts "based solely on the fact that the income beneficiaries of the Trust approved them." Her argument is premised on her assertion that Article X is invalid because it confers unilateral authority on the income beneficiary to approve the Trustees' actions, thereby depriving the contingent beneficiaries of any right of action against the Trustees, even if the Trustees' administration of the Trust decreases the amount of Trust principal.

¶ 21. We have already determined that by failing to argue this issue in the trial court, Therese has waived her right to contest the legal validity of Article X on appeal. We have further concluded that Article X is unambiguous and consistent with the other Trust provisions. It is undisputed that Megan and Mary, the only permissive income beneficiaries during the years 1993 to 1999, have given written approval of the accountings. Under the terms of Article X, their approval is sufficient to release the Trustees of liability. The Trust does not grant contingent beneficiaries the right to object to the Trustees' accountings. Given these facts, the trial court did not err by approving the accountings.

III. Guardian Ad Litem

¶ 22. Therese argues that Wis. Stat. § 701.15(2) mandates the appointment of a guardian ad litem to represent the interests of the minor contingent beneficiaries, especially her children. In the alternative, she argues that the trial court erroneously exercised its discretion when it determined that a guardian ad litem was not necessary.

¶ 23. With respect to trust proceedings, the statute at issue, Wis. Stat. § 701.15(2) provides in part:

[T]he court may appoint a guardian ad litem for any person interested who is legally incapacitated, unascer-tained or unborn if such person is not already represented by a fiduciary having no adverse interest in the proceeding. A guardian ad litem may represent 2 or more such persons where they have a substantially identical interest in the proceeding. The court may dispense with or terminate the appointment of a guardian ad litem for such person if there is a legally competent person who is a party to the proceeding and has a substantially identical interest in it.

¶ 24. Therese, however, did not argue the application of Wis. Stat. § 701.15(2) to the trial court. Instead, she based her request on fiduciary law and the court's "plenary powers to do justice to protect children." She questioned whether all of the Trustees understood the fiduciary duty that they owed to the contingent beneficiaries, and concluded that appointment of a guardian ad litem for the minor grandchildren was necessary to protect their interests. In denying her request, the trial court stated:

I further do not appoint a guardian ad litem to investigate the actions of the trustees. I think that would run counter of the Court's interpretation of Article X. I think it would run contrary to John McGuire's expressed intent in this trust both in Article X and otherwise. And I find no authority for the Court to either appoint a guardian nor do I find any need.

¶ 25. The parties agree that the trial court has authority to appoint a guardian ad litem pursuant to Wis. Stat. § 701.15(2). The question is whether the statute makes such an appointment mandatory or discretionary. Whether a statute is mandatory or directory is a question of law, which we review without deference to the trial court. Combined Investigative Servs., Inc. v. Scottsdale Ins. Co., 165 Wis. 2d 262, 273, 477 N.W.2d 82 (Ct. App. 1991). If a statute is plain and unambiguous, we apply its plain meaning. Id.

¶ 26. We conclude that under the plain language of Wis. Stat. § 701.15(2), the appointment of a guardian ad litem is discretionary with the trial court. Use of the word "may" creates a presumption that the statute is permissive. See Swatek v. County of Dane, 192 Wis. 2d 47, 59, 531 N.W.2d 45 (1995). This general principle can be rebutted if construing "may" as mandatory is necessary to reflect legislative intent. Schmidt v. Department of Local Affairs and Dev., 39 Wis. 2d 46, 53, 158 N.W.2d 306 (1968).

¶ 27. An example of how "may" is properly construed as "shall" is found in Hitchcock v. Hitchcock, 78 Wis. 2d 214, 254 N.W.2d 230 (1977). In Hitchcock, the trial court denied the parties a divorce based on the doctrine of recrimination. The relevant statute had originally provided that "the court may in its discretion grant a judgment of legal separation," but a subsequent amendment removed the phrase "in its discretion," and the reference to the doctrine of recrimination was deleted. Id. at 218-19. Thus the supreme court determined that the statute's legislative history indicated that the intent was to abolish the doctrine of recrimination. The court concluded that if the use of "may" was permissive, the trial court could decline to follow the doctrine of comparative rectitude in favor of the disfavored doctrine of recrimination. Such a result would clearly defeat the legislative intent. Id. at 220.

¶ 28. Therese argues that because the phrase "if the court deems it necessary" was deleted from Wis. Stat. § 323.10 (1969), the predecessor to Wis. Stat. § 701.15(2), we should, as was done in Hitchcock, construe "may" as mandatory in order to accurately reflect legislative intent. We disagree.

¶ 29. Unlike Hitchcock, here there is no indication that the legislature intended to deprive the court of discretion when it enacted Wis. Stat. § 701.15(2). The present statute replaces five statutes addressing the appointment and responsibilities of guardians ad litem in various proceedings. Laws of 1969, ch. 283, § 17. The introductory paragraph of ch. 283 describes the Act's purpose as being to repeal, renumber and amend a number of statutes, and thereby "create chapter 701 of the statutes, relating to revision of the statutes on trusts." Revisions of statutes do not change their meaning unless the intent to change the meaning necessarily and irresistibly follows from the changed language. Pigeon v. DILHR, 109 Wis. 2d 519, 526 n.3, 326 N.W.2d 752 (1982). The deletion of "if the court deems it necessary," which was part of the former Wis. Stat. § 323.10 (1969), does not transform "may" from permissive to mandatory. The use of "may" by itself is sufficient to grant the trial court discretion to appoint a guardian ad litem; the removed phrase was surplusage. It does not "necessarily and irresistibly" follow from this deletion that the legislature's intent was to deprive the trial court of discretion. Moreover, if the first sentence of § 701.15(2) is construed as creating an absolute duty on the trial court to appoint a guardian ad litem, the use of "may" in the first sentence becomes inconsistent with its permissive meaning in the remaining sentences.

¶ 30. Accordingly, because we conclude that the decision to appoint a guardian ad litem under Wis. Stat. § 701.15(2) is discretionary, we must now determine if the trial court erroneously exercised this discretion when it denied Therese's request. We will not find an erroneous exercise if there is a reasonable basis for the trial courts determination. State v. Alsteen, 108 Wis. 2d 723, 727, 324 N.W.2d 426 (1982). We will sustain discretionary acts by the trial court so long as the court "examined the relevant facts, applied a proper standard of law and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach." Modica v. Verhulst, 195 Wis. 2d 633, 650, 536 N.W.2d 466 (Ct. App. 1995).

¶ 31. We conclude that the trial court erred in grounding its decision not to appoint a guardian ad litem on its conclusion that Article X was valid. In denying Therese's request, the trial court stated that it found "no authority for the Court to either appoint a guardian nor do I find any need," because doing so would be contrary to the language and intent of Article X. As noted, the trial court did not mention Wis. Stat. § 701.15(2) and the authority it confers to appoint a guardian for the minor contingent beneficiaries. Thus, the trial court made its decision based in part on a mistaken view of the law. Nor did the trial court adequately articulate the reasoning underlying its finding that there was no need for a guardian ad litem in the proceedings. But this does not require reversal. We will search the record for reasons to sustain a discretionary determination made by the trial court. Filppula-McArthur v. Halloin, 2000 WI App 79, ¶ 16, 234 Wis. 2d 245, 610 N.W.2d 201, aff'd 2001 WI 8, 241 Wis. 2d 110, 622 N.W.2d 436; State v. Pharr, 115 Wis. 2d 334, 343, 340 N.W.2d 498 (1983) (if the trial court fails to set forth its reasoning in exercising its discretion, appellate court should independently review record to determine whether it supports trial court's decision).

¶ 32. Based upon our independent review of the record, we conclude that it supports the trial court's decision not to appoint a guardian ad litem. Under Wis. Stat. § 701.15(2), one reason for dispensing with representation of a minor by a guardian ad litem in trust proceedings is when there is "a legally competent person who is a party to the proceeding and has a substantially identical interest in it." In Therese's view, the grandchildren, as contingent beneficiaries of the trust principal, have an interest in maintaining the status quo and restricting Mary to receiving only the Trusts' income. Acquiescing to a plan whereby Mary artificially created a financial need so that the Trustees would provide her with funds from the Trust principal would not protect that interest. Nor would the grandchildren's interests be served by endorsing a reading of Article X that relieved the Trustees of liability for distributions made to Mary.

¶ 33. These are the same interests asserted by Therese. Her estrangement from her mother and concern that she will not be given as much as her sisters dictate that her interest lies in an application of the Trust provisions that will preserve the most Trust principal. Thus, while the grandchildren have an interest opposed to their parents, who stand to receive substantial sums long before they would be entitled to the Trust income, they share Therese's stated interest in maintaining the Trust principal. Even if her sisters' children share their mothers' interests in supporting Mary's gifting plan, Therese and her children have aligned interests in opposing it. While it may be true that a guardian ad litem might have presented arguments to the trial court that Therese did not, she represented an interest that is substantially identical to that held by the grandchildren, especially her children. In fact, she repeatedly raised concerns at the hearing that the Trustees were not acting in conformance with their duty to the contingent beneficiaries. Moreover, in rendering its decision, the trial court referred to Therese as "attempting to uphold her children's interests." We conclude that the trial court's finding that there was no need for a guardian ad litem reflects the considerations addressed in Wis. Stat. § 701.15(2) and would be a proper exercise of discretion.

By the Court. — Order affirmed.

LUNDSTEN, J.

¶ 34. (concurring). This case may involve, as appellant Therese McGuire concedes, nothing more than an attempt to legally reduce federal estate taxes upon the death of Mary McGuire. At the same time, Therese argues that the means chosen to avoid taxation is at odds with the intent of the creator of the Trust, her father John McGuire, and that such means may significantly diminish the funds that will eventually pass to Therese's children. My quarrel with the majority is that it mischaracterizes Therese's argument and then knocks down a straw man of its own making. Although I agree with the result and part of the analysis in the majority opinion, I do not join with paragraphs 12 to 14 and 16 to 21. Accordingly, I respectfully concur.

¶ 35. On appeal, Therese argues for the first time that Article X of the Trust, a provision she characterizes as "comparatively minor," is invalid and should be stricken because it conflicts with the key feature of the Trust, the overall distribution plan put in place by John McGuire. The majority decision correctly points out that Therese does not argue ambiguity on appeal and that Therese's assertion that Article X is invalid has been waived. The majority then relies on waiver to reject Therese's Article X invalidity argument. Majority at ¶¶ 15,17. If the majority stopped there, I would have no need to write separately. However, the majority goes on to refute Therese's Article X argument, but does so by obfuscating Therese's argument. The majority correctly demonstrates that the Trust's primary goal is to provide for Mary McGuire during her lifetime. The majority suggests that Therese argues to the contrary: "While Therese might prefer otherwise, the terms of the Trust clearly demonstrate a preference for the income beneficiaries over the contingent beneficiaries." Majority at ¶ 19. I think the discussion in paragraphs 18 and 19 of the majority opinion purports to address Therese's central argument, but actually sets up a straw man and then knocks it down.

¶ 36. In my view, Therese concedes in the briefing on appeal that the first job of the trustees, according to the express terms of the Trust, is to provide for Mary McGuire's "reasonable support, care and comfort according to her standard of living during [John McGuire's] lifetime." Therese has no quarrel with the notion that the trustees may go so far as to completely deplete the Trust, thereby depriving subsequent generations, "if the use of the principal for any current income beneficiary seems wise." Therese admits this, but contends that the trustees sought circuit court approval of a plan that adds nothing to wisely providing for the "current income beneficiary," Mary McGuire. Rather, in Therese's view, the approved plan permits distributions from the Trust that undercut John McGuire's plain desire that funds not needed to maintain Mary McGuire's lifestyle be used in a specified way for the benefit of contingent beneficiaries. Two pertinent trust provisions are as follows:

If the aforesaid payments of income from this Trust together with Donor's wife's income from all other sources shall not be sufficient, in the discretion of the Trustees, to provide for her reasonable support, care and comfort according to her standard of living during Donor's lifetime, the Trustees may pay to her or apply for her benefit so much of the principal of this Trust as the Trustees may deem proper or necessary for that purpose....
.. . [T]he Trustees shall bear in mind that it is not Donor's intention to preserve principal for subsequent generations if the use of the principal for any current income beneficiary seems wise. The Trustees shall also take into account other resources available to the beneficiaries of which they have knowledge. Donor suggests, but does not require, that no distribution of principal shall be made to Donor's wife until the principal of the Marital Deduction Trust and Donor's wife's other assets, excluding any residence owned by Donor's wife, have been exhausted.

Therese's argument (that these and other trust provisions, taken as a whole, evidence John McGuire's intent that trust funds be used to maintain Mary McGuire's lifestyle during her lifetime, but that funds not needed for this purpose be distributed according to remaining trust provisions) is a reasonable construction. Furthermore, Therese's companion argument (that the plain meaning of Article X permits Mary McGuire and the other trustees to thwart this part of John McGuire's intent, because it permits Mary to approve payments to herself that exceed the amounts needed to maintain her lifestyle, thereby enabling Mary to both maintain her lifestyle and distribute funds to people of her choosing, while at the same time immunizing the trustees from all challenges to their decisions) is a serious argument which, had it been preserved, would warrant serious consideration.

¶ 37. Ultimately, however, I believe that holding Therese to waiver is the proper course. I disagree with Therese's characterization of Article X as a "comparatively minor provision" and her assertion that it can simply be deleted. Article X sets forth the accounting obligation of the trustees, a requirement needed, as the respondents point out, because the trusts are living trusts which are not subject to trust accounting requirements under Wis. Stat. § 701.16(4). Furthermore, I agree with the circuit court that Article X reflects John McGuire's clear desire to avoid disputes by giving the current income beneficiary authority to approve the actions of the trustees and to also relieve the trustees of liability to contingent beneficiaries. Article X may, on its face, permit actions inconsistent with other trust provisions, but it is hardly a minor provision.

¶ 38. While Therese now makes arguments to support her position that Article X conflicts with other trust provisions that are not easily dismissed, she has failed to propose a viable solution. In her appellate reply brief she contends that we may delete Article X pursuant to authority granted under Wis. Stat. § 701.13(6). That statute provides: "Nothing in this section shall prohibit modification or termination of any trust pursuant to its terms or limit the general equitable power of a court to modify or terminate a trust in whole or in part." However, I do not think it feasible to simply delete Article X. Furthermore, Therese has not suggested how we should modify Article X. Section 701.13(6) does not confer "general equitable power" to modify a trust, but rather explains that such power is not limited by § 701.13. Even assuming we have such power, Therese has not suggested a modification that is either affirmatively authorized by law or that squares with John McGuire's intentions.

       Under this provision, Megan, John and Mary's youngest daughter, was a permissible income beneficiary of the Family Trust until May 8, 1995, her twenty-eighth birthday.

       In the letter sent to Mary's daughters on February 2,2000, her attorney described the situation succinctly:

        Those trusts hold assets having a total value for purposes of this letter in excess of $7,500,000.00. Under current tax law, at the time of your mother's death those assets could be subjected to an estate tax assessed at a rate in excess of 50%. As a result, the government stands to be the biggest single beneficiary of your parent's estate.

       All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       The Comment to ch. 283, § 17 states: "This replaces present ss. 231.35, 323.10 and, as to trust proceedings, ss. 256.52, 260.23 and 324.29(4)."

       To avoid cumbersome language, I will speak as if there is a single trust. In fact, a series of trusts are involved in this case.

       I assume without deciding that the trusts at issue are living trusts. That is how they are described by the respondents and Therese does not contest that characterization.