author: NETTESHEIM, J.

text:
    Lee R. Krahenbuhl, DDS, Plaintiff-Appellant, v. Wisconsin Dentistry Examining Board, Defendant-Respondent.
    Court of Appeals

      No. 03-2864.

      Submitted on briefs May 5, 2004.

    Decided June 30, 2004.

    2004 WI App 147
    (Also reported in 685 N.W.2d 591.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Raymond M. Roder, of Reinhart, Boerner, Van Deuren, S.C. of Madison, and Charles J. Hertel, of Dempsey, Williamson, Lampe, Young, Kelly & Hertel, of Oshkosh.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Peggy A. Lautenschlager, attorney general, and Robert M. Hunter, assistant attorney general.
    Before Brown, Nettesheim and Snyder, JJ.
   NETTESHEIM, J.

¶ 1. Lee R. Krahenbuhl, DDS, appeals from a trial court order upholding a decision of the Wisconsin Dentistry Examining Board (DEB) to suspend and impose conditions on Krahenbuhl's dentistry license based on a violation of the professional conduct requirements set forth in Wis. Stat. § 447.07(3)(a) and (h) (2001-02) and Wis. Admin. Code § DE 5.02(5). Krahenbuhl contends that the disciplinary action, brought more than six years after the patient treatment that is at issue in this case, is barred by the six-year statute of limitations set forth in Wis. Stat. § 893.93(l)(a). Krahenbuhl additionally contends that his due process rights were violated when the DEB improperly acted as its own expert witness and improperly shifted its burden of proof to Krahenbuhl.

¶ 2. We conclude that the six-year statute of limitations set forth in Wis. Stat. § 893.93(l)(a) does not apply to a disciplinary proceeding, the focus of which is to monitor and supervise the performance of a person who has been granted the privilege of a license in this state. We further conclude that Krahenbuhl's due process arguments are essentially a challenge to the sufficiency of the evidence, one that fails in this case. The DEB was presented with substantial evidence to support its finding that Krahenbuhl's treatment constituted a violation of professional standards.

APPLICABLE LAW

¶ 3. Krahenbuhl was disciplined on grounds that he engaged in unprofessional conduct contrary to Wis. Stat. § 447.07(3)(a) and (h) and Wis. Admin. Code § DE 5.02(5). Wisconsin Stat. ch. 447 governs the DEB; § 447.07 governs the disciplinary proceedings of the DEB. Krahenbuhl's violations pertain to the following provisions of § 447.07:

(3) Subject to the rules promulgated under s. 440.03(1), the examining board may make investigations and conduct hearings in regard to any alleged action of any dentist or dental hygienist, or of any other person it has reason to believe is engaged in or has engaged in the practice of dentistry or dental hygiene in this state, and may, on its own motion, or upon complaint in writing, reprimand any dentist or dental hygienist who is licensed or certified under this chapter or deny, limit, suspend or revoke his or her license or certificate if it finds that the dentist or dental hygienist has done any of the following:
(a) Engaged in unprofessional conduct.
(h) Engaged in conduct that indicates a lack of knowledge of, an inability to apply or the negligent application of, principles or skills of dentistry or dental hygiene.

Wisconsin Admin. Code § DE 5.02(5) provides that "[u]n-professional conduct by a dentist... includes ... [practicing in a manner which substantially departs from the standard of care ordinarily exercised by a dentist or dental hygienist which harms or could have harmed a patient."

¶ 4. The statute of limitations at issue on appeal is set forth in Wis. Stat. § 893.93(l)(a) which governs miscellaneous actions. It provides:

(1) The following actions shall be commenced within 6 years after the cause of action accrues or be barred:
(a) An action upon a liability created by statute when a different limitation is not prescribed by law.

BACKGROUND

¶ 5. The dental procedure giving rise to the disciplinary proceedings in this case was performed on a fifteen-year-old patient, Michael Mosher, in 1994. On November 29,1996, Mosher's mother filed a complaint with the Department of Regulation and Licensing stating concerns regarding a root canal that Krahen-buhl had performed on her son. On September 27, 2000, the Division of Enforcement filed, on behalf of the DEB, a complaint against Krahenbuhl alleging the following: On July 5 and 11, 1994, Krahenbuhl performed root canal therapy on Mosher's tooth 18. On April 29, 1996, Mosher visited a subsequent treating dentist, John LeMaster, with complaints of pain localized to tooth 18. The complaint alleged that x-rays taken by LeMaster showed inadequate filling of the distal canal of tooth 18, decay of the tooth at the top of the distal canal, and extension of the filling placed in the canal by more than five millimeters past the end of the distal root.

¶ 6. During the course of the investigation, Kra-henbuhl provided the DEB with x-rays, which he represented were taken on July 5 and 11,1994. The Division's complaint alleges that the x-ray represented to have been taken on July 11, 1994, following Krahenbuhl's filling of Mosher's root canal, could not have been taken on that date because it depicted a radio-opaque area at the top of the tooth which is of an irregular shape and approximately twice as large as the radio-opaque area on the July 5, 1994 x-ray. The x-ray taken by LeMaster on April 29, 1996, depicts a radio-opaque area at the top of the tooth which is of the same size as that depicted in the July 5, 1994 x-ray. LeMaster's x-ray also depicted an overfill of the distal canal of Mosher's tooth 18. Therefore, the Division's complaint alleged that Krahenbuhl falsely represented that an x-ray was taken post-treatment on July 11, 1994, and reflected a permanent crown installed between July 5 and 11, 1994.

¶ 7. The Division alleged that a minimally competent dentist will take a post-treatment x-ray of endo-dontic treatment "to check that the canals are .. . not overfilled through the apical end of the tooth" and that a minimally competent dentist who sees that endodontic treatment has overfilled a canal will take immediate steps to rectify the overfill. Failure to correct an overfill presents an unacceptable risk to the patient of infection, pain and loss of the tooth.

¶ 8. Krahenbuhl filed an answer to the Division's complaint on October 16, 2000, and followed with a motion on February 20, 2001, seeking to dismiss the complaint as barred by the six-year statute of limitations set forth in Wis. Stat. § 893.93(l)(a). The Division opposed Krahenbuhl's motion. The Administrative Law Judge (ALJ), William Black, denied Krahenbuhl's motion on March 15, 2001, stating that Krahenbuhl "failed to present a sufficient basis in either the law or the facts . . . upon which to base a dismissal of the present complaint on the legal theory of laches or any applicable statute of limitations."

¶ 9. A contested hearing was held before ALJ Black on April 12, 2001. The Division presented the videotaped testimony of Mosher and his mother and the in-person testimony of an expert, John Sadowski, D.D.S. Krahenbuhl presented his own testimony and the affidavits of his expert, Terry Kippa, D.D.S. In addition, both parties utilized the documentary evidence of Mosher's records and x-rays.

¶ 10. On November 20, 2001, ALJ Black filed a proposed decision with the Department of Regulation and Licensing recommending that the DEB's complaint he dismissed. ALJ Black found that the State had failed to prove by a preponderance of the evidence that Krahenbuhl had violated Wis. Stat. § 447.07(3)(a) and (h) or Wis. Admin. Code § DE 5.02(5). The ALJ also found that the Division's witness, Sadowski, was not qualified to testify as an expert witness. On December 6, 2001, the Division filed a motion to remand the matter to ALJ Black for additional findings of fact. Krahenbuhl opposed the Division's motion.

¶ 11. On May 2, 2002, the DEB issued its final decision and order without remanding the matter to the ALJ. The DEB's decision was contrary to the ALJ's recommendation and found that Krahenbuhl had violated Wis. Stat. § 447.07(3)(a) and (h) and Wis. Admin. Code § DE 5.02(5). The DEB held that Krahenbuhl had substantially departed from the standard of care ordinarily exercised by a dentist. The DEB suspended Krahenbuhl's license for six months, prohibited Kra-henbuhl from performing endodontic procedures, and directed that Krahenbuhl's patient records be monitored for a period of not less than two years.

¶ 12. Krahenbuhl filed a petition for judicial review of the DEB's decision. On October 27, 2002, the circuit court ordered the matter remanded to the DEB, ruling that the DEB had failed to first consult with the ALJ before issuing its decision rejecting the ALJ's recommendation. The DEB complied and, after consulting the ALJ, issued a further Final Decision and Order on December 6, 2002, again finding that Krahenbuhl had engaged in unprofessional conduct. The DEB again suspended Krahenbuhl's license for six months and imposed other conditions on Krahenbuhl's practice.

¶ 13. On December 20, 2002, Krahenbuhl filed another petition for judicial review of the DEB's latest decision. Krahenbuhl argued, among other things, that (1) the statute of limitations in Wis. Stat. § 893.93(1) (a) barred the DEB's complaint, (2) the DEB's decision improperly placed the burden of proof on Krahenbuhl and (3) the DEB's decision was not based on substantial evidence. Krahenbuhl's petition requested a stay of the DEB's order and dismissal of the underlying complaint.

¶ 14. Following briefing by the parties, the circuit court issued an oral decision on September 23, 2003, rejecting Krahenbuhl's challenges and denying his request for a stay. The court entered a written order reflecting its decision on October 13, 2003. Krahenbuhl appeals.

DISCUSSION

Standard of Review

¶ 15. "In an appeal involving an administrative agency's decision, this court reviews the decision of the administrative agency, not that of the circuit court." Painter v. Dentistry Examining Bd., 2003 WI App 123, ¶ 8, 265 Wis. 2d 248, 665 N.W.2d 397 (citation omitted). An agency's factual findings will be upheld on appeal if supported by substantial evidence. Jicha v. DILHR, 169 Wis. 2d 284, 290, 485 N.W.2d 256 (1992); Wis. Stat. § 227.57(6).

¶ 16. We will not reverse an administrative decision even if it is against the great weight and clear preponderance of the evidence where there is substantial evidence to sustain it. Vill. of Menomonee Falls v. DNR, 140 Wis. 2d 579, 594, 412 N.W.2d 505 (Ct. App. 1987). Substantial evidence, for the purpose of reviewing an administrative decision, is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Id.

¶ 17. With respect to our review of the DEB's conclusion of law, the supreme court recently set forth the levels of deference to be afforded on review. Brown v. LIRC, 2003 WI 142, ¶¶ 13-16, 267 Wis. 2d 31, 671 N.W.2d 279.

Over time, we have developed a three-level approach to an agency's conclusions of law: a court gives an agency's conclusion of law no deference (the court makes a de novo determination of the question of law); a court gives an agency's conclusion of law due weight deference; or a court gives an agency's conclusion of law great weight deference. The appropriate level of scrutiny a court should use in reviewing an agency's decision on questions of law depends on the comparative institutional capabilities and qualifications of the court and the agency to make a legal determination on a particular issue.
No deference is due an agency's conclusion of law when an issue before the agency is one of first impression or when an agency's position on an issue provides no real guidance. When no deference is given to an administrative agency, a court engages in its own independent determination of the questions of law presented, benefiting from the analyses of the agency and the courts that have reviewed the agency action.
Due weight deference is appropriate when an agency has some experience in the area but has not developed the expertise that necessarily places it in a better position than a court to interpret and apply a statute. Under the due weight deference standard "a court need not defer to an agency's interpretation which, while reasonable, is not the interpretation which the court considers best and most reasonable."
Great weight deference is appropriate when: (1) an agency is charged with administration of the particular statute at issue; (2) its interpretation is one of long standing; (3) it employed its expertise or specialized knowledge in arriving at its interpretation; and (4) its interpretation will provide uniformity and consistency in the application of the statute. In other words, when a legal question calls for value and policy judgments that require the expertise and experience of an agency, the agency's decision, although not controlling, is given great weight deference.

Id. (footnotes omitted).

¶ 18. The parties dispute the level of deference to be afforded the DEB's conclusions of law in this case. Krahenbuhl contends that de novo review is appropriate because the issues presented on appeal — whether the statute of limitations applies and whether the DEB acted as its own expert and shifted its burden to Krahenbuhl — present questions of law which are within this court's area of expertise. The DEB contends that its conclusions of law are entitled to great weight deference because it has been charged with administering the licensing requirements for dentists under Wis. Stat. § 447.07 and has long maintained that its authority to regulate licensure is not subject to a statute of limitations.

¶ 19. We conclude that de novo review is appropriate as to the statute of limitations question. The statutory construction and application of Wis. Stat. § 893.93(l)(a) to a licensing disciplinary proceeding presents a question of law that the DEB has no special expertise in addressing. However, Krahenbuhl's remaining challenges, while framed as due process claims, travel to the evidence presented to the DEB and, therefore, are subject to the substantial evidence standard.

Statute of Limitations

¶ 20. The statute of limitations at issue in this case is set out in Wis. Stat. § 893.93(l)(a). It states:

Miscellaneous actions. (1) The following actions shall be commenced within 6 years after the cause of action accrues or be barred:
(a) An action upon a liability created by statute when a different limitation is not prescribed by law.

¶ 21. Krahenbuhl contends that an action brought by a professional licensing board is an "action upon a liability created by statute" under this statute. Krahenbuhl argues that "liability" is a broad term, which includes his responsibilities, obligations and duties under the administrative code regulations. As we have noted, whether Wis. Stat. § 893.93(1)(a) applies to the disciplinary proceeding in this case presents a question of law which we review de novo.

¶ 22. The DEB contends that its enforcement of the regulations governing Krahenbuhl, a licensee of the State, does not arise from a liability created by statute. In support, the DEB cites to Kenosha County v. Town of Paris, 148 Wis. 2d 175, 434 N.W.2d 801 (Ct. App. 1988), for the proposition that the courts have consistently given a narrow construction to Wis. Stat. § 893.93(1)(a). In Kenosha County, the court of appeals held that the term "liability" did not apply in an action seeking to void a town zoning ordinance that was enacted without county approval. Kenosha County, 148 Wis. 2d at 178, 187. The town argued that the "liability" was the statutory duty of the town to seek county approval of its ordinance. Id. at 187. The court of appeals held:

We have examined the type of cases to which sec. 893.93(l)(a), Stats., has been applied, and we conclude that this is not such a case. Section 60.74, Stats. (1967), establishes prerequisites for the validity of a town zoning ordinance, but it does not hold the town "liable" for a violation thereof. There is no "liability" created by sec. 60.74 which would require that an action to determine an ordinance's validity be commenced within six years pursuant to sec. 893.93(l)(a).

Kenosha County, 148 Wis. 2d at 187.

¶ 23. Here, while the DEB's action and sanctions against Krahenbuhl have a "liability" ring, it is the protection of the public, rather than the imposition of penalty or punishment, that lies at the core of the DEB's disciplinary proceeding against Krahenbuhl. See State v. MacIntyre, 41 Wis. 2d 481, 484, 164 N.W.2d 235 (1969) (addressing the primary purpose of attorney licensing/disbarment proceedings). It is well established that the objectives of professional discipline include the rehabilitation of the licensee, the protection of the public, and deterrence to other licensees from engaging in similar conduct. Galang v. State Med. Examining Bd., 168 Wis. 2d 695, 700, 484 N.W.2d 375 (Ct. App. 1992).

¶ 24. In State v. Josefsherg, 275 Wis. 142, 150, 81 N.W.2d 735 (1957), the supreme court held that the statute of limitations did not apply to the state's action to revoke and annul a license to practice medicine issued to the defendant by the Wisconsin state board of medical examiners. The defendant's license was issued in 1927 and the state's action was not brought until 1953. Id. at 142, 144. The state alleged that the defendant had fraudulently obtained his license. Id. at 144-45.

¶ 25. In rejecting the application of the statute of limitations, the Josefsherg court cited to its earlier decision in State v. Schaeffer, 129 Wis. 459, 109 N.W. 522 (1906), which also involved a license revocation. See Josefsberg, 275 Wis. at 148-49. In Schaeffer, the court held that a license revocation was "not an action to enforce a penalty or forfeiture, but a civil action to set aside a certificate of registration" and, therefore, the action was not barred by any statute of limitation. Josefsberg, 275 Wis. at 149. Noting that "[t]here is no special provision in the statutes barring actions of this nature within any prescribed time," the Josefsberg court stated, "We are aware of no valid reason for departing from the principle enunciated in State v. Schaeffer to the effect that the general statutes of limitation do not apply to actions brought for the revocation of a physician's license procured through fraud." Josefsberg, 275 Wis. at 150.

¶ 26. Krahenbuhl contends that Josefsberg does not apply in this case because Josefsberg involved a continuing violation — the continuing use of a license obtained by fraud — whereas Krahenbuhl's case involves a singular, capsulized event concerning his treatment of Mosher. Krahenbuhl argues that while a license revocation is not an action to enforce a penalty or forfeiture, the instant DEB action is exactly that, and therefore the general statute of limitations applies.

¶ 27. We reject Krahenbuhl's attempt to distinguish Josefsberg. As in a license revocation proceeding, the DEB's proceeding in this case focused on the qualifications of a licensee and the responsibility of the DEB to assure that the public is protected from persons who may be providing improper or inadequate treatment. This is true whether the DEB has improperly licensed that person in the first instance or whether a properly licensed person is performing in a manner which substantially departs from the ordinary standard of care. As the court observed in Strigenz v. Department of Regulation and Licensing, 103 Wis. 2d 281, 287, 307 N.W.2d 664 (1981):

The state has created the Dentistry Examining Board and the provisions of ch. 447, Stats., to assure the public that only competent persons will practice dentistry. When the professional license is issued to a dentist, the state assures the public of the competence of that person. As long as that person holds the dentistry license, the state of Wisconsin continues to assure the public of his or her competence as a dentist. The state does not rank nor rate the competence of the dentist but at the very least, the state does assure the public that the licensed dentist is competent to perform at a minimal standard as determined by others in the profession. (Emphasis added.)

¶ 28. Krahenbuhl additionally argues that the public interest reasoning relied on by the Josefsberg line of cases has effectively been overruled by State v. Holland Plastics Co., 111 Wis. 2d 497, 331 N.W.2d 320 (1983), and State v. Chrysler Outboard Corp., 219 Wis. 2d 130, 580 N.W.2d 203 (1998). In both Holland and Chrysler, the supreme court concluded that the state's actions were subject to statutes of limitations. Holland, 111 Wis. 2d at 504 (applying a six-year statute of limitations to the state's action against Holland for negligent construction of a University of Wisconsin building); Chrysler, 219 Wis. 2d at 145 (applying a general ten-year statute of limitations to the state's action to collect penalties for violations of the Spills law).

¶ 29. We reject Krahenbuhl's reliance on Holland and Chrysler for two reasons. First, neither case concerned Wis. Stat. § 893.93(l)(a), the statute at issue in this case. Thus, neither case had occasion to expressly discuss the "action upon a liability created by statute" language that lies at the crux of this case.

¶ 30. Second, even allowing that the defendants' liability in Holland and Chrysler is the "liability" contemplated by Wis. Stat. § 893.93(l)(a), we see a marked difference between an original circuit court proceeding that seeks damages flowing from a breach of contract (Holland) or fines for environmental violations 0Chrysler) on the one hand and an administrative proceeding which supervises and regulates licensees on the other. The Josef sberg line of cases expressly recognize that a state action against a licensee is not principally about damages, penalties or forfeitures but rather is about the protection of the public. See also Doersching v. Funeral Dirs. & Embalmers Examining Bd., 138 Wis. 2d 312, 328, 405 N.W.2d 781 (Ct. App. 1987) ("The state's purpose in licensing professionals is to protect its citizens. Strigenz, 103 Wis. 2d at 286, 307 N.W.2d at 667. License revocation is the ultimate means of protecting the public short of fining or imprisonment.").

¶ 31. We conclude that Wis. Stat. § 893.93(l)(a) does not apply to disciplinary proceedings, the core purpose of which is not to punish the provider but to protect the public and to ensure the performance of licensees meets the accepted standard of care. We therefore conclude that the DEB's disciplinary proceeding against Krahenbuhl is not time-barred.

Due Process Challenge!Substantial Evidence

¶ 32. Krahenbuhl next raises a due process challenge, claiming that the DEB acted as its own expert contrary to Gilbert v. State Medical Examining Board, 119 Wis. 2d 168, 349 N.W.2d 68 (1984), and that the DEB improperly shifted the burden of proof to him. Because this proceeding affects Krahenbuhl's license, which is necessary to engage in his profession, Krahen-buhl is entitled to the procedural protections of the due process clause. See Stein v. State Psychology Examining Bd., 2003 WI App 147, ¶ 16, 265 Wis. 2d 781, 668 N.W.2d 112, review denied, 2003 WI 126, 265 Wis. 2d 419, 668 N.W.2d 559 (Wis. Aug. 13, 2003) (No. 02-2726). However, Krahenbuhl's challenges, while couched in terms of due process, are essentially challenges to the sufficiency of the evidence to support the DEB's findings and conclusions of law and we treat them as such.

¶ 33. Turning first to Krahenbuhl's contention that the DEB acted as its own expert, we observe Gilbert's holding that a board "cannot rely on the expert knowledge of its members to make such inferences from inconclusive testimony. Its actions must be based only upon the record before it. The Board may not substitute its knowledge for evidence which is lacking." Gilbert, 119 Wis. 2d at 205.

¶ 34. In its decision, the DEB found that Krahen-buhl had overfilled the distal canal of Mosher's tooth 18. The DEB concluded that by failing to properly perform the root canal therapy on Mosher and by failing to properly address the complications of that root canal treatment, Krahenbuhl engaged in conduct warranting disciplinary action. In making these findings, the DEB relied on the evidence, not on the contribution of its own expertise de hors the record.

¶ 35. Krahenbuhl contends that the DEB acted as its own expert witness in the finding that he misrepresented the x-ray of Mosher's tooth 18 as taken following the endodontic procedure on July 11,1994. Krahenbuhl argues that the Division's expert, Sadowski, had retreated from his position that the July 11, 1994 x-ray did not depict Mosher's tooth 18 following the root canal procedure. From this, Krahenbuhl reasons that there was no other testimony to support the DEB's finding on this matter. However, the DEB did not view the sequencing of the x-rays as a critical issue. Rather, it stated:

For the purpose of this matter, it is not necessary for the Board to determine the date when the x-ray .. . was taken or the specific treatment or sequence of treatment provided by [Krahenbuhl] in September 1993 and July 1994. [Krahenbuhl’s] violations relate to the facts that he overfilled the distal root canal of Tooth #18 ... and did not take a post treatment x-ray, or if one was taken, did not utilize it to rectify the overfill.

Moreover, the DEB's decision addresses Krahenbuhl's concerns regarding Sadowski's testimony in its decision and states that its finding as to the sequence of the x-rays is based on other testimony from Sadowski, the affidavit of Kippa who was Krahenbuhl's expert, the opinion of the ALJ, Mosher's patient records, and the billing and insurance records.

¶ 36. While Krahenbuhl additionally challenges the DEB's use of billing records, the fact remains that there is substantial evidence, meaning such relevant evidence that a reasonable mind might accept as adequate, to support the DEB's conclusion that the July 11,1994 x-ray was not taken on that date. The affidavit of Krahenbuhl's expert, Kippa, stated that the x-rays labeled July 5 and July 11 appeared to be in reverse chronological order and that the crown depicted in the July 5, 1994 x-ray is the same crown depicted in LeMaster's April 29,1996 x-ray. However, that crown is not depicted in the July 11, 1994 x-ray.

¶ 37. We conclude that there is substantial evidence to sustain the DEB's decision. While Krahenbuhl correctly argues that there is also evidence in the record that might support a contrary finding, we will not reverse an administrative decision even if it is against the great weight and clear preponderance of the evidence where there is relevant evidence which a reasonable mind might accept as adequate to support a conclusion. Vill. of Menomonee Falls, 140 Wis. 2d at 594. We are satisfied that such evidence exists in this case and that the DEB did not act as its own expert in reaching its decision.

¶ 38. Krahenbuhl next argues that the DEB shifted its burden of proof to him. Specifically, Krahen-buhl argues that the DEB based its decision on the premise that it was Krahenbuhl's duty to prove that something else caused the apparent overfill of Mosher's tooth. Again, Krahenbuhl's argument essentially boils down to an evidentiary challenge.

¶ 39. First, Krahenbuhl argues that the Division failed to prove that the x-ray was not taken on July 11, 1994, despite the ALJ's finding that the x-ray jacket dated July 11,1994, provided unrebutted evidence that the x-ray was taken on that date. As discussed above, there was evidence that supported the DEB's finding that the x-ray was out of sequence regardless of the notation on its jacket. Moreover, the crux of the DEB concern regarding this x-ray was not when it was taken, but rather whether it correctly represented the post-treatment condition of Mosher's tooth 18. Hence, the DEB's observation that "it is not necessary for the Board to determine the date when the x-ray.. . was taken or the specific treatment or sequence of treatment provided by [Krahenbuhl]." Rather, the DEB saw this information as bearing on: (1) whether the x-ray conveyed false information, and (2) the adequacy of Krahenbuhl's record keeping procedures.

¶ 40. Krahenbuhl also argues that the Division failed to show how Krahenbuhl found that Mosher had wet root canals on July 5,1994, if the root canal filling was already in place, or how the "overfill" caused the condition of Mosher's tooth as it was found on April 29, 1996, when there were other possible causes such as decay due to patient neglect or intervening treatment. Again, Krahenbuhl overlooks certain of the evidence that was presented to the DEB. Both Mosher and his mother testified that Mosher had not received any treatment other than that provided by Krahenbuhl and the later treatment by LeMaster. The Division was not required to scour the innumerable other potential sources of treatment when Mosher and his mother — the two persons with firsthand knowledge on the topic— unequivocally stated that no such other treatment occurred.

¶ 41. Further, the DEB's focus was on the question of whether Krahenbuhl had overfilled Mosher's tooth and there was substantial evidence presented at the hearing that he had. The DEB relied on LeMaster's records, the affidavit of Kippa and the testimony of Sadowski in concluding that Mosher's tooth 18 had been overfilled. This, coupled with testimony that Mosher had not received any intervening treatment, that resorption would not have caused such an extreme overfull, and that routine dental neglect would not cause the extension of gutta percha into the jawbone provided the DEB with a solid basis to conclude that Krahenbuhl was responsible for the overfill.

¶ 42. Finally, although the DEB did not expressly state that Krahenbuhl was not a credible witness, certain of its statements indicate that concern. The DEB rejected Krahenbuhl's several explanations for the overfill. The DEB rejected Krahenbuhl's explanation for his placement of a permanent crown as "farfetched." The DEB represented Krahenbuhl's explanations as "contrary to logic." Finally, the DEB noted Krahenbuhl's prior criminal conviction for false representation as suggesting a pattern of misrepresentation in his practice.

CONCLUSION

¶ 43. We conclude that Wis. Stat. § 893.93(l)(a) does not apply to disciplinary proceedings, the core purpose of which is not to punish the provider but to protect the public and to ensure the performance of licensees meets the accepted standard of care. We therefore conclude that the DEB's disciplinary proceeding against Krahenbuhl is not time-barred. We further reject Krahenbuhl's due process arguments and conclude that the DEB's decision is supported by substantial evidence. We affirm the circuit court's order upholding the DEB's decision.

By the Court. — Order affirmed.

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

       Krahenbuhl additionally argued that the action was barred under the doctrine of laches and the Medical Practice Act, Wis. Stat. § 448.02. Krahenbuhl does not renew these arguments on appeal.

       WISCONSIN Stat. § 227.57(6) provides:
      If the agency's action depends on any fact found by the agency in a contested case proceeding, the court shall not substitute its judgment for that of the agency as to the weight of the evidence on any disputed finding of fact. The court shall, however, set aside agency action or remand the case to the agency if it finds that the agency's action depends on any finding of fact that is not supported by substantial evidence in the record.


source: Caselaw Access Project

author: DEININGER, EJ.

license: Public Domain

text:
    Piaskoski & Associates, Plaintiff-Respondent-Cross-Appellant, v. Carl L. Ricciardi, Defendant-Appellant-Cross-Respondent.

    Court of Appeals

      No. 03-0009.

      Submitted on briefs December 5, 2003.

    Decided July 1, 2004.

    2004 WI App 152
    (Also reported in 686 N.W.2d 675.)

      On behalf of the defendant-appellant-cross-respondent, the cause was submitted on the briefs of Russell T. Golla of Anderson, O'Brien, Bertz, Skrenes & Golla, Stevens Point.

      On behalf of the plaintiff-respondent-cross-appellant, the cause was submitted on the brief of Michael J. Ganzer and Joseph T Ganzer of Hodan, Dosier & Ganzer, S.C., Milwaukee.
    • Before Deininger, EJ., Lundsten and Higginbotham, JJ.

       Petition to review denied 9-16-04.

   DEININGER, EJ.

¶ 1. Carl Ricciardi appeals a judgment entered after the trial court granted summary judgment to his former law firm, Fiaskoski & Associates. The trial court concluded that Ricciardi and the firm had entered into a valid contract to equally divide attorney fees received in certain cases Ricciardi took with him when he left employment with the Fiaskoski firm. Ricciardi claims the trial court erred in determining that an enforceable contract existed and in failing to declare the contract void on public policy grounds because it violated SCR 20:1.5(e) (2001-02). The law firm cross-appeals, citing as error the trial court's denial of its request for leave to amend its complaint and the court's refusal to award the firm attorney fees it incurred in pursuing this litigation. We affirm on both the appeal and cross-appeal.

BACKGROUND

¶ 2. The Fiaskoski firm hired Ricciardi as an associate and encouraged him to concentrate on building the firm's personal injury practice. From February 1995 until May 1996, Ricciardi handled a number of personal injury cases for the Piaskoski firm as its employee. Ricciardi voluntarily terminated his employment with the firm on or about May 7, 1996.

¶ 3. A number of Ricciardi's personal injury clients elected to continue representation with him after he left the firm and, consequently, Paul Piaskoski and Ricciardi entéred into discussions on how to divide any contingency fees received by Ricciardi on these cases. On May 23rd, Ricciardi sent Piaskoski a letter identifying eighteen clients who had chosen to remain with Ricciardi upon his leaving the firm, and who had signed contingency fee agreements. On May 28th, Paul Pias-koski and Ricciardi met in person to discuss the fees of clients who were departing the firm with Ricciardi. Three days later, on May 31st, Ricciardi followed up with a letter in which he stated: "This letter will serve to confirm our agreement reached at our meeting .... Essentially, we agreed as follows: With respect to all future fees on the personal injury files identified in my letter of 5/23/96 with the exception of [named client], will be divided on a 50/50 basis plus any outstanding fees or disbursements."

¶ 4. The Piaskoski firm did not respond to the May 31st letter, but the parties thereafter equally divided the fees obtained in resolving the cases of at least nine of the eighteen clients identified in Ricciardi's May 23rd letter. One of the remaining cases, that of Daniel Knack, settled for some $780,000, generating a contingency fee of $227,542.29. The firm demanded one-half of the Knack fee inasmuch as Knack was among the clients identified in the May 23rd letter whose contingency fees were to be divided equally between the parties. Ricciardi refused to pay, however, asserting that there was no binding agreement between himself and the firm with regard to a fee division in the Knack case, or any other case. Ricciardi maintained that his practice of sharing fees with the Piaskoski firm had been entirely voluntary and done out of respect for the fact that his and Piaskoski's families had a longstanding friendship. Ricciardi also contended that the fees in the other cases had been apportioned to reflect the amount of time Ricciardi had worked on them while still in the Piaskoski firm's employ. In Ricciardi's view, because he spent very little time advancing the Knack case while working for the firm, it was not entitled to any of the Knack fee.

¶ 5. The law firm sued Ricciardi for one-half of the Knack fee. The trial court granted summary judgment to the plaintiff law firm, concluding that the parties had entered into a binding agreement to equally split any contingency fee obtained in certain cases, including Knack's. The trial court ordered that the Piaskoski firm receive one-half of the fee generated in the Knack case and it entered judgment against Riccia-rdi for prejudgment interest and statutory costs. Ric-ciardi appeals the judgment against him claiming as error the trial court's grant of summary judgment to the firm for one-half of the Knack fee. The trial court also concluded that the "American Rule" prohibits an award of actual attorney fees to a prevailing party absent express statutory or contractual authorization, or a finding of frivolousness, and it thus denied the firm's request for its actual attorney fees in bringing this action. Finally, the trial court denied the firm's request to amend its complaint to add additional cases for which it claimed entitlement to one-half of any fees obtained by Ricciardi. The Piaskoski firm cross-appeals the denial of its requests for actual attorney fees and for leave to amend its complaint.

ANALYSIS

¶ 6. We review an order for summary judgment de novo, applying the same standards as the trial court. See Voss v. City of Middleton, 162 Wis. 2d 737, 748, 470 N.W.2d 625 (1991). Summary judgment is proper when the pleadings, answers, admissions and affidavits show no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Maynard v. Port Publ'ns, Inc., 98 Wis. 2d 555, 558, 297 N.W.2d 500 (1980). We will reverse a decision granting summary judgment if the trial court incorrectly decided legal issues or if material facts are in dispute. See Coopman v. State Farm Fire & Cas. Co., 179 Wis. 2d 548, 555, 508 N.W.2d 610 (Ct. App. 1993). Even if certain facts are in dispute, the dispute will not prevent the granting of summary judgment if the facts at issue are "not material to the legal issue on which summary judgment is sought." Tackes v. Milwaukee Carpenters Health Fund, 164 Wis. 2d 707, 711, 476 N.W.2d 311 (Ct. App. 1991).

I.

¶ 7. A valid contract requires an offer, acceptance and consideration. Briggs v. Miller, 176 Wis. 321, 325, 186 N.W.2d 163 (1922). Offer and acceptance exist when the parties mutually express assent, and consideration exists if the parties manifest an intent to be bound to the contract. Gustafson v. Physicians Ins. Co., 223 Wis. 2d 164, 173, 588 N.W.2d 363 (Ct. App. 1998). Whether the parties assented and exchanged consideration are factual questions, not legal questions. See NBZ, Inc. v. Pilarski, 185 Wis. 2d 827, 838, 520 N.W.2d 93 (Ct. App. 1994); Hoeft v. U.S. Fire Ins. Co., 153 Wis. 2d 135, 144, 450 N.W.2d 459 (Ct. App. 1989). Generally, therefore, we will uphold a trial court's findings on these matters unless its findings are "clearly erroneous." Wis. Stat. § 805.17(2). Where the material facts are undisputed, however, as they must be for summary judgment to be properly granted, the existence and interpretation of a contract becomes a question of law which we decide de novo. Gustafson, 223 Wis. 2d at 172-73.

¶ 8. The trial court concluded that Ricciardi made an offer in his letter of May 23rd to resolve the issue of contingency fees received in cases where Ricciardi succeeded to the representation of former clients of the firm, as identified in the letter, Mr. Knack among them. The court decided that Ricciardi's offer was accepted by the firm in a meeting between Ricciardi and Paul Piaskoski held on May 28th, as evidenced by Ricciardi's May 31st letter confirming "our agreement reached at our meeting on 5/28/96" to divide "on a 50/50 basis," with one exception not relevant here, "all future fees on the personal injury files identified in my letter of 5/23/96." The trial court further concluded that the consideration for the parties' "clear and unambiguous" agreement was also "apparent from the May 31 document," in that "[b]oth sides compromised their respective claims for more than 50 percent of the fees in this fee dispute."

¶ 9. Ricciardi asserts, however, that the May 31st letter constituted his offer, and that the firm's failure to respond to that letter creates a material factual dispute as to whether there was a mutual assent to the terms of the letter. Ricciardi relies on Phillips Petroleum Co. v. Taggart, 271 Wis. 261, 73 N.W.2d 482 (1955), to support his argument that this letter was no more than an unaccepted offer, and that the firm cannot withhold communication of its acceptance of the written offer and later treat it as a contract. Although the supreme court cited this general rule in Phillips, the court's ultimate conclusion was that, despite the fact that an acceptance was never communicated to the offering party, the offering party was still bound to its offer where both parties engaged in subsequent conduct evidencing knowledge and acceptance of the terms of the contract. Id. at 273-75. Thus, the holding in Phillips actually supports the firm's position, given that, in the years following the May 31st letter, Ricciardi sent the Piaskoski firm one-half of the fees in the cases of at least nine of the eighteen clients listed in the May 23rd letter, which the firm accepted without demanding a larger portion of the fees in those cases.

¶ 10. In any event, we conclude that the record supports the firm's assertion, and the trial court's conclusion, that there is no dispute that a binding agreement was reached at the meeting between Riccia-rdi and Paul Piaskoski on May 28th, and that Ricciardi's letter three days later simply memorialized the agreement that was reached. We agree with the trial court that that is exactly what Ricciardi plainly and unambiguously said in his May 31st letter, and the lack of ambiguity in the language chosen precludes a belated attempt to recharacterize what had occurred.

¶ 11. Moreover, we note that Paul Piaskoski averred in an affidavit supporting the firm's motion for summary judgment that he and Ricciardi "reached a verbal agreement on 5/28/96 for the division of fees on the list of outstanding cases appearing [in the May 23rd letter]. In the ensuing give-and-take negotiations, [Ric-ciardi] and I agreed that all fees were to be split on a 50/50 basis including the [Knack] case." In his opposing affidavit, Ricciardi states that he "did not enter into any written agreement with the Piaskoski firm regarding the distribution of fees"; that "[f]rom the time I told Mr. Piaskoski what I would do regarding the division of fees, I never entered into any oral agreement on an annual or other basis pertaining to fee division"; and that "[t]here were no fee discussions with the Piaskoski firm until after I had terminated my employment in May of 1996." (Emphasis added.) These averments do not directly dispute that a verbal agreement was reached on May 28th that called for a fifty-fifty division of fees but did not require an annual or other periodic accounting of fees received.

¶ 12. Ricciardi next argues that, even if we conclude there is no basis in the record for him to dispute that the parties formed a valid, oral contract at the May 28th meeting, its terms were rendered ambiguous by the letters of May 23rd and 31st. Whether a contract is ambiguous presents a question of law, which we decide independently of the trial court. Wausau Underwriters Ins. Co. v. Dane County, 142 Wis. 2d 315, 322, 417 N.W.2d 914 (Ct. App. 1987). A contract is ambiguous if its terms are susceptible to more than one reasonable interpretation. Wilke v. First Fed. Sav. & Loan Ass'n, 108 Wis. 2d 650, 654, 323 N.W.2d 179 (Ct. App. 1982). When the terms of a contract are unambiguous, we will construe the contract as it stands without examining extrinsic evidence to determine the intent of the parties. Rosplock v. Rosplock, 217 Wis. 2d 22, 31, 577 N.W.2d 32 (Ct. App. 1998).

¶ 13. In his May 23rd letter, Ricciardi wrote this:

Enclosed please find executed documentation from clients requesting that I continue to handle their pending legal matters. These individuals have signed contingency fee agreements. They are as follows:
[List of names, including Knack, labeled "a." through "r."]
The files that I was working on with Wendy were hers. Since I am no longer with the firm those clients will remain with Wendy. If these cases are successfully resolved, I have no problem with apportioning the fees in a reasonable manner to compensate you for the time I spent on these files. That is subject that you and I can address.
With respect to the contingent fee cases, I suggest that we do it as we did before — that we split the fees 50/50 plus costs and disbursements.

(Emphasis added.)

¶ 14. , Ricciardi argues that the phrase "these cases" is ambiguous because it might refer either to the list of contingent fee cases identified in the paragraph preceding it, or to the cases that "Wendy" is working on. He suggests that further ambiguity is created when read in conjunction with the May 31st letter, which refers to different fee division arrangements for certain clients, and includes an assertion that, in at least one case, Ricciardi was "not inclined" to share his expected fee with the Piaskoski firm but "would be willing to happily reimburse you for the time spent on the file while I was in your office."

¶ 15. We conclude that the language of the May 23rd letter is not ambiguous and is not made so by the May 31st letter. The clients listed following the first paragraph of Ricciardi's May 23rd letter are identified as "individuals [who] have signed contingency fee agreements." (Emphasis added.) The sentence later in the letter in which Ricciardi proposes to "split the fees 50/50" begins with the phrase "[w]ith respect to the contingent fee cases" (emphasis added), a clear reference to the previously listed clients. The intervening paragraph dealing with "Wendy's" cases can be read in no other way than as serving to distinguish between the clients identified in the list and "those clients [that] will remain with Wendy." The reference in the next sentence to "these cases," which Ricciardi asserts creates ambiguity, does not. "[T]hese cases" unambiguously refers to the clients that "will remain with Wendy," a different group of clients for whom Ricciardi proposes a different resolution of fee issues.

¶ 16. The May 31st letter injects no ambiguity, and, if anything, clarifies which clients will be governed by the parties' fifty-fifty fee sharing agreement. In this letter, Ricciardi confirms that only the "personal injury files identified in my letter of5123196 with the exception of [a client other than Knack who was included in the list], will be divided on a 50/50 basis." (Emphasis added.) Because the excepted client is on the list of clients with "signed contingency fee agreements," the May 31st letter makes it clear that the parties had agreed to a fifty-fifty sharing of fees for all of the remaining contingency fee clients shown on the list, including Knack. The fact that the May 31st letter specifies different arrangements for other clients thus creates no ambiguity with respect to what the parties had agreed to regarding Knack's fee.

¶ 17. In sum, we conclude that the materials submitted on summary judgment produce no genuine dispute regarding any material fact, or any ambiguity, in what the parties agreed to regarding the Knack contingency fee. The trial court correctly concluded that the submissions show, beyond dispute, that Ricciardi offered to share in Knack's fee equally with the Piaskoski firm, and that the offer was accepted at a meeting on May 28th, when both parties compromised any potential claims to more than one-half of Knack's fee, providing consideration for their contract to divide the fee equally.

I — I ( — I

¶ 18. Ricciardi next asserts that, even if we conclude that he and the Piaskoski firm contracted to divide Knack's fee equally between them, the fee-sharing contract is not enforceable because it violates public policy as expressed in SCR 20:1.5(e). The rule Ricciardi points to reads as follows:

A division of fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
(2) the client is advised of and does not object to the participation of all the lawyers involved and is informed if the fee will increase as a result of their involvement; and
(3) the total fee is reasonable.

SCR 20:1.5(e). The agreement between the firm and Ricciardi to divide Knack's fee equally does not appear to comply with requirement (1) under the rule, given that, upon Ricciardi's departure from the firm, he alone assumed responsibility for Knack's representation and there is no indication that the equal division was "in proportion to the services performed" by each party.

¶ 19. Ricciardi's public policy argument, however, raises a threshold question: Does SCR 20:1.5(e) apply to the fee-division agreement at issue? If it does not, the argument must fail because Ricciardi points to no other source of a public policy that the agreement allegedly violated. We conclude that SCR 20:1.5(e) does not apply to the agreement between Ricciardi and the Piaskoski firm to divide Knack's fee equally between them. This was not a fee division "between lawyers who are not in the same firm," but a division between lawyers who were in the same firm when Knack's representation began.

¶ 20. Ricciardi cites several cases from other jurisdictions where courts voided fee-sharing agreements that he claims were similar to this one as violative of public policy expressed in analogous rules governing attorney conduct. None of the cases Ricciardi relies on, however, involved fee-division agreements between a law firm and a departing associate. Moreover, in cases that are more analogous to this one, courts in other jurisdictions have concluded that fee-sharing agreements between a law firm and a departing lawyer do not violate any ethical prohibition against fee division between lawyers who are not "in the same firm." See, e.g., McCroskey, Feldman, Cochrane & Brock v. Waters, 494 N.W.2d 826, 828 (Mich. Ct. App. 1993); Tomar, Seliger, Simonoff, Adourian & O'Brien v. Snyder, 601 A.2d 1056, 1058-59 (Del. Super. Ct. 1990); Baron v. Mullinax, Wells, Mauzy & Baab, 623 S.W.2d 457, 461-62 (Tex. Ct. App. 1981).

¶ 21. The Piaskoski firm claims that Wisconsin precedent is in line with these latter decisions, citing our decision in Gull v. Van Epps, 185 Wis. 2d 609, 517 N.W.2d 531 (Ct. App. 1994). The firm asserts that Gull supports a conclusion that SCR 20:1.5(e) is inapplicable here because, at the time the fee-sharing agreement was reached, Ricciardi and the Piaskoski firm were resolving fee issues that arose from Ricciardi's future representation of clients who had been clients of the firm during Ricciardi's employment. Put another way, the firm maintains that, although Ricciardi terminated his employment with Piaskoski on or about May 7, 1996, he nevertheless remained "in" the Piaskoski firm for the purposes of SCR 20:1.5(e) until the issues regarding the division of fees for the firm's clients who became Ricciardi's clients were resolved.

¶ 22. We thus turn to Gull to see if it offers guidance in resolving the present dispute. We concluded in Gull that SCR 20:1.5(e) "does not apply to the division of fees in concluding the affairs of a partnership because, until that process is completed, the lawyers are in the same firm." Gull, 185 Wis. 2d at 616. Our conclusion in Gull was largely grounded in partnership law and, in particular, on the recognition that, under Wis. Stat. § 178.25(2), a partnership is not terminated upon dissolution, "but continues until the winding up of partnership affairs is completed." Id. Ricciardi thus contends, and we acknowledge, that Gull is not necessarily controlling on the present facts. We nonetheless conclude that our analysis in Gull is instructive and applicable here, even in the absence of a partnership and the inapplicability of partnership law to this dispute.

¶ 23. All facets of the relationship between Ricciardi and the Piaskoski firm did not end abruptly the instant Ricciardi gave notice on May 7, 1996, that he was terminating his employment. Discussion between the parties regarding the terms of Ricciardi's separation from the firm, as evidenced by the correspondence we have described, continued through the end of May. We conclude that, as long as the issue of how to apportion fees received in the future for clients whose representation began while Ricciardi was associated with the firm remained unresolved, the parties were, like the partners in Gull, lawyers "in the same firm" within the meaning of SCR 20:1.5(e). Thus, SCR 20:1.5(e) does not apply to the parties' May 28th agreement to divide Knack's fee equally between them.

¶ 24. Our conclusion that, under the analysis in Gull, SCR 20:1.5(e) should be deemed inapplicable to the present facts finds support in other provisions and comments contained in SCR ch. 20, as well as from the purpose, origins and historical development of SCR 20:1.5(e) as it presently reads. For example, the comment following SCR 20:1.10, where "firm" is defined for the "purposes of the Rules of Professional Conduct," notes that "[w]hether two or more lawyers constitute a firm . . . can depend on the specific facts .... Furthermore, it is relevant in doubtful cases to consider the underlying purpose of the rule that is involved. A group of lawyers could be regarded as a firm for purposes of [one rule but not another]." The rationale behind SCR 20:1.5(e) and similar rules has been identified as follows:

The traditional prohibition of fee-splitting among lawyers is justified primarily as preventing one lawyer from recommending another to a client on the basis of the referral fee that the recommended lawyer will pay, rather than the lawyer's qualifications. The prohibition has also been defended as preventing overcharging that may otherwise result when a client pays two lawyers and only one performs services. Beyond that, the prohibition reflects a general hostility to commercial methods of obtaining clients.

Restatement (Third) of the Law Governing Lawyers § 47 cmt. b (2000).

¶ 25. The agreed upon fifty-fifty division of Knack's fee in this case does not involve any of the ills the rule seeks to prevent. The Piaskoski firm did not refer Knack to Riceiardi because of Ricciardi's willingness to split Knack's fee. Rather, Knack simply followed his lawyer out of the firm with whom the lawyer had been practicing when the representation arose. Similarly, there is no indication that Knack's total fee was higher simply because of the agreement to divide it equally between Riceiardi and his former firm. According to Ricciardi's May 23rd letter, Knack and the other identified clients had already "signed contingency fee agreements," and nothing in the record suggests that the fee was revised upward after Riceiardi and the firm agreed to divide Knack's fee equally. In short, SCR 20:1.5(e) is intended to address problems that are simply not presented when formerly associated attorneys part company and reach agreements for dividing fees for pending matters that originated during their association.

¶ 26. As to the history of the present SCR 20.1.5(e), Wisconsin's supreme court rules governing the conduct of attorneys has generally followed the American Bar Association's (ABA) model rules and revisions to them. When the ABA adopted its Model Code of Professional Responsibility in 1969, the forerunner of the current ABA Model Rules of Professional Conduct, Wisconsin followed suit. See Code of Prof'l Responsibility, 43 Wis. 2d vii (1970). With regard to the division of fees, Wisconsin adopted the following disciplinary rule, which was identical to the ABA Model Code provision:

(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his or her law firm or law office, unless:
(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.
(2) The division is made in proportion to the services performed and responsibility assumed by each.
(3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client.
(B) This Disciplinary Rule does not prohibit payment to a former partner or associate pursuant to a separation or retirement agreement.

Code of Prof'l Responsibility DR 2-107, 43 Wis. 2d at xxix (emphasis added); see Model Code of Prof'l Responsibility DR 2-107 (1969).

¶ 27. In 1983, the ABA replaced its Model Code of Professional Responsibility with the Model Rules of Professional Conduct, and Wisconsin again followed suit by replacing the former Code of Professional Responsibility with the Rules of Professional Conduct for Attorneys, patterned after the new ABA Rules. See In re Amendment of Supreme Court Rules, 139 Wis. 2d xiii (1988). The new fee division restrictions in both ABA Model Rule 1.5(e) and its Wisconsin counterpart, SCR 20:1.5(e), no longer contained the express exclusion of former DR 2-107(B) for "payment to a former partner or associate pursuant to a separation or retirement agreement." See In re Amendment of Supreme Court Rules, 139 Wis. 2d at xxxiii; Committee Completes Review of ABA Rules of Conduct, Wis. Bar Bulletin 60, 63 (Nov. 1984).

¶ 28. We have found nothing in the explanatory notes or comments to the 1983 ABA Model Rules or Wisconsin's 1988 adoption of them that would indicate that the deletion of this exclusion was intended to make the fee division rule applicable to the division of fees for pending matters between law firms and departing attorneys. See Committee Completes Review of ABA Rules of Conduct, Wis. Bar Bulletin 60, 63 (Nov. 1984); Truman McNulty, The Code of Professional Responsibility in Wisconsin, Wis. Bar Bulletin 16, Feb. 1985; ABA, A Legislative History: The Development of the ABA Model Rules of Professional Conduct, 1982-1998, 38-42 (1999). Moreover, we note that, in 2002, the ABA added the following sentence as part of the official commentary to Model Rule 1.5: "Paragraph (e) does not prohibit or regulate division of fees to be received in the future for work done when lawyers were previously associated as a firm." ABA, The 2002 Changes to the ABA Model Rules of Professional Conduct 17 (2003). Although Wisconsin has not yet adopted this additional comment, we have no reason to believe that it does not accurately describe the intended scope of SCR 20:1.5(e).

HH HH HH

¶ 29. We next take up the Piaskoski firm's cross-appeal. The firm argues that the trial court erroneously exercised its discretion on two occasions: when it denied the Piaskoski firm's request to amend its complaint under Wis. Stat. § 802.09(1), and when it reversed on reconsideration an earlier decision to award the firm attorney fees incurred in this litigation. We affirm both rulings.

The law firm filed suit on December 28, 2001. After the trial court granted its summary judgment motion on October 7, 2002, the firm requested leave to amend its complaint to assert a claim for breach of the fee-sharing agreement with respect to five additional cases not pled in the original complaint. The trial court denied the motion, stating:

You know, in fairness to the defense ... I'm going to deny the request for an accounting of these additional five for the following reasons:. . . There was a scheduling conference held .... Mr. Ricciardi was there representing himself. [Counsel was] there for the plaintiff. There was a deadline set for amending pleadings and naming additional parties, the pertinent part being the amending pleadings. That deadline has long since passed. It was July 15 of '02. There's no reading of the plaintiffs complaint in this case that would include a request for accounting of files other than those named. I've read and re-read the plaintiffs complaint numerous times here, and there's nothing in there making that request. Everybody's had their deadline for dispositive motion filing. That was August 12. You did bring a motion to compel because the defendant, according to your motion, was not cooperating with discovery, but there is, at least in my reading of your motion to compel... nothing in it that supports your request for accounting of five of the files, so what's fair is fair. You didn't plead it. You didn't ask for it. I'm not ordering the accounting on those.

The trial court also denied the firm's subsequent motion for reconsideration, finding that "the matter is not going to be held open for the in[clusion] of those other matters. They weren't pled. My ruling stands on that."

¶ 30. "A trial court's decision to grant leave to amend a complaint is discretionary." Finley v. Culligan, 201 Wis. 2d 611, 626, 548 N.W.2d 854 (Ct. App. 1996). We will not reverse a trial court's discretionary decision unless the record discloses that the court failed to exercise its discretion, that the facts do not support the decision, or that the court applied the wrong legal standard. See id. at 626-27. The trial court "in exercising its discretion must balance the interests of the party benefiting by the amendment and those of the objecting party." State v. Peterson, 104 Wis. 2d 616, 634, 312 N.W.2d 784 (1981).

¶ 31. When a motion to amend the complaint is filed after a motion for summary judgment has been granted, as happened here, there is no presumption in favor of allowing the amendment. Mach v. Allison, 2003 WI App 11, 27, 259 Wis. 2d 686, 656 N.W.2d 766. "Rather, the party seeking leave to amend must present a reason for granting the motion that is sufficient, when considered by the trial court in the sound exercise of its discretion, to overcome the value of the finality of judgment." Id. The reasons for not acting sooner, the amount of time passed since filing the original complaint, the number and nature of prior amendments, and the nature of the proposed amendment are all relevant considerations, as is the effect on the defendant. Id.

¶ 32. The Piaskoski firm contends that Ricciardi possessed sole knowledge of the additional clients for whom it wished to recover fees, and that his failure to disclose their existence deprived it of an opportunity to obtain relief. The firm cites John v. John, 153 Wis. 2d 343, 450 N.W.2d 795 (Ct. App. 1989), where we affirmed a trial court's allowance of an amendment because the defense withheld information, contributing to the plaintiffs late amendment. Id. at 365. The amendment in John, however, did not come after summary judgment had been granted to the plaintiff, as is the case here. We conclude that John is thus distinguishable and that the guidance in Mach is controlling. Moreover, because whether to allow a belated amendment is a discretionary decision of the trial court, our affirmance of a decision to grant leave in one case does not mean that we must reverse a decision to deny leave in another, even if the facts were similar. See Hartung v. Hartung, 102 Wis. 2d 58, 66, 306 N.W.2d 16 (1981) (noting that "a trial court in an exercise of discretion may reasonably reach a conclusion which another judge or another court may not reach").

¶ 33. Ricciardi parted company with the Piasko-ski firm in May 1996, and the firm contends that it was unaware of the additional clients until October 2002. When asked by the trial court why it could not have obtained this information sooner, the firm's attorney replied: "Well, [we] could have, Judge, but quite frankly, we were relying on this May 23 letter that listed, in Mr. Ricciardi's words, the cases that he took." When asked by the trial court to explain why, if these files originated with the Piaskoski firm, the firm couldn't ascertain which files Ricciardi took simply by examining its own files, counsel replied that it "could have, but for the fact that Mr. Ricciardi had all of the files, the paper files, with him." The firm did not dispute, however, the trial court's subsequent comment that it must have had "at least index card files in [the] office."

¶ 34. We thus cannot conclude that the trial court erred in determining that the firm failed to present sufficient reason to justify its failure to act sooner to amend its complaint. The law firm has provided no sufficient explanation, either here or in the trial court, why the firm could not have ascertained the names of all of its former clients who became Ricciardi's clients long before it prevailed in obtaining summary judgment to recover a portion of the Knack fee. We are satisfied that the trial court did not erroneously exercise its discretion in denying the firm's belated request to amend its complaint.

¶ 35. Finally, we also affirm the trial court's ultimate decision denying the firm its actual attorney fees incurred in pursuing this litigation. At the summary judgment hearing, the trial court granted the firm's request for attorney fees, concluding that "none of the defenses asserted by [Ricciardi] or his counterclaims were meritorious." The court ordered that the law firm was "entitled to actual attorney's fees subject to the Court's approval." The trial court explained that "[t]his is not a request for [fees for responding to a] frivolous [defense] .... The Court is finding that the plaintiff is entitled to actual attorney's fees [for] having succeeded on [its] claim, and based on the Court's ruling against [Ricciardi] on [his] defenses and. . . counterclaim, but not frivolous."

¶ 36. Ricciardi moved the trial court to reconsider its decision to award actual attorney fees. The court did so and reversed its previous order:

I was wrong. Mr. Ricciardi is absolutely right. The American Rule does not permit reasonable attorneys fees to the victor in this kind of a suit because there isn't a statute, and there was no provision in the contract.... and I have searched the case law myself beyond the cases provided by both lawyers, and although I did find [one case] which does provide for reasonable attorneys fees in the event that the Court finds that the efforts of counsel.... showed obdurate behavior, I think that's more analogous to a frivolous finding, and I specifically found that this was not frivolous. I know that that's vexing to [the law firm] that I found it not to be frivolous. I just couldn't say that Mr. Ricciardi's position lacked any basis in law. It doesn't go to that extreme, and it's not frivolous.

¶ 37. The firm maintains that the trial court's second ruling was incorrect because the "American Rule" does not apply where a statutory provision, such as Wis. Stat. § 802.05(1), authorizes "reasonable attorney fees" as a sanction for certain conduct of an opposing party or counsel. Nothing in the trial court's initial ruling, however, suggests that § 802.05(1) was the basis for its decision to award attorney fees, and the court expressly disavowed any finding of frivolousness under Wis. Stat. § 814.025, which was the basis on which the firm had requested attorney fees.

¶ 38. The trial court correctly concluded on reconsideration that the "American Rule" precludes an award of attorney fees in this case. There was no provision in the parties' contract for awarding attorneys fees in the event of litigation over the division of fees. The only possible statutory bases cited by the firm for an attorney fee award in this case are Wis. Stat. §§ 802.05(1) and 814.025, but an award under neither is supported by any findings in the record. Finally, we agree with the trial court's assessment that, although Ricciardi's defenses to the firm's action were not meritorious, neither were they entirely frivolous. Ricciardi's argument that SCR 20:1.5(e) bars enforcement of the parties' agreement to divide fees was not "without any reasonable basis in law or equity." Section 814.025(3)(b).

CONCLUSION

¶ 39. For the reasons discussed above, we affirm the appealed judgment.

By the Court. — Judgment affirmed.

       All references to the Wisconsin Supreme Court Rules and the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       Ricciardi's principal argument in this appeal is that the fee-sharing contract is unenforceable because it violates public policy. He correctly points out that public policy "may be expressed by statute, administrative regulation, or by the court's expression of the policy of the common law." Heyde Cos., Inc. v. Dove Healthcare, 2002 WI 131, ¶ 10, 258 Wis. 2d 28, 654 N.W.2d 830. Ricciardi contends that SCR 20:1.5(e) defines a public policy of the State of Wisconsin that limits the way in which attorneys may divide attorney fees.
      Whether Wisconsin's Rules of Professional Conduct for Attorneys, SCR ch. 20, can be used in this fashion to affect the outcome of civil litigation between two attorneys appears to be a question of first impression. We note that the preamble to the Rules of Professional Conduct for Attorneys instructs as follows:
      The rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. Furthermore, the purpose of the rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the rule.
      SCR ch. 20 pmbl. Cf. Peck v. Meda-Care Ambulance Corp., 156 Wis. 2d 662, 669-73, 457 N.W.2d 538 (Ct. App. 1990) (concluding that Wisconsin's Code of Professional Responsibility, predecessor to the Rules of Professional Conduct, cannot be used to define standards of professional care as a basis for civil liability).
      Courts in other jurisdictions have held, however, that similar rules regulating attorney conduct have the force of law and have relied on them to void contracts as against public policy. See, e.g., In re Vrdolyak, 560 N.E.2d 840, 845 (Ill. 1990) (announcing that in Illinois the Code of Professional Responsibility operates with the force of law); Holstein v. Grossman, 616 N.E.2d 1224, 1229 (Ill. App. Ct. 1993) (holding that an oral fee-sharing agreement is unenforceable as a matter of public policy because it violates the Code of Professional Responsibility); Kaplan v. Pavalon & Gifford, 12 F.3d 87, 92 (7th Cir. 1993) (same); but see Freeman v. Mayer, 95 F.3d 569, 575-76 (7th Cir. 1996) (holding that Indiana Rules of Professional Conduct do not provide grounds for relief from an otherwise valid contract and questioning if the rule would give standing to an attorney because it is intended to protect clients).
      Because we conclude that SCR 20:1.5(e) does not apply to a fee-sharing agreement between a law firm and a departing associate, we do not reach the question of whether a violation of SCR 20:1.5(e) either permits or compels a court to void a fee-sharing contract on public policy grounds.

        See Kaplan, 12 F.3d at 88 (involving referral from sole practitioner to more experienced law firm); Chambers v. Kay, 56 P.3d 645, 647-48, 650-52 (Cal. 2002) (involving sole practitioners in separate offices expressly found to not be "associates"); Kelley v. Donohue, 907 P.2d 458, 459-60 (Alaska 1995) (involving attorneys in separate law firms); Belli v. Shaw, 657 P.2d 315, 316 (Wash. 1983) (same); Ford v. Albany Med. Ctr., 283, A.D.2d 843, 843-44 (N.Y.A.D. 2001) (same); Post v. Bregman, 707 A.2d 806, 808-10 (Md. Ct. App. 1998) (same).

       Ricciardi asserts in his reply brief that "[e]veiy law partnership in Wisconsin would be extremely surprised to learn that it is in effect dissolved and must wind up its business every time an employee/associate, as contrasted with a partner/shareholder, leaves, quits, is laid off or fired." Although we accept Ricciardi's point that it is perhaps not uncommon for associates to leave law firms, taking with them clients and cases acquired or developed during the associates' tenure with the firms, we fail to see how our conclusion could be interpreted to mean that the firm must dissolve or "wind up its business" when this occurs. Rather, we are concluding only that, for purposes of the applicability of SCR 20:1.5(e), any fee-sharing agreements struck between the firm and the departing associate that relate to transitioning clients are agreements between lawyers "in the same firm." We think it more likely that Wisconsin law firms and associates would be surprised to learn, had we reached the opposite conclusion, that they face disciplinary sanctions for failing either to strictly divide fees "in proportion to services performed" or to maintain "joint responsibility" for the future representation of a client, notwithstanding the parting of their ways.

       The Michigan Court of Appeals reached a similar conclusion in McCroskey, Feldman, Cochrane & Brock v. Waters, 494 N.W.2d 826 (Mich. App. 1993):
      With regard to MRPC [Michigan Rules of Professional Conduct] 1.5(e), it is arguable that... the [present] agreement provides for "a division of a fee between lawyers who are not in the same firm." However, we interpret the court rules in accordance with the intent and purpose behind them. MRPC 1.5(e) is designed to prohibit brokering, to protect a client from clandestine payment and employment, and to prohibit aggrandizement of fees. Plainly, none of these concerns is implicated in this case. The agreement is simply a mechanism for dividing an already existing fee. In other words, this is not a referral situation contemplated by the rule. Instead, the contract simply seeks to obviate time-consuming squabbles that formerly arose when plaintiffs entitlement to its fair share of any fee generated by a departing client's file was determined on a quantum merit basis. We agree with plaintiff that such arrangements, as long as they are reasonable, should be encouraged.

        Id. at 828 (citations and footnote omitted).

       We note as well that the Restatement (Third) of the Law GoveeniNG LawyeRS § 47 (2000), entitled "Fee-Splitting Between Lawyers Not In The Same Firm," is similar in content to both ABA Model Rule 1.5(e) and SCR 20:1.5(e). The Restatement commentary to § 47 explains that the section does not apply to "[l]awyers in the same firm," and thus does not affect agreements for the division of fees with "former partners or associates." Restatement (Third) of the Law Governing Lawyers § 47 cmt. g (2000) ("Under this Section, law-firm members may also share fees in making payments to former partners or associates under a separation or retirement agreement and may distribute fees among members of a dissolved firm for post-dissolution work arising from matters entrusted to the firm before its dissolution.").

       WISCONSIN Stat. § 802.09(1) provides in relevant part as follows:
      A party may amend the party's pleading once as a matter of course at any time within 6 months after the summons and complaint are filed or within the time set in a scheduling order under s. 802.10. Otherwise a party may amend the pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given at any stage of the action when justice so requires.

       Wisconsin follows the "American Rule" under which "parties to litigation are generally responsible for their own attorney's fees unless recovery is expressly allowed by either contract or statute, or when recovery results from third-party litigation." DeChant v. Monarch Life Ins. Co., 200 Wis. 2d 559, 571, 547 N.W.2d 592 (1996).


author: HIGGINBOTHAM, J.

text:
    In the Matter of the Guardianship of Jane E.P.: Grant County Department of Social Services, Appellant, v. Unified Board of Grant and Iowa Counties, Respondent.

    Court of Appeals

      No. 03-0634.

      Oral argument April 27, 2004.

    Decided July 1, 2004.

    2004 WI App 153
    (Also reported in 687 N.W.2d 72.)

      On behalf of the appellant, the cause was submitted on the briefs of Sheila Stuart Kelley of Kopp, McKichan, Geyer, Skemp & Stombaugh, LLP, Platteville. There was oral argument by Sheila S. Kelley.

      On behalf of the respondent, the cause was submitted on the brief of Craig R. Day of Law Office of Craig R. Day, Lancaster. There was oral argument by Craig R. Day.

    A nonparty brief was filed by John J. Prentice of Prentice & Phillips LLP, Milwaukee, for Wisconsin Counties Association.
    Before Deininger, EJ., Lundsten and Higginbotham, JJ.

       Petition to review granted 9-16-04.

   HIGGINBOTHAM, J.

¶ 1. Grant County Department of Social Services appeals an order dismissing its petition for guardianship and protective placement of Jane E.E The petition for guardianship and protective placement was dismissed upon motion by the Unified Board of Grant and Iowa Counties, alleging that the circuit court lacked competence to proceed upon the petition because Jane was not a resident of the State of Wisconsin. The County argues that pursuant to federal case law, Jane is the proper subject of a Wisconsin guardianship and the statutory residency requirements violate her right to interstate travel. We agree and reverse the order of the circuit court dismissing the guardianship petition and remand for proceedings consistent with this order.

FACTS

¶ 2. Jane is a forty-six-year-old woman who suffers from Wernicke's encephalopathy. Due to her condition, Jane is unable to handle her finances and property and is unable to meet her basic needs. She is currently a resident of the Galena Nursing Home in Galena, Illinois, placed there pursuant to a guardianship in the state of Illinois. Her guardian is her sister, Deborah V.

¶ 3. Many of Jane's family members are residents of southern Grant County, Wisconsin; these family members want Jane to reside at the Southwest Health Center Nursing Home in Grant County, Cuba City, Wisconsin, a privately-owned facility. Through the office of Grant County Corporation Counsel, Deborah V. filed a petition for guardianship and protective placement in Grant County. The petition nominated Deborah V as guardian of the person and estate of Jane and sought protective placement of Jane, nominating the Cuba City facility as the proposed custodian.

¶ 4. The circuit court signed an Amended Order for Comprehensive Evaluation directed to the Unified Board, the agency responsible for performing evaluations on individuals who are the subject of guardian-ships due to mental illness, developmental disability and other similar incapacities. The Board instead sought to have the circuit court dismiss the petition, arguing that the circuit court lacked competence to proceed because Jane was not a resident of Wisconsin. After a hearing on this motion, the circuit court granted the Board's motion and dismissed the petition for guardianship and protective placement based upon Jane's non-residency. The County appeals.

DISCUSSION

¶ 5. This case addresses whether Wisconsin's protective placement statute requiring a proposed ward to reside in a Wisconsin county at the time a petition is filed, Wis. Stat. § 55.06(3)(c), violates the ward's constitutionally protected right to travel. The Board argues § 55.06(3)(c) is constitutional because it does not burden Jane's right to travel and because the statute is a bona fide residency requirement. Therefore, the Board argues, since Jane is not a resident of Grant County, the court lacks competence to consider the guardianship and protective placement petition filed on behalf of Jane's guardian. The Board further argues that if Jane's right to travel is burdened, the burden is justified by the potential fiscal impact counties and the State will suffer by providing services to nonresidents. The County claims these statutes impose a residency requirement that infringes on Jane's constitutional right to interstate travel and that by requiring Jane to reside in Wisconsin at the time the petition was filed, Jane's constitutional right to travel to Wisconsin with the intent on residing here was infringed. We agree with the County and resolve this dispute by addressing the constitutionality of these statutes.

¶ 6. We review the constitutionality of statutes de novo, without deference to the circuit court. State v. Chvala, 2004 WI App 53, ¶ 9, 271 Wis. 2d 115, 678 N.W.2d 880. Statutes enjoy a presumption of constitutionality and we review the statutes so as to preserve their constitutionality. Id. The County makes an as-applied constitutional challenge to Wis. Stat. § 55.06(3)(c). A party challenging the constitutionality of a statute as applied must demonstrate that it is unconstitutional beyond a reasonable doubt. State v. Joseph E. G., 2001 WI App 29, ¶ 5, 240 Wis. 2d 481, 623 N.W.2d 137.

¶ 7. The United States Supreme Court long ago recognized that "the nature of our Federal Union and our constitutional concepts of personal liberty unite to require that all citizens be free to travel throughout the length and breadth of our land uninhibited by statutes, rules, or regulations which unreasonably burden or restrict this movement." Shapiro v. Thompson, 394 U.S. 618, 629 (1969), overruled in part on other grounds by Edelman v. Jordan, 415 U.S. 651 (1974).

For all the great purposes for which the Federal government was formed, we are one people, with one common country. We are all citizens of the United States; and, as members of the same community, must have the right to pass and repass through every part of it without interruption, as freely as in our own States.

Id. at 630 (citation omitted). The right to travel is not ascribed to any particular constitutional provision but is a right so elementary as "to be a necessary concomitant of the stronger Union the Constitution created." Id. at 630-631 (citation omitted). The right to travel protects the right of a citizen of one state to enter and to leave another state. Saenz v. Roe, 526 U.S. 489, 500 (1999).

¶ 8. To provide a context for our discussion we first examine the statutes involved in this case. Wisconsin Stat. § 880.03 provides, in relevant part,

The court may appoint a guardian of the person of anyone subject to guardianship who is also a resident of the county, or of a nonresident found in the county, under extraordinary circumstances requiring medical aid or the prevention of harm to his or her person or property found in the county. The court may appoint a guardian of the estate of anyone subject to guardianship, whether a resident of the state or not, if any of the estate is located within the county. Separate guardians of the person and of the estate of a ward may be appointed.

Venue for a petition for guardianship of a nonresident "shall be directed to the circuit court of the county of residence of the person subject to guardianship or of the county in which the person is physically present." Wis. Stat. § 880.05. Plainly these statutes establish that before Jane may be appointed a guardian, Jane must be a proper subject for guardianship and must be physically present in the county in which the appointing court is located.

¶ 9. Wisconsin Stat. § 55.06(1) provides, in part, "No protective placement under this section may be ordered unless there is a determination of incompetency" in accordance with the guardianship statutes. Wisconsin Stat. § 55.06(3)(c), the statute at issue here, provides that a protective placement petition "shall be filed in the county of residence of the person to be protected." Wisconsin Stat. § 49.001(6) defines "residence", as that term is used in ch. 55, as follows:

"Residence" means the voluntary concurrence of physical presence with intent to remain in a place of fixed habitation. Physical presence is prima facie evidence of intent to remain.

Thus, Jane must "reside" or be physically present in the county in which the petition for protective placement is filed with the intent to remain there.

¶ 10. These statutes affect Jane in the following way. Jane's sister, her Illinois guardian, wishes to place Jane in the Grant County facility. Because the nursing home is a facility with sixteen or more beds, the facility requires a court order protectively placing Jane there. See Agnes T. v. Milwaukee County, 189 Wis. 2d 520, 523, 525 N.W.2d 268 (1995). To be protectively placed at the nursing home, the circuit court must find Jane to be incompetent. However, Jane must first move to Grant County, Wisconsin before a petition for protective placement may be filed and considered by the Grant county circuit court under Wis. Stat. § 55.06(3). The result is that Jane is not permitted to move to Cuba City to live in the nursing home because she is not a resident of Grant County. We next examine more specifically how these statutes infringe upon Jane's right to travel.

¶ 11. The County argues that the residency requirement of Wis. Stat. § 55.06(3)(c) violates Jane's right to interstate travel. The County relies heavily on the analysis in Bethesda Lutheran Homes and Services, Inc. v. Leean, 122 F.3d 443 (7th Cir. 1997), appeal after remand, 154 F.3d 716, to support its argument. We recognize we are not bound by decisions by lower federal courts interpreting Wisconsin law. Johnson v. County of Crawford, 195 Wis. 2d 374, 383, 536 N.W.2d 167 (Ct. App. 1995). However, we may rely on the analysis by a federal court's interpretation of Wisconsin law if that analysis proves instructive. See Baldewein Co. v. Tri-Clover, Inc., 2000 WI 20, ¶ 10, 233 Wis. 2d 57, 606 N.W.2d 145. Thus, although we are not bound by Bethesda Lutheran, we consider the analysis employed by the court to be sound and we adopt it here.

¶ 12. We first examine the analysis in Bethesda Lutheran before applying it to the case at hand. In Bethesda Lutheran, four out-of-state individuals sought admission to Bethesda Lutheran Homes, a private intermediate care facility located in Jefferson County, Watertown, Wisconsin. Bethesda Lutheran, 122 F.3d at 444-45. The facility offered long-term care to severely retarded individuals. Id. Wisconsin law required individuals seeking placement in this type of facility to first obtain a court order of protective placement under Wis. Stat. § 55.06(3)(c). Id. at 445. As we have noted, Wis. Stat. § 55.06(3)(c) requires the petition for protective placement to be "filed in the county of residence of the person to be protected."

¶ 13. Bethesda Lutheran Homes and the four non-resident individuals, along with other individuals not relevant to this case, sued various state and local officials pursuant to 42 U.S.C. § 1983 complaining, in part, that the residency requirement of Wis. Stat. § 55.06(3)(c) impeded their constitutional right to travel because it prevented them from relocating to the Watertown facility from their current out-of-state placement. Bethesda Lutheran, 122 F.3d at 444. Writing for the court, Judge Posner recognized that Wis. Stat. § 55.06(3)(c) required that "to be admitted to the Watertown facility the prospective resident must first establish his residence in a Wisconsin county. So nonresidents of Wisconsin are ineligible." Id. at 445. Judge Posner characterized the nonresidents' challenge as follows:

[Their challenge] is to their being required to become residents (in the sense of domiciliaries) of the state before [undergoing the protective-placement procedure], which is to say, required to move into the state at the beginning of the process without intending to leave it. Since anyone who is approved for protective placement is by definition incapable of living outside the Watertown facility or its equivalent in restrictiveness, it is unclear where in Wisconsin the applicant for admission to the facility is supposed to live while the placement petition is being processed.

Id. at 446.

¶ 14. The state officials advanced several reasons justifying the residency requirement, all of which were rejected by the Bethesda Lutheran court. The court suggested that fiscal considerations could serve as a possible justification for the residence requirement but found that the state failed to adequately argue it. Id. at 447. The court then concluded that the residency requirement unjustifiably interfered with interstate travel and that the requirement was "an interference" unjustified by the state. Id.

¶ 15. We now apply these principles and the court's analysis in Bethesda Lutheran to the case at hand. This case presents a nearly identical situation as in Bethesda Lutheran. Jane is a nonresident of Wisconsin attempting to access a private nursing home in Grant County, Cuba City, Wisconsin. She currently receives Medicaid, which would cover her expenses at the nursing home. Jane is incompetent and is protectively placed by court order in a nursing home in Illinois. Jane's guardian, through Grant County Social Services, filed a petition in Grant County circuit court in an effort to appoint Jane's sister as her guardian and obtain a court order protectively placing Jane in the Grant County nursing home. Like the nonresident plaintiffs in Bethesda Lutheran, Jane cannot live in the nursing home without a protective placement order and, under Wisconsin statutes, Jane cannot access the court to receive a protective placement order without living in a Wisconsin county first. Based on this analysis we conclude Jane's right to travel to Wisconsin to live at the Grant County nursing home has been unconstitutionally restricted.

¶ 16. The Board argues that Wis. Stat. § 55.06(3)(c) is not unconstitutional because the statute does not burden Jane's right to travel and because the statute establishes a bona fide residency requirement. The Board also argues that even if § 55.06(3)(c) unconstitutionally burdens Jane's right to travel, the burden is justified because of the potential fiscal impact individuals such as Jane may have on a local government's budget. The Board's arguments lack merit.

¶ 17. The Board argues the residency requirement of Wis. Stat. § 55.06(3)(c) is not a burden on Jane's right to travel, contending that any person may move to Wisconsin, establish residence and avail him or herself of the Wisconsin guardianship and protective placement system. For Jane, it is not that simple. As the court in Bethesda Lutheran said

Since anyone who is approved for protective placement is by definition incapable of living outside the Water-town facility or its equivalent in restrictiveness, it is unclear where in Wisconsin the applicant for admission to the facility is supposed to live while the placement petition is being processed.

Bethesda Lutheran, 122 F.3d at 446. Jane's situation is similar to the nonresidents in Bethesda Lutheran. She is incompetent and by definition is incapable of living outside of a long-term care facility. Based on the definition of "residence" Jane must first move to Wisconsin and "reside" here for some uncertain period of time before a court may consider a petition filed on her behalf for protective placement. Clearly, because Jane is incompetent and cannot first move to Wisconsin and have a petition for protective placement filed on her behalf, § 55.06(3)(c), as applied to Jane, unconstitutionally burdens her right to travel.

¶ 18. The Board also argues that the protective placement residency requirement is a bona fide residency requirement, which, under Martinez v. Bynum, 461 U.S. 321, 327-28 (1983), is constitutionally appropriate. The Supreme Court in Martinez explained:

A bona fide residence requirement, appropriately defined and uniformly applied, furthers the substantial state interest in assuring that services provided for its residents are enjoyed only by residents .... It does not burden or penalize the constitutional right of interstate travel, for any person is free to move to a State and to establish residence there. A bona fide residence requirement simply requires that the person does establish residence before demanding the services that are restricted to residents.

Id. at 328-29 (footnote omitted). The Supreme Court has repeatedly acknowledged the constitutionality of bona fide residency requirements that are "appropriately defined and uniformly applied." Dunn v. Blumstein, 405 U.S. 330, 342 n.13 (1972); Memorial Hosp. v. Maricopa County, 415 U.S. 250, 255 (1974).

¶ 19. In our view, Wis. Stat. § 55.06(3)(c) does not establish a bona fide residency requirement. Rather, the statute prevents the County, and hence Jane, from presenting a guardianship and protective placement petition to the court and from having that court consider the petition simply because Jane is not a resident of a Wisconsin county. Wisconsin Stat. § 55.06(3)(c) restricts Jane's ability to access the courts for consideration of her only means to move to Wisconsin, a petition for protective placement.

¶ 20. It may be that the legislature could constitutionally establish a bona fide residency requirement for individuals wishing to access long-term care facilities in Wisconsin at public expense. See Jones v. Milwaukee County, 168 Wis. 2d 892, 906, 485 N.W.2d 21 (1992) (a 60-day waiting period requirement under Wis. Stat. § 49.015 is constitutional under the equal protection clause); Saenz, 526 U.S. at 502 ("There may be a substantial reason for requiring the nonresident to pay more than the resident for a hunting license ... or to enroll in the state university .. . ."). But the legislature has not done so here.

¶ 21. The Board argues that even if Jane's right to travel is restricted, the restriction.is justified because of the potential fiscal impact individuals such as Jane may have on a local government's budget. The Board points to testimony by its director, presented at the eviden-tiary hearing before the circuit court, claiming that the Board spent over $360,000 on an individual with a similar diagnosis as Jane's. That individual developed behavioral problems while in a long-term care facility in Grant County and was eventually placed in Mendota Mental Health Institution. According to statute, the Board is required to carry the fiscal burden of persons placed in Mendota. The Board claims Jane may develop similar or other problems resulting in a placement at Mendota or another Board-funded facility.

¶ 22. The Board's justification for infringing on Jane's constitutionally protected right to travel is infirm in several ways. The Board's claim that the fiscal burden on county and state programs which fund county mental health programs is speculative and finds no basis in the record. The record is not sufficiently developed for us to make a reasonable assessment as to whether the fiscal burden on the Board is significant. The testimony presented by the Board was broad and unspecific on the extent of any possible fiscal impact to be suffered by the Board by placing Jane or other nonresidents in Wisconsin nursing home facilities. Moreover, the undisputed evidence shows that the Board is not financially responsible for individuals placed in nursing homes. Thus, because Jane is seeking placement in a nursing home, the Board's financial concern is speculative. It is also pure speculation as to whether Jane will develop problems warranting placement in a facility for which the Board would be financially responsible. More importantly, as the Bethesda Lutheran court pointed out, "the power of a state to confine its public services to residents does not entitle the state to establish arbitrary barriers to a nonresident's becoming a resident." Bethesda Lutheran, 122 F.3d at 448 (citation omitted).

¶ 23. Fundamentally, Jane simply seeks to exercise her constitutional right to move from one state to another, and any regulation that serves to discourage or thwart that right, unless shown to be necessary to promote a compelling governmental interest, is unconstitutional. See Shapiro, 394 U.S. at 634. The Board has failed to establish a compelling governmental interest in restricting Jane's right to travel to Wisconsin to reside in a nursing home for her long-term care.

CONCLUSION

¶ 24. Wisconsin Stat. § 55.06(3)(c) governing the filing of a petition for protective placement, requires the ward to reside in a Wisconsin county when a protective placement petition is filed. We agree with the persuasive reasoning of Bethesda Lutheran and conclude that this statute, as applied to Jane, violates her constitutional right to interstate travel. We therefore reverse the order of the circuit court dismissing the petition and remand for proceedings consistent with this order.

By the Court. — Order reversed.

       The Board was created pursuant to Wis. Stat. § 51.42(3) (2001-02) to administer a community mental health, developmental disabilities, alcoholism and drug abuse program. All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       The circuit court did not address the constitutional challenge presented here, noting that neither party was challenging the constitutionality of the residency requirement and that no notice had been provided to the Wisconsin Attorney General regarding a possible constitutional challenge. The Unified Board argues on appeal that because the County has not notified the Wisconsin Attorney General of the constitutional challenge to Wis. Stat. § 55.06(3)(c), the County's appeal should be dismissed. Recognizing the statewide importance of the issue presented in this appeal, we provided notice to the Wisconsin Attorney General of these proceedings and afforded the Attorney General an opportunity to participate in this case. The Attorney General has chosen not to participate. Because the notice requirement to the Attorney General has now been satisfied, we address the constitutional challenge to § 55.06(3)(c).