author: VERGERONT, PJ.

text:
    Joseph Teff, D.C. d/b/a Teff Chiropractic, and Soderholm-Wilder Chiropractic Clinic, S.C., d/b/a Madison Chiropractic-East, Plaintiffs-Respondents-Cross-Appellants, v. Unity Health Plans Insurance Corporation d/b/a Unity Health Plans, Defendant-Appellant-Cross-Respondent.
    Court of Appeals

      No. 02-1319.

      Submitted on briefs February 7, 2003.

    — Decided May 29, 2003.

    2003 WI App 115
    (Also reported in 666 N.W.2d 38.)

      On behalf of the defendant-appellant-cross-respondent, the cause was submitted on the briefs of Thomas M. Typer of Whyte Hirschboeck Dudek S.C., Madison.
    On behalf of the plaintiffs-respondents-cross-appellants, the cause was submitted on the briefs of Mark Frankel and James D. Peterson of LaFollette Godfrey & Kahn, Madison, and Charles W. Giesen of Giesen Law Offices, S.C., Madison.
    Before Vergeront, PJ., Dykman and Lundsten, JJ.
   VERGERONT, PJ.

¶ 1. This case concerns a dispute over contracts between Unity Health Plans Insurance Corporation, a health maintenance organization, and two providers of chiropractic services: Dr. Joseph Teff and Soderholm-Wilder Chiropractic Clinic. After entering a default judgment against Unity on liability, the trial court held an evidentiary hearing on damages. It awarded $449,447.81 in damages plus prejudgment interest to Teff and $234,306.85 in damages plus prejudgment interest to Soderholm-Wilder. Unity appeals, contending the trial court erred in: (1) entering a default judgment on liability, (2) construing the 1995 contract, (3) not permitting Unity to call expert witnesses, (4) not reducing lost revenues for 1997 by the amount that loss was "mitigated," (5) awarding damages for defamation, and (6) awarding prejudgment interest. We conclude that on the first five points, the trial court did not err. With respect to prejudgment interest, we conclude the court correctly awarded prejudgment interest for the damages for 1995 and for the services performed in the first month of 1997, but that it erred in awarding prejudgment interest on the damages for lost revenues for 1997 because those damages were neither liquid nor liquidable.

¶ 2. Teff and Soderholm-Wilder cross-appeal the trial court's dismissal of their claim for promissory estoppel. We conclude the court correctly ruled that their claim for promissory estoppel was barred because their contract with Unity covered all the essential terms of the business relationship with Unity.

¶ 3. Accordingly, we reverse the judgment insofar as it awards prejudgment interest on lost revenues for 1997, affirm the judgment in all other respects, and remand for a recalculation of prejudgment interest consistent with this decision.

BACKGROUND

¶ 4. Teff and Soderholm-Wilder entered into a contract with Unity to provide chiropractic services to its members for the year 1995. The contract was renewed for 1996 under the provision for automatic renewal for another year if neither party notified the other of the intent to terminate within 180 days before the expiration of the current term. In December 1996, Unity terminated the contract effective January 1, 1997, although Teff and Soderholm-Wilder provided services to Unity members for a short time thereafter on a fee-for-service basis.

¶ 5. Teff and Soderholm-Wilder filed this action alleging various contract claims — that Unity had wrongfully terminated the 1996 contract because it had not given the required notice, had failed to make payments as required under the contracts for 1995 and 1996, and had failed to pay for services provided in January 1997. The complaint also alleged a number of tort claims, some of which were dismissed by partial summary judgment. The contract claims and claims for defamation, interference with prospective business advantage, and promissory estoppel were scheduled for trial beginning on June 25, 2000. The October 18, 1999 scheduling order required Teff and Soderholm-Wilder to name experts and provide reports by December 15, 1999, and Unity to do so by January 31, 2000. The order provided that any witness not disclosed as required by the order would not be permitted to testify at trial except for good cause, and failure to comply with the terms of the order would be cause for imposing sanctions, including dismissal and default judgment.

¶ 6. In November 1999, Teff and Soderholm-Wilder moved to compel discovery on the ground that Unity had provided evasive interrogatory answers and failed to produce requested documents. This followed an earlier motion to compel discovery, after which the court directed the parties to resolve that discovery dispute. The court granted the second motion to compel and ordered Unity to provide the requested discovery by December 20, 1999. In February 2000, Teff and Soderholm-Wilder filed a third motion alleging that the material Unity provided in response to that order was evasive and non-responsive, as were responses to requests for admissions, and that Unity had not permitted review of documents that were relevant to the action. The motion asked as a sanction that the court strike Unity's answer and counterclaims. In another motion filed at the same time, they requested an order precluding Unity from calling any expert witnesses not disclosed as required by the scheduling order.

¶ 7. After a hearing on these motions on May 1, 2000, the court declined to grant the relief requested by Teff and Soderholm-Wilder, although it stated that it was "this close" to granting the motion and further disobedience of the court's orders would result in stronger sanctions, including default judgment. The court's order issued orally on that date, and later reduced to writing, directed that Unity provide a list of its trial witnesses by May 15, comply with the earlier order compelling discovery by May 31, and pay the movants $3,984.49 no later than May 31. The trial date was adjourned.

¶ 8. On May 19, 2000, Unity filed a notice of appearance of new counsel, an outside law firm, explaining that the in-house counsel who had been representing Unity left the employment of Unity's parent company on May 11, 2000. Shortly théreafter, Teff and Soderholm-Wilder moved for a default judgment because May 15 had passed without Unity providing a witness list. On May 30, Unity's new counsel filed a motion to amend the scheduling order and enlarge the time for discovery and sent a list of potential witnesses to Teff and Soderholm-Wilder. When the May 31 deadline passed withoút Unity complying with the order compelling discovery or paying the sanction, Teff and Soderholm-Wilder' filed a motion for a default judgment on these additional grounds.

¶ 9. The court granted the motions for a default judgment on all the remaining claims, struck Unity's counterclaims, and set an evidentiary hearing on damages. In arriving at this conclusion, the court explained that it was considering not only the violation of the May 1 order, but the preceding repeated failures to comply with the scheduling order regarding witnesses and the discovery demands. The court commented on what it perceived to be Unity's failure to take the lawsuit seriously and give it the attention it deserved, in spite of having an entire staff of attorneys to attend to its legal needs. The court stated that it did not know what caused the departure of the attorney initially representing Unity, but it concluded that Unity, not the plaintiffs, should bear the burden of Unity's choice to continue to have that attorney represent it even after the numerous violations of discovery and scheduling orders. The court acknowledged that a default judgment was the most stringent of remedies, but concluded that Teff and Soderholm-Wilder were entitled to this remedy.

¶ 10. After a lengthy evidentiary hearing, the court entered a written decision awarding the following damages: unpaid reconciliation payments for 1995— $109,217.13 to Teff and $41,818.37 to Soderholm-Wilder; fees for services provided in January 1997, which were not disputed — $10,595.05 to Teff and $6,130.66 to Soderholm-Wilder; lost revenues for 1997 —$319,635.63 to Teff and $176,357.82 to Soderholm-Wilder; and defamation — $10,000 to each. The court concluded that Teff and Soderholm-Wilder had not established that they were entitled to any additional reconciliation payments for 1996, had not established damages for interference with prospective patient relationships independent of damages for breach of contract, and, as a matter of law, the promissory estoppel claim was barred because of the existence of the contracts. The court also concluded that Teff and Soderholm-Wilder were entitled to prejudgment interest on all the damages except those for defamation, because with that exception, the damages were "liquid or liquidable."

DISCUSSION

Default Judgment

¶ 11. Unity contends that the trial court erroneously exercised its discretion in granting a default judgment because it applied the wrong legal standard in that it did not require that Unity act egregiously or in bad faith, but only that it lack a justifiable excuse. In addition, Unity asserts, the evidence established that it did have a justifiable excuse.

¶ 12. The decisions whether to impose sanctions on a party and which sanctions to impose are committed to the trial court's discretion. See Schultz v. Sykes, 2001 WI App 255, ¶ 8, 248 Wis. 2d 746, 638 N.W.2d 604. We affirm discretionary decisions if the court examined the relevant facts, applied the proper legal standard, and reached a reasonable conclusion. Garfoot v. Fireman's Fund Ins. Co., 228 Wis. 2d 707, 717, 599 N.W.2d 411 (Ct. App. 1999). When the issue is whether the court applied the proper legal standard in exercising its discretion, we review that issue de novo. Sulzer v. Diedrich, 2002 WI App 278, ¶ 9, 258 Wis. 2d 684, 654 N.W.2d 67.

¶ 13. The parties both agree that a default judgment is an appropriate sanction for discovery violations if the court finds the noncomplying party's conduct is: (1) without a clear and justifiable excuse, and (2) either egregious or in bad faith. Hudson Diesel, Inc. v. Kenall, 194 Wis. 2d 531, 542, 535 N.W.2d 65 (Ct. App. 1995). In support of its argument that the trial court did not apply the second requirement, Unity points to the court's questioning of Teffs and Soderholm-Wilder's attorney after his initial presentation on the motions. The court questioned whether the requirement of egregiousness or bad faith had been met. We do not agree with Unity that this shows the court did not apply this standard; rather, it shows the court understood this w;as the standard and, at that point in the proceedings, had not come to a decision on whether the standard had been met.

¶ 14. Unity also points out that when the court explained its decision that a default judgment was warranted, it did not use the words "egregious" or "bad faith" to describe Unity's conduct. However, we do not reverse simply because the court did not use these words if there is an implicit finding under the correct standard and if the facts provide a reasonable basis for the court's implicit determination. Schneller v. St. Mary's Hosp. Med. Ctr, 162 Wis. 2d 296, 311, 470 N.W.2d 873 (1991). We conclude the facts do provide a reasonable basis for the court's implicit determination that Unity's conduct was egregious. Egregious conduct is conduct that, although unintentional, is "extreme, substantial and persistent." Kenall, 194 Wis. 2d at 543. There is a reasonable basis in the record for determining that Unity's conduct met this standard. Not only did Unity disobey the court's order compelling discovery, but its disobedience persisted even after the court warned that further disobedience would result in stronger sanctions than the monetary one it imposed, including a default judgment. In addition, the record, including the affidavits filed by Teff and Soderholm-Wilder, show that Unity's failure to provide discovery did not involve simply a few pieces of information, but was an extensive disregard of Unity's obligations that a reasonable judge could find substantial and extreme.

¶ 15. With respect to the requirement of no justifiable excuse, Unity argues its failure to comply with the May 15 and May 31, 2001 deadlines was excusable because its counsel ceased employment on May 11, and it acted promptly to retain new counsel, who did not receive the written order entered after the May 1 hearing until May 23. New counsel acted reasonably and promptly, Unity contends, in requesting additional time and providing a non-inclusive list of potential witnesses. Unity reasons that, since the court decided that a default judgment was not warranted at the hearing on May 1, and since the noncompliance after that date was due to its counsel leaving, the court acted unreasonably in entering a default judgment. Unity also argues that the court impermissibly imposed a stricter standard for in-house counsel in deciding whether Unity had a justifiable excuse, because it stated that its analysis might be different if Unity's attorney were a solo practitioner.

¶ 16. We do not agree with Unity's analysis for several reasons. First, the court was not precluded from taking into account the entire history of Unity's conduct simply because it had decided on May 1 to give Unity one more chance to comply with its orders. That decision does not necessarily mean that the conduct leading up to that point did not warrant a default judgment; rather, it may simply mean that the court decided not to impose that sanction at that time. Unity, with its new counsel, made no attempt to explain why its prior violations were justifiable. Second, the record supports the court's determination that Unity acted unreasonably in continuing to have the first attorney represent it, and thus was responsible for suddenly having to find new counsel who was not in a position to comply with the May 1 order: there is no evidence that Unity did not know of the violations of the prior orders, and it was reasonable for the court to infer either that Unity did know or should have known. Third, the court did not impose a stricter standard for in-house counsel, but was appropriately taking into account the record before it, from which the court could reasonably infer that Unity had other attorneys available, and thus there was no excuse for not responding to court orders. The reference to a solo practitioner as a different situation did not establish a different standard, but was simply the use of a contrasting example to explain why Unity did not have the excuse of insufficient personnel for its failure to comply with court orders.

¶ 17. We are satisfied that the court applied the correct legal standard, considered the facts of record, and made a reasonable decision to enter a default judgment.

Contract Construction

¶ 18. The dispute over whether Teff and Soderholm-Wilder were entitled to additional payments for 1995 was based on the parties' differing interpretations of their contract. An addendum that took effect on March 1, 1995, provided that payment to Teff and Soderholm-Wilder would be on a capitation basis — a fixed sum paid monthly for each member. The addendum explained that the capitation payment was computed on a baseline utilization of members seeking chiropractic services, with each chiropractor's capitation payment based on the portion of the number of members the chiropractor had provided services to in the first nine months of 1994. The addendum also provided for a reconciliation if actual utilization differed by more than a specified percentage above or below the baseline utilization. Teff contended before the trial court that under this provision he was owed $109,217.13 in reconciliation payments for 1995, and Soderholm-Wilder contended it was owed $41,818.37.

¶ 19. Unity's position in the trial court and before this court is that the addendum does not set forth the reconciliation procedure that the parties intended. According to Unity, we must consider another, document along with the addendum, the Reconciliation Payment Calculation for 1995, which includes an additional step in computing the reconciliation payments. Together these documents create an ambiguity, Unity asserts, which we must resolve by resort to extrinsic evidence. Unity contends that under the procedure the parties intended, Teff and Soderholm-Wilder are not due the sums awarded by the trial court.

¶ 20. The trial court concluded that the terms of the addendum governed, and it awarded the sums requested by Teff and Soderholm-Wilder.

¶ 21. In construing a contract, we begin with the language of the contract, and if that is plain, we enforce those terms as written. Erickson v. Gundersen, 183 Wis. 2d 106, 117, 515 N.W.2d 293 (Ct. App. 1994). It is only when the contract on its face is ambiguous that we may look outside the contract to extrinsic evidence to determine the intent of the parties. See id. at 118 n.3. Whether a contract is ambiguous is a question of law, which we review de novo. Id. at 115.

¶ 22. As is evident from the mere recitation of these well-established principles, the Reconciliation Payment Calculation may not serve to create an ambiguity in the contract between the parties. That contract is expressed in the addendum, and the language on the method of reconciliation is not ambiguous. The Reconciliation Payment Calculation for 1995 is not part of the addendum but is simply Unity's own calculation of the reconciliation payments. We conclude the trial court correctly decided that the provisions on the reconciliation payments expressed in the addendum governed the computation of reconciliation payments for 1995.

Expert Witnesses

¶ 23. During the trial on damages, Teff and Dr. Jeff Wilder testified on the projected lost revenues for 1997 resulting from Unity's termination of the contract effective January 1, 1997. Unity objected to their testimony on this topic on the ground that they were providing expert testimony. They were not qualified to testify as experts, Unity argued, and they had not been identified as expert witnesses. The court allowed Teff and Wilder to testify on matters related to their own businesses, explaining that it did not view this as expert testimony. The court did not allow Unity to present two witnesses — a chiropractor and a financial expert — on the ground that they were not identified as required by the scheduling order, no motion to amend the order had been timely brought, and it was too late in the proceedings to allow witnesses who had not been identified or deposed.

¶ 24. Unity contends that Teff and Wilder did not have the expertise required to testify on projected economic losses, and that the court committed legal error because it applied a different standard to Unity than it did to Teff and Soderholm-Wilder by allowing Teff and Wilder to testify, but not Unity's experts.

¶ 25. We begin by examining each of the trial court's decisions on these witnesses separately, and we do so applying a deferential standard of review. The decision whether a witness is competent to testify on a particular matter is within the trial court's discretion, Love v. State, 64 Wis. 2d 432, 439, 219 N.W.2d 294 (1974), as is the decision whether to permit a witness to testify who was not identified as required by court order. Siker v. Siker, 225 Wis. 2d 522, 535, 593 N.W.2d 830 (Ct. App. 1999).

¶ 26. In order to establish lost revenues for 1997, Teff and Wilder estimated the capitation and reconciliation payments they would have received under the Unity contract for that year. They first calculated the percentage of total Unity chiropractic patients each saw in 1995 based on their own records and information provided by Unity. Teff and Wilder explained the basis for their reasoning that their percentage of Unity's chiropractic patients would have been at least as great in 1997 as in 1995, which included the total number of Unity's chiropractic providers during the relevant period. They also testified that 1995 was a more reliable indicator than 1996 because the number of Unity patients they had in 1996 was adversely affected by certain actions of Unity related to this dispute. To arrive at their lost 1997 capitation payments, they applied the 1995 percentage to the total capitation payments Unity made to chiropractors in 1997, which information Unity provided in discovery. To arrive at their lost 1997 reconciliation payments, they applied the 1995 percentage to an estimate of the total reconciliation payments Unity made to chiropractors in 1997; the estimate was based on the ratio of 1996 capitation payments to 1996 reconciliation payments, applied to the 1997 capitation payments. They explained that Unity had not provided the actual amount of 1997 reconciliation payments in response to discovery requests.

¶ 27. In deciding to admit this testimony, the court reasoned that, as business owners, Teff and Wilder were competent to testify on the value of their businesses. The court relied on D'Huyvetter v. A.O. Smith Harvestore, 164 Wis. 2d 306, 323, 475 N.W.2d 587 (Ct. App. 1991) (general rule in Wisconsin is that nonexpert owners may testify to the value of their property; weight is for the trier of fact). It accepted Teff s and Wilder's testimony, based on their records, of their percentages of all Unity patients for 1995, and it accepted their reasons for their estimation that the percentage in 1997 would have been at least as great, including finding that 1995 was a more reliable indicator than 1996. The court found their estimation of the total 1997 reconciliation payment reasonable because Unity had not timely provided that information in discoveiy.

¶ 28. We conclude that the court properly exercised its discretion in allowing Teff and Wilder to testify on the lost capitation and lost reconciliation payments for 1997 and in relying on that testimony. On those points, their testimony was based on detailed records they kept in the course of their business, and on the knowledge and experience they had acquired from running their chiropractic businesses, and that is sufficient. See Black v. Gen. Elec., 89 Wis. 2d 195, 212, 278 N.W.2d 224 (Ct. App. 1979).

¶ 29. We also conclude the court properly exercised its discretion in not allowing Unity's two witnesses to testify. A trial court has broad discretion in deciding how to respond to untimely motions to amend scheduling orders because that broad discretion is essential to the court's ability to manage its calendar. Schneller, 162 Wis. 2d at 310, The trial court's decisions to exclude these two witnesses were well within that broad range of authority.

¶ 30. Unity provided a witness list on May 30, 2000, which listed neither as a witness, but did state "Additional Madison-Area Chiropractors — (to be identified)." The evidentiary hearing on damages began on November 15, 2000, and took place over six days between that date and August 21, 2001. On the second last day, June 28, 2001, Unity sought to have the chiropractor testify, although it had not until that time identified him as a witness. Teff and Soderholm-Wilder objected. The only reason Unity gave for not having identified him sooner was that he was a rebuttal witness and it was not possible to fully identify rebuttal witnesses until the plaintiffs' case had been presented. However, it was evident from Unity's description of the chiropractor's proposed testimony that he was not responding to unanticipated testimony. The court reasonably concluded that it would unnecessarily prolong the trial to have the chiropractor testify when he had not .been deposed earlier. The court also took into account that his proposed testimony — the nature of his own business practices — would not be useful in determining contract damages for Teff and Soderholm-Wilder. When Unity expressed a desire to call an expert to testify on contract damages, the court made clear that if Unity wanted to do that, it would need to move the court in writing to amend its witness list; the court emphasized that Unity had known what Teffs and Wilder's testimony would be at trial, and there had been adequate opportunity before this point in the trial to identify rebuttal witnesses.

¶ 31. The next day of the hearing — the last day— took place on August 21, 2001. In spite of the court's clear explanation of what Unity needed to do if it wanted to have the court consider its request to call an expert, Unity did not file a motion to amend the witness list and permit it to call an expert until that morning, having faxed a copy to opposing counsel the night before. The court acted reasonably in denying the motion, thoroughly explaining its reasons: Unity had known of the plaintiffs' theory of damages since at least September 2000, and had plenty of time to develop a theory of defense and retain an expert; the evidentiary hearing had begun in November 2000 and already taken five days; Unity had already forfeited time on June 28, 2001, because it did not have witnesses ready to testify; the court had made clear on that date that a motion would have to be made immediately for the court to even consider a request to- call an expert witness; and the witness had not yet been deposed.

¶ 32. There is no merit to Unity's contention that the trial court acted unfairly and committed "legal error" in making these decisions regarding Unity's proposed witnesses while permitting Teff and Wilder to testify. Teff and Wilder were timely disclosed as witnesses, and Mackey and the financial expert were not. The court was consistent in its view that testimony about one's own business was admissible: it permitted employees of Unity to testify on matters of Unity's business of which they had firsthand knowledge, just as it did Teff and Wilder.

Amount of 1997 Losses

¶ 33. Unity argued in the trial court, as it does on appeal, that any damages for lost revenues for 1997 must be offset by amounts Teff and Soderholm-Wilder were able to earn that year without Unity patients. Unity relied as evidence for the offset on an exhibit (exhibit 99) showing the gross and net revenues for Teff and Soderholm-Wilder from 1994 through 1998, based on their tax returns, which showed an increase from 1996 to 1997. According to Unity, the amount of offset for Teff can be computed by taking the percentage of increase in gross revenues from 1995 to 1996, which was 17%, assuming the same percentage of increase from 1996 to 1997, and subtracting from the resulting projected figure for 1997 the actual gross revenues for 1997, which results in the sum of $35,512. For Soderholm-Wilder, Unity relies on Wilder's testimony that a well-run chiropractic business should see a 10% to 12% increase in gross revenues, and uses 12% to project the increase in gross revenues from 1996 to 1997, then subtracts from that the actual gross revenues, which results in the sum of $49,260. In Unity's view, these sums are the maximum amounts of profits that Teff and Soderholm-Wilder lost because Unity terminated the contract for 1997.

¶ 34. The trial court agreed that contract damages should be offset by losses that were avoided, and decided that Unity had the burden on this issue to present evidence from which the court could make a reasonable estimate of the amount of an offset. The court determined that Unity had not met its burden because exhibit 99 did not separate revenue from Unity patients from revenue from other patients, and it was therefore impossible to determine from that document what the amount of the offset should be.

¶ 35. On appeal, Unity appears to acknowledge in its main brief that it has the burden of proving the revenues that Teff and Soderholm-Wilder would not have earned in 1997 if they had had a contract with Unity for 1997. However, some arguments in Unity's reply brief suggest Unity believes Teff and Soderholm-Wilder had the burden of proof on this issue. To resolve any uncertainty, we will decide the issue, which, since it is a question of law, we review de novo. Long v. Ardestani, 2001 WI App 46, ¶ 33, 241 Wis. 2d 498, 519, 624 N.W.2d 405 (the allocation of the burden of proof is a question of law, which we review de novo). We conclude the trial court correctly assigned the burden of proof on this issue to Unity. Although the case law on this point is more than 100 years old, it remains good law: when a defendant contends that the lost profits from a contract breach should be reduced by other business the plaintiff was able to conduct as a result of not having to perform on that contract, it is the defendant's burden to prove the plaintiff could not have done both. Nash v. Hoxie, 59 Wis. 384, 388-90, 18 N.W. 408 (1884).

¶ 36. Unity contends on appeal that it did meet its burden of proof based on the undisputed facts of the revenues as shown on the tax returns and Wilder's testimony on the expected increase in gross revenues of a well-run clinic. While these items of evidence may be undisputed, their use in the particular calculations to prove what Teff and Soderholm-Wilder would have made in 1997 rests upon a number of factual assumptions that were disputed. For example, Unity's method assumes that Teff and Soderholm-Wilder were at full capacity in 1995 and 1996, but there was evidence and reasonable inferences from the evidence indicating they were not. Unity's method also assumes that the proportion of Unity patients to non-Unity patients had no impact on revenue, but there was evidence and reasonable inferences from evidence that it did. In short, there was extensive testimony on a number of factors that affected Teff s and Soderholm-Wilder's revenues, none of which Unity's calculation took into account.

¶ 37. As the trier of fact, it was for the trial court to determine both the credibility of the witnesses, Gehr v. City of Sheboygan, 81 Wis. 2d 117, 122, 260 N.W.2d 30, 33 (1977), and the weight to be given to each witness's testimony, Milbauer v. Transport Employes' Mutual Benefit Society, 56 Wis. 2d 860, 865, 203 N.W.2d 135, 138 (1973). We do not overturn the trial court's findings of fact unless they are clearly erroneous. Wis. Stat. § 805.17(2) (2001-02). We conclude the evidence supported the trial court's determination that Unity's calculation was not a reliable basis for determining the amount of revenues Teff and Soderholm-Wilder would have had in 1997 if the contract had not been terminated.

Defamation Damages

¶ 38. At the evidentiary hearing, Teff and Soderholm-Wilder presented evidence of statements made by Unity representatives to Teff s and Soderholm-Wilder's patients, which included the following: Teff and Wilder charged more than they were worth, they were less competent than Unity's other providers, and they did not want to remain Unity providers. The court found these and other similar statements challenged the professional integrity of Teff and Wilder and conveyed inaccurate information about why they would no longer be Unity providers in 1997. The court also credited Wilder's testimony that Soderholm-Wilder "has never recovered" from the impact of Unity's defamatory statements, and Teff s testimony that his percentage of new patients declined due to Unity's negative comments about his integrity. The court inferred from the testimony of Teff and Wilder and their patients that Unity's statements had harmed Teffs and Wilder's reputations, although it also found that their reputations had not been substantially injured because they continued to have successful businesses.

¶ 39. Unity contends there is no evidence to support the award of $10,000 each to Teff and Soderholm-Wilder for defamation damages because they presented no evidence of damages in addition to damages for breach of contract, and the witnesses who were patients testified that Unity's actions had not affected their high esteem for Teff and Wilder.

¶ 40. Slanderous statements that impugn one's business or profession belong to a category typically called "slander per se" and are actionable without proof of pecuniary loss. Martin v. Outboard Marine Corp., 15 Wis. 2d 452, 459, 113 N.W.2d 135 (1962). In such cases "proof of the defamation itself is sufficient to establish the existence of some damages so that the [fact finder] may, without other evidence, estimate the amount of damages." Starobin v. Northridge Lakes Dev. Co., 94 Wis. 2d 1, 13, 287 N.W.2d 747 (1980) (citation omitted). The nonpecuniary injury that damages in defamation cases compensate for include impairment to reputation and standing in the community, personal humiliation, and mental anguish and suffering. See Denny v. Mertz, 106 Wis. 2d 636, 659, 318 N.W.2d 141 (1982), citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 349-50 (1974).

¶ 41. When we review a damage award in either a bench or jury trial, we do not substitute our judgment for that of the fact finder, hut rather determine whether the award is within reasonable limits, and we view the evidence in the light most favorable to support the damage award. Cords v. Anderson, 80 Wis. 2d 525, 552-53, 259 N.W.2d 672 (1977). Applying this standard, we conclude the award of $10,000 to Teff and to Soderholm-Wilder was reasonable. The trial court expressly stated that the damages for defamation could not duplicate the damages for the contract claims, which in any event only extended through 1997, and that the basis for the award was the harm to reputation and professional standing. Teff and Soderholm-Wilder did not have to present evidence that the harm to Teff s and Wilder's reputations translated into a loss of income. The fact that some patients continued to have a favorable impression of Teff and Wilder, in spite of the statements, does not require the trial court to find they suffered no harm to their reputations, because there was other evidence that supported a reasonable inference that the statements had harmed their reputations. As the jury instruction, which the trial court looked to for guidance, provides: "It is not required that [plaintiff] prove damages by any financial yardstick measuring dollars and cents. Injury to reputations, good name, and feelings are not subject to mathematical calculations or certainty." Wis JI — Civil 2516.

Prejudgment Interest

¶ 42. Unity contends the court erred in awarding prejudgment interest on the damages on the breach of contract claims because those damages were not liquidated or liquidable. Since a party’s entitlement to prejudgment interest is a question of law, our review on this issue is de novo. Beacon Bowl v. Wis. Elec. Power Co., 176 Wis. 2d 740, 776, 501 N.W.2d 788 (1993).

¶ 43. The general rule is that prejudgment interest may be recovered only when damages are either liquidated or liquidable, that is, there is a reasonably certain standard of measurement by the correct application of which one can ascertain the amount he or she owes. Johnson v. Pearson Agri-Systems, Inc., 119 Wis. 2d 766, 771, 350 N.W.2d 127 (1984). The most frequently stated rationale for the rule is that if the amount of damages is either liquidated or determinable by reference to some objective standard, the defendant can avoid the accrual of interest by simply tendering to the plaintiff a sum equal to the amount of damages. Id. The case law applying this rule has staked out a middle ground between two competing policies: one policy views interest as a penalty for wrongfully withholding damages legally due, and the other views interest as an element of compensation. Beacon Bowl, 176 Wis. 2d at 777. Thus, the cases attempt to balance the right of the injured party to receive full compensation against the right of the withholding party to be free of a claim for interest where refusal to pay the claim is legally justifiable. Wyandotte Chem. Corp. v. Royal Elec. Mfg., 66 Wis. 2d 577, 585, 225 N.W.2d 648 (1975). The question whether damages in a particular case are liquidable is not always easy to resolve. Dahl v. Housing Auth. of the City of Madison, 54 Wis. 2d 22, 31, 194 N.W.2d 618 (1972).

¶ 44. In this case the damages on which the court awarded prejudgment interest are: (1) reconciliation payments for 1995 as damages for breach of the 1995 contract, (2) fees for services actually provided Unity patients for one month in 1997 at the request of Unity, and (3) the lost revenues for 1997 resulting from Unity's breach of the terms of the 1996 contract regarding termination of that contract. We examine separately each set of damages to determine whether they are "liquidable," as that term has been defined in the case law.

¶ 45. With respect to the 1995 reconciliation payments, the dispute was whether the method of computation was determined by the addendum alone or by the addendum in conjunction with the Reconciliation Payment Calculation for 1995. Unity contends that when there is a dispute over what is owed under a contract, the amount owed cannot be ascertained by a reasonably certain standard without a trial, relying on Loehrke v. Wanta Builders, Inc., 151 Wis. 2d 695, 707, 445 N.W.2d 717, 722 (Ct. App. 1989). InLoehrke, we concluded that, because there was a real dispute over which of the extra charges by the subcontractor were necessary and properly authorized, prejudgment interest was not due on that amount, but only on the amount that the prime contractor did not dispute at trial. Id. at 700, 707. In this case, the dispute over the proper method under the contract for determining the amount of reconciliation payments did not require the resolution of factual issues, and Unity identifies no factual issues that needed to be resolved in order to apply that method. Accordingly, we do not agree that Loehrke precludes the award of prejudgment interest on the 1995 reconciliation payments.

¶ 46. Instead, we conclude that the 1995 contract did provide a "reasonably certain method" for determining the amount of the reconciliation payments. The language of the 1995 addendum plainly sets forth that method, and Unity has identified no factual disputes that needed resolution in order to apply that method. Unity could have chosen to stop the interest by paying that amount; instead it chose to advance a construction of the contract that we have concluded is not reasonable. Prejudgment interest in this case is in keeping with the rationale of the rule and strikes the proper balance between full compensation to the plaintiff and the right of the defendant to be free of a claim for interest where refusal to pay is legally justifiable.

¶ 47. Our conclusion is also consistent with Jones v. Jenkins, 88 Wis. 2d 712, 726, 277 N.W.2d 815, 821 (1979), which no party cites, but which is helpful because it concerns prejudgment interest in a case involving the construction of a contract. In Jones, the trial court had to construe a contingency fee agreement in order to determine the amount an attorney was owed. The trial court concluded that the contract was ambiguous and took evidence relating to the parties' intent; the construction of the contract was thus a question of fact. Id. at 718, 720, 722. The supreme court affirmed both the trial court's ruling that the contract was ambiguous and the trial court's construction of the contract based on the evidence. Id. at 725-26. The supreme court also affirmed the denial of prejudgment interest, giving as one reason that "[wjhere the dispute goes to the very method of calculating the amount owed, prejudgment interest is not appropriate." Id. at 726. In Jones, the contract language determining the amount owed was ambiguous, meaning there were two reasonable constructions of that language. See Borchardt v. Wilk, 156 Wis. 2d 420, 427, 456 N.W.2d 653 (Ct. App. 1990). In.this case there was only one reasonable construction, and, thus, by definition a reasonably certain standard by which Unity could determine the amount of reconciliation payments it owed Teff and Soderholm-Wilder.

¶ 48. With respect to the fee for services Teff and Soderholm-Wilder provided Unity patients for January 1997, Unity agreed during the hearing that it owed Teff and Soderholm-Wilder the amounts they were requesting. That stipulation implicitly concedes that there were no genuine factual disputes that needed resolution in order to determine how much Unity owed for those services. When there is full recovery for work done under a contract and the record shows no more than putting the plaintiff to his or her proof, prejudgment interest is allowed. Dahl, 54 Wis. 2d 22 at 32-33. When, as here, the party who has withheld payment concedes during trial the amount requested is owing, there is an unquestionable entitlement' to prejudgment interest. See Loehrke, 151 Wis. 2d at 700, 707 (allowing prejudgment interest on the amount conceded at trial).

¶ 49. With respect to the damages for lost revenues for 1997, the analysis is different because these damages were not based on services actually provided by Teff and Soderholm-Wilder. It was necessary to estimate the number of Unity patients Teff and Soderholm-Wilder each would have seen under the contract during 1997, based on evidence of what had occurred in the past, as well as relevant circumstances in 1997, and reasonable inferences from that evidence. The parties disputed which past years and trends should be the basis for an estimate of Unity patients for 1997, whether increased variable costs should be taken into account, and, as discussed in the a preceding section of this opinion, whether Teff and Soderholm-Wilder would have received all the revenues they actually did receive in 1997 in addition to revenues under the contract if it had not been terminated. There was also conflicting evidence over whether Teff and Soderholm-Wilder lost income for new patient referrals as a result of the contract termination; the court found they had not proved this. In short, there were a number of factual issues that needed resolution in order to determine the amount of lost income in 1997.

¶ 50. As we have already stated, in Loehrke, 151 Wis. 2d at 707, we did not allow prejudgment interest for the portion of the damage award that required a resolution of factual issues. Subsequently, in Chevron Chemical Co. v. Deloitee & Touche, 176 Wis. 2d 935, 951, 501 N.W.2d 15 (1993), the court remanded for a trial on damages for negligent and intentional representation after affirming a default judgment on liability and stated: "Because there are issues of fact regarding damages, the damages are not liquidated or liquidable." In keeping with these cases, we conclude the trial court erred in allowing prejudgment interest on the amount awarded to compensate for lost revenues in 1997. It is true that, once the court decided to use the plaintiffs' projections of the Unity patients they would have served under the contract in 1997, the lost capitation and lost reconciliation payments for 1997 could be readily calculated based on the totals of capitation and reconciliation payments made by Unity in 1997 and the plain contract language. However, the court's decision to use the plaintiffs' projections was the result of its resolution of various factual issues, as was its decision not to allow an offset and its decision not to compensate for lost new patient referrals.

¶ 51. We do not agree with Teff and Soderholm-Wilder that Weyenberg Shoe Manufacturing Co. v. Seidl, 140 Wis. 2d 373, 410 N.W.2d 604 (Ct. App. 1987), supports prejudgment interest on lost 1997 income. In that wrongful employment termination case, we concluded in a brief discussion that there was a reasonably certain standard by which to measure those damages, which consisted of wages and benefits lost as a result of the wrongful discharge, and therefore prejudgment interest should have been allowed. Id. at 388-89. However, the issues we resolved in that case related to the employer's liability; there is no indication that there were factual issues that needed to be resolved to decide the amount of damages.

Cross-Appeal — Promissory Estoppel

¶ 52. The promissory estoppel claim was based on Teff s and Wilder's position that they relied on Unity's representations that they would be awarded "rolling" one-year contracts or a five-year contract and that their relationship would be longterm. As we have explained above, the court entered an order that default judgment be entered on this claim, along with other claims, and scheduled a hearing on damages. In their brief filed after that hearing, Teff and Soderholm-Wilder argued that they were entitled to lost revenues for 1997 and subsequent years based on this claim. One of Unity's responses in its brief was that Teff and Soderholm-Wilder were not entitled to any damages for this claim because a promissory estoppel claim did not lie when there was a contract between the parties. In their reply brief, Teff and Soderholm-Wilder argued that liability on the promissory estoppel claim had been determined by the default judgment.

¶ 53. The trial court agreed with Unity that the plaintiffs were not entitled to damages based on promissory estoppel because they had a contract with Unity that addressed the essential elements of the parties' relationship. The court relied on the rule that a contract is an absolute bar to a promissory estoppel claim, unless it does not embody all the essential elements of the business relationship. Goff v. Massachusetts Protective Assoc., Inc., 46 Wis. 2d 712, 717, 176 N.W.2d 576 (1970); Kramer v. Alpine Valley Resort, Inc., 108 Wis. 2d 417, 421, 321 N.W.2d 293, 295 (1982). The court explained that the default judgment had relieved the plaintiffs of proving the first two elements of the claim, which are factual, but that the third element remained a policy issue for the court in spite of the default judgment.

¶ 54. On their cross-appeal, Teff and Soderholm-Wilder contend the trial court did not have the authority to rule on the third element of the promissory estoppel claim at the time and using the procedure that it did. They acknowledge that the third element of the claim was a matter for the court to decide, but assert, as they did in the trial court, that the default judgment necessarily entailed a conclusion by the trial court that they were legally entitled to judgment on that claim, which includes a conclusion that the third element was met. In their view, the court could reconsider that conclusion only under Wis. Stat. § 805.17(3), which requires that amendments to a trial court's findings and conclusions be made within twenty days and after the parties have had the opportunity to be heard. Since the court did not comply with § 805.17(3), they assert, they are entitled to reinstatement of the promissory estoppel claim and a remand for a trial on damages for this claim.

¶ 55. Unity does not agree that the default judgment entailed a decision that the third element of the claim was established. It therefore responds that the court did not reconsider anything, but instead properly made the decision on the third element after the evidentiary hearing on damages. Alternatively, Unity argues that even if the court did reconsider a prior ruling, Wis. Stat. § 805.17(3) does not apply.

¶ 56. Whether the court acted within its statutory or common law authority presents a question of law, which we review de novo. See Harvest Sav. Bank v. ROI Inv., 228 Wis. 2d 733, 737, 598 N.W.2d 571 (Ct. App. 1999).

¶ 57. In resolving this issue, we need not decide whether the default judgment necessarily implied a conclusion that the third element was established as well as the first two. Even if it did, nothing precluded the court from considering the issue when raised by Unity in its brief after the hearing on damages. A court has the inherent authority to reconsider a nonfinal ruling any time prior to the entry of the final order or judgment. Fritsche v Ford Motor Credit Co., 171 Wis. 2d 280, 293-94, 491 N.W.2d 119 (Ct. App. 1992). The order for the entry of a default judgment was not a final order, because it expressly ordered further proceedings to determine damages.

¶ 58. We reject Teffs and Soderholm-Wilder's argument that the court was limited to acting within the confines of Wis. Stat. § 805.17(3). That subsection provides in part:

(3) RECONSIDERATION motions. Upon its own motion or the motion of a party made not later than 20 days after entry of judgment, the court may amend its findings or conclusions or make additional findings or conclusions and may amend the judgment accordingly. The motion may be made with a motion for a new trial.

Our analysis of § 805.17(3) in Continental Casualty Co. v. Milwaukee Metropolitan Sewerage District, 175 Wis. 2d 527, 533-34, 499 N.W.2d 282 (Ct. App. 1993), is pertinent. There we concluded that § 805.17(3) did not apply to a motion for reconsideration of a summary judgment. We based this conclusion on the following: (1) minutes from Judicial Council meetings that indicated this was intended to apply only to bench trials; (2) the context of this subsection — in a section entitled "Trial to the Court" establishing procedures for trials to the court and in a chapter entitled "Trials"; and (3) on the language of the subsection, which refers to "findings." Id. at 532-34. With respect to the last factor, we pointed out that courts do not -make findings at the summary judgment stage. Id. at 533-34.

¶ 59. Teff and Soderholm-Wilder argue that our reasoning in Continental Casualty is not applicable here, because a trial court does make findings of fact in deciding whether the criteria for granting a default judgment are met, unlike in a summary judgment proceeding. We disagree for two reasons: first, the findings on egregiousness and justifiable excuse were not the subject of reconsideration by the court; rather, to the extent the court reconsidered anything, it was whether a default judgment should have been entered on the promissory estoppel claim in view of the legal principles applicable to that claim. More importantly, the first two bases for our decision in Continental Casualty compel the conclusion in this case that Wis. Stat. § 805.17(3) does not apply: a default judgment on liability is not the result of a trial.

¶ 60. Teff and Soderholm-Wilder also assert they did not have notice that the court was going to reconsider the default judgment on the promissory estoppel claim before the hearing on damages, and this prejudiced them because they did not have the opportunity to present evidence that the contract with Unity did not govern all essentials of their relationship with Unity. However, they do not provide any detail as to what evidence they would have presented, and they are not seeking as a remedy on appeal the opportunity to that evidence. In the trial court they had the opportunity to present argument to the trial court in response to Unity's post-trial brief, and they did. They did not in that brief request a hearing to present additional evidence or identify the evidence they would have presented had they known Unity was going to raise this issue. The best we can glean from their brief on appeal is that they would have presented evidence that Unity promised a long-term relationship and continued renewals of the contract and, since these promises were not embodied in the written contract, the written-contract did not govern all the essentials of their relationship. However, this is evidence of the promises they assert were made; it does not address the completeness of the contract. In short, Teff and Soderholm-Wilder have not persuaded us that their substantial rights were affected by not knowing before the hearing on damages that Unity was going to raise the contracts as a bar to the promissory estoppel claim.

¶ 61. Turning to the merits of the court's decision on this issue, Teff and Soderholm-Wilder have identified no error, and we conclude there is none. We agree with the trial court that the plain language of the 1995 and 1996 contracts addressed the essentials of the business relationship between Unity on the one hand, and Teff and Soderholm-Wilder on the other. Most important for purposes of this case, the contracts were clearly limited to terms of one year with clear provisions for renewal and for termination. The trial court correctly reasoned that the very purpose of the rule is to prevent a party from accomplishing under a promissory estoppel claim what it cannot accomplish under the principles of contract construction — resort to extrinsic evidence to establish terms of a contract that are not contained in the plain language of the contract and are inconsistent with it. Accordingly, we affirm the trial court's ruling that Teff and Soderholm-Wilder were not entitled to damages on the promissory estoppel claim.

By the Court. — Judgment and order affirmed in part; reversed in part and cause remanded with directions.

       At the hearing, Unity's new counsel stated that he understood from remaining in-house counsel that the departure was not voluntary, that there had been discussion about finding other employment, but the actual departure was abrupt and unexpected.

       In Unity's post-hearing brief in the trial court, it asserted that if the proper reconciliation procedure were applied, the maximum amount owed to Teff would be $22,143, and the maximum amount owed to Soderholm-Wilder would be $12,387.

       In contrast, the court found that Teffs and Wilder's testimony estimating lost referrals for 1997 and their extrapolation from that to the value of those lost referrals went beyond their expertise as chiropractors, and therefore it did not award any damages for lost referrals. That finding is not at issue on this appeal.

       Many of the facts Unity sets forth in its statement of facts on this issue are from the offer of proof of what the financial expert would have testified to had the court allowed it. Since we have concluded the court properly exercised its discretion in not allowing his testimony, we do not consider his proposed testimony.

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

       Either slander (oral) or libel (written) may be the basis for a defamation claim. Martin v. Outboard Marine Corp., 15 Wis. 2d 452, 457, 113 N.W.2d 135 (1962). In contrast to slander, all libels are actionable without alleging or proving special damages. Id. at 461-62. Whether based on slander or libel, a defamation claim has these elements: the statement must be false, must be communicated by speech, conduct, or in writing to a person other than the person defamed; and the communication is unprivileged and tends to harm one's reputation so as to lower him or her in the estimation of the community or to deter thirdpersons from associating with him or her. Mach v. Allison, 2003 WI App 11, ¶ 12, 259 Wis. 2d 686, 656 N.W.2d 766. In this case, these elements were established by means of the default judgment, although the proof of damages necessarily involved evidence that also would be relevant to prove the elements of the claim.

       Unity also makes a brief and undeveloped argument that, as a matter of law, Teff and Soderholm-Wilder were not entitled to any damages because they disseminated the information they alleged was defamatory. Unity refers generally to evidence that Teff and Wilder contacted their patients and informed them that Unity had decided not to contract with them, but does not describe the specific statements Teff and Wilder made to their patients, does not provide a record cite, and does not explain the rather startling implication of their argument that Teff and Wilder made statements that impugned their own professional integrity. Because this argument is so undeveloped, we do not address it. See State v. Pettit, 171 Wis. 2d 627, 646, 492 N.W.2d 633 (Ct. App. 1992).

       The elements of a claim for promissory estoppel are a promise that: (1) the promisor reasonably should have expected would induce substantial action or inaction, (2) did induce such action or inaction, and (3) must be enforced in order to avoid injustice. Hoffman v. Red Owl Stores, Inc., 26 Wis. 2d 683, 698, 133 N.W.2d 267 (1964). Whether the first two elements have been established is a question for the trier of fact; whether the third element has been established is a policy decision for the court. U.S. Oil v. Midwest Auto Care Services, 150 Wis. 2d 80, 89, 440 N.W.2d 825 (Ct. App. 1989).


source: Caselaw Access Project

author: CANE, C.J.

license: Public Domain

text:
    Brenda Beaudette, Teresa K. Col'on, and Mitchell Lang, Plaintiffs-Respondents-Cross-Appellants, v. Eau Claire County Sheriff's Department, Defendant-Appellant-Cross-Respondent.
    Court of Appeals

      No. 02-2916.

      Oral argument May 12, 2003.

    — Decided June 3, 2003.

    2003 WI App 153
    (Also reported in 668 N.W.2d 133.)

      On behalf of the defendant-appellant-cross-respondent, the cause was submitted on the briefs of and oral argument by James R. Scott of Lindner & Marsack, S.C. of Milwaukee.
    On behalf of the plaintiffs-respondents-cross-appellants, the cause was submitted on the brief of Carol S. Dittmar and Teresa E. O'Halloran of Garvey, Anderson, Johnson, Geraci & Mirr, S.C. of Eau Claire. There was oral argument by Carol S. Dittmar.

    Before Cane, C.J., Hoover, PJ., and Peterson, J.
   CANE, C.J.

¶ 1. The Eau Claire County Sheriffs Department appeals a judgment awarding three former employees back pay and the employees cross-appeal the award of their attorney fees. The employees resigned from the department while it was negotiating a new collective bargaining agreement with the union. The previous contract, however, had expired, and when the employees left, the department and the union had not reached a new agreement. After the new agreement was signed, the employees sought, and were eventually awarded, retroactive pay by the circuit court.

¶ 2. On appeal, the department argues the court erred when it determined that (1) the employees' claims were not barred by the statute of limitations; (2) the employees were not required to exhaust their remedies under the collective bargaining agreement; and (3) the collective bargaining agreement provided wages to the employees. The department also argues Wis. Stat. ch. 109, under which the employees sought relief, was inappropriate to resolve this dispute. In addition, the employees cross-appeal the circuit court's award of attorney fees, claiming the court erred when it reduced the amount of fees they requested.

¶ 3. We conclude that the employees were not required to exhaust their contractual remedies because the department repudiated the collective bargaining agreement when it failed to process the employees' grievance. Further, we determine that the employees' claims were not barred by the statute of limitations and that they were entitled to back pay under the new agreement. In addition, we are satisfied Wis. Stat. ch. 109 was an appropriate vehicle to resolve this dispute. Finally, the court did not err in its award of attorney fees. Therefore, we affirm the judgment.

Background

¶ 4. Brenda Beaudette, Teresa Col'on, and Mitchell Lang all worked for the Eau Claire County Sheriffs Department until February or June 1998. They were members of the municipal employees' union and worked under the terms of collective bargaining agreements. When one of these agreements expired on December 31,1995, the department and the union had not negotiated its successor, and did not do so until July 1998. The new agreement provided for increased wages and its effective dates were January 1, 1996, through December 31, 1999. All current employees received retroactive wage increases.

¶ 5. On August 5, 1998, the County personnel committee denied retroactive pay to employees who had stopped working for the County during the negotiations. On September 25, the union filed a grievance requesting back pay on the employees' behalf. On both September 30 and October 7, the department sent the union correspondence that it was taking the position that the employees lacked standing to grieve. The union notified the employees of the department's stance on October 10 and did not take any further action on the employees' behalf.

¶ 6. On July 10, 2000, the employees filed a notice of claim under Wis. Stat. § 893.80 and on December 29 commenced a Wis. Stat. ch 109 wage claim in circuit court. Both parties moved for summary judgment. The department argued that (1) the employees failed to exhaust administrative remedies under the collective bargaining agreement; (2) their wage claim was barred by the statute of limitations; (3) they were not entitled to back pay under the new agreement; and (4) that the employees' claim was not for "wages" under ch. 109. The employees claimed the new agreement entitled them to back pay because they worked for the department during the new agreement's effective dates. They also argued the department was estopped from denying back pay because it had been given to another employee who left the bargaining unit during the interim period, but still worked for the County.

¶ 7. The trial court awarded the back pay. It concluded the employees did not have to exhaust their remedies under the collective bargaining agreement because the department had refused to allow their grievance to proceed. In addition, the court concluded the Wis. Stat. § 893.44(1) two-year statute of limitations of had not begun to run until October 10, when the union representative informed the employees their grievance had been denied. The court further determined the statute of limitations was tolled by 120 days because the employees filed the notice of claim under Wis. Stat. § 893.80. Also, the court concluded the employees were entitled to $7,872.06 in back pay under the new bargaining agreement. Finally, the court determined Wis. Stat. ch. 109 applied to the employees' claim, although it refused to award penalties allowed under that chapter and reduced the employees' claimed attorney fees from $14,087 to $9,500 and awarded costs of $2,312.18. The department appeals and the employees cross-appeal.

Discussion

¶ 8. We first address the department's claim the employees failed to exhaust their contractual remedies and therefore should have been barred from seeking relief in court. Whether the employees exhausted their remedies under the collective bargaining agreement requires us to interpret the agreement. This presents a question of law that we review independently of the circuit court. See Wisconsin Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶ 22, 233 Wis. 2d 314, 607 N.W.2d 276.

¶ 9. Under the collective bargaining agreement, the employees are represented by the Wisconsin Professional Police Association/Law Enforcement Employee Relations Division. The agreement contains a grievance and arbitration procedure. Grievances that involve the interpretation or application of the agreement must be submitted to the personnel director, who then presents the dispute to the personnel committee. After the committee has made a decision, either party may take the grievance to arbitration by the Wisconsin Employment Relations Commission.

¶ 10. Grievance and arbitration procedures included in a collective bargaining agreement are presumed to be exclusive remedies unless the parties to the agreement expressly agree that they are not. See Mahnke v. WERC, 66 Wis. 2d 524, 529, 225 N.W.2d 617 (1975) (citing Vaca v. Sipes, 386 U.S. 171, 184 n.9 (1967)). An employee who fails to exhaust exclusive remedies is foreclosed from suing the employer on a claim arising from the contract. See Mahnke, 66 Wis. 2d at 529. Courts have recognized three exceptions to this rule. First, when the employer's conduct amounts to a repudiation of the collective bargaining agreement, the employee may proceed directly against the employer in court. Vaca, 386 U.S. at 185. In such a situation, the employer is estopped by its own conduct to rely on the contractual procedures as a defense to the employee's trial court claim. Id. The second exception is where the union has sole power under the contract to invoke the higher stages of the grievance procedures and where the employee has been prevented from exhausting his contractual remedies by the union's wrongful refusal to process the grievance. Id. Finally, an employee may proceed against an employer in court after demonstrating that pursuing the contractual remedies would be futile. See D'Amato v. Wisconsin Gas Co., 760 F.2d 1474, 1488 (7th Cir. 1985).

¶ 11. The collective bargaining agreement is silent regarding the exclusivity of its remedies; therefore, we assume the parties intended them to be exclusive. See Mahnke, 66 Wis. 2d at 529. We must then decide what consequences the parties' actions have under the agreement and Vaca. While the employees did not exhaust their contractual remedies, the parties dispute who is at fault for this failure. The department argues the blame lies with the employees, acting through the union, for failing to take the matter to arbitration as either party is allowed to do under the contract. The employees, however, contend that the department repudiated the contractual remedies when it claimed the employees had no standing to grieve and, as a result, they should be able to pursue their contractual claim in court.

¶ 12. An employer repudiates the contractual remedies when it anticipatorily rejects those remedies. See Bailey v. Bicknell Minerals, Inc., 819 F. 2d 690, 692 (7th Cir. 1987). An employer has repudiated the contractual remedies when it no longer considers them binding and therefore frustrates the complaint's processing. See id.; D'Amato, 760 F.2d at 1488. The only evidence of repudiation is the county personnel director's correspondence with the union. The meaning of words in a document is a question of law we review de novo. Felland v. Sauey, 2001 WI App 257, ¶ 18, 248 Wis. 2d 963, 637 N.W.2d 403. Further, whether this language shows the department repudiated the contractual remedies is also a question of law. See Ide v. LIRC, 224 Wis. 2d 159, 166, 589 N.W.2d 363 (1999) (whether facts fulfill a legal standard is a question of law).

¶ 13. In his September 30 letter, the personnel director told the employees' union representative that, "The county maintains that since neither the union nor the former employees have standing under Article 5 to grieve this matter, the county will not answer the grievance and will not process any further." In the October 7 letter, the director informed the union representative the matter would not be placed on the next personnel meeting agenda. The parties dispute the meaning of these letters. The department contends these statements were merely part of the "give and take of day to day labor relations" and it should not be penalized for taking an extreme position early in the dispute. On the other hand, the employees claim that these letters amount to the department's repudiation of the contractual remedies. We agree with the employees.

¶ 14. Under Article Five of the agreement, a grievance regarding the agreement's applicability must be submitted to the personnel director, who gives it to the personnel committee to resolve. After receiving the grievance, the department failed to follow the agreement's procedures by refusing to process it and not submitting it to the committee. These actions frustrated the grievance and amounted to a rejection of the contractual remedies. If, for instance, the department had submitted the claim to the personnel committee, and the committee, acting according to the grievance procedures, decided that the employees lacked standing, the department would not have repudiated the contract. Instead, the department refused to follow the agreed upon procedures and as a result, the employees may bypass the contractual remedies.

¶ 15. The department argues the employees should nonetheless be required to take the matter to arbitration in order to exhaust their remedies. We disagree. First, the agreement states a party may take the grievance to arbitration within thirty days of the personnel committee's decision. No decision was made. Second, the employees tried to exhaust their remedies and the department frustrated that attempt. As a result, the employees could properly bring their claim in circuit court, and the department may not defend by arguing it was barred because of a failure to exhaust the agreement's remedies.

¶ 16. Next, we address the department's argument that the employees' claim was barred by the statute of limitations. Interpreting the statute of limitations presents a question of law that is reviewed independently of the circuit court. See Ghashiyah v. Prudential Ins. Co., 198 Wis. 2d 699, 702, 543 N.W.2d 538 (Ct. App. 1995). Wisconsin Stat. § 893.44(1) requires that any action to recover unpaid wages, salary or compensation for personal services be commenced within two years of the claim's accrual. The employees filed a notice of claim under Wis. Stat. § 893.80(l)(a). The circuit court determined this tolled the statute of limitations for 120 days under Colby v. Columbia County, 202 Wis. 2d 342, 357, 550 N.W.2d 124 (1996), and the department does not challenge this ruling. Therefore, the parties agree that the employees' claim must be commenced within two years and 120 days of its accrual or be barred.

¶ 17. The parties disagree on the date the claim accrued. Essentially, the department contends because the wage claim is based on a contract, like all other contract claims it accrued on the date of the breach, not when the aggrieved party discovered the breach. See CCL Assocs. v. Arrowhead Pacific Corp., 174 Wis. 2d 604, 617, 497 N.W.2d 115 (1993). This date, according to the department, is August 8, 1998, the day the personnel committee denied retroactive pay to former employees. If this is the date the claim accrued, the employees' claim would have been time barred on December 6, 2000, twenty-three days before they filed their complaint.

¶ 18. The employees, on the other hand, suggest that the "discovery rule" should apply in this case, making a policy argument that it is necessary to avoid an unjust result. They offer two dates on which their claim accrued. The first is September 25, 1998. This-is the date they initiated their grievance, which the employees argue shows they had enough information regarding the breach of the agreement to file a corn-plaint. As a result, their claim would have become barred on January 23, 2001. Alternatively, the employees suggest that the claim accrued on October 10,1998, the date the union representative notified one of the employees that the department had rejected their grievance. The employees contend that they did not have enough knowledge of the department's refusal to allow the grievance until this date and therefore had no claim until then. If the claim accrued on October 10 it was not barred until February 7, 2001. The circuit court accepted October 10 as the date of accrual.

¶ 19. We take a different approach. "A cause of action accrues when there exists a claim capable of enforcement, a suitable party against whom it may be enforced, and a party with a present right to enforce it." Sopha v. Owens-Corning Fiberglas Corp., 230 Wis. 2d 212, 223, 601 N.W.2d 627 (1999). Examining this basic principle in light of the record, we conclude the claim accrued on September 30, 1998, the date the department notified the union representative that its position was that the employees lacked standing to grieve and that it would not answer the grievance or process it any further. This was the date the department repudiated the contractual remedies. Before this date, the department would have been able to defend the claim on the basis of the employees' failure to exhaust the agreement's remedies, and a circuit court would have been unable to hear the case. In other words, the employees did not have a present right to enforce their claim until the department repudiated the contractual remedies. The department did this on September 30. As a result, the employees had until January 28, 2001, to file their claim. It is not barred by the statute of limitations because they filed their claim on December 29, 2000.

¶ 20. Next, the department argues that the provisions of Wis. Stat. ch. 109 are inapplicable to the lawsuit. Chapter 109 requires that employers pay their employees within thirty-one days of earning wages. Wis. Stat. § 109.03(1). It allows employees to bring claims against their employers for unpaid wages and also to collect penalties under certain circumstances. Wis. Stat. § 109.02(5), 109.11. It is clear that the employees are seeking wages, as defined in Wis. Stat. § 109.01(3). The department, however, contends this chapter's purpose is merely to ensure employees are paid their wages when they are due. See Jacobson v. American Tool Cos., 222 Wis. 2d 384, 400, 588 N.W.2d 67 (Ct. App. 1998). Chapter 109, the department claims, is only an enforcement mechanism and should not be used to resolve the underlying dispute whether the wages are owed under the new agreement. The application of a statute to a set of facts is a question of law that we review de novo. Shannon v. Shannon, 150 Wis. 2d 434, 447, 442 N.W.2d 25 (1989).

¶ 21. We would agree with the department, at least in the collective bargaining context, if the department had not repudiated the contractual remedies. If, for instance, the dispute had proceeded to arbitration, the employees had prevailed, and the department refused to pay the back pay, then Wis. Stat. ch. 109 would be an enforcement mechanism only. Because the department repudiated the contractual remedies, allowing the employees to proceed directly to court, we conclude that ch. 109 is an appropriate vehicle to resolve the underlying dispute whether the wages were owed.

¶ 22. This situation is similar to that in German v. DOT, 2000 WI 62, 235 Wis. 2d 576, 612 N.W.2d 50. There, several state patrol officers brought a Wis. Stat. ch. 109 claim seeking back wages for their meal breaks. Id., ¶ 1. The officers claimed they were on duty during these breaks according to Department of Workforce Development regulations. Id. The DOT argued ch. 109 was not the appropriate forum to resolve this issue and, instead, the officers should have brought their claim under the administrative procedures of Wis. Stat. § 103.005 to allow the DWD to determine if those wages were actually owed. Id., ¶ 2. In rejecting this claim, the supreme court undertook an analysis of both chs. 109 and 103 and concluded the officers' claims could be completely resolved under ch. 109. Id., ¶ 16.

¶ 23. Much of the supreme court's reasoning in German depended on the demonstrated interrelationship between Wis. Stat. chs. 103 and 109. See id. at ¶¶ 13-16. This might suggest that the apparent lack of any such relationship between ch. 109 and, for instance, Wis. Stat. § 111.70, which governs municipal employee relations, would weigh against allowing the complete resolution of the dispute under ch. 109. In fact, in our earlier resolution of German, we addressed the DOT's argument that allowing the officers' claims to proceed under ch. 109 would open the door to increased litigation by in part pointing out that municipal collective bargaining agreements could not be enforced by ch. 109. German v. DOT, 223 Wis. 2d 525, 543, 589 N.W.2d 651 (Ct. App. 1998).

¶ 24. In support of this statement, we relied on the supreme court's decision in AFSCME Local 1901 v. Brown County, 146 Wis. 2d 728, 432 N.W.2d 571 (1988). See German, 223 Wis. 2d at 543. There, a municipal union sought Wis. Stat. ch. 109 penalties when the county failed to pay back wages pursuant to an arbitration agreement within § 109.03(1), a thirty-one-day requirement. Local 1901, 146 Wis. 2d at 729-30. The county sought to defend the claim under the provisions of Wis. Stat. § 111.70(7m)(e), which allows a municipal employer to avoid civil liability for failing to implement an arbitration award by showing good cause. Id. at 735-36. The court determined that the county could raise the defense. Id. at 735. The issue in Local 1901, however, was not whether the provisions of § 111.70 applied to the exclusion of Wis. Stat. ch. 109 but, rather, whether a municipal employer could raise the good cause defense in a ch. 109 claim. Id. at 729. The court noted, "The issue centers on whether ch. 109 governs exclusively or is considered in conjunction with sec. 111.70(7m)(e)." Id. The court determined ch. 109 did not govern exclusively, but that it was subject to § 111.70(7m)(e).

¶ 25. We are satisfied that, at least under the circumstances presented here, Wis. Stat ch. 109 is available to resolve the underlying dispute. The ch. 109 claim was allowed in Local 1901, subject to the Wis. Stat. § 111.70 defense. The underlying dispute whether the employer owed wages, however, had already been resolved by arbitration. That is likely what would have happened here had the department not repudiated the contractual remedies. The repudiation allowed the employees to bypass the contractual remedies and proceed directly to court. Thus, they were entitled to resolve any dispute whether they would have been entitled to back pay in court. It would be a waste of judicial resources to require the employees to bring an action, to interpret the contract and then, if they prevailed, a separate wage claim. When an employer repudiates the contractual remedies of a collective bargaining agreement, employees are allowed to proceed under ch. 109 if they are seeking back pay.

¶ 26. Next, we must address whether the employees are entitled to back pay under the agreement. This requires us again to interpret the collective bargaining agreement, a question of law we review independently of the circuit court. See Wisconsin Label, 233 Wis. 2d 314, ¶ 22. The primary goal in contract interpretation is to determine and give effect to the parties' intention at the time the contract was made. Id., ¶ 23. When the language is unambiguous, we apply its literal meaning. Id.

¶ 27. . The collective bargaining agreement's effective dates are January 1, 1996, to December 31, 1999. Section 14.01 of the agreement states, "A wage rate schedule based on classification of work is attached covering the calendar year of 1996 to 1999, entitled 'Appendix A.'" The agreement does not specifically mention retroactive pay for employees, current or former. The department argues the agreement's lack of specificity on this issue makes it unclear what the parties intended with regard to retroactive pay. Rejecting this argument, the circuit court determined because the employees worked for the department during the contract's effective dates, they were entitled to wages for that time. We agree.

¶ 28. The issue presented here appears to be one of first impression in Wisconsin. The Oregon Supreme Court has addressed the issue, however, and we find its reasoning persuasive. In Springer v. Powder Power Tool Corp., 348 P.2d 1112 (Or. 1960), the court faced a nearly identical situation. The employer and the union entered into a contract on August 24, 1953, but made its effective date April 1, 1953. Id. at 1113. Between these dates, several employees quit and sought back pay based on the contract's new pay scale, which had been awarded to employees who had not left. Id. The Oregon court reasoned:

The agreement in this case states "This agreement shall become effective on April 1, 1953 and shall remain in full force and effect for a period of one (1) year." It specifies that wage rates "shall be effective during the term of this agreement." We believe this language is clear and free from ambiguity. Since the parties have agreed that the contract should be effective as of April 1, 1953, we are bound to construe it as if it were made on that date. If it had been entered into on April 1, 1953, plaintiffs assignors without question would have been entitled to pay at the new rate for they were then employees of the company. By providing that the contract should be retroactive to that date, the same result was accomplished and employees for whose benefit this action is brought are entitled to the retroactive pay.

Id. at 1116.

¶ 29. Similarly, the effective dates of this contract are January 1, 1996, to December 31, 1999. It is undisputed the employees worked for the department during this time period. Had the contract been signed on its effective start date, the employees would have received their raises. We do not discern any ambiguity in the contract because of its failure to address retro-activity. Instead, the contract is unambiguous. People who worked in the bargaining unit during the term of the agreement are entitled to be paid according to its terms.

¶ 30. Finally, we must address the employees' cross-appeal of the circuit court's determination of their attorney fees. The employees requested approximately $14,000 in fees and the court awarded $9,500. The court is authorized to award attorney fees in Wis. Stat. ch. 109 wage claims as "reasonable expenses" pursuant to § 109.03(6). Jacobson, 222 Wis. 2d at 398-99. In Jacobson, we determined attorney fees should be allowed as reasonable expenses because it would defeat ch. 109's purpose to require an employee to pay attorney fees from recovered wages. Here, the employees make the same argument, saying that by not awarding all the requested fees, the employees will be forced to use their recovery to pay their attorneys.

¶ 31. We defer to the trial court's attorney fee determination because it has the "advantageous position to observe the amount and quality of the work performed and has the expertise to evaluate the reasonableness of the fees." Allied Processors v. Western Nat'l Mut. Ins. Co., 2001 WI App 129, ¶ 46, 246 Wis. 2d 579, 629 N.W.2d 329. We will sustain the award unless the trial court erroneously exercised its discretion. Standard Theaters, Inc. v. DOT, 118 Wis. 2d 730, 747, 349 N.W.2d 661 (1984). A court properly exercises discretion when it considers the facts of record under the proper legal standard and reasons its way to a rational conclusion. Burkes v. Hales, 165 Wis. 2d 585, 590, 478 N.W.2d 37 (Ct. App. 1991).

¶ 32. In making its decision, the court first noted that its decision was difficult because of the amount of requested fees, $14,087, was greater than the amount in controversy, $7,031.24, and that courts in general have a hard time determining what is reasonable in terms of the time expended on wage claims. Next, the court pointed out that the employees' three attorneys spent 112 hours on the case, much of which was devoted to research and intraoffice conferences. The court then stated, "When all is said and done, there really is not much law to research on the subject." The court also noted there was a lack of case law regarding attorney fees in wage claim cases. Next, the court weighed the fact an attorney fees award was appropriate in order to give attorneys incentive to accept wage claims with the fact that it would be unfair to penalize the employer in this case because it thought it had a valid defense to the employees' claims. The court then listed the twelve factors found in 42 U.S.C. § 1988 used to assess the reasonableness of attorney fees. Finally, the court added, "After considerable reflection; weighing the above factors; and bearing in mind that this is a straight forward case that did not require extensive discovery; this court believes the plaintiffs should recover attorney's fees of $9,500.00 plus out of pocket costs of $2,312.18."

¶ 33. We conclude this represents a proper exercise of the court's discretion. Most notably, the court expressed concern that the amount of time the employees' attorneys spent on research was unreasonable, given the absence of case law in the area. Further, the court noted the case did not require extensive discovery, was not especially difficult, and compared the amount recovered with the amount of fees requested. These are appropriate considerations when evaluating an attorney fee request. See SCR 20:1.5. The court did not erroneously exercise its discretion when awarding the employees' attorney fees.

By the Court. — Judgment affirmed. No costs on appeal.

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

       This figure represents the total of the court's award to each of the employees: $2,791.50 + 3,124.20 + 1956.36 = $7,872.06. However, in its determination of attorney fees, the court stated that the employees' combined claim totaled $7,031.24. We are unable to determine the source of this discrepancy.

       It is unclear why the court referred to a federal statute, however, the factors found in this statute are similar to those found in SCR 20:1.5.

       SupReme Couet Rule 20:1.5 provides in part:
      (а) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:
      (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
      (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
      (3) the fee customarily charged in the locality for. similar legal services;
      (4) the amount involved and the results obtained;
      (5) the time limitations imposed by the client or by the circumstances;
      (б) the nature and length of the professional relationship with the client;
      (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
      (8) whether the fee is fixed or contingent.