author: VERGERONT, J.

text:
    Lenticular Europe, LLC, a Wisconsin limited liability company, by John Van Leeuwen, Plaintiff-Appellant, v. William T. Cunnally, Defendant-Respondent.
    Court of Appeals

      No. 04-1054.

      Submitted on briefs October 14, 2004.

    Decided January 27, 2005.

    2005 WI App 33
    (Also reported in 693 N.W.2d 302.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Earl H. Munson Jr., Esq., of Boardman, Suhr, Curry & Field, LLP, Madison, and Russell K. Statman, Esq., of Law Office of Russell K. Statman, Plattsburgh, New York.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Robert A. Pasch, Rebecca R. DeMarb, and Jennifer M. Krueger, of Murphy Desmond S.C., Madison.
    Before Deininger, EJ., Dykman and Vergeront, JJ.
   VERGERONT, J.

¶ 1. The dispositive issue on this appeal is whether John Van Leeuwen, a minority member of Lenticular Europe, LLC, was authorized to bring this action on behalf of the company. We conclude that Van Leeuwen was authorized to bring this action because: (1) no provision of the operating agreements override the "default" terms of Wxs. Stat. § 183.1101(1), which therefore apply; and (2) the other member's interest in the outcome of this action was adverse to the interest of Lenticular Europe at the time this action was filed. Because the circuit court erroneously concluded that Van Leeuwen was not authorized to bring this action, we reverse the court's order vacating the default judgment and dismissing the complaint; and we remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 2. Lenticular Europe, (the LLC) is a limited liability company engaged in Europe in the business of buying and selling lenticular materials — a type of plastic that allows for enhanced three-dimensional animated imaging. The LLC was formed in 2000 and has at all times had two members, Van Leeuwen and Lenticu-lar Corporation (Lenticular Corp), a corporation organized under Wisconsin law. William Cunnally has been president and sole shareholder of Lenticular Corp since November 2000. Van Leeuwen and Lenticular Corp signed an operating agreement and a supplemental operating agreement that were both effective January 1, 2001. According to the operating agreement, Van Leeuwen owned one-third of the membership interest in the LLC and Lenticular Corp owned two-thirds; Lenticular Corp was to manage the business and affairs of the LLC.

¶ 3. Van Leeuwen on behalf of the LLC filed this action against Cunnally in September 2002. The complaint alleged that Van Leeuwen was authorized to bring this action on behalf of the LLC pursuant to Wis. Stat. § 183.1101. The complaint further alleged that Cunnally had directed the transfer of all revenues from the LLC to Lenticular Corp's accounts in Wisconsin and then directed approximately $700,000 from those accounts for his personal benefit. Based on this conduct, the complaint claimed that Cunnally had converted funds of the LLC, had breached his fiduciary duty to the LLC, and had induced Lenticular Corp to breach its fiduciary duty to the LLC. Lenticular Corp, the complaint alleged, was not joined as a party because it had filed for protection of creditors under 11 U.S.C. § 1101 et seq. (Chapter 11) in May 2002. The complaint demanded the sum of $700,000 or the amount proved at trial, as well as attorney fees and expenses under § 183.1101(4).

¶ 4. Although Cunnally was served with the summons and complaint on November 16, 2002, he did not file a motion or pleading until May 2003, when he moved the court for an enlargement of time under Wis. Stat. § 801.15(2) in which to file the accompanying proposed answer. The LLC, by Van Leeuwen, opposed the motion and moved for a default judgment. After a hearing, the court denied the motion to enlarge, determining that Cunnally had failed to show excusable neglect, and it granted the motion for a default judgment.

¶ 5. However, before the scheduled trial on damages occurred, Cunnally moved for relief from the default judgment under Wis. Stat. § 806.07(l)(h), asserting there were extraordinary circumstances justifying that relief. He argued, among other points, that Van Leeuwen had no authority to bring this action in the name of the LLC because his vote to bring the action did not constitute a majority of the membership as required by section 4.4 of the supplemental operating agreement. The LLC, by Van Leeuwen, opposed the motion. In support of the position that Van Leeuwen was authorized to bring the action, the LLC made two arguments: (1) under Wis. Stat. § 183.1101(1), Len-ticular Corp's vote on bringing the action had to be excluded because it had "an interest in the outcome of the action that is adverse to the interest of the limited liability company," and (2) under Wis. Stat. § 183.0802, Lenticular Corp ceased to be a member when it filed the bankruptcy proceeding.

¶ 6. After considering the briefs and affidavits submitted by the parties, the court concluded that relief from the default judgment should be granted. The court confirmed that it had determined that Cunnally had not shown excusable neglect, and it did not alter that determination. However, the court agreed with Cun-nally that Van Leeuwen had no authority to bring the action on behalf of the LLC. The court concluded that this lack of authority together with the other circumstances that had not constituted excusable neglect did constitute extraordinary circumstances under Wrs. Stat. § 806.07(l)(h). The court therefore vacated the default judgment, and, based on its conclusion that Van Leeuwen had no authority to bring this action on behalf of the LLC, it dismissed the complaint without prejudice.

¶ 7. In reaching the conclusion that Van Leeuwen did not have the authority to bring this action, the court made these rulings of law: (1) Wis. Stat. § 183.1101(1) does not require exclusion of Lenticular Corp's vote on whether to bring the action because that subsection expressly allows an operating agreement to provide otherwise and section 4.4 of the supplemental operating agreement does that; and (2) Wis. Stat. § 183.0802 does not preclude Lenticular Corp from remaining a member of the LLC after it filed the Chapter 11 proceeding because that statute expressly allows an operating agreement to provide otherwise, and section 9.3 of the supplemental operating agreement does that.

DISCUSSION

¶ 8. On appeal, the LLC by Van Leeuwen challenges the court's conclusion that he lacks the authority to bring this action on behalf of the LLC, contending that each of the two rulings the court made in support of that conclusion are erroneous. Alternatively, the appellant argues that even if Van Leeuwen did lack the authority to bring this action, this defense does not constitute extraordinary circumstances under Wis. Stat. § 806.07(l)(h). Because we agree that the court erred in deciding that Van Leeuwen did not have the authority to bring this action on behalf of the LLC, we do not address the other arguments.

¶ 9. Relief from a default judgment under Wis. Stat. § 806.07(l)(h) — for "any other reasons justifying relief" — is appropriate only when there are extraordinary circumstances. State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 542, 363 N.W.2d 419 (1985). The decision whether to grant relief under § 806.07(1) is committed to the circuit court's discretion. Id. at 542. We affirm a discretionary decision if the circuit court examined the relevant facts, applied the correct law, and using a rational process reaches a reasonable result. Id. However, when, as here, a discretionary decision is based on the circuit court's resolution of questions of law, we review those legal rulings de novo. Town of Grand Chute v. Outagamie County, 2004 WI App 35, ¶ 7, 269 Wis. 2d 657, 661, 679 N.W.2d 540. In particular, the issue whether Van Leeuwen had the authority to bring this action is a question of law because it depends upon the proper construction of provisions of the limited liability statute and the operating agreements and the relevant facts are not disputed. See id.

¶ 10. When we construe a statute, we begin with the language of the statute and give it its common, ordinary, and accepted meaning, except that technical or specially defined words are given their technical or special definitions. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 45, 271 Wis. 2d 633, 681 N.W.2d 110. We interpret statutory language in the context in which it is used, not in isolation, but as part of a whole, in relation to the language of surrounding or closely related statutes, and reasonably so as to avoid absurd or unreasonable results. Id., ¶ 46. We also consider the scope, context, and purpose of the statute insofar as they are ascertainable from the text and structure of the statute itself. Id., ¶ 48.

I. Van Leeuwen's Authority to Bring this Action

A. Construction and Application of Wis. Stat. § 183.1101(1)

¶ 11. The appellant contends that under Wis. Stat. § 183.1101(1), the vote of Lenticular Corp on whether to bring the action in the name of the LLC must be excluded. This section is found in subchapter XI, "Suits By And Against A Limited Liability Company" and provides:

(1) Unless otherwise provided in an operating agreement, an action on behalf of a limited liability company may be brought in the name of the limited liability company by one or more members of the limited liability company, whether or not the management of the limited liability company is vested in one or more managers, if the members are authorized to sue by the affirmative vote as described in s. 183.0404 (l)(a), except that the vote of any member who has an interest in the outcome of the action that is adverse to the interest of the limited liability company shall be excluded.

¶ 12. Wis. Stat. § 183.0404(l)(a), to which Wis. Stat. § 183.1101(1) refers, is found in subchapter iy "Rights And Duties Of Members And Managers" and provides:

(1) Unless otherwise provided in an operating agreement or this chapter, and subject to sub. (2), an affirmative vote, approval or consent as follows shall be required to decide any matter connected with the business of a limited liability company:
(a) If management of a limited liability company is reserved to the members, an affirmative vote, approval or consent by members whose interests in the limited liability company represent contributions to the limited liabibty company of more than 50% of the value, as stated in the records required to be kept under s. 183.0405 (1), of the total contributions made to the limited liability company. .

(Footnote added.)

¶ 13. According to the appellant, section 4.4 of the supplemental operating agreement does not provide "otherwise" than Wis. Stat. § 183.1101(1) because the section does not mention votes to authorize lawsuits but instead is concerned only with general voting rights. Section 4.4 provides:

Manner of Acting. The affirmative vote of Members owning or holding at least a majority of the outstanding Membership Interests shall be the act of the Members, unless the vote of a greater or lesser proportion or number is otherwise required by the Wisconsin Act or by this Agreement. Unless otherwise expressly provided in this Agreement or required under applicable law, Members who have an interest (economic or otherwise) in the outcome of any particular matter upon which the Members vote or consent may vote or consent upon any such matter and their Membership Interests, vote or consent, as the case may be, shall be counted in the determination of whether the requisite matter was approved by the Members.

Cunnally responds that section 4.4 applies to all votes on all matters, including lawsuits, because no language suggests that votes on authorization to bring lawsuits are excluded. According to Cunnally, because section 4.4 applies to votes on all matters, it provides "otherwise" than § 183.1101(1) and thus overrides it.

¶ 14. We begin with an analysis of the statute, because it is the statute that determines when a provision in the operating agreement overrides a statutory provision. In general, Wis. Stat. ch. 183 provides detailed terms for the organization, operation, and dissolution of LLCs. Many of the provisions in the chapter, like Wis. Stat. §§ 183.1101(1) and 183.0404(l)-(4), begin with the language "unless otherwise provided in an operating agreement" and then lay out specific terms that are, in essence, "default" terms: that is, they govern an LLC unless an LLC's operating agreement provides otherwise. The numerous opportunities for members of an LLC to choose to be governed by terms that differ from those in the statute plainly express the legislature's intent to provide LLC members with the flexibility to define many aspects of their relationship by contract. At the same time, the legislature has also plainly expressed the intent that the policy choices it has made in the default terms govern unless a different choice is made in the operating agreement.

¶ 15. Turning to the statutory subsections at issue in this case, we observe that the legislature has chosen to treat a vote to authorize an action on behalf of an LLC differently than voting on other matters. Not only is Wis. Stat. § 183.1101(1) contained in a different subchapter than Wis. Stat. § 183.0404, but the default terms of the former contain a protection for members that the latter does not: under § 183.1101(1) the "vote of any member who has an interest in the outcome of the action that is adverse to the interest of the limited liability company shall be excluded," while § 183.0404 contains no provision for excluding votes of members with an adverse interest. We conclude the legislature's decision to treat voting to authorize an action on behalf of an LLC differently from voting on other matters indicates its intent that, in order to override the default terms of § 183.1101(1), an operating agreement must explicitly address voting to authorize an action on behalf of an LLC.

¶ 16. Against this statutory background, we examine the provision of the supplemental operating agreement at issue. Section 4.4 does not refer to voting on any particular matter, and, thus, does not explicitly address voting to authorize an action on behalf of an LLC. We therefore conclude that it does not override Wis. Stat. § 183.1101(1).

¶ 17. Cunnally, like the circuit court, emphasizes the legislative intent that members of an LLC have the flexibility to structure their relationships by contract. However, that principle does not resolve the question of what the members of this LLC intended to agree upon with respect to authorizing an action on behalf of the LLC. Because an LLC is a creature of statute, and, indeed, is organized by the signing and filing of articles of incorporation that must state it is organized under Wis. Stat. ch. 183, Wis. Stat. § 183.0202(1), members of an LLC can be reasonably expected to know the provisions of the chapter, including the default terms. When the legislature provides a specific default term on a topic and the operating agreement does not explicitly refer to that topic, it is reasonable to conclude the parties did not intend to override that default term. Thus, even if Cunnally's construction of section 4.4, when read without reference to Wis. Stat. § 183.1101(1), is reasonable — that is, that section 4.4 covers voting on all matters — it is certainly not the only reasonable construction when read in the context of the statute. Cunnally does not propose how such an ambiguity is to be resolved, because he sees none.

¶ 18. We conclude that if an operating agreement is ambiguous as to whether the members intended to override a particular statutory default term, the statutory default term governs. We are satisfied that when the legislature chose to allow members to override certain statutory terms in their operating agreement, it intended that the members plainly set forth their intent in the agreement. Thus, even if we begin our analysis with the question of the intent of the parties, as Cunnally urges, we do not agree with his construction of section 4.4. When viewed in the context of Wis. Stat. ch. 183, which is a necessary part of the analysis, there is at the least an ambiguity whether the members intended, by agreeing to section 4.4, to override the default terms of Wis. Stat. § 183.1101(1). Because section 4.4 does not plainly set forth the member's intent to override those default terms, we conclude the default terms of § 183.1101(1) govern this LLC.

B. Adverse Interest under Wis. Stat. § 183.1101(1)

¶ 19. Having concluded that the default terms of Wis. Stat. § 183.1101(1) govern, we next consider whether Lenticular Corp had an interest in the outcome of this action adverse to the LLC. The circuit court did not decide this issue because of its conclusion that section 4.4 overrides the default terms of § 183.1101(1). The appellant contends that, at the time this action was filed, Lenticular Corp's interest in the outcome was adverse to the LLC because, if the LLC were to succeed in proving the allegations of the complaint, Lenticular Corp would face potential liability to the LLC and also to Cunnally for contribution: claims could have been filed against Lenticular Corp in the Chapter 11 proceeding and, ultimately, Lenticular Corp might have been joined as a defendant or third-party defendant in this action. Cunnally responds that Len-ticular Corp's interest in the outcome of this action is not adverse to the LLC for two reasons: (1) the action is against Cunnally, not Lenticular Corp, and the corporation cannot be held liable for Cunnally's actions; and (2) because of the bankruptcy action, the corporation's creditors will benefit if there is any recovery from Cunnally.

¶ 20. To resolve this issue, we examine the allegations of the complaint in light of the circumstances that existed when it was filed in September 2002. Thus, we do not consider it relevant that in February 2003 the Chapter 11 proceeding Lenticular Corp had filed in May 2002 was converted to a bankruptcy under 11 U.S.C. § 701 et seq. In September 2002, Lenticular Corp was the debtor and debtor-in-possession in the Chapter 11 proceeding and continued to operate.

¶ 21. In order to prevail against Cunnally on the claim of aiding and abetting Lenticular Corp in a breach of its fiduciary duty, the LLC would have to prove, as alleged in the complaint, that Lenticular Corp directed or knowingly permitted the transfer to itself of all the LLC's revenues and then transferred approximately $700,000 to or for the benefit of Cunnally personally. We agree with the appellant that a judgment against Cunnally on this claim would necessarily involve findings that would also establish liability on the part of Lenticular Corp.

¶ 22. As for whether such findings would adversely affect Lenticular Corp as a debtor-in-possession in a Chapter 11 proceeding, the parties' briefs, particularly Cunnally's, are somewhat sparse. The record shows that in August 2002, Van Leeuwen declared in a paper filed under penalty of perjury in the Chapter 11 proceeding that he intended to file a proof of claim on behalf of the LLC against Lenticular Corp in that proceeding, based on the same facts that are the basis for the claims against Cunnally in this action. The record indicates the claims against Lenticular Corp would be for conversion and breach of fiduciary duty. We cannot tell from the record whether a proof of claim was in fact filed against Lenticular Corp on behalf of the LLC for conversion and breach of fiduciary duty in the Chapter 11 proceeding at the time this action was filed. It appears not. However, the critical point for our analysis is whether a proof of claim could have been filed after this action was filed, if it had not been before, and Cunnally does not contend that it could not have been. We take this silence as a concession that (assuming Van Leeuwen had the authority to do so) Van Leeuwen could have filed a claim in the Chapter 11 proceeding on behalf of the LLC against Lenticular Corp for conversion and breach of fiduciary duty and could have litigated those claims in that proceeding.

¶ 23. Whether findings adverse to Lenticular Corp in this action would have preclusive effect in a Chapter 11 proceeding on claims against Lenticular Corp is an issue that neither party addresses. However, assuming for purposes of argument they would not have preclusive effect, such findings would still be adverse to Lenticular Corp and would likely have some impact on claims against Lenticular Corp in the Chapter 11 proceeding — if only on the decision whether to prosecute them.

¶ 24. As an alternative to filing a claim in the Chapter 11 proceeding, Van Leeuwen on behalf of the LLC could also have sought to join Lenticular Corp in this action by means of a motion to lift the automatic stay. See footnote 7. In addition, as the appellant points out, not only would the LLC have an interest in pursuing claims against Lenticular Corp if it prevailed on its aiding and abetting claim against Cunnally, but Cunnally might as well. We therefore reject Cunnally's argument that, because Lenticular Corp is not a party to this action, its interest in the outcome is not adverse to the LLC.

¶ 25. Turning to Cunnally's argument that Len-ticular Corp will benefit from an outcome favorable to the LLC because it is a two-thirds owner, we reject this as well. Even if Lenticular Corp is entitled to two-thirds of what the LLC recovers in this action, if it is jointly and severally liable with Cunnally, it may be responsible for paying the entire amount.

¶ 26. In short, we conclude that, based on the allegations of the complaint, at the time this action was filed, Lenticular Corp had an interest in the outcome of this action that was adverse to that of the LLC. The LLC would benefit if it prevailed on the aiding and abetting claim against Cunnally, but that result could subject Lenticular Corp to more liability than any benefit it would gain from the LLC's success on that claim.

¶ 27. Because the interest of Lenticular Corp in the outcome of this action was adverse to the LLC at the time this action was filed, its vote must be excluded under Wis. Stat. § 183.1101 from the decision whether to authorize this action on behalf of the LLC. The result is that Van Leeuwen's vote was sufficient to authorize this action on behalf of the LLC. The circuit court therefore erred in concluding that he was not authorized.

II. Relief under Wis. Stat. § 806.07(l)(h)

¶ 28. The circuit court's decision to grant relief under Wis. Stat. § 806.07(1)(h) was based on the erroneous legal conclusion that Van Leeuwen was not authorized to bring this action on behalf of the LLC. Therefore, that decision must be reversed. See Clark v. Mudge 229 Wis. 2d 44, 50, 599 N.W.2d 67 (Ct. App. 1999).

¶ 29. Based on the court's written decision, we are satisfied that the court would not have granted the motion had it not concluded that Van Leeuwen lacked authority to bring this action. The court explained that Cunnally had made a number of arguments why the default judgment should be set aside under Wis. Stat. § 806.07(l)(h), that "[n]one of those arguments, standing alone, resulted in an order to vacate the default judgment," but that the court had asked for additional briefing on the argument that Van Leeuwen did not have authority to bring the action. That is the argument that persuaded the court to grant relief from the default judgment. Accordingly, we do not direct the circuit court on remand to consider whether it would grant Cunnally's motion for reasons other than Van Leeuwen's lack of authority. Instead, we reverse the order vacating the default judgment and dismissing the complaint; and we direct the circuit court to conduct such further proceedings as are appropriate based on the default judgment.

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

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       Wisconsin Stat. § 806.07(l)(h) provides:
      Relief from judgment or order. (1) On motion and upon such terms as are just, the court, subject to subs. (2) and (3), may relieve a party or legal representative from a judgment, order or stipulation for the following reasons:
      (h) Any other reasons justifying relief from the operation of the judgment.

       Wisconsin Stat. § 183.0404(l)(b)-(3) provides:
      Oí) If the management of a limited liability company is vested in one or more managers, the affirmative vote, consent or approval of more than 50% of the managers.
      (2) Unless otherwise provided in an operating agreement or this chapter, the affirmative vote, approval or consent of all members shall be required to do any of the following:
      (a) Amend the articles of organization.
      (b) Issue an interest in a limited liabibty company to any person.
      (c) Adopt, amend or revoke an operating agreement.
      (d) Allow a limited habihty company to accept any additional contribution from a member.
      (e) Abow a partial redemption of an interest in a limited babibty company under s. 183.0603.
      (f) Value the contributions of members under s. 183.0501 (2).

        (fin) Convert to a new form of business entity under s. 183.1207.
      (g) Authorize a manager, member or other person to do any act on behalf of the limited liability company that contravenes an operating agreement, including any provision of the operating agreement that expressly limits the purpose or business of the limited liability company or the conduct of the business of the limited liability company.
      (3) Unless otherwise provided in an operating agreement, if any member is precluded from voting with respect to a given matter, then the value of the contribution represented by the interest in the limited liability company with respect to which the member would otherwise have been entitled to vote shall be excluded from the total contributions made to the limited liability company for purposes of determining the 50% threshold under sub. (l)(a) for that matter.

       The appellant also argues that the last clause in Wis. Stat. § 183.1101(1), beginning "except that the vote ...," may not be overridden by a contrary provision in an operating agreement; in other words, "[ujnless otherwise provided in an operating agreement..." does not modify that last clause but only the preceding clauses. We do not address this issue of statutory construction.

       Wisconsin Stat. § 183.0102(16) defines an operating agreement as:
      (16) "Operating agreement" means an agreement in writing, if any, among all of the members as to the conduct of the business of a limited liability company and its relationships with its members.
      Thus, an LLC need not have an operating agreement and if it does, the agreement need not cover any particular topic.

       In Gottsacker v. Monnier, 2004 WI App 25, ¶¶ 18-19, 269 Wis. 2d 667, 676 N.W.2d 533, review granted by 2004 WI 114, 273 Wis. 2d 654, 684 N.W.2d 136, we concluded that the provision in Wis. Stat. § 183.1101 for excluding the vote of any member who had an adverse interest in the outcome did not apply to votes on matters governed by Wis. Stat. § 183.0404 — in particular, a vote to transfer property. Instead, we held, the obligation under Wis. Stat. § 183.0402(l)(a) to "deal fairly with the limited liability company [and] its members in connection with a matter in which the member or manger has a material conflict of interest" applied to that vote.

       This statement was filed in support of a motion to modify automatic stay entered pursuant to 11 U.S.C. § 362(d) (1998) to permit Van Leeuwen to prosecute this action in the name of the LLC against Cunnally and to join the debtor, Lenticular Corp, if that entity was determined to be a necessary and indispensable party, while continuing to stay enforcement of any judgment against Lenticular Corp. The bankruptcy court agreed with counsel for the debtor and debtor-in-possession that relief from the stay was unnecessary to proceed against Cunnally because Lenticular Corp was not a party to this proposed action. Three days after that ruling, this action was filed.


source: Caselaw Access Project

author: CANE, C.J.

license: Public Domain

text:
    Emmett O'Connell, Jr. and David O'Connell, Plaintiffs-Respondents, v. Gerald L. O'Connell and Maxine L. O'Connell, Defendants-Appellants, Mary Catherine Neimon, Third-Party Defendant, Sean O'Connell, Defendant.
    Court of Appeals

      No. 04-0895.

      Submitted on briefs December 6, 2004.

    Decided February 1, 2005.

    2005 WI App 51
    (Also reported in 694 N.W.2d 429.)

      On behalf of the defendants-appellants, the cause was submitted on the briefs of Janet L. Marvin of Park Falls.
    On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Jack A. Carlson of Washburn.
    Before Cane, C.J., Hoover, PJ., and Peterson, J.

       Petition to review denied 6-1-2005.

   CANE, C.J.

¶ 1. After a partition action, Gerald and Maxine O'Connell appeal a judgment and an order denying them reimbursement for improvements they made to the property over the course of their co-tenancy first with Gerald's brother Emmett and his wife, and then with Gerald's nephews, Emmett, Jr. and David. They also appeal the circuit court's award of costs and attorney fees to be paid from the proceeds of the property's sale. Gerald and Maxine argue that the circuit court erred when it concluded their claim for equitable reimbursement was cut off by a warranty deed, executed on February 8, 1994, which transferred Emmett, Sr.'s undivided half interest to his two' sons. They also argue that the circuit court erroneously exercised its discretion regarding costs and fees because it failed to consider or make a record of the factors on which its decision was based.

¶ 2. The issue is thus whether the 1994 warranty deed extinguished Gerald's right to equitable reimbursement for improvements and repairs made prior to 1994. We conclude it does not because a potential claim in equity in a partition action is not an encumbrance under Wis. Stat. § 706.10(5) and the warranty deed.

¶ 3. The question of whether Gerald should be reimbursed for disproportionately borne expenses is remanded to the trial court for equitable consideration under Wis. Stat. § 842.02. Because it is unclear, based on the judgment and the record, whether the award of fees and costs represented a reasonable exercise of discretion, we reverse and remand that issue to the trial court as well.

Background

¶ 4. From 1951 to 1994, brothers Gerald and Emmett O'Connell, and their wives Maxine and Annette, owned land on Spider Lake as co-tenants in common. Each couple had an undivided half-interest in the property. During these years, Gerald claims that he made substantial improvements to the property at his expense. In 1994, Gerald, Maxine, Emmett, and Annette signed a warranty deed that conveyed one-half interest in that property to Gerald and Maxine and a one-quarter interest each to Emmett O'Connell, Jr. and David O'Connell, Emmett and Annette's sons.

¶ 5. Five years after the conveyance, on December 1, 1999, Emmett, Jr. and David filed a complaint requesting an accounting from Gerald for profits derived from cutting trees on the property and a temporary injunction. Gerald and Maxine counterclaimed, seeking partition and reimbursement for unfairly borne expenses. The parties eventually agreed to partition, stipulating that the property was not suitable for division. The circuit court accepted that stipulation and the Spider Lake property was sold at a sheriffs sale to Emmett, Jr., David, and Robert Neimon for $351,000. Pursuant to an earlier court order, Gerald then filed an affidavit for reimbursement of disproportionately borne expenses, $48,530.93, and reasonable attorney fees. After a hearing, the circuit court denied Gerald reimbursement for any expenses or improvements undertaken before the February 8, 1994, warranty deed. The final judgment ordered that Gerald be reimbursed only for expenditures made after 1994; in addition, it awarded both parties the attorney fees they requested, deducting them from the proceeds of the sale prior to any division of money. Gerald now appeals.

Discussion

¶ 6. Statutory interpretation and the application of statutes to specific facts are questions of law we review without deference. See Garcia v. Mazda Motor of Am., Inc., 2004 WI 93, ¶ 7, 273 Wis. 2d 612, 682 N.W.2d 365. When we interpret statutes, we seek to give effect to the plain meaning of their words because we "assume that the legislature's intent is expressed in the statutory language." State ex rel. Kalal v. Circuit Court, 2004 WI 58, ¶¶ 44-45, 271 Wis. 2d 633, 681 N.W.2d 110. If we are construing two statutes that seemingly conflict, we will attempt to harmonize them so that each is given full force and effect. See City of Milwaukee v. Kilgore, 193 Wis. 2d 168, 184, 532 N.W.2d 690 (1995).

¶ 7. When a circuit court awards attorney fees, the amount of the award is left to the discretion of the court. See Kolupar v. Wilde Pontiac Cadillac, Inc., 2004 WI 112, ¶ 22, 275 Wis. 2d 1, 683 N.W.2d 58. We will uphold that award so long as the court "employs a logical rationale básed on the appropriate legal principles and facts of record." Village of Shorewood v. Steinberg, 174 Wis. 2d 191, 204, 496 N.W.2d 57 (1993).

¶ 8. Wisconsin Stat. § 842.02 codifies the common law of partition, but partition remains an equitable action. See, e.g., Kubina v. Nichols, 241 Wis. 644, 648, 6 N.W.2d 657 (1942); Klawitter v. Klawitter, 2000 WI App 16, ¶ 7, 240 Wis. 2d 685, 623 N.W.2d 169. Under the partition statute, a party "having an interest in real property jointly or in common with others" may sue for judgment partitioning that interest unless such an action is prohibited by statute or by agreement between the parties. Wis. Stat. § 842.02(1). When physical partition is impossible, as the parties agreed it was in this case, the court may order the land sold and the proceeds of that sale divided. See Wis. Stat. § 842.02(2). If partition does not equalize the positions of the parties, the circuit court in equity may, under Wis. Stat. § 842.14(4), order compensation by one party to another. See Klawitter, 240 Wis. 2d 685, ¶ 9.

¶ 9. As the circuit court recognized, the partition statute made it possible for Gerald to make a claim in equity for disproportionately borne expenses, in the form of improvements and other costs, against Emmett, Jr. and David. The court ruled, however, that Gerald could only bring that claim for expenses he incurred after February 8, 1994 — the date on which the warranty deed conveying an interest in the property to Emmett, Jr. and David was executed.

¶ 10. The critical issue raised by this appeal is thus whether Wis. Stat. § 706.10(5) and the warranty deed in question extinguish the access to equity in a partition action authorized by Wis. Stat. § 842.02. Emmett, Jr. and David argue that the deed either functions as a "voluntary and intentional relinquishment of a known right," or that the warranty of a title free from all encumbrance effectively destroys any claim to reimbursement for expenses incurred before the deed was signed. See Milas v. Labor Ass'n of Wis., Inc., 214 Wis. 2d 1, 9, 571 N.W.2d 656 (1997). We are not persuaded.

¶ 11. Under Wis. Stat. § 706.10(5), a "conveyance by which the grantor contracts to warrant the land or its title shall be construed according to its terms"; unless otherwise provided, however, the grantor is warranting that the land or title is "free from all encumbrance." The deed signed by Gerald and the original group of co-tenants warrants that the title "is good, indefensible in fee simple and free and clear of all encumbrances except municipal and zoning ordinances, recorded easements for public utilities, recorded building and use restrictions, general and special taxes levied in the year of closing." The deed simply echoes the statute, warranting only a title "free of encumbrance." Neither the statute nor the deed can cut off Gerald's equitable claim, therefore, unless an inchoate, potential cause of action in equity constitutes an encumbrance.

¶ 12. Encumbrance is defined as a "claim or liability that is attached to property or some other right and that may lessen its value, such as a lien or mortgage; any property right that is not an ownership interest." Black's Law Dictionary 568 (8th ed. 2004). Wisconsin courts have long recognized a distinction between an interest that attaches to property and a right recognized in courts to assert an equitable claim. See Larscheid v. Kittell, 142 Wis. 172, 174, 125 N.W.2d 442 (1910). That right to assert an equitable claim in a partition action is nothing more than the opportunity to invoke the court's discretion. Because the right to assert a claim in equity is "only recognized under the broadest of equity powers and for the purpose of promoting equity in excess of legal rights, courts will not enforce it to the extent of doing inequity to others." Id. at 174-75.

¶ 13. Unlike a mortgage or ordinary lien, the right codified in Wxs. Stat. § 842.02 does not therefore attach to the property nor does it automatically diminish its value. Wisconsin does, however, recognize another form of encumbrance on property, equitable liens. The necessary elements of an equitable lien are "a debt, duty or obligation owing by one person to another" and a "res to which that obligation fastens"; they arise "from written contracts showing an intention to charge some particular property with the payment of a debt." McIntyre v. Cox, 68 Wis. 2d 597, 602, 229 N.W.2d 613 (1975). An equitable lien creates a security interest in that land. Id.

¶ 14. There is thus no equitable lien in this case unless Gerald's right to bring an equitable action was a "debt, duty or obligation owing by one person to another" in February of 1994 when the warranty deed was executed. "[T]he covenant against encumbrances is a covenant as to things existing at the time it is made. If broken at all, it is broken at the time it is made." Olson v. Capital City Lumber Co., 190 Wis. 182, 185-86, 208 N.W. 891 (1926) (citation omitted). We conclude it was not.

¶ 15. As the circuit court recognized, Gerald could have brought an equitable claim for reimbursement for the improvements he made to the Spider Lake property if partition had occurred prior to the 1994 warranty deed. That right would have existed even if Gerald had made those improvements without the other co-tenants' consent or promise of contribution. See Rainer v. Holmes, 272 Wis. 349, 354-55, 75 N.W.2d 290 (1956). Wisconsin does not require that other tenants approve of the improvements or expenditures. "In the absence of any evidence to the contrary, it may be presumed that an act by one co-tenant favorable to all was done either with the knowledge and assent of his [or her] associates or else they thereafter ratified it." Id. at 355 (citation omitted). Any improvements Gerald undertook before 1994 were presumably "ratified" by the other co-tenants. To the extent that co-tenancy involves enjoyment of the whole by all tenants, those improvements presumably benefited all parties equally and were equally enjoyed by all parties.

¶ 16. Gerald could not, therefore, have asked to be reimbursed for disproportionately borne expenses until unity of possession was dissolved and the property, or any proceeds from the sale of the property, was being divided in proportion to the economic interests held by the parties. Even if a right to bring a claim in equity did constitute a debt or obligation, that right did not come into existence until after the warranty deed was executed. In 1994, there was thus no equitable lien or other encumbrance on the Spider Lake property.

¶ 17. When Emmett, Jr. and David became co-tenants of the Spider Lake property, they too enjoyed the benefit of any improvements Gerald had made. When that property was sold, the value of those improvements was added to the sale price and they equally enjoyed that benefit as well. Wisconsin's law of partition expressly authorizes circuit courts in equity to order compensation by one party to another when a partition does not equalize the positions of the parties. See Wis. Stat. § 842.14(4); see also Klawitter, 240 Wis. 2d 685, ¶ 9. Gerald argues for compensation on exactly that ground. He claims the half-share in the proceeds of the sale his half ownership would ordinarily entitle him to is inadequate because expenses borne only by him increased the property's value.

¶ 18. The circuit court notes there was no evidence that Emmett, Jr. or David were aware of any disproportionately borne expenses and suggests that Gerald should have pursued the issue before rather than "raising it now." While we agree this view is intuitively appealing, whether a co-tenant knows about expenditures for the common good is not a bar to bringing a claim in equity. And although it is undoubtedly true that Gerald could have discussed the issue with his brother sometime between 1951 and 1994, he could not have raised the issue in the legal sense before an action for partition. There is no question of inequity in a partition action until after a judgment of division or an order to sell the property and divide the proceeds. We conclude that, under Wis. Stat. § 842.02, Gerald has the right to seek equitable reimbursement for disproportionately borne expenses.

¶ 19. Emmett, Jr. and David contend, however, that even if the warranty deed does not cut off Gerald's claim, the doctrine of laches does. That argument fails on the same grounds. Gerald made his claim for reimbursement when he cross-complained for partition. That is not "unreasonable delay." See Riegleman v. Krieg, 2004 WI App 85, ¶ 22, 271 Wis. 2d 798, 679 N.W.2d 857. And it cannot be turned into "unreasonable delay" by suggesting that Gerald ought to have sought partition earlier. The O'Connell brothers and their wives owned the Spider Lake property together for decades. The 1994 warranty deed indicates the arrangement was expected to continue through the next generation. The fact that Gerald shared that expectation until 1999 cannot be used to bar his right to bring a claim he made in 1999.

¶ 20. Gerald and Maxine also argue that the circuit court erroneously exercised its discretion in awarding attorney fees and costs without considering or making a record of the factors on which its decision was based. Because it is unclear, from the record and the judgment, on what facts and principles the court based its finding that the fees for both parties were "reasonable and necessary," we must agree.

¶ 21. The court awarded Gerald and Maxine $15,197.69 in attorney fees and $21,756.80 in fees to Emmett, Jr. and David, exactly the amounts requested by the parties. The record on which this award was made is incomplete. The parties submitted cancelled checks as proof of payment. Some incomplete invoices, describing services and billing fees, were also provided. In addition, the parties testified they thought their attorney fees were reasonable and the work done was necessary. Gerald further testified that, as an attorney, he thought the attorney fees requested by Emmett, Jr. and David seemed excessive. No explanation was offered for the significant difference in the attorney fees requested by the parties. The court did not find that the hourly fees charged were reasonable based on fees charged in the locality for similar work. Nor did it address the time, labor, and skill required to perform the legal work or the reputation of the lawyers. The court's failure to make such explicit findings of fact does not necessarily constitute erroneous exercise of discretion. Taken together, however, the court's silence and the incomplete record make it impossible to determine on what facts the court based its conclusions. From the record, it is not even clear whether the fees claimed were associated with both the Mollenhoff and Spider Lake partition actions or the latter action alone. We cannot conclude, therefore, that the award represents a reasonable exercise of discretion.

By the Court. — Judgment and order reversed and cause remanded.

       This action originally involved a second parcel of land on Mollenhoff Lake; one-quarter of that land was owned by Gerald O'Connell, one-quarter by Mary Catherine Neimon, Gerald's sister, one-quarter by Sean O'Connell, Gerald's nephew, and one-eighth each by Gerald's other nephews, Emmett, Jr. and David O'Connell. The parties agreed to sell the Mollenhoff property after stipulating it was not suitable for division. The proceeds of that sale, $602,000, were distributed to the parties based on their percentage of ownership. Mary Catherine and Sean have no interest in the property from whose partition this appeal arises.

       The court awarded Gerald and Maxine reimbursement for improvements and expenses incurred after February 8, 1994.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       The complaint suggests that trees were being cut on both the Spider and Mollenhoff Lake properties.

       After the original action began, Mary Catherine intervened and Sean O'Connell was interpleaded.

       Gerald also requested 5% annual interest on his unreim-bursed share of the improvements, which he calculated as $23,948.81.

       After all deductions, Gerald was paid $163,361.24.

       As a general rule, attorney fees are not recoverable without some statutory provision or contract to the contrary. Cedarburg Light & Water Comm'n v. Glens Falls Ins. Co., 42 Wis. 2d 120, 124-25, 166 N.W.2d 165 (1969).

       Other jurisdictions similarly characterize actions to recover the value of improvements as equitable rather than legal causes of action. See, e.g., Staub v. Phillips, 271 S.W. 365 (Mo. 1925).

        McIntyre is instructive in this context. McIntyre v. Cox, 68 Wis. 2d 597, 602, 229 N.W.2d 613 (1975). There, a son conveyed his interest in property to his mother after the mother signed an agreement that if she sold the property without his consent, the son would receive two-thirds of the proceeds. Id. The court held that no equitable lien was created at that time both because the son had an interest in the proceeds, not in the land, and because no debt existed until the property was sold. Id. at 602. The son might have a cause of action against the mother for breach of contract, but he had no claim against the purchaser of the land. Id. at 603.

       For the same reason, the warranty deed cannot function, as Emmett, Jr. and David suggest, as a voluntary and intentional waiver.

       Without complete billing invoices, the court cannot determine how much time the attorneys spent on particular tasks, which means, in turn, it cannot assess whether the number of hours spent pursuing those tasks was reasonable. See Kolupar v. Wilde Pontiac Cadillac, Inc., 2004 WI 112, ¶ 32, 275 Wis. 2d 1, 683 N.W.2d 58.

       The circuit court did not explicitly address any of the factors the supreme court has suggested be employed to inject the exercise of discretion with "objectivity and uniformity." See, e.g., Kolupar, 275 Wis. 2d 1, ¶ 30.

       During a hearing on January 9, 2004, David O'Connell told the court only that all attorney fees were incurred as "a result of this lawsuit, the ongoing lawsuit." Nothing in the record or transcript clarifies that ambiguous explanation.


author: HOOVER, PJ.

text:
    Adam Austin-White, by his Guardian ad Litem, Ardell W. Skow, Milo D. White and Jane A. Austin, Plaintiffs-Appellants, v. Todd C. Young, Defendant, Austin Mutual Insurance Company, Defendant-Respondent.
    Court of Appeals

      No. 04-0943.

      Submitted, on briefs December 6, 2004.

    Decided February 1, 2005.

    2005 WI App 52
    (Also reported in 694 N.W.2d 436.)

      On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Ardell W. Skow and Martha H. Heidt of Doar, Drill & Skow, S.C. of Baldwin.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Thomas D. McCormick of McCormick Law Office, P.A. of Hudson.
    Before Cane, C.J., Hoover, EJ., and Peterson, J.
   HOOVER, PJ.

¶ 1. Adam Austin-White appeals a summary judgment granted to Austin Mutual Insurance Company (AMI), which determined AMI did not have to extend either uninsured motorist coverage or medical payments coverage to Austin-White following an accident caused by Todd Young. The court concluded that Young was not using a covered vehicle under Austin-White's uninsured motorist coverage and that Austin-White did not meet the definition of an insured for the medical coverage. We agree that Austin-White is not an insured under the medical payments section of the insurance policy. However, we conclude that under the "complete operation" doctrine, Young was loading a pickup truck — an insured use of a covered vehicle — at the time of the accident. AMI therefore must extend coverage based on the uninsured motorist coverage section of the policy. Accordingly, we affirm in part, reverse in part, and remand the cause.

Background

¶ 2. On August 3, 2001, Austin-White was with Todd Young at Young's home. Young had previously hired Austin-White on several occasions to help with odd jobs and, on that day, Austin-White had assisted with some landscaping. Following a break, Young decided to scrap an inoperable dump truck he had at the site.

¶ 3. Young removed the dump truck's tailgate. The gate had chains attached, which controlled how far the gate could open when on the truck, but Young did not remove them. Austin-White was not assisting in this task. He had been instructed to wait near Young's flatbed pickup truck because once Young finished with the gate, he was going to take Austin-White home.

¶ 4. Because the gate was too heavy to lift, Young loaded the tailgate onto his Bobcat, a "skid-steer loader," and piled the chains on the top of the gate without securing them. He intended to load the gate onto the pickup truck's bed. As Young approached the truck on the Bobcat, Austin-White, who had been leaning on the pickup truck's driver's door, began walking towards the passenger side of the pickup truck so as to be out of Young's way. However, one of the chains slid off the top of the gate and caught under the Bobcat's wheel, pulling the gate down. It landed on Austin-White, injuring his leg.

¶ 5. Young's vehicles were uninsured. AMI issued an insurance policy to Austin-White's parents that included uninsured motorist coverage as well as medical payments coverage. Austin-White filed this action against Young and AMI. The parties filed cross-motions for summary judgment. The circuit court granted Austin-White's motion on the issue of Young's liability, and later granted AMI's motion on the issue of coverage. The court determined Young was operating only the Bobcat and it was not a covered vehicle under the uninsured motorist provisions. The court also determined that under the medical payments provisions, Austin-White did not meet the definition of an insured. Austin-White appeals.

Discussion

¶ 6. We review summary judgment decisions de novo, using the same methodology as the circuit court. Guenther v. City of Onalaska, 223 Wis. 2d 206, 210, 588 N.W.2d 375 (Ct. App. 1998). The methodology is well known and need not be repeated here, except to say that summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Walker v. Tobin, 209 Wis. 2d 72, 76, 568 N.W.2d 303 (Ct. App. 1997). We are also called upon in this case to interpret an insurance policy, which presents a question of law that we also review de novo. Guenther, 223 Wis. 2d at 210.

I. Uninsured Motorist Coverage

¶ 7. The AMI uninsured motorist coverage section provides that AMI will pay damages an insured is entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by an insured and caused by an accident. There is no dispute that Austin-White is an insured under the policy for purposes of this provision. The contentious phrase in this case states: "The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the 'uninsured motor vehicle.'"

¶ 8. The only question is whether Young's ownership, maintenance, or use of the pickup truck caused Austin-White's injuries. There are three elements to this accident: the dump truck's tailgate, the Bobcat, and the pickup truck. We first reject, as a matter of law, the contention that because Austin-White was hit with the tailgate, he was hit by a motor vehicle. It is clear that the dump truck was being disposed of in pieces. It was scrap metal that previously comprised a dump truck, but the gate was not, at the time, actually a vehicle. Second, we note that both parties agree the Bobcat itself is not a covered vehicle under the policy.

¶ 9. It is undisputed that the pickup truck qualifies as an "uninsured motor vehicle," but the parties disagree on whether the truck was in "use" at the time. Austin-White contends there is liability for the use of loading the pickup truck based on the "complete operation" doctrine. AMI denies any liability because only the Bobcat was in operation and, contrary to Austin-White's contention, Young was not in the process of loading the truck but was in fact several feet away.

¶ 10. We conclude Young was in the process of using his pickup truck when Austin-White was injured. "As used in a liability insurance policy, the words 'arising out of are very broad, general, and comprehensive. They ... require only that there be some causal relationship between the injury and the risk for which coverage is provided." Lawver v. Boling, 71 Wis. 2d 408, 415, 238 N.W.2d 514 (1976). "As it is used in the coverage clause of an automobile liability policy, the phrase 'arising out of is not so much concerned with causation as it is with defining the risk for which coverage will be afforded." Id. at 415-16.

¶ 11. "In determining whether the negligent act that caused a bodily injury arose out of the 'use' of a motor vehicle within the coverage of a motor vehicle liability policy, the court must consider whether it was a natural and reasonable incident or consequence of the use of the vehicle . . . ." See Allstate Ins. Co. v. Truck Ins. Exch., 63 Wis. 2d 148, 160, 216 N.W.2d 205 (1974) (citation omitted). That is, the "question is usually resolved by determining whether the alleged 'use' is one which is reasonably consistent with the inherent nature of the vehicle.... That the activities could possibly have been carried on, and the accident taken place, without the use of the vehicle is irrelevant." Lawver, 71 Wis. 2d at 416. "[0]nce the general activities which involve the vehicle can be said to constitute a covered 'use' of that vehicle, it makes no difference, for coverage purposes, whether the negligent act for which liability attaches [] occurs in the actual operation of the vehicle or in some other aspect of that 'use.'" Id.

¶ 12. "Loading and unloading . .. constitutes the 'use' of the vehicle in spite of the absence of any specific 'loading and unloading' clause from the policy." Allstate, 63 Wis. 2d at 158. For there to be coverage, a person must be actively engaged in loading or unloading and the negligent act must be part of that activity. See Amery Motor Co. v. Corey, 46 Wis. 2d 291, 297, 174 N.W.2d 540 (1970). Thus, the question is whether Young's use of the Bobcat to lift the tailgate was a part of loading the pickup truck and was a reasonably consistent use of the truck. We answer both parts of that question affirmatively.

¶ 13. Using a pickup truck, flatbed or otherwise, to transport cargo is part of the truck's inherent nature. The bed portion of a truck is not intended for passengers, meaning transportation of cargo, including scrap metal, is the very purpose of the design.

¶ 14. We are satisfied that this case is controlled by precedent applying the "complete operation" doctrine. In adopting this doctrine, the supreme court noted that the doctrine "contemplates that the loading commences when the items of cargo leave their original location on the way toward the vehicle...." Komorowski v. Kozicki, 45 Wis. 2d 95, 101, 172 N.W.2d 329 (1969) (citation omitted). Moreover, loading and unloading "are an extension of the use clause and cover operations or acts in which the movement of the truck itself does not play a part." Id. at 104 (citation omitted).

¶ 15. It is undisputed that Young was in the process of moving the tailgate onto the flatbed of the pickup truck. To do this, he needed to transport the gate from its original location. That he used the Bobcat is irrelevant — it was simply a necessary, preparatory act preceding his setting the gate on the flatbed. The pickup truck is a covered vehicle under the AMI policy, Austin-White's injuries occurred while Young was in the "complete operation" of loading the pickup, and the loading is a covered use. Therefore, Austin-White is covered under the uninsured motorist provisions of the policy.

II. Medical Payments

¶ 16. According to a separate section of the policy, AMI will pay reasonable medical expenses incurred due to bodily injury caused by an accident and sustained by an insured. For purposes of the medical expenses clause, "insured" means:

1. You or any "family member":
a. While "occupying"; or
b. As a pedestrian when struck by;
a motor vehicle designed for use mainly on public roads or a trailer of any type.

In the policy, "occupying" means "in, upon, getting in, on, out or off."

¶ 17. Under subsection (l)(b), Austin-White contends that because he was struck by the dump truck's tailgate, he was struck by a motor vehicle and is entitled to payment as a matter of law. As mentioned earlier in this opinion, we reject the notion that the dump truck, disassembled into scrap metal, constitutes a motor vehicle.

¶ 18. Under subsection (l)(a), Austin-White contends there is a factual dispute as to whether he was occupying the pickup truck. We disagree. According to his own testimony, he was walking around to the passenger side of the truck. He was not in the truck, upon the truck, or getting into, onto, out of, or off of the truck. Moreover, it strikes us as inconsistent to argue, even in the alternative, that he was a pedestrian entitled to judgment as a matter of law, but that he was also occupying the pickup truck under disputed facts.

¶ 19. In any event, Austin-White was not struck by a motor vehicle, nor was he occupying a motor vehicle at the time of his injury. For purposes of the medical payments provision, he is not insured by AMI.

By the Court. — Judgment affirmed in part; reversed in part, and cause remanded. No costs.

       Young's girlfriend owned the property and there was also a claim filed with her homeowner's insurance, but that was resolved prior to this appeal.

       AMI contends that Austin-White cites "many cases interpreting what constitutes 'use' of a motor vehicle [but] they don't adequately address the issue of liability arising out of Young's alleged 'use' of the dump truck and pickup.. .. Merely citing cases in which 'use' has been interpreted does not sufficiently address the issue of how 'liability' attaches to the 'use.'"

        The circuit court granted summary judgment to Austin-White on the issue of Young's liability but rejected the idea that Young was using a motor vehicle defined by the policy. AMI did not cross-appeal the summary judgment finding of liability. The only remaining question, therefore, is whether Austin-White was injured by Young's use of an uninsured motor vehicle. That is, liability has already been established; coverage has not.

       Even if he was leaning against the pickup truck's driver's door, we do not think this constitutes occupying the truck under any portion of the definition.


author: NETTESHEIM, J.

text:
    William J. Myers, Plaintiff-Appellant, v. General Casualty Company of Wisconsin, Defendant-Respondent.
    Court of Appeals

      No. 04-0827.

      Submitted on briefs December 15, 2004.

    Decided February 2, 2005.

    2005 WI App 49
    (Also reported in 694 N.W.2d 723.)

      On behalf of the plaintiff-appellant, the cause was submitted on the brief of Michael J. Jassak and Benjamin S. Wagner, oí Habush, Habush & Rottier, S.C. of Racine.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Philip C. Reid and Lauri A. Schumacher of Cook & Franke, S.C. of Milwaukee.
    Before Anderson, PJ., Brown and Nettesheim, JJ.

       Petition to review denied 6-1-2005.

   NETTESHEIM, J.

¶ 1. William J. Myers appeals from a declaratory judgment granted in favor of his motor vehicle insurer, General Casualty Company of Wisconsin. Myers argues that the trial court incorrectly determined that an uninsured motorist (UM) reducing clause in the General Casualty policy is valid and not contextually ambiguous. We uphold the trial court's rulings and consequently affirm the judgment.

BACKGROUND

¶ 2. The parties do not dispute the facts. On July 25, 1997, Myers was operating a motor vehicle in the course of his employment when he was struck by a vehicle driven by an uninsured motorist. It is undisputed that the uninsured motorist's negligence was the cause of the accident. As a result of the accident, Myers sustained severe and permanent injuries. At the time of the accident, Myers had worker's compensation insurance through his employer. Myers received in excess of $213,000 in worker's compensation benefits as a result of his injuries.

¶ 3. At the time of the accident, Myers also had UM coverage of $100,000 per person under a motor vehicle insurance policy issued to him by General Casualty. The UM coverage included a reducing clause for worker's compensation payments. Myers made a claim for his damages against General Casualty under the UM provision. Relying on the reducing clause, General Casualty denied the claim.

¶ 4. Myers responded with the instant action against General Casualty alleging that the reducing clause was invalid under Wis. Stat. § 632.32(5)(i) (2003-04) and the supreme court's decision in Badger Mutual Insurance Co. v. Schmitz, 2002 WI 98, 255 Wis. 2d 61, 647 N.W.2d 223. Alternatively, Myers alleged that the reducing clause, when considered in conjunction with other provisions in the policy, created an ambiguity and was, therefore, unenforceable.

¶ 5. General Casualty's answer alleged an affirmative defense under the UM reducing clause. Later, General Casualty moved for declaratory judgment on the basis of the reducing clause. Following briefing by the parties, the trial court granted General Casualty's motion. The court held that the reducing clause was valid and that the clause was not contextually ambiguous. Myers appeals from the ensuing judgment dismissing his complaint.

DISCUSSION

Standard of Review

¶ 6. The grant or denial of a declaratory judgment is addressed to the trial court's discretion. Commercial Union Midwest Ins. Co. v. Vorbeck, 2004 WI App 11, ¶ 7, 269 Wis. 2d 204, 674 N.W.2d 665, review denied, 2004 WI 20, 269 Wis. 2d 200, 675 N.W.2d 806 (Wis. Feb. 24, 2004) (No. 03-0100). However, when the exercise of such discretion turns upon a question of law, we review the question de novo, benefiting from the trial court's analysis. Id. Here, all of the issues raised by Myers turn upon our construction of the General Casualty insurance policy, an exercise that presents a question of law. See id.

The General Casualty Policy

¶ 7. General Casualty first issued its motor vehicle insurance policy to Myers in 1985. The policy included uninsured motorist coverage and an accompanying reducing clause for worker's compensation payments. At that time, UM reducing clauses were valid. However, in 1987, the supreme court held that such clauses were not authorized by Wis. Stat. § 632.32(4)(a) (1979-80), which required an insurer to include UM coverage in a motor vehicle liability policy. Nicholson v. Home Ins. Cos., 137 Wis. 2d 581, 594, 405 N.W.2d 327 (1987). As a result, the reducing clause in Myers' original policy and in subsequent renewal policies was of no legal effect. Later, in 1995, the Wisconsin legislature responded to Nicholson with the enactment of Wis. Stat. § 632.32(5)(i) (1995-96) which permits insurers to include reducing clauses for certain types of payments as part of their UM coverage. See 1995 Wis. Act 21.

¶ 8. That brings us to the General Casualty policy which is at issue in this case. In 1997, after the enactment of Wis. Stat. § 632.32(5)(i), General Casualty issued its renewal policy to Myers. The policy consisted of a nineteen-page primary policy, a nine-page "Amendment of Policy Provisions — Wisconsin," and a five-page "Underinsured Motorist Coverage — Wisconsin." The primary policy replicated the original policy, including the original UM reducing clause. In addition, as a result of the legislature's enactment of § 632.32(5)(i), the "Amendment" section of the policy recited a further reducing clause. Therefore, the General Casualty policy at issue includes two UM reducing clauses.

¶ 9. The reducing clause in the primary policy reads in relevant part:

LIMIT OF LIABILITY
Any amounts otherwise payable for damages under this coverage shall be reduced by:
1. all sums paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under the Liability Coverage of this policy, and
2. all sums paid or payable because of the bodily injury under any workers' or workmen's compensation, disability benefits law or any similar law.
Any payment under this coverage to or for an "insured" will reduce any amount that person is entitled to recover for the same damages under the Liability Coverage of this policy.

¶ 10. The language of the reducing clause in the amendment is substantially similar to that in the primary policy. It reads as follows:

III. UNINSURED MOTORIST COVERAGE
LIMIT OF LIABILITY
C. The limit of liability shall be reduced by all sums:
1. Paid because of the "bodily injury" by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under Part A; and
2. Paid or payable because of the "bodily injury" under any of the following or similar law:
a. Workers' compensation law; or
b. Disability benefits law.
D. No one will be entitled to receive duplicate payments for the same elements of loss.

Myers' Challenges

1. Compliance with Wis. Stat. § 632.32

¶ 11. Myers argues that the reducing clauses in both the primary policy and the amendment are unenforceable because they do not comply with Wis. Stat. § 632.32(5)(i), which governs motor vehicle insurance policies issued or delivered in Wisconsin. It provides:

(i) A policy may provide that the limits under the policy for uninsured or underinsured motorist coverage for bodily injury or death resulting from any one accident shall be reduced by any of the following that apply:
1. Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made.
2. Amounts paid or payable under any worker's compensation law.
3. Amounts paid or payable under any disability benefits laws.

Sec. 632.32(5)(i).

¶ 12. Myers first argues that the reducing clauses fail to comply with Wis. Stat. § 632.32(5)(i) because they reduce UM coverage by payments made "because" of the bodily injury rather than "for" the bodily injury as set forth in § 632.32(5) (i). The essence of this argument is that the language of a reducing clause must mirror that of § 632.32(5)(i). We disagree. There is no "magic language" required by § 632.32(5)(i) and a reducing clause does not have to mirror the language of the statute. Hanson v. Prudential Prop. & Cas. Ins. Co., 224 Wis. 2d 356, 370, 591 N.W.2d 619 (Ct. App. 1999). Moreover, General Casualty is not attempting to reduce Myers' payments under this language of the reducing clauses. Rather, it is relying on the worker's compensation language of the reducing clauses. "The fact that an insurance policy may include arguably ambiguous language upon which the insurer has not relied is of no consequence and will not defeat the right of an insurer to reduce its limits of liability under a valid provision." Remiszewski v. American Family Ins. Co., 2004 WI App 175, ¶ 17, 276 Wis. 2d 167, 687 N.W.2d 809, review denied, 2004 WI 138, 276 Wis. 2d 30, 689 N.W.2d 57 (Wis. Oct. 19, 2004) (No. 03-2653).

¶ 13. Next, Myers argues that the use of the phrase "or any similar law" following the reference to worker's compensation benefits is an invalid attempt to reduce payments from sources not permitted under Wis. Stat. § 632.32(5) (i). We also reject this argument. In Van Erden v. Sobczak, 2004 WI App 40, ¶ 25, 271 Wis. 2d 163, 677 N.W.2d 718, review denied, 2004 WI 114, 273 Wis. 2d 655, 684 N.W.2d 136 (Wis. May 12, 2004) (No. 02-1595), the court considered a reducing clause that contained similar language: "The limits of this coverage will be reduced by: .... 3. A payment made or amount payable because of bodily injury under any workers' compensation or disability benefits law or any similar law." Van Erden, 271 Wis. 2d 163, ¶ 24 (emphasis added). The Van Erden court held that the inclusion of the "similar law" language "does no disservice to the legislative intent. The wording merely acts as a catchall phrase for jurisdictions that may call their disability benefits law by another name." Id., ¶ 25.

¶ 14. While Myers acknowledges Van Erden's holding, he contends that the Van Erden court failed to fully consider that the inclusion of the "similar law" language failed to inform the insured of the amount of underinsured motorist (UIM) coverage actually purchased. Even assuming this criticism is valid, we are duty bound to follow Van Erden. Cook v. Cook, 208 Wis. 2d 166, 189-90, 560 N.W.2d 246 (1997).

¶ 15. We uphold the trial court's ruling that the General Casualty reducing clauses comply with Wis. Stat. § 632.32(5)(i).

2. Contextual Ambiguity

¶ 16. Myers next argues that even if the reducing clauses comply with Wis. Stat. § 632.32(5)(i), they are not enforceable because they are contextually ambiguous when read in conjunction with other provisions of the policy. In answering this criticism, we limit our discussion to the reducing clause recited in the primary policy since, as our analysis will reveal, this clause is not contextually ambiguous because the Index Of Coverage correctly refers the insured to the section of the policy where the clause is located and the clause itself clearly notifies the insured that UM coverage will be reduced by any worker's compensation payments. Therefore, assuming for the sake of argument that the reducing clause in the Amendment is contextually ambiguous, such assumed ambiguity is of no consequence.

¶ 17. To date, the published case law concerning contextual ambiguity has been limited to zm&erinsured motorist provisions. See, e.g., Folkman v. Quamme, 2003 WI 116, 264 Wis. 2d 617, 665 N.W.2d 857; Vorbeck, 269 Wis. 2d 204; Van Erden, 271 Wis. 2d 163; Dowhower v. Marquez, 2004 WI App 3, 268 Wis. 2d 823, 674 N.W.2d 906 (Dowhower III), review denied, 2004 WI 20, 269 Wis. 2d 198, 675 N.W.2d 804 (Wis. Feb. 24, 2004) (No. 01-1347). Thus, General Casualty correctly observes that "[i]t is an open question whether the methodology used to analyze UIM reducing clauses applies to UM reducing clauses because there is a significant difference between the two types of coverage."

¶ 18. While we acknowledge the differences between UIM and UM coverage, we see no reason why the principles governing contextual ambiguity in a UIM reducing clause setting should not also apply in a UM reducing clause setting. If the goal in a UIM case is to assure that a reasonable insured is not given false signals or expectations, see Dowhower III, 268 Wis. 2d 823, ¶ 18, that surely must also be the goal in a UM case. We therefore will examine General Casualty's reducing clause using the principles set forth in the UIM cases.

¶ 19. The standard for addressing alleged contextual ambiguity in the UIM setting is whether the "organization, labeling, explanation, inconsistency, omission, and text of other provisions in the policy" create "an objectively reasonable alternative meaning and, thereby, disrupt an insurer's otherwise clear policy language." Id., ¶ 19 (citing Folkman, 264 Wis. 2d 617, ¶¶ 19, 30). "[Contextual ambiguity in an insurance policy must be genuine and apparent on the face of the policy, if it is to upset the intentions of an insurer embodied in otherwise clear language." Folkman, 264 Wis. 2d 617, ¶ 29. A policy will not be enforced when it is so ambiguous or obscure as to create false expectations. See id., ¶¶ 20, 31. To assess contextual ambiguity, "the court should trace the route the insured would have to take from the declarations page to the reducing clause." Dowhower III, 268 Wis. 2d 823, ¶ 19.

¶ 20. With these principles in mind, we examine the provisions of General Casualty's primary policy. Beginning with the title page, we observe that it advises the insured that "[t]he policy itself sets forth, in detail, the rights and obligations of both you and your insurance company. It is important that you read your policy carefully." While directives to read a policy carefully will not resolve the question of contextual ambiguity, they can serve as markers that assist a reasonable insured in navigating through a policy. Vorbeck, 269 Wis. 2d 204, ¶¶ 23-24.

¶ 21. The title page is immediately followed by a one-page document entitled, "Your Personal Auto Policy Quick Reference." This page includes an "Index of Coverage" which lists the various sections of the primary policy. These sections are "Part A — Liability," "Part B — Medical Payments Coverage," "Part C — Uninsured Motorist Coverage," "Part D — Coverage for Damage to Your Auto," "Part E — Duties After an Accident of Loss," and "Part F — General Provision." Opposite each of these sections listings is a reference to the page of the policy where the particular section is addressed. In addition, the index lists subsections under the sections headings. The portion of the index relating to UM coverage reads:

Part C — Uninsured Motorist Coverage 8
-Insuring Agreement -Other Insurance
-Exclusions -Arbitration
-Limit of Liability

¶ 22. As the "Index Of Coverage" promises, the section entitled "Part C-UNINSURED MOTORIST COVERAGE" commences at page eight. This section then addresses the various subsections in the order they are listed in the index. Following the "Insuring Agreement" and "Exclusions" subsections, the insured would next find the "LIMIT OF LIABILITY" subsection on page nine. This subsection includes the reducing clause at issue. Thus, the index correctly refers the insured to the reducing clause in the primary policy in an orderly, direct and understandable fashion.

¶ 23. Myers cites to Dowhower III in support of his contention that the UM reducing clause is contextually ambiguous because General Casualty's declarations page, which follows the Quick Reference page, does not indicate any possibility of a reduction in the limit of liability for UM coverage of $100,000 per person. See Dowhower III, 268 Wis. 2d 823, ¶ 20 (observing that the declarations page in no way assists the insured in understanding that the limits of liability are subject to conditions and exceptions set forth later in the policy). However, the declarations page in Dowhower additionally misleads the insured as to the location of UIM coverage information by listing the UIM limits of liability under the UM coverage heading. Id., ¶ 20. Here, in contrast, the "Index of Coverage" which immediately precedes the declarations page, straightforwardly directs the insured to the UM coverage provisions where the limits of liability clearly set out the reducing clause.

¶ 24. Myers additionally points to the failure of the Quick Reference page to reference a UM reducing clause; however, there is no requirement that it do so. See Vorbeck, 269 Wis. 2d 204, ¶ 32. Unlike the policy in Dowhower III which failed to address UIM coverage in its index, the above analysis demonstrates that the Quick Reference includes an Index Of Coverage which references the UM provisions of the policy and the various subsections bearing on that coverage, including a limit of liability which recites the reducing clause. We hold that when an insurance policy correctly refers an insured to a relevant provision of an insurance policy without confusion, misdirection or false signals, the insured is properly charged with the obligation to read the provision.

¶ 25. Finally, Myers complains that the Quick Reference and Index Of Coverage refers to the original and once prohibited reducing clause in the primary policy. He argues that the insertion of this "illicit reduction language compounds the confusion and ambiguity of General Casualty's UM policy." We disagree. The reducing clause in the primary policy, while once prohibited, was enforceable at the time General Casualty reissued Myers' policy in 1997. Rather than confusing the insured, our analysis of the primary policy demonstrates that the reducing clause in the primary policy is easily located and clearly notifies the insured that UM coverage will be reduced by all amounts paid or payable by worker's compensation.

¶ 26. In summary, we conclude that there is nothing in General Casualty's primary policy which would befuddle a reasonable insured in his or her attempt to locate and understand the limits of the policy's UM coverage, including the reducing effect of any past or future worker's compensation payments. See Vorbeck, 269 Wis. 2d 204, ¶ 30. In tracing the route that a reasonable insured would have had to take to arrive at General Casualty's UM reducing clause, we encounter no inconsistent or misleading provisions which might produce an objectively reasonable alternative meaning of the policy. See id. We conclude that the UM reducing clause in General Casualty's policy is not contextually ambiguous and is therefore enforceable.

Conclusion

¶ 27. The UM reducing clauses in the General Casualty policy do not violate the provisions of Wis. Stat. § 632.32(5)(i). Nor is the reducing clause in the primary policy contextually ambiguous. We uphold the trial court's judgment in favor of General Casualty.

By the Court. — Judgment affirmed.

       Myers' employer additionally provided him with a motor vehicle insurance policy issued by Cities and Villages Mutual Insurance Company. Myers named Cities and Villages in this action before the circuit court. Like General Casualty, Cities and Villages obtained a judgment that its UM provisions were valid and enforceable. Myers does not appeal the judgment as it pertains to Cities and Villages.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       General Casualty first argues that Myers' arguments are waived because he did not raise them before the circuit court. Assuming this is so, we nonetheless choose to address them on the merits.

       Myers does not contend that the existence of two reducing clauses in a single policy produces any contextual ambiguity. Nor does he cite to any interplay between the two clauses that augurs for contextual ambiguity. Rather, he registers separate contextual ambiguity challenges to each.

       "[T]he concept of uninsured motorist and underinsured motorist coverage is to provide protection in diametrically opposite circumstances. Uninsured motorist coverage is effective where the tortfeasor has no liability insurance and under-insured motorist coverage is effective where there is a tortfeasor with liability coverage but inadequate in amount for the injuries caused." Schwochert v. American Family Mut. Ins. Co., 139 Wis. 2d 335, 346, 407 N.W.2d 525 (1987), aff'd, 172 Wis. 2d 628, 494 N.W.2d 201 (1993).

       Myers additionally argues that the language forbidding "duplicate payments for the same elements of loss" in Section D of the Limit of Liability provisions in the Amendment is ambiguous. However, General Casualty did not rely on this provision when denying Myers' claim for UM benefits. As we have noted, "The fact than an insurance policy may include arguably ambiguous language upon which the insurer has not relied is of no consequence and will not defeat the right of an insurer to reduce its limits of liability under a valid provision." Remiszewski v. American Family Ins. Co., 2004 WI App 175, 276 Wis. 2d 167, ¶ 17, 687 N.W.2d 809, review denied, 2004 WI 138, 276 Wis. 2d 30, 689 N.W.2d 57 (Wis. Oct. 19, 2004) (No. 03-2653).


author: SNYDER, J.

text:
    In re the Commitment of Tremaine Y.: State of Wisconsin, Petitioner-Respondent, v. Tremaine Y., Respondent-Appellant.

    Court of Appeals

      No. 04-2149.

      Submitted on briefs December 15, 2004.

    Decided February 2, 2005.

    2005 WI App 56
    (Also reported in 694 N.W.2d 462.)

      On behalf of the respondent-appellant, the cause was submitted on the briefs of Robert W. Peterson, assistant state public defender, and Samantha J. Hu-mes, assistant state public defender, Milwaukee.

      On behalf of the petitioner-respondent, the cause was submitted on the brief of Eileen W. Pray, assistant attorney general, and Peggy A. Lautenschlager, attorney general.
    Before Brown, Nettesheim and Snyder, JJ.

       Petition to review denied 5-11-2005.

   SNYDER, J.

¶ 1. Tremaine Y. appeals from an order denying his motion to dismiss the State's petition to commit him as a sexually violent person under Wis. Stat. ch. 980 (2003-04). Tremaine argues that the State's petition for his commitment under ch. 980 is flawed because the only adjudication for a sexually ■violent offense occurred when he was eleven years old. He contends that a subsequent change of placement order placing him at Ethan Allen School could not form the basis for the ch. 980 petition. We disagree and affirm the order of the circuit court.

FACTS

¶ 2. Tremaine was adjudicated delinquent of attempted first-degree sexual assault on March 12, 1998, when he was eleven years old. He was placed under the supervision of the Department of Health and Social Services for one year and released to his mother. On November 16, the State petitioned for a change of placement, alleging that Tremaine had committed a new sex offense in July. The circuit court placed Trem-aine at Norris Adolescent Treatment Center and extended the supervision order through March 12, 2000. Tremaine was subsequently moved from Norris to St. Aemilian-Lakeside.

¶ 3. In 1999, Tremaine was adjudicated delinquent for fourth-degree sexual assault. The circuit court ordered him to remain at St. Aemilian-Lakeside for sex offender treatment. The dispositional order in case no. 97-JV-XXX was extended with the adjudication of case no. 99-JV-XXX until March 12, 2001.

¶ 4. In March 2001, the circuit court extended Tremaine's dispositional order to March 12, 2002, for Kenosha county case nos. 97-JV-XXX, 98-JV-XX, and 99-JV-XXX. Referencing the same three cases, the court changed Tremaine's placement to Ethan Allen School, a secured correctional facility, on May 17, 2001.

¶ 5. Tremaine was adjudicated delinquent on November 1, 2001, for fourth-degree sexual assault. The dispositional order mandated continued placement at Ethan Allen School and supervision by the Department of Corrections through March 12, 2002, concurrent with his supervision under case nos. 97-JV-XXX and 99-JV-XXX. Subsequently, Tremaine was adjudicated delinquent for having sex with a child age sixteen or older, contrary to Wis. Stat. § 948.09, and his placement at Ethan Allen School continued to March 12, 2003.

¶ 6. A final extension hearing took place on March 6, 2003, and the circuit court extended Tremaine's dispositional order through March 12, 2004. This order for extension referenced all five previous adjudications. On March 8, 2004, the State filed a Wis. Stat. ch. 980 petition to commit Tremaine as a sexually violent person within the meaning of Wis. Stat. § 980.01(7). Tremaine moved to dismiss the petition, arguing that only his first delinquency adjudication would qualify as a sexually violent offense as defined by ch. 980 of the Wisconsin Statutes and that the associated disposition did not order the correctional placement required by Wis. Stat. § 980.02(2)(ag). The circuit court denied Tremaine's motion to dismiss and Trem-aine appeals.

DISCUSSION

¶ 7. The parties differ in their presentation of the issues. Tremaine contends that the change of placement order executed on May 17, 2001, was contrary to the plain language of Wis. Stat. § 938.34(4m), which prohibits a court from placing juveniles under the age of twelve in a secured correctional facility. He argues that the 97-JV-XXX dispositional order entered on March 12,1998, when he was eleven years old, cannot form the basis for subsequent corrections placement.

¶ 8. The State first responds that Tremaine's challenge to the 2001 change of placement order is too late, and that this is an improper forum for a collateral attack on that order. We disagree. Tremaine does have the right to challenge that placement order in the context of this Wrs. Stat. ch. 980 proceeding. See, e.g., Neylan v. Vorwald, 124 Wis. 2d 85, 97, 368 N.W.2d 648 (1985). "When a court or other judicial body acts in excess of its jurisdiction, its orders or judgments are void and may be challenged at any time." Id. (citation omitted). Furthermore, collateral attack is a proper method for challenging the order or judgment. Id. If Tremaine can demonstrate that the order was void, he is entitled to have it treated as a "legal nullity." Id. at 99 (citation omitted). We will therefore consider Tremaine's argument in the context of the ch. 980 petition.

¶ 9. The interpretation of a statute or its application to undisputed facts is a question of law, which this court reviews de novo. State v. Keith, 216 Wis. 2d 61, 68, 573 N.W.2d 888 (Ct. App. 1997). "When interpreting a statute, our purpose is to discern legislative intent. To this end, we look first to the language of the statute as the best indication of legislative intent. Additionally, we may examine the statute's context and history." Village of Lannon v. Wood-Land Contractors, Inc., 2003 WI 150, ¶ 13, 267 Wis. 2d 158, 672 N.W.2d 275 (citations omitted). When interpreting a statute, we presume that "the legislature intends for a statute to be interpreted in a manner that advances the purposes of the statute." State v. Carey, 2004 WI App 83, ¶ 8, 272 Wis. 2d 697, 679 N.W.2d 910 (citation omitted), review denied, 2004 WI 114, 273 Wis. 2d 657, 684 N.W.2d 138 (WI June 8, 2004) (Nos. 03-1578-CR to 03-1583-CR).

¶ 10. A petition under Wis. Stat. ch. 980 must allege that:

The person is within 90 days of discharge or release ... from a secured correctional facility, as defined in s. 938.02(15m) ... if the person was placed in the facility for being adjudicated delinquent under s. 938.183 or 938.34 on the basis of a sexually violent offense or from a commitment order that was entered as a result of a sexually violent offense.

Wis. Stat. § 980.02(2)(ag) (emphasis added). Tremaine does not dispute that at the time of the State's petition he was within ninety days of release from Ethan Allen School. He further acknowledges that the dispositional order for the sexually violent offense, case no. 97-JV-XXX, was extended several times and remained in effect at the time the State filed the ch. 980 petition. However, he asserts that he was placed at Ethan Allen school "for non-sexually violent offenses" and that he was merely "on supervision for 97 JV [XXX]." Therefore, he argues, he was not placed in the secured correctional facility for being adjudicated delinquent of a sexually violent offense.

¶ 11. Tremaine draws support for his position from State v. Terry T., 2002 WI App 81, 251 Wis. 2d 462, 643 N.W.2d 175. Terry T. was adjudicated delinquent and all parties agreed that he should be placed at Homme Home, a facility with an appropriate treatment program. Id., ¶¶ 2, 9. Terry T. was not eligible for Serious Juvenile Offender Program (SJOP) placement at the time of the original disposition because he was under the age of fourteen. See Wis. Stat. § 938.34(4h). Because of subsequent inappropriate conduct and because he was over the age of fourteen, the State later moved for a change of placement to Ethan Allen School for the SJOP. See Terry T., 251 Wis. 2d 462, ¶¶ 2-3. The issue presented was "whether on a motion to extend supervision or change placement a juvenile court has the authority to order a juvenile's placement in the SJOP when that placement was not part of the original disposition." Id., ¶ 5 (footnote omitted). We concluded it did not. Id., ¶ 17. We held that "the juvenile justice code authorizes a trial court to consider an SJOP placement only as part of an original disposition; it has no authority to consider the SJOP as a dispositional tool in any subsequent proceeding." Id., ¶ 1.

¶ 12. Tremaine argues by analogy that a juvenile court does not have the authority to change his placement to a secured correctional facility where such placement was prohibited by a statutory age restriction at the time of the original disposition. His analogy fails, however, because it stretches our Terry T. conclusion beyond the intended scope. In Terry T, we determined that the five-year SJOP placement may only occur at an original disposition. Id., ¶ 12. We specifically distinguished SJOP placement, stating, "[I]t is not a means to extend or revise a disposition already in effect." Id. In contrast, the May 17, 2001 order here did extend and revise the existing disposition on Tremaine's sexually violent offense. At the time Tremaine's placement was changed to Ethan Allen School, he was no longer under the age limit found in Wis. Stat. § 938.34(4m). Accordingly, the order placing Tremaine at Ethan Allen School was valid.

¶ 13. The remaining issue is whether Wis. Stat. ch. 980 applies where the juvenile was not placed in a secured correctional facility following the original adjudication of the underlying sexually violent offense, but rather as the result of extended and revised placement orders that incorporated additional offenses. Although no case law on this discrete issue exists, we consult our previous ruling in Keith for guidance. There, we observed:

The Legislative Reference Bureau (LRB) note to the assembly bill which introduced [Wis. Stat. § 980.02(2)(ag)] stated that a petition should allege that a subject be "within 90 days of release from custody, commitment or supervision resulting from a conviction or adjudication for a sexually violent offense." .... [T]he LRB note suggests only a generalized conception of custody, rather than an examination of the numerical order in which various offenses were sentenced. This makes sense in light of ch. 980's twin objectives of protecting the public and treating high risk sex offenders to reduce the chance of future sexual misconduct. The risk that a sex offender may re-offend is not affected by the order in which he [or she] serves time ... and the public is not endangered until the offender is actually released into the community.

Keith, 216 Wis. 2d at 72 (citations omitted).

¶ 14. We recognize that criminal sentencing concepts are foreign to juvenile proceedings. See State v. Wolfe, 2001 WI App 136, ¶ 15, 246 Wis. 2d 233, 631 N.W.2d 240. Nonetheless, the twin purposes of Wis. Stat. ch. 980 apply equally to juvenile offenders. We conclude that the risk of reoffense and the protection of the public are best served by applying a Wis. Stat. § 980.02(2)(ag) analysis to a juvenile's placement circumstances pending release rather than to a juvenile's placement under the original disposition. Tremaine's original disposition in case no. 97-JV-XXX could not have formed a basis for a ch. 980 petition; however, his subsequent placement in a secured correctional facility, which was based at least in part on the sexually violent offense in case no. 97-JV-XXX, is sufficient to support the State's petition.

CONCLUSION

¶ 15. At the time of the State's petition for Wis. Stat. ch. 980 commitment, Tremaine was within ninety days of release from a secured correctional facility. Tremaine's placement was based on a sexually violent offense as well as subsequent offenses. The requirements of Wis. Stat. § 980.02(2)(ag) are met and the circuit court properly denied Tremaine's motion to dismiss the State's petition.

By the Court. — Order affirmed.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       The sexual assault charge, Kenosha county case no. 97-JV-XXX, was resolved in conjunction with other unrelated charges in Kenosha county case no. 98-JV-XX. Due to the confidential nature of the juvenile proceedings underlying the State's petition, we do not provide the complete file numbers for these cases.

       Kenosha county case no. 99-JV-XXX.

       Kenosha county case no. 00-JV-XXX.

       Kenosha county case no. 02-JV-XXX.

       Kenosha county case nos. 97-JV-XXX, 98-JV-XX, 99-JV-XXX, 00-JV-XXX, and 02-JV-XXX.

       On September 1, 2004, we granted leave to appeal the circuit court's nonfinal order pursuant to Wis. Stat. § 808.03(2) in order to clarify an issue of general importance to the administration of justice.

       Further, the record indicates that every extension and change of placement order referenced Kenosha county case no. 97-JV-XXX, the sexually violent offense.