author: HOOVER, PJ.

text:
    Dr. Kenneth M. Wolnak, Plaintiff-Appellant-Cross-Respondent, v. Cardiovascular & Thoracic Surgeons of Central Wisconsin (n/k/a Wausau Heart & Lung Surgeons, S.C.), Defendant-Respondent-Cross-Appellant, Dr. Fernando A. Riveron, Defendant-Respondent.††
    Court of Appeals

      No. 2004AP1051.

      Submitted on briefs February 7, 2005.

      Decided September 7, 2005.

    2005 WI App 217
    (Also reported in 706 N.W.2d 667.)

      On behalf of the plaintiff-appellant-cross-respondent, the cause was submitted on the briefs of Matthew S. Mayer oí Mattery & Zimmerman, S.C., of Wausau.
    On behalf of the defendant-respondent-cross-appellant and the defendant-respondent, the cause was submitted on the combined briefs of David J. Eckert of Tuchscherer, Eckert & Wagman, S.C. of Wausau, and Douglas J. Klingberg of Ruder, Ware & Michler, LLSC of Wausau.
    Before Cane, C.J., Hoover, PJ., and Peterson, J.

       Petition to review denied 12-14-05.

       Petition to cross review denied 12-14-05.

   HOOVER, PJ.

¶ 1. This appeal arises from a breach of contract and defamation action brought by Dr. Kenneth Wolnak against Dr. Fernando Riveron and Riveron's clinic, Cardiovascular & Thoracic Surgeons of Central Wisconsin, S.C. ("CATS"). CATS counterclaimed, alleging breach of contract, tortious interference with a contract, and misrepresentation. Wolnak appeals: (1) the denial of summary judgment on the tortious inference claim; (2) the denial of his motion in limine to exclude character evidence; (3) the jury's verdict finding tortious interference; (4) the granting of CATS's motion in limine excluding evidence on the non-compete clause; and (5) the denial of his motion after verdict for statutory wage claim penalties. CATS individually cross-appeals, arguing: (1) the damage award for CATS's breach of contract should be reduced or struck because Wolnak breached first and (2) the jury erroneously concluded CATS did not rely on Wolnak's misrepresentations. For reasons given in this opinion, we affirm in all respects.

Background

¶ 2. CATS is a private surgical practice that Riv-eron joined in 1996. At that time there were two other surgeons in the practice. By 1998, they needed an additional surgeon to handle the workload and Riveron was put in charge of hiring the new doctor. Ultimately, he hired Wolnak, a surgeon he knew from his residency, based on what Riveron thought was an impressive resume. Wolnak joined CATS under contract in January 1999. Dr. John Johnkoski joined the practice sometime thereafter, and the two surgeons with whom Riveron initially practiced left. Riveron eventually became president of CATS.

¶ 3. CATS is affiliated with Wausau Hospital. The hospital would not grant surgical privileges to any surgeon who did not have at least one other surgeon available as backup. This is the hospital's "two surgeon rule."

¶ 4. During Wolnak's employment at CATS, there were issues with both his performance and his compensation. According to Riveron, Wolnak's performance problems included poor record keeping, patient handling, surgical judgment, and staff relations, as well as high morbidity and mortality rates. Regarding compensation, the contract initially based compensation on "physician production" rather than salary. Wolnak claims he was underpaid under this contract, although Riveron claims they agreed to orally modify the contractual compensation structure after repeated problems with Wolnak's performance.

¶ 5. Around Christmas 2000, Wolnak asked Riv-eron if he would ever become a partner in CATS. When Riveron's answer was unsatisfactory, Wolnak handed a resignation letter to Riveron, who responded that Wol-nak was fired.

¶ 6. Sometime prior to this conversation, Wolnak had spoken with Johnkoski, who was also dissatisfied with his partnership track. He thought Riveron was failing to honor a verbal promise regarding the time-frame. Wolnak told Johnkoski he was thinking of resigning and forming a competing practice. When the subject of a non-compete clause within their contracts came up, Wolnak stated that he believed the clause only applied if they were fired.

¶ 7. After his conversation with Wolnak, Riveron telephoned Johnkoski, who was vacationing in Michigan. Riveron told Johnkoski that Wolnak had quit and asked Johnkoski if he was thinking of resigning as well. Johnkoski expressed his disappointment over his contract's timeline for becoming a partner, and Riveron agreed to make him a partner sooner than called for in the contract. Ultimately, Johnkoski stayed with CATS.

¶ 8. Wolnak continued to practice with the clinic for a few weeks following his resignation, but was ultimately unable to reconcile with CATS. He finally left, and commenced this action for breach of contract and defamation. CATS counterclaimed for breach of contract, tortious interference with Johnkoski's contract, and misrepresentation.

¶ 9. The parties filed competing motions for summary judgment and the trial court denied them both, except for CATS's request to dismiss the punitive damages claim. Prior to trial, the court denied Wolnak's motion in limine to exclude character evidence against him. The court also granted CATS's motion in limine to bar Wolnak's assertion that the covenant not to compete did not apply if he resigned. After granting that motion, the court determined that it had to dismiss Wolnak's defamation claim against CATS because it had been premised on Wolnak's interpretation of the covenant.

¶ 10. Following a jury trial, the jury found that CATS breached its contract by failing to pay Wolnak according to the contract and awarded him $226,422.44. The jury also found that Wolnak misrepresented his background to obtain employment, but that CATS did not believe or rely on the misrepresentations, and awarded nothing. Finally, the jury determined that Wolnak tortiously interfered with Johnkoski's contract and awarded CATS $125,638.13. After trial, Wolnak filed a motion to change the verdict to add penalties for wage claim violations in accordance with Wis. Stat. § 103.455 and Wis. Stat. ch. 109. CATS sought to change the jury's answer that it did not rely on Wolnak's misrepresentation and sought damages on that claim. The court denied the motions after verdict. Wolnak appeals and CATS individually cross-appeals.

Discussion

I. Tortious Interference

¶ 11. Wolnak raises three issues regarding the tortious interference claim. First, he contends the trial court erred in denying his motion for summary judgment to dismiss the claim. Second, he claims it was error for the trial court to admit evidence pertaining to his character. Third, he argues there is insufficient evidence to support the jury's verdict. We disagree with all three assertions.

A. Summary Judgment

¶ 12. We review summary judgments de novo, using the same methodology as the trial court and benefiting from its analysis. Lambrecht v. Estate of Kaczmarczyk, 2001 WI 25, ¶ 20-24, 241 Wis. 2d 804, 623 N.W.2d 751. First, we examine the pleadings to determine whether there is a claim for relief and whether genuine issues of material fact exist. Id., ¶ 21. If the pleadings state a claim and there are factual issues, we consider whether the moving party has made a prima facie case for summary judgment. Id., ¶ 22. Inferences drawn from the material submitted by the moving party are viewed in the light most favorable to the non-moving party. Id., ¶¶ 22-23. In order to be entitled to summary judgment, the moving party must prove there is no genuine issue as to any material fact and that moving party must show that it is entitled to judgment as a matter of law. Id., ¶ 24.

¶ 13. Wolnak concedes CATS stated a claim upon which relief could be granted. He argues, however, that his summary judgment proofs demonstrate CATS cannot prove the elements of tortious interference, thereby entitling him to summary judgment, despite the trial court's conclusion that issues of fact precluded granting his motion.

¶ 14. The elements of a claim for tortious interference with a contract are: (1) the plaintiff had a current or prospective contractual relationship with a third party; (2) the defendant interfered with that contractual relationship; (3) the interference was intentional; (4) a causal connection exists between the defendant's interference and the plaintiffs damages; and (5) the defendant was not justified or privileged to interfere. Duct-O-Wire Co. v. U.S. Crane, Inc., 31 F.3d 506, 509 (7th Cir. 1994). Wolnak argues there is no issue of material fact on causation, intent, or privilege. In other words, he contends he did not cause CATS's damages, he did not act with the requisite intent, and his actions were privileged, and there is no factual dispute to the contrary. We disagree.

1. Causation

¶ 15. Causation exists in Wisconsin where the defendant's actions are a "substantial factor" in producing the harm to the plaintiff. World Wide Prosthetic Supply v. Mikulsky, 2001 WI App 133, ¶ 23, 246 Wis. 2d 461, 631 N.W.2d 253. "Substantial factor 'denotes that the defendant's conduct has such an effect in producing the harm as to lead the trier of fact, as a reasonable person, to regard it as a cause, using that word in the popular sense.'" Fischer v. Ganju, 168 Wis. 2d 834, 857, 485 N.W.2d 10 (1992) (citation omitted).

¶ 16. Wolnak's causation argument is premised on two primary assertions. First, Wolnak points out that Johnkoski ultimately did not resign from CATS. Second, Wolnak relies on a portion of Johnkoski's testimony where he indicated he did not believe Wolnak had anything to do with his promotion. However, neither of these facts disproves or negates causation.

¶ 17. Johnkoski's resignation was not the only way CATS could be damaged. Interference that makes the performance of a contract more expensive can also be a basis for damages. Magnum Radio, Inc. v. Brieske, 217 Wis. 2d 130, 136-37, 577 N.W.2d 377 (Ct. App. 1998). Johnkoski testified that he knew CATS believed he would quit and affiliate with Wolnak if his contract was not renegotiated. Indeed, Johnkoski told Riveron he was considering leaving. A jury could conclude that as a result of Wolnak's solicitations, Johnkoski believed he had leverage to renegotiate a contract he otherwise intended to honor as written. The jury heard evidence that CATS felt compelled to renegotiate Johnkoski's contract.

¶ 18. Johnkoski did, at one point, express a belief that Wolnak had no influence over his promotion. Accordingly, Wolnak implicitly argues, albeit without authority, that Johnkoski's subjective beliefs are somehow relevant to whether Wolnak caused CATS's damages. However, Johnkoski stated at another point that he thought Wolnak had some impact that forced or caused CATS to engage Johnkoski in negotiation discussions. Thus, even if Wolnak is correct that Johnkoski's opinion bears on the matter of causation, Johnkoski's own testimony reveals a factual dispute that would have precluded summary judgment. That is, there was a genuine dispute over whether Wolnak caused CATS to have to renegotiate a more expensive contract with Johnkoski. On that disputed element alone, summary judgment was inappropriate and therefore properly denied.

2. Intent

¶ 19. Wolnak argues that there is no evidence he intentionally acted to interfere with Johnkoski's contract with CATS. He also contends that while his own resignation set into motion a series of events leading to Johnkoski's promotion, his resignation does not establish intent to interfere.

¶ 20. In determining intent, we may consider an individual's actions and statements. Ordinarily, it is reasonable to infer that a person intends the natural and probable consequences of his or her actions. See Wis JI — Civil 2780 (2003); State v. Ivy, 119 Wis. 2d 591, 598-99, 350 N.W.2d 622 (1984).

¶ 21. Wolnak admits that he "did discuss with Johnkoski them resigning and starting their own practice. However, Johnkoski rejected that invitation." We fail to see how Johnkoski's rejection vitiates Wolnak's actions. In order to form a new practice with Wolnak, Johnkoski would have had to walk away from — if not breach outright — his contract with CATS. Because Wol-nak attempted to make Johnkoski leave CATS, we cannot see how Wolnak intended anything but interference, at least when we view the evidence in the light most favorable to CATS. Simply because the result was not what Wolnak sought does not mean he did not exert the requisite intent.

¶ 22. Wolnak tries to analogize to Cudd v. Crownhart, 122 Wis. 2d 656, 364 N.W.2d 158 (Ct. App. 1985), as a way of showing he lacked intent. His analogy is unavailing. In Cudd, Morrow, a co-owner of Cudd's real estate, was on the property with prospective purchaser Toth. While Morrow and Toth were examining the land, Cudd's neighbor, Crownhart, approached and informed Toth there was a boundary dispute. Toth never made an offer and testified he would have but for the boundary dispute with Crownhart.

¶ 23. Cudd and Morrow brought an action against Crownhart for tortious inference. The jury found for Cudd and Morrow, but we reversed, holding there was no evidence from which the jury could have inferred intent. The record established the boundary dispute had been ongoing and that Toth would have still made an offer had Cudd and Morrow shown they were taking steps to resolve the dispute. Toth tried on three occasions to have Cudd and Morrow prove they had resolved the dispute, but they never responded to his inquires. Eventually, the boundary dispute was actually settled in Cudd and Morrow's favor.

¶ 24. We determined, however, that Crownhart had been exercising a right to protect what he thought was legally his. Although Crownhart was ultimately adjudicated incorrect, his attempt to protect what he thought was his could not be the sole basis for liability, and Cudd and Morrow had no other evidence of Crownhart's intent.

¶ 25. Wolnak says that "like Crownhart, Wolnak was simply telling Johnkoski what he believed." We did not hold Crownhart simply told Toth what he believed. We held Crownhart had a legally protected right to assert a claim to real estate. Inviting Johnkoski to abandon his contract with CATS to start a new practice because Wolnak disagreed with or disliked Riveron is not the same thing as asserting a claim to real estate. Thus, sufficient evidence of Wolnak's intent was presented for CATS to survive summary judgment.

3. Privilege

¶ 26. Wolnak argues "CATS submitted no evidence that Wolnak acted improperly and instead seemed to assert that any interference is improper." Further, he argues, "[t]here is nothing inherently wrong with urging someone to resign from a contract and join him in a business."

¶ 27. Wolnak contends encouraging breach of contract for the purposes of competition is privileged. The burden for demonstrating privilege is on Wolnak to prove he had privilege, not on CATS to disprove it. Wis JI — Civil 2780. Wolnak relies on two cases to support his argument that he did nothing wrong by urging Johnkoski to quit CATS and join him but, again, his reliance is misplaced. The two cases on which he relies-Stop-N-Go of Madison, Inc. v. Uno-Ven Co., 184 F.3d 672 (7th Cir. 1999), and Patton v. Mid-Continent Systems, Inc., 841 F.2d 742 (7th Cir. 1988) — speak of efficient contract breaches, and neither case has anything to do with direct competition as does the present case.

¶ 28. While it is true that society, in general, will not interfere with efficient breaches because they actually benefit society, courts routinely note that one element of an efficient breach is that someone remains liable for damages arising from the breach. See Stop-N-Go, 184 F.3d at 680; Patton, 841 F.2d at 750. Wolnak, however, attempts to escape all liability for the breach.

¶ 29. Moreover, assuming without deciding that competition is, in fact, privileged, the privilege does not extend to encouraging the breach of an existing contract. See National Oil Co. v. Phillips Petrol. Co., 265 F. Supp. 320, 329 (W.D. Wis. 1966) (citing Restatement of Torts, § 768 cmt. i (1939)); see also 45 Am. Jur 2d Interference § 29 (1999) ("The privilege of competition protects solicitation for future business, not interference with existing contracts.").

¶ 30. Wolnak has not shown any facts that would entitle him to summary judgment on the basis of privileged actions. Thus, the court properly denied Wolnak's motion for summary judgment.

B. Character Evidence

¶ 31. Wolnak filed a motion in limine, which the court denied, seeking to prohibit admission of Dr. Christopher Stone's deposition testimony. Wolnak argues the court erred in denying the motion because it resulted in the admission of character evidence against him.

¶ 32. In his deposition, Stone testified regarding Wolnak's attempts to compete with him in Kenosha after Wolnak left Wausau. Wolnak argues this evidence is improper because it "was introduced to show that Wolnak must have tortiously interfered with Johnkoski's contract with CATS because he had tried to compete with Dr. Stone . . .."

¶ 33. Without deciding whether it was error to admit the deposition, we are satisfied its admission was not prejudicial because the evidence was cumulative. Stone actually testified at trial, providing the same information as was in the deposition. Wolnak did not object to Stone's trial testimony.

C. Sufficiency of the evidence

¶ 34. A jury verdict "will not be upset if there is any credible evidence to support it." Meurer v. ITT Gen. Controls, 90 Wis. 2d 438, 450, 280 N.W.2d 156 (1979). We view the evidence in the light most favorable to the verdict. Id.

¶ 35. Wolnak's sufficiency arguments closely mirror his summary judgment arguments. Wolnak contends there is insufficient evidence of causation and insufficient evidence he acted improperly. For the reasons stated, we disagree with Wolnak's assertions.

1. Causation

¶ 36. Wolnak focuses a great deal on what John-koski did or did not do. Essentially, Wolnak's argument is that because Johnkoski ultimately did not resign, he did not breach his contract and, therefore, Wolnak cannot be said to have interfered. Wolnak's argument is disposed of by Magnum Radio. There the question was "whether a person whose alleged interference with a contractual relationship results not in abandonment or nonperformance of the contract but only in making the plaintiffs performance of the contract more expensive or onerous may also be held liable for his or her actions." Id. at 136-37. We answered that question affirmatively, based on the Restatement (Second) of Torts, § 766A (1979).

¶ 37. In this case, Riveron testified that he believed CATS had to accelerate or renegotiate the terms of Johnkoski's contract — at a higher price — to keep Johnkoski. This is supported, at least tangentially, by Johnkoski's testimony that he thought Wolnak's offer had some impact. The jury was entitled to believe as little or as much of the evidence as was submitted, and when it comes to testimony of witnesses, the jury is in the best position to evaluate the veracity of the witnesses. In re Estate of Dejmal, 95 Wis. 2d 141, 151-52, 289 N.W.2d 813 (1980). Neither Riveron's nor Johnkoski's testimony is patently incredible. See Thomas v. State, 92 Wis. 2d 372, 381-82, 284 N.W.2d 917 (1979). As such, the testimony sufficiently supports a determination that Wolnak caused CATS damage by making it more expensive to perform CATS's portion of Johnkoski's contract.

2. Privilege

¶ 38. Wolnak argues there is insufficient evidence that he acted improperly. As stated above, however, the burden of proof is on him to show that his actions were privileged. He fails to carry this burden.

¶ 39. The summary judgment discussion applies equally here. The cases on which Wolnak relies speak of efficient breaches and specifically acknowledge that someone must be held liable for the breach. Wolnak ignores the portions of those cases discussing payment for the breach. And, in any event, "competition" as a motivating force is not protected when it is used to interfere with existing contracts. National Oil, 265 F. Supp. at 329. Thus, Wolnak not only failed to present factual evidence of privilege to the jury, but he failed as a matter of law to demonstrate that his actions were privileged. With no legal or factual basis for his claim, the jury was free to reject that theory.

II. Motion In Limine Regarding Covenant Not to Compete

¶ 40. Wolnak made a claim against CATS and Riveron for defamation. He claimed that at the time he was interviewing with Marshfield Clinic for a position, Riveron informed the Clinic of a noncompete clause in Wolnak's contract. The clause states:

The surgeon agrees that for a period of two (2) years following the termination of his employment by the corporation, that surgeon will not... in any capacity engage in practice of cardiovascular or thoracic surgery ... within a radius of fifty (50) miles from Wausau Hospital.

¶ 41. Wolnak believed this clause applied only if CATS fired him because the clause stated "following the termination of his employment by the corporation." (Emphasis added.) CATS argued it applied whatever way Wolnak's employment ended and brought a motion in limine to preclude Wolnak from arguing his interpretation. The trial court granted the motion, stating the covenant was reasonable as to time and geographical restrictions, but without specifically interpreting the disputed language. Because the court essentially concluded that the covenant applied whether Wolnak resigned or was fired, it dismissed the defamation claim.

¶ 42. We will assume without deciding the trial court erred in interpreting the covenant and that Wolnak is correct to state the covenant applies only if he is fired. Nonetheless, we conclude the error was harmless.

¶ 43. "An error does not require reversal unless it affects the substantial rights of the party seeking to set aside the judgment." Hannemann v. Boyson, 2005 WI 94, ¶ 57, 698 N.W.2d 714 (citing Wis. Stat. § 805.18(2)). Thus, we must determine whether the error was prejudicial or harmless. The test for harmless error in civil cases is the same as that in criminal cases." Id. (citation omitted). The question is whether it is clear beyond a reasonable doubt that a rational jury would have reached the same result or verdict absent the error. See id., ¶¶ 57-58.

¶ 44. The basis of Wolnak's defamation claim was that Riveron prevented him from being hired by Marsh-field Clinic when Riveron informed the Clinic of Wolnak's noncompete clause. This presumes the Clinic would have failed to hire Wolnak because it did not wish to be a party to the breach of that clause. Wolnak's claim fails for two reasons. First and foremost, Wolnak himself informed the Clinic of the existence of the clause. Wolnak's disclosure makes it irrelevant whether Riv-eron also disclosed the information.

¶ 45. Moreover, there was ample evidence that Wolnak abandoned the interview process with the Clinic, essentially removing himself from consideration for any position, and there is nothing linking this to disclosure of the noncompete clause. Thus, even if the court had allowed evidence of Wolnak's interpretation, we are convinced a reasonable jury would have reached the same result as the trial court. That is, Wolnak ultimately defeated himself at the Clinic; CATS did not defame him.

III. Motion After Verdict: Wage Penalties

A. Wisconsin Stat. § 103.455

¶ 46. Wolnak claims he is entitled to damages for wrongful deductions from his wages for faulty workmanship contrary to Wis. Stat. § 103.455. CATS argues Wolnak is not entitled to relief under the statute because he failed to plead it as a basis for damages. Wolnak responds that his complaint is sufficient under Wisconsin's notice pleading rules. We reject Wolnak's assertion.

¶ 47. The sufficiency of a complaint is a question of law we review de novo. Green v. Heritage Mut. Ins. Co., 2002 WI App 297, ¶ 10, 258 Wis. 2d 843, 655 N.W.2d 147. We are, indeed, a notice pleading state. Wis. Stat. § 802.02. Under notice pleading, one need only give the opposing party fair notice of what the claim is and the grounds upon which it is based. Hertlein v. Huchthausen, 133 Wis. 2d 67, 72, 393 N.W.2d 299 (Ct. App. 1986).

¶ 48. When we review the complaint's sufficiency, we examine whether it contains sufficient details to give the defendant and the court a fair idea of what the plaintiff is complaining about. We construe pleadings liberally, but will only look to the four corners of the document. Heinritz v. Lawrence Univ., 194 Wis. 2d 606, 610, 614, 535 N.W.2d 81 (Ct. App. 1995).

¶ 49. Wolnak contends his complaint is sufficient because he alleged he was not paid according to his contract. We conclude this is insufficient to put the defendant and court on notice that Wolnak would seek Wis. Stat. § 103.455 damages.

¶ 50. Wisconsin Stat. § 103.455 states, in relevant part:

No employer may make any deduction from the wages due or earned by any employee, who is not an independent contractor, for defective or faulty workmanship, lost or stolen property or damage to property, unless the employee authorizes the employer in writing to make that deduction. ... If any deduction is made or credit taken by any employer that is not in accordance with this section, the employer shall be liable for twice the amount of the deduction or credit taken in a civil action brought by the employee. . . .

¶ 51. Thus, what the statute does is identify a specific, prohibited employment practice and a penalty for employers engaged in such an activity. There need not be a contract for an employer to breach Wis. Stat. § 103.455, and a violation of that statute may not necessarily be a breach of contract.

¶ 52. Moreover, to the extent that Wis. Stat. § 103.455 imposes, and Wolnak sought, punitive damages on an employer, punitive damages are not generally allowed in breach of contract actions. See Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶ 28, 270 Wis. 2d 146, 677 N.W.2d 233. Indeed, the elementary rule of contract damages is to restore a party to the position he would have been in but for the breach. United Leasing & Fin. Servs., Inc. v. R.F. Optical, Inc., 103 Wis. 2d 488, 492, 309 N.W.2d 23 (Ct. App. 1981). Thus, we conclude § 103.455 necessarily creates a separate and distinct claim from simple breach of contract, and it must be pled as such.

B. Wisconsin Stat. ch. 109

¶ 53. Wolnak argues he is entitled to penalty wages and costs under Wis. Stat. ch. 109. Wolnak argues the trial court erroneously exercised its discretion when it stated that it saw no reason to change the jury's verdict on the breach of contract action and did not explain its reasoning for not awarding him damages under ch. 109. CATS contends Wolnak is not entitled to the damages because he has failed to show any maliciousness warranting penalty wages and he was not the prevailing party so is not entitled to costs.

¶ 54. The decisions whether to impose a penalty under Wis. Stat. § 109.11(2)(a) or award costs under Wis. Stat. § 109.03(6) are committed to the trial court's discretion by use of the word "may" instead of "shall." See Rotfeld v. DNR, 147 Wis. 2d 720, 726, 434 N.W.2d 617 (Ct. App. 1988). The trial court properly exercises its discretion when it applies the appropriate legal standard to the facts of record and, following a logical reasoning process, draws a conclusion a reasonable judge could reach. Stan's Lumber, Inc. v. Fleming, 196 Wis. 2d 554, 572, 538 N.W.2d 849 (Ct. App. 1995). Only wrongful withholding of wages for dilatory or other unjust reasons should be penalized. American Fed'n of State, Local 1901 v. Brown County, 146 Wis. 2d 728, 731, 432 N.W.2d 571 (1988).

¶ 55. We generally look for reasons to sustain discretionary decisions. Burkes v. Hales, 165 Wis. 2d 585, 590, 478 N.W.2d 37 (Ct. App. 1991). When the trial court's reasoning is inadequate or incomplete, we may independently review the record to look for additional reasons to support the court's exercise of discretion. See Stan's Lumber, 196 Wis. 2d at 573.

¶ 56. First, Wis. Stat. ch. 109 penalties, as Wolnak points out, are not appropriately jury questions. Thus, the court should not have been expected to change the jury verdict or answers to reflect a penalty, although it conceivably could have supplemented the award with its own order.

¶ 57. Second, just as we concluded a Wis. Stat. § 103.455 claim must be pled with specificity, so too must a Wis. Stat. ch. 109 claim. Such a conclusion is even more strongly supported in this instance, because the chapter refers multiple times to a wage claim. Wolnak did not bring a wage claim, he brought a contract action. While the contact dealt with a dispute over compensation, Wis. Stat. § 109.03(5) establishes a distinct cause of action and enforcement procedure for a wage claim, wholly apart from any contract claims Wolnak might pursue. Additionally, we again have a situation where Wolnak seeks to have penalties assessed on a contract action. Thus, we conclude that merely pleading a contract action based on nonpayment of wages is insufficient to trigger a Wis. Stat. ch. 109 wage claim under notice pleading.

¶ 58. More to the point, we are not convinced that CATS's withholding wages was dilatory or otherwise unjust. There appears to have been a legitimate dispute over the terms of Wolnak's compensation following an oral agreement to modify his contract. That is, it appears CATS believed it had paid Wolnak in full based on its understanding of the contract. In addition, Wol-nak and his accountant conceded at trial that Wolnak had been overpaid in 1999. Although this is not meant to excuse an employer's wrongful refusal to pay wages —the employer has other remedies — it is not necessarily unreasonable for the court to consider this a mitigating circumstance when determining whether to assess penalty wages.

¶ 59. Finally, Wolnak was not the prevailing party as that term is used in Wis. Stat. § 109.03(6) or Wis. Stat. § 109.11. Wolnak argues he is the prevailing party because the jury found CATS breached the contract. But Wolnak ignores the plain language of the statutes. Both refer to the prevailing party in a wage claim. This was not a wage claim. The statutes do not apply, and Wolnak is not entitled to the penalty wages or costs. However, even if the statutes did apply, the record supports a discretionary determination not to award those penalties.

IV Cross-Appeal

¶ 60. CATS individually cross-appeals two portions of the judgment. First, it challenges the damage award to Wolnak because, it contends, he breached the contract first, absolving it of any obligation to perform its part of the contract. Second, it contends it was entitled to damages for Wolnak's misrepresentation as found by the jury. We reject both arguments.

¶ 61. Again, we review a jury's verdict to see if there is any credible evidence to support the verdict. Meurer, 90 Wis. 2d at 450. There is sufficient evidence from which the jury could have inferred Wolnak upheld his portion of the contract.

¶ 62. Riveron testified that he had problems with Wolnak from the very beginning of his employment. These problems did not, however, result in CATS firing Wolnak but rather in an oral modification to his compensation scheme. Wolnak showed, through W-2 forms, that he had not been compensated correctly. Moreover, the trial court noted while ruling on the post-verdict motions, Wolnak continued to perform surgeries and services for CATS, generating revenue for the clinic, even if he may have ignored admonitions about the types of surgeries he was to perform.

¶ 63. Nonetheless, it is clear the jury considered Wolnak's responsibility under the contract was to generate income for CATS in exchange for compensation. Wolnak provided services, but CATS failed to pay him correctly. This is supported by credible evidence of record, even if there are other conclusions that could be drawn.

¶ 64. Regarding the misrepresentation, it is true that the jury determined Wolnak misrepresented himself when he applied to work for CATS. It is also true CATS would be entitled to damages if it relied on Wolnak's misrepresentations to its detriment. However, there was sufficient evidence from which the jury could conclude that CATS did not rely on Wolnak's misrepresentations.

¶ 65. Riveron knew Wolnak from Loyola University and they had kept in touch over the years. Indeed, the two had phone conversations where Wolnak expressed frustration in his job search. Dr. Stone and two other physicians — all at least as experienced as Riveron —testified that looking at Wolnak's resume, they could determine almost instantly that there were obvious problems with his so-called credentials.

¶ 66. On the basis of that evidence, the trial court explicitly and properly acquiesced to the jury's duty to weigh evidence and assess witness credibility. This evidence is sufficient to support a conclusion that, although Wolnak may have misrepresented himself on paper, Riveron either knew or should have known, on CATS's behalf, that reliance on those pretenses was inappropriate.

By the Court. — Judgment and orders affirmed. No costs awarded.

       We will refer to Riveron and the Clinic collectively as CATS, although from time to time, we will reference Riveron individually. Also, in reviewing the transcript, it appears that at one point, a motion was granted to dismiss Riveron from the case. Neither party, however, makes this an issue, and we simply mention it as a jurisdictional aside.

       The Honorable Raymond F. Thums issued the order denying summary judgment. The Honorable C.A. Richards presided over the remaining matters.

       One of the issues at trial was whether Wolnak misrepresented his credentials.

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

       To say there is nothing wrong with urging someone to break a valid contract so as to join someone else in a business venture would seem to eviscerate tortious interference as a cause of action.

       An efficient breach is an "intentional breach of contract and payment of damages by a party who would incur greater economic loss by performing under the contract." Black's Law Dictionaey 200 (8th ed. 2004).

       Wolnak also complained it was error to allow evidence of his morbidity and mortality rates because they portray him as a bad physician and lead to the implication that he therefore must have interfered with Johnkoski's contract. However, there is sufficient evidence from which the jury could find tortious interference, even without this evidence.

       Wolnak does not directly raise the sufficiency of the evidence issue regarding intent. To the extent he might claim he did, we would simply refer to ¶ 21, infra. Wolnak admitted speaking to Johnkoski about abandoning his contract with CATS. This is sufficient evidence to support a verdict of intentional interference, regardless of whether Johnkoski actually accepted Wolnak's offer.

       There was a dispute as to whether Wolnak was fired or quit. Evidently, Wolnak handed Riveron a sealed letter of resignation. Riveron dropped the letter to the ground without opening it and then fired Wolnak. For purposes of this particular issue, we assume that Wolnak resigned.

       In addition, under notice pleading, the plaintiff must allege facts which, if proven true, show that he is entitled to relief. Here, Wolnak conceded that it was not until after Riveron testified that he had a factual basis for a Wis. Stat. § 103.455 claim. This means his complaint would not have shown he was entitled to relief. While Wolnak moved, at the close of CATS's case, to conform his pleadings to the evidence, he has not shown that the court ever granted this motion. See Grothe v. Valley Coatings, Inc., 2000 WI App 240, ¶ 6, 239 Wis. 2d 406, 620 N.W.2d 463 (we will not search the record for evidence to support a party's argument). Thus, his complaint was insufficient in this respect as well.
      On the merits of the claim, we are not convinced that Wis. Stat. § 103.455 applies here. Section 103.455 exists to prevent wrongful deduction meant "to shift the burden of a work related loss" from the employer to the employee. Erdman v. Jovoco, Inc., 181 Wis. 2d 736, 751-52, 512 N.W.2d 487 (1994) (citation omitted). While Wolnak cites Riveron's testimony referring to "withhold[ing] money from him because his workmanship ... was defective," we think this more accurately establishes a complete refusal to pay Wolnak, which is governed by Wis. Stat. ch. 109.

       In the alternative, CATS asks us to reduce the damage award. The jury awarded approximately $116,000 on the basis of a clause in the contract that CATS would pay Wolnak for ninety days' worth of services following his termination. The sole basis for CATS's remittitur is its argument that the contract does not apply because Wolnak breached the contract. As stated above, there was sufficient evidence from which the jury could reject the notion of Wolnak's breach.


source: Caselaw Access Project

author: KESSLER, J.

license: Public Domain

text:
    State of Wisconsin, Plaintiff-Respondent, v. Rickey Eugene Pinkard, Defendant-Appellant.

    Court of Appeals

      No. 2004AP2755-CR.

      Submitted on briefs August 02, 2005.

      Decided September 7, 2005.

    2005 WI App 226
    (Also reported in 706 N.W.2d 157.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of John J. Grau of Grau Law Office of Waukesha.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of David J. Becker, assistant attorney general and Peggy A. Lautenschlager, attorney general.
    Before Fine, Curley and Kessler, JJ.

       Petition to review denied 11-11-05.

   KESSLER, J.

¶ 1. Rickey Eugene Pinkard appeals from a judgment of conviction for possession of cocaine with intent to deliver, contrary to Wis. Stat. § 961.41(lm)(cm)lr (2003-04). He presents a single issue on appeal: whether one who is holding drugs for someone and plans to return the drugs to that person has the "intent to ... deliver" required for conviction. See § 961.41(lm). We conclude that this conduct falls within the criminal statute and, therefore, affirm the judgment.

BACKGROUND

¶ 2. On April 25, 2003, police officers stopped a vehicle that Pinkard was driving. As Pinkard was pulling his vehicle to the curb, he leaned toward the passenger window and threw something out of the window. The officers recovered a clear plastic bag that contained twenty-two individually wrapped cuts of cocaine.

¶ 3. Pinkard was arrested and charged with possession with intent to deliver. According to the criminal complaint, Pinkard told officers that he threw the bag out of the window because he "didn't want to get in trouble for someone else's stuff."

¶ 4. After plea negotiations, Pinkard appeared before the trial court to enter a guilty plea. However, the trial court refused to accept the plea, because in the course of discussing whether there was a factual basis for the plea, Pinkard denied that he had been holding the cocaine for someone else. Instead, he asserted that he was going to "throw it away" and had not intended to return it to anybody.

¶ 5. The case was tried to the trial court. Pinkard did not testify. However, the trial court heard evidence that Pinkard told officers both that he was holding the cocaine for someone, and that he was planning to throw it away. The trial court found Pinkard guilty, specifically finding that Pinkard intended to return the cocaine to the person who gave it to him. After sentencing, this appeal followed.

DISCUSSION

¶ 6. On appeal, Pinkard does not challenge the trial court's finding that he intended to return the cocaine to the person who gave it to him. Instead, he argues that in order to have the requisite intent to deliver under Wis. Stat. § 961.41(lm), he "must have possessed the cocaine with the intent to deliver it to someone other than the person who gave it to him, i.e. a third person." At issue is the application of § 961.41(lm) to undisputed facts. This presents a question of law that we review de novo. See Badger State Bank v. Taylor, 2004 WI 128, ¶ 13, 276 Wis. 2d 312, 688 N.W.2d 439 (interpretation of statute and application of statute to undisputed facts are ordinarily questions of law reviewed independently).

¶ 7. Wisconsin Stat. § 961.41(lm) provides in relevant part:

Possession with intent to MANUFACTURE, DISTRIBUTE OR DELIVER. Except as authorized by this chapter, it is unlawful for any person to possess, with intent to manufacture, distribute or deliver, a controlled substance or a controlled substance analog. Intent under this subsection may be demonstrated by, without limitation because of enumeration, evidence of the quantity and monetary value of the substances possessed, the possession of manufacturing implements or paraphernalia, and the activities or statements of the person in possession of the controlled substance or a controlled substance analog prior to and after the alleged violation ....

The term "deliver" as used in § 961.41(lm) is defined in Wis. Stat. § 961.01(6), which provides: " 'Deliver' or 'delivery', unless the context otherwise requires, means the actual, constructive or attempted transfer from one person to another of a controlled substance or controlled substance analog, whether or not there is any agency relationship."

¶ 8. Pinkard contends that because he did not intend to deliver the cocaine to a third person, he did not intend to "deliver" it as that term is defined in Wis. Stat. § 961.01(6), and used in Wis. Stat. § 961.41(1m). He relies on State v. Smith, 189 Wis. 2d 496, 525 N.W.2d 264 (1995), a conspiracy case where the Wisconsin Supreme Court concluded:

[A] conviction for conspiracy to deliver a controlled substance cannot be upheld where the only evidence presented by the State was that the seller purported to have in his possession and agreed to sell a small amount of the controlled substance consistent with personal use to the buyer and where there was not even a claim that the buyer intended to sell, deliver or give the controlled substance to a third party ....
[T]he legislature did not intend a buyer-seller relationship for a small amount of a cocaine for the buyer's personal use to be a conspiracy and thus make the buyer guilty of a felony. A conspiracy must involve at least two people, with each member subject to the same penalty for the conspiracy. The two parties involved here are the buyer and seller. When the case is examined from the point of the buyer instead of the seller, it becomes obvious that the State's interpretation does not give effect to the legislative intent behind the Wisconsin Uniform Controlled Substances Act, ch. 161, Stats.
Here, there was no claim or proof that the buyer intended to further deliver the cocaine which would be a felony. As such, the most the buyer could have been guilty of was the misdemeanor of possession. We conclude the legislature did not intend that the State could, by adding a conspiracy charge to the possession charge, create a felony charge against the buyer who buys an amount of cocaine consistent with personal use where there is not even a claim by the State that the buyer intended to further deliver the cocaine to a third party.

Id. at 498-99, 501-02 (footnotes and citation omitted). Pinkard argues that just as Smith could not be guilty of conspiracy to deliver a controlled substance because there was no intention to give it to a third party, Pinkard cannot be guilty of delivering a controlled substance where there was likewise no intention to deliver it to a third party.

¶ 9. The State disagrees with this analysis, noting that Smith's ultimate holding was based on the court's examination of the intent of the Wisconsin Controlled Substances Act. See Smith, 189 Wis. 2d at 501-03. The State explains:

[Smith] concluded that allowing a conspiracy prosecution of both the buyer and the seller of a controlled substance based simply on the agreement of the seller to sell, and the buyer to purchase for personal use, a controlled substance would be inconsistent with the intent behind the act, which is to treat sellers more severely than the ultimate users of illicit drugs.
Unlike the situation in Smith, on this appeal Pinkard has not pointed to any evidence of legislative intent that would support his position. He has not provided any basis for concluding that the Legislature intended to exclude from the scope of the terms "distribute" or "deliver,"... a delivery such as that envisioned in this case — i.e., a transfer of a controlled substance by the holder... to the person who had given the controlled substance to the holder.

We agree with the State's analysis.

¶ 10. Not only is Smith distinguishable because it involves criminal conspiracy and relies on legislative intent, it actually supports the State's position that Pinkard intended to "deliver" the drugs back to the original owner. Citing the statutory definition of "delivery" — a "transfer from one person to another," see Wis. Stat. § 161.01(6) (1991-92) — Smith held that the statute "requires two people for a delivery." Smith, 189 Wis. 2d at 503. Pinkard does not suggest that the definition of delivery in Wis. Stat. § 961.01(6) is ambiguous, and we conclude it is not. Delivery requires transfer from one person to another. Id. Pinkard's intent to transfer the drugs to the person from whom he received them satisfies this definition.

¶ 11. Our conclusion is consistent with interpretations of statutes in other jurisdictions. In Malloy v. United States, for example, the court concluded that a man serving as a drug "mule" for a drug dealer was guilty of intent to distribute cocaine. 605 A.2d 59, 60-61 (D.C. 1992) (per curiam). The defendant's role was to transport illegal drugs to a new location and then surrender them to the person who had originally given him the drugs. Id. at 60. The defendant argued his possession was simply a bailment, and that the original owner constructively possessed the drugs at all times. Id. at 61. The court rejected this argument, holding that the criminal statute did not "distinguish among types of transfers between parties, i.e. sales to third persons or, as in this case, deliveries between a dealer and a courier." Id. (citation omitted).

¶ 12. Just like the defendant in Malloy, Pinkard cannot escape liability for participating in the drug trade by holding drugs with the purpose of returning them to the person from whom they were originally acquired. Whether Pinkard had delivered the drugs to the original owner for distribution to buyers, or to a third party for distribution to buyers, the ultimate conduct would have been the same: delivering drugs for use by others, a crime the legislature intended to punish under Wis. Stat. § 961.41(lm).

CONCLUSION

¶ 13. We conclude that Pinkard's intent to return the cocaine to the person who gave it to him constitutes intent to deliver under Wis. Stat. § 961.41(lm). Therefore, we affirm the judgment.

By the Court. — Judgment affirmed.

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

       Pinkard was sentenced to two years of incarceration and two years of extended supervision. The sentence was stayed and Pinkard was placed on probation so that he could participate in the Felony Drug Offender Alternative to Prison Program.

       Wisconsin Stat. § 161.01(6) (1991-92) was renumbered Wis. Stat. § 961.01(6) in 1995. The quoted statutory language remains substantially similar in the current version.


author: WEDEMEYER, EJ.

text:
    State of Wisconsin, Plaintiff-Respondent, v. Donavin Hemphill, Defendant-Appellant.

    Court of Appeals

      No. 2004AP2829-CR.

      Submitted on briefs August 2, 2005.

      Decided September 7, 2005.

    2005 WI App 248
    (Also reported in 707 N.W.2d 313.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Jeffrey W. Jensen of Law Offices of Jeffrey W Jensen, Milwaukee.

      On behalf of the plaintiff-respondent, the cause was submitted on the brief of Gregory M. Weber, assistant attorney general and Peggy A. Lautenschlager, attorney general.
    Before Wedemeyer, EJ., Fine and Curley, JJ.

       Petition to review denied 12-14-05.

   WEDEMEYER, EJ.

¶ 1. Donavin Hemphill appeals from a judgment entered after a jury found him guilty of possession of a firearm by a felon and possession of a short-barreled shotgun, contrary to Wis. Stat. §§ 941.29(2) and 941.28(2) (2003-04). He also appeals from an order denying his postconviction motion. Hemphill claims that the admission of a statement made to police who arrived at the crime scene violated his right to confrontation, and that the evidence against him without the admitted statement was insufficient to support the conviction. Because the challenged statement did not violate Hemphill's confrontation rights, we affirm.

BACKGROUND

¶ 2. On October 28, 2001, police were dispatched in response to a call of "trouble with subjects." On the way to the scene, the call was updated to "subject with gun." When the police arrived at the scene, they saw Chreshonda Fields standing outside an apartment building. Fields pointed at two people who were walking away from the building and said something like, "Those are the ones. That's them."

¶ 3. The pair drove away in a vehicle and the police followed. The vehicle stopped, and the officers observed the male passenger making furtive movements and the passenger side door open slightly two times. When police officers approached the car, they observed a sawed-off shotgun placed underneath the vehicle. The male passenger was identified as Hemphill and he was charged as indicated above.

¶ 4. Hemphill pled not guilty and the case proceeded to trial. Hemphill's theory of defense was that he did not possess the shotgun the police found; rather, it must have simply been lying in the street when the vehicle pulled up and stopped. Fields did not testify during the trial. However, the police officers testified as to the statement she made to them when they arrived at the scene. Trial counsel made no objection to this evidence. Hemphill was convicted and judgment was entered. He filed a postconviction motion alleging that trial counsel was ineffective for failing to object to the admission of Fields's statement through the police officers.

¶ 5. He based his argument in part on the recent United States Supreme Court case, Crawford v. Washington, 541 U.S. 36 (2004), wherein the court modified the Ohio v. Roberts, 448 U.S. 56 (1980) rule governing out-of-court statements. The Supreme Court concluded that when a proffered statement is testimonial in nature, it can be admitted only if the defendant had a prior opportunity to cross-examine the unavailable declarant. Crawford, 541 U.S. at 68.

¶ 6. Hemphill claimed that his case should be controlled by the Crawford rule, that Fields's statement was testimonial and, therefore, it was improperly admitted because he had no opportunity to cross-examine her. He argued that the statement violated his Sixth Amendment right to confrontation, that the statement was inadmissible hearsay, and that his trial counsel was ineffective for failing to raise the issue. The trial court denied the motion, ruling that even assuming retroactive application of Crawford to this case, the proffered statement here was not testimonial in nature. The trial court further ruled that the Fields statement was not hearsay because it was not offered to prove the truth of the matter, hut was offered to explain why the officers followed the pair departing from the scene. Finally, the trial court held that even if the statement was hearsay, it was admissible under the present sense impression exception to the hearsay rule, Wis. Stat. § 908.03(1).

¶ 7. Hemphill now appeals from the judgment and order.

DISCUSSION

¶ 8. The first issue is whether the Supreme Court's recent decision in Crawford requires reversal in this case. We agree with the trial court that it does not.

¶ 9. In reviewing constitutional questions, we will not upset the trial court's historical facts unless they are clearly erroneous; however, our application of those facts to constitutional standards and whether a defendant's constitutional rights were in fact violated, are issues this court reviews independently. See State v. Trammel, 141 Wis. 2d 74, 77-78, 413 N.W.2d 657 (Ct. App. 1987).

¶ 10. In Crawford, the Supreme Court modified the rules governing a defendant's confrontation rights with respect to out-of-court statements proffered for use at trial, which are testimonial in nature. 541 U.S. at 36. The Supreme Court offered some guidance to lower courts in addressing whether a proffered statement is testimonial in nature. Id. Although the definition was not comprehensive, the Court ruled that "at a minimum" the term testimonial applies "to prior testimony at a preliminary hearing, before a grand jury, or at a former trial; and to police interrogations." Id. at 68. The reasoning behind the Supreme Court's ruling was that these situations present the practices with the "closest kinship to the abuses at which the Confrontation Clause was directed." Id.

¶ 11. The statement made by Fields in the instant case does not fall into any of the identified categories of "testimonial" statements. This was not a statement extracted by the police with the intent that it would be used later at trial. It was not an interrogation situation. Fields offered the statement without any solicitation from police. It was a spontaneous statement made to a responding police officer. Like the foreign cases cited by the State in its brief, the Fields statement was offered unsolicited by the victim or witness, and was not generated by the desire of the prosecution or police to seek evidence against a particular suspect. See People v. Moscat, 777 N.Y.S.2d 875 (N.Y. Crim. Ct. 2004); State v. Forrest, 596 S.E.2d 22 (N.C. Ct. App. 2004); People v. Corella, 18 Cal. Rptr. 3d 770 (Cal. Ct. App. 2004).

¶ 12. Based on our analysis, we agree with the trial court that Fields's statement was not testimonial in nature. Accordingly, the Crawford rule controlling testimonial statements does not apply. Rather, the Roberts rule governs the admissibility of the Fields statement.

¶ 13. In order to be admissible under Roberts, the declarant must be unavailable to testify and the statement must bear "adequate ’indicia of reliability.'" Id., 448 U.S at 66. A statement is sufficiently reliable if it fits within a "firmly rooted hearsay exception" or if it possessed "particularized guarantees of trustworthiness." Id. (footnote omitted). In the instant case, the Fields statement falls squarely within the present sense impression or excited utterance exceptions to the hearsay rule. Therefore, it is sufficiently reliable and was properly admitted. Hemphill’s claim that the admission of the Fields statement violated his confrontation rights fails.

¶ 14. Similarly, his connected claim that trial counsel provided ineffective assistance by failing to raise the confrontation issue fails as well. We have just concluded that the statement did not violate Hemphill’s confrontation rights and was properly admitted. It logically follows then, that counsel cannot be faulted for failing to make an objection, which would have been overruled. See State v. Toliver, 187 Wis. 2d 346, 360, 523 N.W.2d 113 (Ct. App. 1994).

¶ 15. Finally, because we have concluded that the proffered evidence was properly admitted, we need not address Hemphill's last claim that without the Fields statement, the evidence was insufficient to support his conviction. The Fields statement was properly admitted; therefore, there is no reason to analyze whether the remaining evidence alone was sufficient to support the conviction.

By the Court. — Judgment and order affirmed.

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

       Under Ohio v. Roberts, 448 U.S. 56 (1980), proffered hearsay statements are admissible if the declarant is unavailable to testify as long as the statement bears "adequate 'indicia of reliability.'" Id. at 66. A statement is sufficiently reliable if it fits within a "firmly rooted hearsay exception" or if it possessed "particularized guarantees of trustworthiness." Id. (footnote omitted).

       Wisconsin Stat. § 908.03(1) provides that an out-of-court statement is not hearsay if it is a present sense impression: "A statement describing or explaining an event or condition made while the declarant was perceiving the event or condition, or immediately thereafter."
      Wisconsin Stat. § 908.03(2) provides that an out-of-court statement is not hearsay if it is an excited utterance: "A statement relating to a startling event or condition made while the declarant was under the stress of excitement caused by the event or condition."


author: VERGERONT, J.

text:
    John C. Koshick a/k/a Jack Koshick d/b/a Jack Koshick Presents, Plaintiff-Appellant, v. State of Wisconsin, Defendant-Respondent.
    Court of Appeals

      No. 2005AP539.

      Submitted on briefs August 10, 2005.

      Decided September 8, 2005.

    2005 WI App 232
    (Also reported in 706 N.W.2d 174.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Kent A. Tess-Mattner, Schmidt, Rupke, Tess-Mattner & Fox, S.C., Brookfield.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Sandra L. Tarver, asst, attorney general, and Peggy A. Lautenschlager, attorney general.
    Before Lundsten, PJ., Vergeront and Higginbotham, JJ.
   VERGERONT, J.

¶ 1. This appeal involves the construction of Wis. Stat. § 775.01, which permits suit against the State of Wisconsin in prescribed circumstances. John C. Koshick's complaint alleges that the State breached a contract to lease the Wisconsin State Fair Park to him for an event called the Milwaukee Metal Fest, and he seeks damages for lost profits and expenses incurred. The circuit court granted the State's motion to dismiss on the ground of sovereign immunity and Koshick appeals, contending that § 775.01 permits his breach of contract claim. We conclude that Koshick's breach of contract claim seeking lost profits and expenses incurred is not a "claim" within the meaning of § 775.01. Therefore, the State is entitled to dismissal on the ground of sovereign immunity. We affirm.

BACKGROUND

¶ 2. According to Koshick's complaint, on June 2, 1999, he entered into a contract with the director of the Wisconsin State Fair Park to lease part of the park to him on July 30,1999 and July 31,1999, so that he could produce the Milwaukee Metal Fest. Koshick was to pay the State Fair Park Board $10,000 for use of the park and was to receive in return specified percentages of the gross revenues from sales of food, beverages, merchandise, and tickets. The contract was to be reduced to writing, although the complaint does not allege that this was done. In reliance on the contract, the complaint alleges, Koshick engaged bands to play at the festival, began advertising, arranged for tickets to be printed, and entered into agreements with MTV to broadcast the festival in Europe and on Pay for View in the United States. On or about July 1, 1999, the State Fair Park director told Koshick that the State Fair Park Board would not honor its agreement to lease the park to him.

¶ 3. The complaint also alleges that Koshick presented a claim for $5,910,212 to the Wisconsin Claims Board and the board rejected his claim. Koshick then introduced a bill into the Wisconsin legislature to enact legislation providing for payment to him of $5,910,212, and the bill was defeated. The complaint asserts two claims for relief, breach of contract and promissory estoppel, and seeks damages for lost profits and expenses incurred. The complaint does not allege that Koshick paid any money to the State Fair Park Board.

¶ 4. The State moved to dismiss the complaint based on the doctrine of sovereign immunity. The State argued that it had consented to suit under the limited circumstances of Wis. Stat. § 775.01. According to the State, the meaning of "claim" in the statute does not encompass the types of claims for which Koshick sought relief. The circuit court agreed with the State and dismissed the complaint.

ANALYSIS

¶ 5. On appeal, Koshick argues that the circuit court erred in concluding that his breach of contract claim is barred by the doctrine of sovereign immunity because, according to Koshick, the court erred in its construction of Wis. Stat. § 775.01. The dispute over the meaning of § 775.01 in this case involves the meaning of the word "claim": "Upon the refusal of the legislature to allow a claim against the state the claimant may commence an action against the state. . . ." Section 775.01. Koshick's position is that "claim" means a claim for breach of contract seeking money damages, and, thus, includes his breach of contract claim, which seeks compensation for expenses he incurred in anticipation of holding the festival at the State Fair Park and for lost profits based on his anticipated share of revenues from the sale of food, beverages, merchandise, and tickets.

¶ 6. Sovereign immunity derives from article iy section 27 of the Wisconsin Constitution, which provides: "The legislature shall direct by law in what manner and in what courts suits may be brought against the state." The State waives its sovereign immunity and consents to suit only as expressly directed by the legislature. State v. P.G. Miron Constr. Co., 181 Wis. 2d 1045, 1052-53, 512 N.W.2d 499 (1994). If the legislature has not done so and if the defense of sovereign immunity is raised, then the court has no personal jurisdiction over the State. Lister v. Board of Regents, 72 Wis. 2d 282, 291, 240 N.W.2d 610 (1976).

¶ 7. The issue on this appeal requires us to construe Wis. Stat. § 775.01 to determine whether it expresses the legislature's intent that the State may be sued for the breach of contract claim alleged in Koshick's complaint. The construction of a statute and the application of case law to a given set of facts — here, the allegations in the complaint — present questions of law, which we review de novo. Brown v. State, 230 Wis. 2d 355, 363-64, 602 N.W.2d 79 (Ct. App. 1999).

¶ 8. The original version of Wis. Stat. § 775.01 was enacted in 1850, and, although it has been renumbered since that time, the text has remained substantially the same as relevant to this appeal. The oldest case we have been able to locate discussing the meaning of "claim" in the statute is Chicago, Milwaukee & St. Paul Railway Co. v. State, 53 Wis. 509, 10 N.W. 560 (1881). That was an action to restrain the State from collecting more than the plaintiff had already paid for a license fee. Id. at 509-10. The court concluded that the action was not authorized by the predecessor to § 775.01, stating:

It is manifest from the language of the section, and from the whole chapter of which the section is a part, that the statute relates only to actions upon those ordinary claims against the state which, if valid, render the state a debtor to the claimant; and not to an equitable action....

Id. at 512. Several years later, the court applied this same meaning — claims which, if valid, render the state a debtor to the claimant — in concluding that the statute did not apply to tort actions. Houston v. State, 98 Wis. 481, 487, 74 N.W. 111 (1898). Since Houston, this has been the meaning consistently given the statute — most often in the context of reaffirming the ruling in Houston that the statute does not permit tort claims against the State. See, e.g., Holzworth v. State, 238 Wis. 63, 67, 298 N.W. 163 (1941); Chart v. Gutmann, 44 Wis. 2d 421, 428-31, 171 N.W.2d 331 (1969); Cords v. State, 62 Wis. 2d 42, 50, 214 N.W.2d 405 (1974); Brown v. State, 230 Wis. 2d 355, 364, 602 N.W.2d 79 (Ct. App. 1999).

¶ 9. In Trempealeau County v. State, 260 Wis. 602, 605-06, 51 N.W.2d 499 (1952), the court gave more definition to the term "debtor" as used to limit the types of claims authorized by the statute. In Trempealeau, the claim was for money that the State had received, which, the plaintiff county alleged, belonged to the county. Id. at 602-03. The specific type of action was one "to recover upon an obligation implied in law, for the recovery of money had and received." Id. at 604. The State argued that this claim was not authorized by the statute because it was based on equitable considerations, even though it was classified as an action at law, and thus should be treated as a claim demanding relief in equity. Id. at 604-05. The court began its analysis of the issue by asking whether the relationship between debtor and creditor existed in the action. Id. at 605. The court turned to the definition of "debt" in Corpus Juris Secundum, according to which a" 'debt' is that for which an action of debt or indebitatus assumpsit will lie; and includes a sum of money due upon a contract, implied in law, 26 C.J.S., Debt, page 1[.]" Trempealeau, 260 Wis. at 605. Because the claim before it was one based upon a contract implied in law and the relationship of debtor-creditor between the plaintiff and the State existed, the court concluded the claim was authorized by the statute. Id. at 606.

¶ 10. Koshick asserts that, because his breach of contract claim is neither a tort claim nor a claim seeking equitable relief, it is authorized by Wis. Stat. § 775.01. However, this position overlooks the meaning the Trempealeau court gave the term "debt": "that for which an action of debt or indebitatus assumpsit will lie." Trempealeau, 260 Wis. at 605. The Trempealeau court concluded that the claim there was authorized by the statute not because it was a breach of contract claim, but because it was for a sum of money due upon a contract implied in law, thus making the State a debtor. Id. at 605-06. Therefore, the relevant inquiry here is whether Koshick's breach of contract claim is an action of debt or indebitatus assumpsit. To answer this inquiry, we consult the section of Corpus Juris Secundum that the Trempealeau court consulted.

¶ 11. 26 C.J.S. explains that "debt," for which an action of debt will lie, is "a specific sum of money which is due or owing from one to another." 26 C.J.S. Debt § 1 (2001). An essential element of the action is that it is for a

fixed and definite sum of money, or one that can readily be made fixed and definite, either from fixed data or agreement, or by mathematical computation or operation of law. Thus, an action of debt does not lie to recover unliquidated or unascertained damages. Further, the action cannot be maintained where the sum must be ascertained by resorting to extraneous evidence.
However, an action for debt can be maintained for the reasonable value of goods and materials where goods are sold and delivered ... or where the terms of a contract furnish the means of ascertaining the exact amount due for specific articles or services.

26 C.J.S. Debt § 4 (2001).

¶ 12. Koshick's breach of contract claim is plainly not an action on a debt. He is not seeking an amount due for goods or services that he has sold or delivered to the State; he is not, as was the plaintiff in Trempealeau, seeking money that the State has received that he asserts he is entitled to. The lost profits and the incurred expenses he seeks to recover are not liquidated; they cannot be readily determined from the terms of the alleged contract or from fixed data or mathematical computation.

¶ 13. Koshick argues that "claim" in Wis. Stat. § 775.01 cannot be construed to mean only actions of indebitatus assumpsit because this term refers to an action to recover money after a judgment finding that money was owed. Koshick relies on Harrigan v. Gilchrist, 121 Wis. 127, 441, 99 N.W. 909 (1904), for this argument. However, the passage Koshick refers to states that indebitatus assumpsit may be used to recover money after a judgment has been rendered; it does not suggest that this is the only situation in which this type of action is appropriate. Id. There is, therefore, nothing in Harrigan that calls into question the way in which the Trempealeau court defined "debt."

¶ 14. The supreme court and this court have each applied Trempleau's construction of the statute in deciding that a claim was authorized by Wis. Stat. § 775.01. In Boldt v. State, 101 Wis. 2d 566, 568, 305 N.W.2d 133 (1981), the claim was for recovery of certain social security payments the State had received on the plaintiffs behalf to which, the plaintiff alleged, he was entitled. Relying on Chicago, Milwaukee and Trempea-leau, the court concluded that the complaint alleged a claim for money had and received, and, thus, came within § 775.01. Boldt, 101 Wis. 2d at 572-74.

¶ 15. In CleanSoils Wisconsin, Inc. v. DOT, 229 Wis. 2d 600, 605, 599 N.W.2d 903 (Ct. App. 1999), the claim was for money that a subcontractor on a State project alleged it was owed for work it had done but for which it had not been paid because the general contractor had not been paid by the State. We rejected the State's argument that it was a debtor only to the general contractor, concluding that the subcontractor was a third-party beneficiary under the contract. Id. at 611-12. With that issue resolved, we concluded that, applying the meaning of "debt" from Trempealeau, there was no dispute that the subcontractor's claim based upon the contract was one that would render the State a debtor to the subcontractor. CleanSoils, 229 Wis. 2d at 611-12. However, we also concluded that the subcontractor's claim for unjust enrichment did not come within that definition and therefore was not permitted. Id. at 612-13. Specifically, we stated, the receipt of a benefit by the State was not the same as the receipt of money, as in Trempealeau and Boldt, and, therefore, the subcontractor's claim for unjust enrichment was not a claim for money had and received. CleanSoils, 229 Wis. 2d at 612-13.

¶ 16. Koshick argues that, if claims for money had and received are included within the meaning of "claims" in Wis. Stat. § 775.01, then his claim for breach of contract should be, too. He points out that the former, while an action at law, is governed by equitable principles and is implied at law, see CleanSoils, 229 Wis. 2d at 611, 613, citing Trempealeau, 260 Wis. at 605-06, while he had an express contract with the State. However, the reason an action for money had and received is a "claim" within the meaning of § 775.01 is that, according to the Trempealeau court's definition of "debt," such a claim, if valid, renders the State a debtor to the claimant. Trempealeau, 260 Wis. at 605. Whether the contract is express or implied in law, the claim based upon it must nonetheless be one that, if valid, renders the State a debtor to the claimant under the definition of "debt" in Trempealeau. CleanSoils recognizes and applies this principle.

¶ 17. Koshick also argues that our decision in Brown v. State, 230 Wis. 2d 355, 602 N.W.2d 79 (Ct. App. 1999), supports his position that every claim for money damages for a breach of contract is permitted under Wis. Stat. § 775.01. We do not agree.

¶ 18. In Brown, the plaintiff alleged a breach of contract arising out of the State's refusal to pay her lottery winnings in monthly rather than annual installments; she sought either the present value of the entire award or an order directing payment by monthly installments. Id. at 359-60. The circuit court dismissed the claim on the ground that Wis. Stat. § 775.01 does not encompass claims for specific performance of a contract under our ruling in Erickson Oil Products, Inc. v. State, 184 Wis. 2d 36, 516 N.W.2d 755 (Ct. App. 1994). Brown, 230 Wis. 2d at 371. We agreed that an order for payment of future installments was in essence an order for specific performance and that, under Erickson, the legislature has not expressly consented to suit for specific performance of a contract. Brown, 230 Wis. 2d at 371-72. However, we concluded that Erickson did not address the issue of installments that were allegedly already due but unpaid. Brown, 230 Wis. 2d at 372-73. Because the State provided no authority for concluding that § 775.01 did not permit a claim for breach of contract seeking the payments allegedly past due, we concluded the court erred in dismissing on sovereign immunity grounds the breach of contract claim insofar as it sought those payments. Brown, 230 Wis. 2d at 373. Ultimately, though, we decided that the circuit court correctly dismissed the entire breach of contract claim because it did not state a claim for relief. Id. at 381.

¶ 19. Brown does not hold, as Koshick argues, that every breach of contract claim comes within Wis. Stat. § 775.01 as long as the remedy sought is money damages rather than specific performance. Rather, in describing the limits of § 775.01 as construed in prior case law, we specifically stated in Brown that the statute is "limited to claims which, if valid, would render the State a debtor to the claimant." Brown, 230 Wis. 2d at 364 (citation omitted). Our statement that "Erickson does not preclude suit for damages for a breach of contract against the State, but only suit for equitable relief such as an injunction or specific performance," Brown, 230 Wis. 2d at 373, is not a statement that Erickson permits all suits seeking money damages for a breach of contract. Indeed, Erickson did not address that issue because no damages were sought, only injunctive relief and specific performance. Erickson, 184 Wis. 2d at 41. Nor did we in Brown conclude that all claims seeking money damages for breach of contract were claims within § 775.01, as Koshick suggests. As we have already explained, we decided that Brown's breach of contract claim, insofar as it sought only amounts allegedly past due, was not barred by sovereign immunity because the State did not present authority to the contrary. Brown, 230 Wis. 2d at 373. More specifically, the State in Brown did not argue that, as to the amounts allegedly past due, it was not a debtor within the meaning of prior case law. We therefore did not address the issue.

¶ 20. Finally, Koshick asserts that, if his action is barred by sovereign immunity even though he has complied with Wis. Stat. § 16.007 and Wis. Stat. § 775.01, then he is without a remedy for the damages he has suffered. We addressed the same argument in Erickson. There we explained that the Wisconsin Constitution expressly delegates to the legislature the task of determining in what manner the State may be sued, and our supreme court has been unwavering in holding that this responsibility rests exclusively with the legislature; courts will not find consent to suit absent a clear expression by the legislature. Erickson, 184 Wis. 2d at 51-52. In addition, we observe that the supreme court has rejected arguments that a citizen has a "right" to sue the State. See Cords, 62 Wis. 2d at 51-52.

¶ 21. We recognize that the distinction between an action on debt and other types of actions for breach of contract now appear archaic and may well have no procedural or sustentative significance for litigants bringing such claims against non-State entities today. Nonetheless, there has historically been a distinction. See 26 C.J.S. Debt §§ 1-4 (2001). See also 11 Arthur Linton Corbin, Corbin on Contracts § 995 (interim ed. 2002) (explaining that actions for debt and indebitatus assumpsit were both for a sum owed by the defendant because of a binding obligation to pay that sum or because of receipt of something equivalent in value to that sum, based either on an actual agreement or implied in law; and further explaining that money damages as reparation for a breach of contract were obtained in a different type of action). In its earliest construction of the predecessor to Wis. Stat. § 775.01, our supreme court invoked this distinction to decide what the legislature meant in using the term "claim." Chicago, Milwaukee, 53 Wis. at 512. That construction has remained unchanged, with definition added by the court in Trempealeau, 260 Wis. at 605-06. When a statute has been construed by the courts, the legislature is presumed to know that in the absence of changing the statute, the construction given by the courts will remain unchanged. Zimmerman v. Wisconsin Elec. Power Co., 38 Wis. 2d 626, 633-34, 157 N.W.2d 648 (1968). Thus, we presume the legislature is aware of the manner in which the courts have construed § 775.01 and its predecessors and has chosen not to alter that construction. It is, of course, free to do so at any time.

¶ 22. We conclude that Koshick's breach of contract claim seeking damages for lost profits and expenses incurred is not a "claim" within the meaning of Wis. Stat. § 775.01, as construed in Chicago, Milwaukee, 53 Wis. at 512, and Trempealeau, 260 Wis. at 605-06, and the many cases relying on both. Accordingly, the legislature has not consented to this suit against the State. The circuit court therefore properly dismissed the complaint on the ground of sovereign immunity.

By the Court. — Order affirmed.

       The codified statute at the time relevant to this appeal was Wis. Stat. § 775.01 (1999-2000). It is the same version found at § 775.01 (2003-2004) and provides:

        Actions against state; bond. Upon the refusal of the legislature to allow a claim against the state the claimant may commence an action against the state by service as provided in s. 801.11(3) and by filing with the clerk of court a bond, not exceeding $1,000, with 2 or more sureties, to be approved by the attorney general, to the effect that the claimant will indemnify the state against all costs that may accrue in such action and pay to the clerk of court all costs, in case the claimant fails to obtain judgment against the state.
      All references to the Wisconsin Statutes are to the 2003-2004 version unless otherwise noted.

       The complaint does not label the two causes of action, but that is not necessary in order to state a claim for relief. Strid v. Converse, 111 Wis. 2d 418, 422-23, 331 N.W.2d 350 (1983). The facts alleged adequately state claims for breach of contract and for promissory estoppel.

       The State conceded in the circuit court that Koshick had followed the statutory procedures necessary to bring suit against the State.

       Koshick does not argue that the circuit court erred in dismissing his claim for promissory estoppel.

       1850 Wis. Laws, ch. 249, §§ 1, 2. It appeared at Wis. Rev. Stat. § 3200 (1878) when the court in Chicago, Milwaukee & St. Paul Railway Co. v. State, 53 Wis. 509, 10 N.W. 560 (1881), considered it. It was renumbered to Wis. Stat. § 285.01, 1925 Wis. Laws, ch. 4, § 1, and then renumbered again to Wis. Stat. § 775.01. 1979 Wis. Laws, ch. 32, § 53.

       The case cited by the court in Trempealeau County v. State, 260 Wis. 602, 605, 51 N.W.2d 499 (1952), for the proposition that the statute did not authorize claims requesting equitable relief is In re Wausau Investment Co., 163 Wis. 283, 290, 158 N.W. 81 (1916). That case relied on the meaning given the statute in Chicago, Milwaukee & St. Paul Railway Co. v. State, 53 Wis. 509, 512, 10 N.W. 560 (1881) — "claims which, if valid, render the state a debtor" — to conclude that the statute did not authorize an action seeking an order that the State redeem certain tax certificates out of state funds. Wausau Inv. Co., 163 Wis. at 290-91.

       26 C.J.S. Debt § 2 (2001) explains that "[a]n action of debt is a concurrent remedy with assumpsit on all simple contracts, where the sum to be recovered is certain or may readily be ascertained either from the contract itself or by operation of law."

        Brown also asserted a claim for misrepresentation. Brown v. State, 230 Wis. 2d 355, 358, 602 N.W.2d 79 (Ct. App. 1999). Consistent with established case law, we concluded that Wis. Stat. § 775.01 did not consent to suit on this claim because it is a tort. Id. at 363-64.

       In Erickson Oil Products, Inc. v. State, 184 Wis. 2d 36, 41, 516 N.W.2d 755 (Ct. App. 1994), the plaintiff asserted claims of breach of contract, equitable estoppel, and promissory estoppel based upon allegations that the State accepted its offer to purchase certain property and then rejected the offer. The relief sought was an injunction preventing the State from conveying the land to a third party and specific performance of the land contract sale. Id. at 41-42. We rejected the plaintiffs arguments that in Wis. Stat. § 775.01 the State had consented to he sued for specific performance of a contract for the sale of real estate, id. at 47, and we concluded that the State had not otherwise consented to such suit. Id. at 50.

       Specifically, we held that the purchase of a lottery ticket upon prescribed terms creates a binding contract with the State or state lottery agency, Brown v. State, 230 Wis. 2d 355, 376, 602 N.W.2d 79 (Ct. App. 1999), but that the complaint and attachments did not allege a breach of the prescribed terms. Id. at 379-81.

       Wisconsin Stat. § 16.007 prescribes the procedure for presenting a claim to the claims board.