Frivolousness rule is retroactive, rules Wisconsin Supreme Court.

• Date: 16 July 2007
• Author: Ziemer, David

Byline: David Ziemer

Rule 802.05 applies retroactively to suits already pending on July 1, 2005, the rule's effective date, the Wisconsin Supreme Court held last week, but only if its application would not pose an unreasonable burden. The holding reverses a published decision of the court of appeals, which held the rule retroactive to all cases, Trinity Petroleum, Inc. v. Scott Oil Co, Inc., 2006 WI App 219, 266 Wis.2d 666, 724 N.W.2d 259. Scott Oil Co., Inc., and Trinity Petroleum, Inc., had a contractual agreement under which Trinity would transport Scott Oil's petroleum products. Scott Oil terminated the contract and Trinity sued for breach of contract. On April 5, 2005, Scott Oil moved for summary judgment. The court granted the motion on July 5. After the grant of summary judgment, Scott Oil moved for attorney fees on the grounds that Trinity's action was frivolous, pursuant to rules 802.05 and 814.025. Waukesha County Circuit Court Judge James R. Kieffer denied the motion, because the Supreme Court had repealed the two statutes and recreated Rule 802.05, effective July 1. The court stated that it considered the plaintiff's action frivolous, but held that sanctions could not be imposed, because Scott Oil failed to comply with the 21-day "safe harbor" provision of the new rule. The safe harbor provision requires a party to give prior notice to the offending party; only if the purportedly frivolous pleading is not withdrawn within 21 days, may the party move the court for sanctions. The statute's other significant change was to make the award of sanctions discretionary, rather than mandatory, if frivolousness is found. Scott Oil appealed, but a divided court of appeals affirmed, holding that because the rule change is procedural, it is retroactive. A dissent by Judge Daniel P. Anderson agreed that the rule is retroactive, but concluded that, under the circumstances of this case, it should not be retroactive. The Supreme Court granted review and reversed, in a July 5 decision by Chief Justice Shirley S. Abrahamson. The majority agreed that the change was procedural, and thus retroactive generally, but remanded to the circuit court to determine whether retroactive application in this case would place an unreasonable burden on Scott Oil. Justice Patience Drake Roggensack dissented, in an opinion joined by Justices David T. Prosser and Jon P. Wilcox. Writing for the majority, Abrahamson noted that Supreme Court Order 03-06, which recreated...