Safe-harbor rule requires strict compliance, rules Wisconsin Court of Appeals.

• Author: Ziemer, David

Byline: David Ziemer

A postjudgment sanction for filing a frivolous lawsuit is not allowed under the new version of Rule 802.05, because the 21-day safe harbor provision must be satisfied, the Wisconsin Court of Appeals held on Nov. 29.

Ten Mile Investments, LLC sued Cynthia Siciliano seeking specific performance for her refusal to close on a real estate transaction. Siciliano counterclaimed, also seeking specific performance.

Siciliano prevailed on the merits and moved for sanctions under the statute, for filing a frivolous claim. Jackson County Circuit Court Judge John A. Damon found the suit frivolous and awarded a sanction of more than $17,000.

Both parties appealed, and the court of appeals reversed, in a decision by Judge Paul B. Higginbotham.

The court first held that the new rule applies to the case, even though the lawsuit was filed before it became effective.

Under the safe-harbor provision of the new rule, a party seeking sanctions must first serve the motion on the opposing party, who then has 21 days to withdraw or appropriate correct the claimed violation. The party seeking sanctions cannot move the court for them until that time period has expired.

In Trinity Petroleum, Inc. v. Scott Oil Co., 2007 WI 88, 735 N.W.2d 1, the Supreme Court held that retroactivity of the statute must be decided on a case-by-case basis, and may not be retroactive if such an application would impose an unreasonable burden on the party seeking sanctions.

In both Trinity Petroleum and the case at bar, the suit was filed before ht rule became effective. However, in Trinity Petroleum, the circuit court decided the case only five days after the effective date.

In contrast, 11 weeks passed between the effective date and the trial date in Sic-iliano's case. Finding that she had ample opportunity to comply with the new rule's procedural requirements, the court concluded that retroactive application of the rule would not impose an unreasonable burden on her.

The court then held that a postjudgment motion for sanctions cannot comply with the safe-harbor provision.

When Trinity Petroleum was before the court of appeals, the court held that post- judgment motions for sanctions must be denied. Trinity Petroleum, Inc. v. Scott Oil Co., 2006 WI App 219, 296 Wis.2d 666, 724 N.W.2d 259.

However, when the Supreme Court heard the case and reversed, it did not express any opinion on whether a postjudgment sanction motion complies with the safe-harbor provision; thus...