ANNETTE KINGSLAND ZIEGLER, J.
¶ 1 This is a review of a decision of the court of appeals, Betz v. Diamond Jim's Auto Sales, 2012 WI App 131, 344 Wis.2d 681, 825 N.W.2d 508, reversing an order of the Milwaukee County Circuit Court
¶ 2 In this case we are asked to determine the circumstances under which plaintiff's counsel may recover statutory attorney's fees directly from a defendant when, without counsel's knowledge or approval, the plaintiff and defendant enter into a settlement agreement that does not address attorney's fees.
¶ 3 Betz hired Milwaukee attorney Vincent Megna ("Megna") to represent him in his dispute with Diamond Jim's.
¶ 4 Diamond Jim's argues that the right to recover statutory attorney's fees belonged to Betz, and that Betz did not assign his right to recover those fees to Megna. As a result, Diamond Jim's argues that Megna cannot recover fees directly from Diamond Jim's. Further, Diamond Jim's argues that public policy encourages parties to settle disputes and requiring counsel's consent to such settlements in fee-shifting cases presents a conflict of interest.
¶ 5 Megna argues that Betz did assign his statutory right to recover attorney's fees, and that the public policy underlying fee-shifting statutes would be undermined if clients were allowed to settle fee-shifting cases without ensuring payment of statutory attorney's fees. Megna further asserts that attorney involvement and consent to settlement agreements in fee-shifting cases will not serve as a barrier to settlement.
¶ 6 We conclude that the statutory right to recover attorney's fees belonged to Betz, and that Betz did not assign his right to recover those fees to Megna in their fee agreement. Because we conclude that Betz did not assign his right to recover statutory attorney's fees to Megna, we must conclude that Diamond Jim's could not have had notice of the assignment. As a result, we conclude that Megna may not seek statutory attorney's fees directly from Diamond Jim's, and that the settlement agreement entered into between Diamond Jim's and Betz is clear, unambiguous, and enforceable. We therefore reverse the court of appeals.
¶ 7 On October 19, 2009, Betz purchased a 1999 Cadillac Escalade from Diamond Jim's. Betz paid $8,705.98 for the vehicle, including sales tax, title, and license fee. Over the following months, Betz experienced problems with the vehicle, which Diamond Jim's was unable to address to Betz's satisfaction.
¶ 8 On February 12, 2010, Betz hired Megna to represent him in his dispute with Diamond Jim's. The terms of the fee agreement
(bolding omitted) (all blanks in original).
¶ 9 On March 1, 2010, Betz sued Diamond Jim's in Milwaukee County Circuit Court. Betz asserted claims for false advertising, contrary to Wis. Stat. § 100.18 (2009-10),
¶ 10 On May 17, 2010, Megna, on behalf of Betz, made a settlement offer pursuant to Wis. Stat. § 807.01. The settlement offer sought $10,750 in damages and $5,900 in attorney's fees. The offer stated that the check for attorney's fees should be made payable to Megna's firm. Diamond Jim's rejected this offer through counsel.
¶ 11 On September 28, 2010, counsel for Diamond Jim's made a counter-offer to settle the case by repurchasing the vehicle and paying $2,000 towards Betz's attorney's fees. Megna, on behalf of Betz, rejected this offer.
¶ 12 On April 4, 2011, Betz and Thomas Letizia ("Letizia"), the general manager of Diamond Jim's, met without counsel and settled the case. The settlement agreement provided, in relevant part:
¶ 13 On April 5, 2011, counsel for Diamond Jim's learned of the settlement and drafted a letter advising Megna that the case was resolved. The letter referenced the parties' "confidential settlement" agreement and included a draft stipulation to dismiss the case.
¶ 14 On April 21, 2011, Megna filed three motions with the circuit court. First, Megna asked the circuit court to compel Diamond Jim's to pay statutory attorney's fees pursuant to Wis. Stat. § 100.18(11).
¶ 15 Diamond Jim's opposed Megna's motions. Diamond Jim's argued that the statutory right to recover attorney's fees belonged to Betz, and that the settlement agreement was a clear and unambiguous contract between the parties and should be enforced. Diamond Jim's asserted that the parties were entitled to settle the case without counsel if they chose, and that while Wis. Stat. § 100.18(11) allows for recovery of attorney's fees, it does not mandate such a recovery in the event of a settlement. Diamond Jim's also argued that the settlement agreement should remain confidential unless the parties agreed to disclose the terms.
¶ 16 On July 26, 2011, the court granted Megna's motion to require disclosure of the confidential settlement agreement. The court held all other motions in abeyance for 30 days to allow the parties the opportunity to negotiate a settlement of the attorney's fee issue. On August 31, 2011, the parties disclosed to the court that they had failed to resolve the dispute. The court then set a briefing schedule for the pending motions.
¶ 17 On September 30, 2011, Diamond Jim's filed a motion for reformation of the contract, or alternatively, for rescission. The filing included an affidavit from Letizia wherein he stated that when he signed the settlement agreement, he believed it resolved the issue of statutory attorney's fees. Diamond Jim's argued that if the settlement agreement did not, in fact, resolve the fee issue, the agreement did not
¶ 18 On December 8, 2011, the circuit court held a motion hearing. The court determined that the statutory right to recover attorney's fees belonged to Betz and not to his attorneys. The court further concluded that the settlement agreement was a clear, unambiguous, and binding contract between Betz and Diamond Jim's. As a result, the court denied Megna's motions and dismissed the case.
¶ 19 On January 23, 2012, Megna appealed.
¶ 20 On appeal, Megna argued that the fee-shifting statute did not permit Betz to settle his claims without Megna's knowledge or consent. Megna asserted that the right to collect fees under the statute belonged to the attorney and not the client, and that Diamond Jim's had a duty to refrain from settling without Megna's knowledge or consent. Megna further argued that the public policy underlying fee-shifting statutes would be frustrated if clients were permitted to settle fee-shifting cases without addressing statutory attorney's fees. Finally, Megna argued that it would be inequitable to allow Diamond Jim's to avoid paying statutory attorney's fees in this case.
¶ 21 Diamond Jim's argued that Betz had a right to settle his claims and that right was not conditioned on his attorney's knowledge or consent. Diamond Jim's asserted that the trial court properly relied on contract principles in resolving the issue, and that statutory attorney's fees cannot be awarded under equitable principles. Diamond Jim's further argued that Megna should be seeking attorney's fees from his client, Betz, and not Diamond Jim's.
¶ 22 On October 16, 2012, the court of appeals reversed the circuit court. Betz, 344 Wis.2d 681, ¶ 1, 825 N.W.2d 508. The court of appeals concluded that the settlement agreement, despite being clear and unambiguous, was void because it was contrary to the public policy behind fee-shifting statutes. Id., ¶ 13. The court of appeals therefore ordered Betz to return the settlement payment and remanded the case to the circuit court for continued litigation. Id., ¶ 14.
¶ 23 Diamond Jim's petitioned this court for review, which we granted on May 10, 2013.
¶ 24 "The interpretation of an unambiguous contract presents a question of law for this court's independent review." Town Bank v. City Real Estate Dev., LLC, 2010 WI 134, ¶ 32, 330 Wis.2d 340, 793 N.W.2d 476 (citing Admanco, Inc. v. 700 Stanton Drive, LLC, 2010 WI 76, ¶ 15, 326 Wis.2d 586, 786 N.W.2d 759).
¶ 25 "[T]he application of public policy considerations to a contract" also presents a question of law that this court reviews de novo. Northern States Power Co. v. Nat'l Gas Co., 2000 WI App 30, ¶ 7, 232 Wis.2d 541, 606 N.W.2d 613 (citing Bowen v. Lumbermens Mut. Cas. Co., 183 Wis.2d 627, 654, 517 N.W.2d 432 (1994)).
¶ 26 "[A]n important purpose of fee-shifting statutes is to encourage injured
¶ 27 "The cumulative effect of minor transgressions is considerable, yet they would not be deterred if fees were unavailable." Fletcher v. City of Fort Wayne, Ind., 162 F.3d 975, 976 (7th Cir. 1998). "If the cost of litigation reduces or even eliminates recovery, retail buyers will be less likely to enforce their rights under the statute." Kolupar, 303 Wis.2d 258, ¶ 37, 735 N.W.2d 93. Fee-shifting thus prevents "defendants from inflicting with impunity small losses on the people whom they wrong." Orth v. Wisconsin State Employees Union Council 24, 546 F.3d 868, 875 (7th Cir.2008).
¶ 28 Fee-shifting statutes, and the attorneys who represent clients in such cases, are thus vital to ensuring that the rights of consumers are vindicated in court. The importance of this public policy is not a matter of debate.
¶ 29 Additionally, attorneys who represent clients in fee-shifting cases already take a significant risk that they will not be paid, because they may not "win" a case. Ordinarily, fees are awarded only to a "prevailing party." See, e.g., Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987). While we recognize the important right of a client to settle, if a client has an unfettered right to settle without counsel's involvement when a fee-shifting statute is implicated, otherwise qualified attorneys will be discouraged from practicing in this vitally important area of law.
¶ 30 Nonetheless, the legislature has determined that an award of attorney's fees under Wis. Stat. § 100.18(11) belongs to the "person suffering pecuniary loss." Gorton v. Hostak, Henzl & Bichler, S.C., 217 Wis.2d 493, 503, 577 N.W.2d 617 (1998). Thus, statutory attorney's fees belong to the client and not the attorney. Given this legislative determination and the public policy considerations implicated in these matters, both the purpose of fee-shifting statutes and the public interest they promote are undermined when a client settles without counsel and that settlement does not provide for recovery of statutory attorney's fees.
¶ 31 In Zeisler v. Neese, the Seventh Circuit was presented with a similar conflict involving a settlement that failed to address the statutory right to recover attorney's fees. 24 F.3d 1000 (7th Cir.1994). The Seventh Circuit's analysis in Zeisler informs our conclusions in the case at issue and aids us in balancing the competing public policy considerations.
¶ 32 In Zeisler the plaintiff, Carol Zeisler ("Zeisler"), purchased a used car from Neese Motors ("Neese") using dealer financing. Id. at 1001. Zeisler became unhappy with the vehicle and contacted Attorney Barry Barash ("Barash") to represent
¶ 33 While the suit was pending, Zeisler defaulted on her financing agreement with Neese, and Neese repossessed the car. Id. Neese offered to provide Zeisler with a different, less expensive vehicle in exchange for her agreement to dismiss the lawsuit. Id. Without consulting Barash, Zeisler agreed to the settlement. Id. The settlement made no reference to attorney's fees. Id. The trial court dismissed the suit over Barash's objections. Id.
¶ 34 On appeal the Seventh Circuit affirmed the trial court. Id. The court concluded that the statutory right to recover attorney's fees belonged to the client and not the attorney, and that the interests of the client were served by encouraging settlement. Id. The court, acknowledging the policy concerns involved, then addressed how attorneys could protect their legitimate interest in receiving payment:
Id. at 1002.
¶ 35 Thus, practically speaking, under Zeisler so long as the written contract between the lawyer and the client so provides, counsel can seek payment of attorney's fees from the client. Moreover, when the written contract between the lawyer and the client provides for a valid assignment of the right to recover statutory attorney's fees, counsel may pursue such fees from the defendant so long as the defendant had notice of the assignment. In other words, if the parties enter into a private settlement without the involvement of counsel, and the settlement fails to provide for statutory attorney's fees,
¶ 37 At the outset, we note that it is undisputed that neither Megna nor counsel for Diamond Jim's was involved in the April 4, 2011 settlement agreement with Betz. It is likewise undisputed that the settlement agreement between Betz and Diamond Jim's failed to provide for payment of Megna's attorney's fees. Thus, under the facts presented, the crux of the matter before the court, as it was in Zeisler, is (1) whether Betz assigned his statutory right to recover attorney's fees to Megna under the fee agreement, and if so, (2) whether Diamond Jim's had notice of the assignment at the time of the settlement.
¶ 38 Given the fact that Betz and Diamond Jim's settled this case without counsel and without providing for Megna's attorney's fees, we first address whether the fee agreement provided for a valid assignment of the right to recover statutory attorney's fees from Betz to Megna. In order to determine whether Betz assigned his right to recover statutory attorney's fees to Megna under the fee agreement, we look to the fee agreement itself. A fee agreement is a contract. "When construing contracts that were freely entered into, our goal `is to ascertain the true intentions of the parties as expressed by the contractual language.'" Town Bank, 330 Wis.2d 340, ¶ 33, 793 N.W.2d 476 (quoting State ex rel. Journal/Sentinel, Inc. v. Pleva, 155 Wis.2d 704, 711, 456 N.W.2d 359 (1990)).
¶ 39 "In ascertaining the intent of the parties, contract terms should be given their plain or ordinary meaning." Huml v. Vlazny, 2006 WI 87, ¶ 52, 293 Wis.2d 169, 716 N.W.2d 807. "`If the contract is unambiguous, our attempt to determine the parties' intent ends with the four corners of the contract, without consideration of extrinsic evidence.'" Town Bank, 330 Wis.2d 340, ¶ 33, 793 N.W.2d 476 (quoting Huml, 293 Wis.2d 169, ¶ 52, 716 N.W.2d 807). "Only when the contract is ambiguous, meaning it is susceptible to more than one reasonable interpretation, may the court look beyond the face of the contract and consider extrinsic evidence to resolve the parties' intent." Id. (citing Capital Invs., Inc. v. Whitehall Packing Co., Inc., 91 Wis.2d 178, 190, 280 N.W.2d 254 (1979)).
¶ 40 Megna argues that Betz assigned his statutory right to recover attorney's fees to Megna under the fee agreement. Alternatively, Megna argues that Betz's right to recover attorney's fees should be equitably subrogated to Megna. In either case, Megna argues that Betz lacked the right to relinquish statutory attorney's fees against Diamond Jim's. Under the logic of Zeisler, Megna's argument is unpersuasive.
¶ 41 "An assignment is the `manifestation of the assignor's intention to transfer' a right so that the assignee acquires the right to performance by the obligor." Stilwell v. Am. Gen. Life Ins. Co., 555 F.3d 572, 577 (7th Cir.2009) (quoting Restatement (Second) of Contracts § 317 (1981)). "It is essential to an assignment of a right that the obligee manifest an intention to transfer the right to another person without further action or manifestation of intention by the obligee." Restatement (Second) of Contracts § 324 (1981). No such manifestation exists in the fee agreement at issue.
¶ 42 The terms of the fee agreement indicate that Betz understood that "the defendant is usually responsible for paying" attorney's fees in suits under Wis.
¶ 43 The fee agreement further provides for a number of circumstances where Betz might have to pay for Megna's fees or costs himself. For example, if the case had settled prior to the filing of the lawsuit, Betz would have had to pay a flat rate for Megna's fees. Similarly, if Betz had declined to settle the case on terms his attorneys "deem[ed] reasonable," he would have had to immediately pay all of Megna's costs up to that point and continue to pay further costs as they became due. Finally, the agreement provided that if either Betz or his attorneys terminated the attorney-client relationship, Betz would be responsible for paying both Megna's fees and costs. These provisions provide evidence that Betz did not assign his right to statutory attorney's fees to Megna in the fee agreement. As a result, traditional principles of contract law militate against finding that Betz assigned his right to statutory attorney's fees to Megna.
¶ 44 Similarly, Megna's argument that Betz equitably subrogated his right to recover statutory attorney's fees to counsel is not compelling.
¶ 45 "`Subrogation is an equitable doctrine invoked to avoid unjust enrichment, and may properly be applied whenever a person other than a mere volunteer pays a debt which in equity and good conscience should be satisfied by another.'" Ocwen Loan Servicing, LLC v. Williams, 2007 WI App 229, ¶ 7, 305 Wis.2d 772, 741 N.W.2d 474 (quoting Rock River Lumber Corp. v. Universal Mortg. Corp. of Wis., 82 Wis.2d 235, 240-41, 262 N.W.2d 114 (1978)). Courts are permitted "to grant equitable remedies to private litigants in situations in which there is no explicit statutory authority or in which the available legal remedy is inadequate to do complete justice." Breier v. E.C., 130 Wis.2d 376, 388, 387 N.W.2d 72, 77 (1986); see also GMAC Mortg. Corp. of Pa. v. Gisvold, 215 Wis.2d 459, 479-80, 572 N.W.2d 466 (1998).
¶ 46 In the case at issue, we are presented with specific statutory authority which grants the right to recover attorney's fees to the plaintiff. Wis. Stat. § 100.18(11)(b)2. If we were to conclude that the client's right to recover statutory attorney's fees is equitably subrogated to the attorney once counsel is retained, despite a fee agreement that does not clearly assign that right, we would undermine the legislature's explicit directive to the contrary. The legislature has concluded that it is the client's right to recover statutory attorney's fees. The equitable principles espoused by Megna do not trump the language of the agreement or the legislative directive.
¶ 47 Additionally, Megna is not necessarily without a remedy if he is unable to recover directly from Diamond Jim's. Megna could seek payment from Betz under their fee agreement. For these reasons, equitable relief in the form of subrogation is not appropriate in this case.
¶ 48 Further, to the extent this fee agreement could be deemed unclear regarding Megna's right to recover statutory attorney's fees from Betz or Diamond Jim's, "the burden is on the attorney who possesses legal knowledge and who drafts the agreement to state clearly the terms of the fee agreement and to address specifically the allocation of court-awarded attorney fees." Gorton, 217 Wis.2d at 508, 577 N.W.2d 617;
¶ 49 Given that written fee agreements are required, see SCR 20:1.5(c), attorneys are cautioned to clearly draft a fee agreement so that it unambiguously assigns the client's statutory right to recover attorney's fees from the defendant under these circumstances. As discussed, vital public policy interests are at stake.
¶ 50 A clear fee agreement not only protects the attorney, but also protects the client and avoids conflict. A more clearly drafted fee agreement in the case at issue would have resolved the problem without the necessity of additional litigation.
¶ 51 Because Megna's fee agreement failed to clearly secure an assignment from Betz in the case at issue, his remedy against Diamond Jim's is foreclosed.
¶ 52 Finally, because we conclude that the fee agreement does not provide for a valid assignment of Betz's right to recover statutory attorney's fees to Megna, we conclude that the second Zeisler criterion cannot be met. Because there was no assignment between Betz and Megna, Diamond Jim's could not know of the assignment. As a result, the Zeisler test is not met in this regard either.
¶ 53 We conclude that the statutory right to recover attorney's fees belonged to Betz, and that Betz did not assign his right to recover those fees to Megna in their fee agreement. Because we conclude that Betz did not assign his right to recover statutory attorney's fees to Megna, we must conclude that Diamond Jim's could not have had notice of the assignment. As a result, we conclude that Megna may not seek statutory attorney's fees directly from Diamond Jim's, and that the settlement agreement entered into between Diamond Jim's and Betz is clear, unambiguous, and enforceable. We therefore reverse the court of appeals.
The decision of the court of appeals is reversed.
¶ 54 PATIENCE DRAKE ROGGENSACK, J., did not participate.
¶ 55 SHIRLEY S. ABRAHAMSON, C.J. (dissenting).
The issue before the court is whether the written fee agreement between Randy Betz, the client, and Vince Megna, the attorney, transferred the client's right to statutory attorney fees to the attorney. The majority opinion, ¶ 43, purports to apply "traditional principles of contract law" to decide the issue. It does not.
¶ 56 The majority opinion interprets the text of the fee agreement in a scant three paragraphs, ¶¶ 41, 42, and 43, without any analysis, proof, authority, or resort to contract principles.
¶ 57 At ¶ 41, without any analysis, proof, authority, or use of principles of contract interpretation, the majority opinion recites the rule that an assignment depends on the assignor's intention and then pronounces in a single sentence that "no such manifestation [of the assignor's intention to transfer a right] exists in the fee agreement at issue."
¶ 59 At ¶ 43, without any analysis, proof, authority, or use of principles of contract interpretation, the majority opinion pronounces that various parts of the fee agreement that "provide[] for a number of circumstances in which Betz might have to pay for Megna's fees or costs himself" "provide evidence that Betz did not assign his right to statutory attorney's fees to Megna in the fee agreement."
¶ 60 Rather than apply rules of contract interpretation, some of which the majority opinion dutifully recites, the majority opinion simply decrees, ipse dixit, that the language of the fee agreement does not mean what it says. This resolution cannot be correct.
¶ 61 This court's pronouncements about assignments extend beyond the instant case. Assignments are frequently the subject of litigation in this court. This court has considered assignments in other cases and contexts, each with its own particularities due to the circumstances of the case.
¶ 62 I apply the following principles of contract law to the instant case.
¶ 63 The Restatement (Second) of Contracts, relied upon by the majority opinion, ¶ 41, defines an assignment as follows: "An assignment is the `manifestation of the assignor's intention to transfer' a right so that the assignee acquires the right to performance by the obligor."
¶ 64 The Restatement does not require any particular formalities to be observed to make an effective assignment.
¶ 65 The phrase "manifestation of intention" is a basic concept in contract formation in the Restatement (Second) of Contracts. The phrase "adopts an external or objective standard for interpreting conduct; it means the external expression of intention as distinguished from undisclosed intention."
¶ 66 To determine the parties' "manifestation of intention," the courts apply other well-accepted rules of contract interpretation: "We interpret a contract to give `reasonable meaning to each provision and without rendering any portion superfluous.'"
¶ 67 "Because the scope of retainer agreements varies from attorney to attorney and case to case," inquiries about the meaning of a retainer and fee allocation agreement between an attorney and a client "are necessarily fact intensive."
¶ 68 The meaning given to words "depends to a varying extent on the context and on the prior experience of the parties."
¶ 69 When there is an ambiguity, the courts look to extrinsic evidence to resolve the parties' intent.
¶ 70 I now apply these interpretive aids to the text of the fee agreement.
¶ 71 I have attached a true and correct copy of the fee agreement to give the full text of the agreement.
¶ 72 The text of the fee agreement at issue is not derived from a legal form book. It is written in plain English, a practice that should be commended.
¶ 73 The text of the fee agreement, giving meaning to each provision read separately and to the text read as a whole, clearly manifests an intention in plain English that the attorney will look to the defendant for attorney fees in some circumstances, and to the client in other circumstances.
¶ 74 The circuit court interpreted the agreement as I do. The circuit court declared:
The circuit court was correct.
¶ 75 The words of the agreement itself support this interpretation.
¶ 76 The agreement is divided into several parts, with a bold-faced, capitalized heading preceding each part. Each part of the fee agreement explains the allocation of attorney fees under a particular set of circumstances.
¶ 77 The headings are descriptive of four various circumstances under which fees are to allocated:
¶ 78 The words that manifest an intention to give the attorney the right to collect attorney's fees are in the part labeled "
¶ 79 The agreement states under the heading
¶ 80 The
¶ 81 The "
¶ 82 The language in the "
¶ 83 The majority opinion, ¶ 42, dismisses the "
¶ 84 Unable to provide a qualifier for the key last sentence of the "
¶ 85 The word "usually" in the second sentence is a correct non-legalese statement of the law. A court usually holds the defendant liable for the plaintiff's attorney fees based on the attorney's hourly rate as stated in the fee agreement. But courts do not always do so.
¶ 86 The real problem the fee agreement faces in the majority opinion is that the text of the "
¶ 88 In contrast, the client probably better understands the plain English version Attorney Megna used, which states that Megna, not the client, gets statutory fees from the defendant in litigation.
¶ 89 The majority opinion ignores the rule of interpretation that no particular magic words are needed to manifest an intention to assign. Instead, the majority opinion sends a message to attorneys who represent clients in cases where fee-shifting statutes apply: use legalese, not plain English. The majority opinion seems to endorse attorneys who use the legalese version of assignment, in which the client "in exchange for valuable consideration, hereby assigns and transfers the right to pursue attorney's fees, pursuant to [statute], to [attorney] of [address] and all [attorney's] legal assigns and heirs" and so forth.
¶ 90 The majority opinion ignores the rule of interpretation that requires us to give reasonable meaning to each word of the contract. What reasonable meaning does the "
¶ 91 Other provisions of the fee agreement support interpreting the "
¶ 92 In each instance, the agreement treats the attorney, not the client, as the holder of the right to attorney's fees paid by the defendant.
¶ 93 The fee agreement sets forth various fee allocations under differing circumstances. The majority opinion asserts that these provisions for fee allocation under circumstances other than litigation "provide evidence that Betz did not assign his right to statutory attorney's fees to Megna in the fee agreement." Majority op., ¶ 43.
¶ 94 The majority does not say, and I cannot figure out, why a provision requiring Betz to pay fees or costs under certain circumstances (for example, if no lawsuit were filed) means that "principles of contract law militate against finding that Betz assigned his right to statutory attorney's fees to Megna." Majority op., ¶ 43.
¶ 95 The assignment of attorney fees is thus effective under certain circumstances; the assignment does not come into play should certain other circumstances come to pass. There is nothing unusual about this arrangement.
¶ 96 I conclude, as did the circuit court, that the text of the "
¶ 97 This interpretation is supported not only by the text but also by the context in which the fee agreement was executed and operates, namely the Wisconsin lemon law allowing claims for defective cars and Wis. Stat. § 100.18 governing suits for misrepresentation. Words in a contract "are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight."
¶ 98 A car purchase, next to a home purchase, is the largest single expenditure of many people. When a consumer purchases a defective car, the lemon law statutes and Wis. Stat. § 100.18 are designed to give the consumer a remedy. Both statutes are fee-shifting statutes that modify the American rule regarding who pays
¶ 99 In cases governed by the lemon law and Wis. Stat. § 100.18 (explicitly referenced in the "
¶ 100 The legislature has expressed this vital public policy of the state favoring fee shifting in lemon law and misrepresentation cases to ensure the rights of consumers: "Fee-shifting statutes, and the attorneys who represent clients in such cases, are thus vital to ensuring that the rights of consumers are vindicated in court."
¶ 101 Attorney Megna holds himself out as, and is known as, one of the few attorneys in Wisconsin who takes lemon law cases.
¶ 102 This is the context in which the fee agreement at issue was executed. Indeed, the majority opinion, ¶¶ 26-29, discusses the importance that the legislature has given to the fee-shifting statutes in enforcing the consumer-protection laws at issue in the instant case.
¶ 103 The majority opinion acknowledges, and rightly so, that the defendant should not be able to circumvent the fee-shifting statute's public policy by cutting attorneys out of their ability to collect attorney's fees through unfettered out-of-court settlement:
Majority op., ¶ 29. I agree with the majority opinion's analysis of the legislature's mandated public policy.
¶ 104 Why then does the majority opinion ignore the legislative declaration of public policy in deciding the instant case? The majority opinion does not say.
¶ 105 In sum, when I apply the rules of contract interpretation, I conclude that the text and context of the entire fee agreement demonstrate that the agreement assigned the statutory fees from the client to the attorney in the circumstances listed in the "
¶ 106 A few other matters regarding contract interpretation emerge in the majority opinion.
¶ 107 In the end, the majority opinion never truly decides whether there are competing reasonable interpretations of the fee agreement requiring a court to look beyond the four corners of the contract to interpret its meaning. Instead, the majority opinion waffles.
¶ 109 On the other hand, the majority opinion views the fee agreement as potentially "unclear" on the subject of the assignment of attorney's fees. Majority op., ¶ 48.
¶ 110 If the fee agreement is "unclear," the intention of the parties is a question of fact to be determined by the finder of fact after being presented with extrinsic evidence.
¶ 111 I would recognize the fee agreement for what it is, an unambiguous assignment of the right to attorney's fees from Betz to Attorney Megna.
¶ 112 Furthermore, the majority opinion apparently assumes, without discussion, that the fee agreement is an integrated contract.
¶ 113 Yet this contract on its face is not complete and therefore is not fully integrated. There is a blank in the fee agreement that is not filled in. The amount Attorney Megna will charge the client in the "
¶ 114 A blank in a contract on a material matter indicates that the contract is not fully integrated and that extrinsic evidence may be used to understand the intention of the parties.
¶ 115 Rather than looking to extrinsic evidence, as dictated by our rules of contract interpretation for unclear or non-integrated contracts, the majority opinion asserts that the burden is on the attorney "to state clearly the terms of the fee agreement and to address specifically the allocation of court-awarded attorney's fees." Majority op., ¶ 48 (quoting Gorton v. Hostak, Henzl & Bichler, S.C., 217 Wis.2d 493, 508, 577 N.W.2d 617 (1998) and citing Ziolkowski Patent Solutions Grp., S.C. v. Great Lakes Dart Mfg., Inc., 2011 WI App 11, ¶ 13, 331 Wis.2d 230, 794 N.W.2d 253).
¶ 116 In the Gorton case, the fee agreement was a contingent fee agreement. The fee agreement was silent regarding the allocation of reasonable attorney fees under Wis. Stat. § 100.18. Statutory attorney fees were awarded. The Gorton court held that the distribution of the statutory attorney fee award was governed by the contract between the parties.
¶ 117 In contrast, in the instant case the "
¶ 118 Furthermore, in Gorton the dispute about who was entitled to the statutory attorney fees pursuant to the fee agreement between the attorney and the client was between the attorney and the client. The attorney and client were adversaries. To the extent that the agreement between the attorney and client in Gorton did not specifically address the allocation of statutory attorney fees, the attorney, who had obviously drafted the agreement and who had legal expertise, lost.
¶ 119 In the instant case, no dispute exists between the attorney (Megna) and the client (Betz) that, pursuant to their fee agreement, the attorney, not the client,
¶ 120 The interpretation of the fee agreement proposed by the majority opinion is, unfortunately, troubling on too many different fronts.
¶ 121 For the foregoing reasons, I dissent. I would remand the case to the circuit court to determine whether the defendant had notice of the assignment.
