Retroactive rules can't disrupt business contracts, Wisc. SC rules

Legal News Line Jul. 11, 2007, 6:00am

Chief Justice Shirley S. Abrahamson

MADISON -- A new state rule governing contracts can't be applied retroactively without exception if it imposes some hardships on the party expected to comply, the Wisconsin Supreme Court recently ruled. In Trinity Petroleum Inc. v. Scott Oil Company, Inc. (docket# 2005AP2837), the Court overturned two lower-court rulings denying Scott Oil's motion for sanctions against Trinity for "frivolous commencement and maintenance of a lawsuit." Both the Wakesha County Circuit Court and the Wisconsin Court of Appeals said rule 802.05 (2005-06) automatically applied retroactively to the case. Scott was thus granted summary judgement but denied sanctions because it could not comply with part of the new law. The Supreme Court disagreed. Although "procedural rules" such as the one in question "generally have retroactive application", there are exceptions, wrote Chief Justice Shirley S. Abrahamson for the five-Justice majority. "The circuit court did not determine in the instant case whether retroactive application of the new rule impaired contract rights, disturbed vested rights, or imposed an unreasonable burden on a party," she wrote. Nor did it "make final and conclusive findings on whether the plaintiff had either commenced or maintained a frivolous action," Abrahamson concluded. But in a three-Justice partial dissent, Justice Patricia Drake Roggensack disagreed with the majority's analysis for omitting key issues. She also stated that the lower court imposed the wrong statute retroactively. Roggensack agreed to reverse and remand the case to circuit court but "would direct the court to apply § 814.025, if Scott proves its claim."

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