COURT OF APPEALS DECISION DATED AND FILED August 10, 2010 A.
John Voelker Acting Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
and CROSS-APPEAL from orders of the circuit court for
Before Curley, P.J., Brennan and Lundsten, JJ.
¶1 CURLEY, P.J. MBS-Certified Public
Accountants, LLC, and Thomas H. Schmitt, CPA, d/b/a Metropolitan Business
Services (unless otherwise specified, collectively referred to as MBS, using
the singular pronoun “it”) appeal from orders dismissing their claims under Wis. Stat. §§ 100.207, 100.18, and
the Wisconsin Organized Crime Control Act (WOCCA), see Wis. Stat. §§ 946.80–946.88
(2007-08).[1] MBS argues that the trial court erred when it
dismissed MBS’s damages claims based on its application of the voluntary
payment doctrine. ILD
Telecommunications, Inc., d/b/a ILD Teleservices (ILD) cross-appeals, arguing
that the trial court erred when it concluded that MBS could state a claim
against ILD for violating § 100.207(2).
ILD further asserts that MBS cannot state a claim under
§ 100.207(3) because it is not a “consumer.” Because we conclude that the voluntary
payment doctrine precludes MBS from recovering damages for its payment of
allegedly unlawful fees and affirm the trial court’s order dismissing its
lawsuit, we need not address ILD’s cross-appeal. See Gross v. Hoffman, 227
I. Background.
¶2 MBS, on behalf of a putative class, brought an action to recover monetary damages from and injunctive relief against various telecommunications companies, based on allegations that the companies wrongfully billed unauthorized services (a practice known as “cramming”) to Wisconsin consumers. In its complaint, MBS alleged that companies engaged in cramming “routinely insert relatively small, unauthorized charges into consumers’ telephone bills, with the expectation that they will not notice the charges and, therefore, will unwittingly pay them.”
¶3 MBS named three categories of defendants: (1) service providers (i.e., internet/web hosting; nationwide directory assistance; international calling plans), which start the cramming process by generating charges for unauthorized services; (2) billing aggregators or consolidators, such as ILD, which consolidate unauthorized charges and forward them on to local exchange carriers; and (3) local exchange carriers, such as Wisconsin Bell, Inc., d/b/a AT&T Wisconsin (Wisconsin Bell), which incorporate the unauthorized charges into consumers’ telephone bills.[2] MBS alleged five causes of action: violation of Wis. Stat. § 100.207; violation of Wis. Stat. § 100.20(5); violation of Wis. Stat. § 100.18; violation of WOCCA; and unjust enrichment.[3] Initially, MBS sought both monetary and injunctive relief; however, MBS later voluntarily dismissed its claim for injunctive relief.
¶4 Wisconsin
II. Analysis.
¶5 A motion to dismiss for failure to state a claim tests the
legal sufficiency of the complaint and presents a question of law that we
review de novo.[5] Wausau Tile, Inc. v. County Concrete Corp.,
226
¶6 “The voluntary payment doctrine places upon a party who
wishes to challenge the validity or legality of a bill for payment the
obligation to make the challenge either before voluntarily making payment, or
at the time of voluntarily making payment.”
Putnam v. Time Warner Cable of Se. Wis., 2002 WI 108, ¶13, 255
Wis. 2d 447, 649 N.W.2d 626 (citing 66 Am. Jur. 2d Restitution and Implied Contracts § 108 (2001) (“The rule is well
settled that a person cannot recover money that he or she has voluntarily paid
with full knowledge of all of the facts and without fraud, duress, or extortion
in some form, and that no action will lie to recover the voluntary payment.”). “‘The doctrine has been applied in several
diverse contexts to preclude actions to recover payments that parties paid
voluntarily, with full knowledge of the material facts, and absent fraud or
wrongful conduct inducing payment.’”
¶7 Two key reasons support Wisconsin’s adoption of the voluntary
payment doctrine: (1) it “allows
entities that receive payment for services to rely upon these funds and to use
them unfettered in future activities”; and (2) it “operates as a means to
settle disputes without litigation by requiring the party contesting the
payment to notify the payee of its concerns.”
Putnam, 255
¶8 MBS argues that the trial court erred when it applied the voluntary payment doctrine to dismiss all of its damages claims. First, MBS relies on the principle that the objective of statutory interpretation is to discern the intent of the legislature and advance the legislative purpose, see Estate of Capistrant v. Froedtert Mem’l Lutheran Hosp., 2003 WI App 213, ¶5, 267 Wis. 2d 455, 671 N.W.2d 400, which MBS asserts was to prohibit cramming, see Wis. Stat. § 100.207(3), and make it unlawful to include “false, misleading or deceptive” statements or representations in telephone bills, see § 100.207(2). MBS contends that applying the voluntary payment doctrine in this context would enable Wisconsin Bell and ILD to circumvent liability for conduct that the legislature sought to prohibit. It writes:
Given the deceptive nature of the illegal billing schemes alleged here, it would be contrary to the express purpose of Wis. Stat. § 100.207 to allow [Wisconsin Bell and ILD] to engage in the very conduct that the legislature prohibited, only to avoid statutory liability for damages because their deceptive conduct has had the desired effect—namely, to cause customers unknowingly to pay unauthorized charges.
¶9 We note, however, that “[t]he [voluntary payment] doctrine
presupposes mistaken or wrongful conduct by the payee.” Putnam, 255
¶10 Next, MBS submits that allowing Wisconsin Bell and ILD to avoid paying damages based on the voluntary payment doctrine would render the damages provision found at Wis. Stat. § 100.207(6)(a)1. meaningless insofar as “[o]nly those customers who were not deceived by the cramming (i.e., those who noticed the deceptive charges before paying their telephone bills, and either objected or refused to pay those charges) could bring claims for damages.”[7] (Emphasis in brief.) MBS continues: “Indeed, if a customer noticed the charges and refused payment, what claim for damages would still exist?”
¶11 Contrary to MBS’s assertions, the voluntary payment doctrine
does not nullify Wis. Stat. § 100.207(6)(a)1. If a timely objection is made to an
unauthorized charge and no relief ensues, the customer may pursue a claim for
damages. Requiring that the customer
object to unauthorized charges in order to pursue a claim was deemed acceptable
in Putnam
and Butcher
in the context of late-payment fees on cable television bills and the
collection of sales tax on services set forth in telephone bills, respectively. See Putnam, 255
¶12 As its third argument, MBS relies on the principle that where a
statute and common law conflict, the language of the statute controls. See Kensington Dev. Corp. v.
¶13 The plaintiffs in Butcher, like MBS, argued that the
statute at issue did not contain a protest requirement and based on the absence
of such a requirement, asserted that the legislature did not intend the
voluntary payment doctrine to apply. See id.,
298
Wisconsin Stat. § 77.59(4)(a)
authorizes a taxpayer to file with DOR a claim for a refund for taxes paid to
the seller if the claim is for at least fifty dollars. Plaintiffs point out that this section does
not include a protest requirement and they argue that this shows the
legislature intended that the voluntary payment doctrine not apply to actions
such as this to recover from the seller.
We do not agree. Section
77.59(4)(a) expresses the legislature’s intent that a taxpayer need not protest
the tax when paying it in order to recover a refund under the procedure established
in § 77.59(4)(a). The statute expresses no intent and no policy judgment on whether the
common law voluntary payment doctrine should apply in a court action outside
the statutory scheme.
Butcher,
298
¶14 MBS further contends that the trial court erred when it held that the legislature needed to abrogate the voluntary payment doctrine when it enacted the statutes at issue. This argument also fails.
¶15 In this regard, we, like the trial court, are persuaded by Fuchsgruber
v. Custom Accessories, Inc., 2001 WI 81, 244
It is axiomatic that a statute does not abrogate a rule of common law unless the abrogation is clearly expressed and leaves no doubt of the legislature’s intent. Statutes in derogation of the common law are strictly construed. A statute does not change the common law unless the legislative purpose to do so is clearly expressed in the language of the statute. To accomplish a change in the common law, the language of the statute must be clear, unambiguous, and peremptory.
¶16 MBS argues that a holding that the voluntary payment doctrine
applies to preclude the claims at issue here would amount to a radical change
in
¶17 Having determined that the voluntary payment doctrine applies,
we must now consider whether any of the exceptions—i.e., fraud, duress, and
mistake of fact—come into play. See Butcher, 298
¶18 In Meyer v. The Laser Vision Institute, 2006 WI App 70, 290 Wis. 2d
764, 714 N.W.2d 223, the court explained that the question of whether a
document is deceptive or misleading “need only be sent to the trier of fact
where there are facts alleged or reasonable inferences that can be drawn from
those facts that could form the basis for a … claim.”
¶19 To support a fraud claim, MBS needed to allege the following: (1) Wisconsin Bell and ILD made a factual representation; (2) which was untrue; (3) Wisconsin Bell and ILD either made the representation knowing it was untrue or made it recklessly without caring whether it was true or false; (4) Wisconsin Bell and ILD made the representation with intent to defraud and to induce another to act upon it; and (5) MBS believed the statement to be true and relied on it to its detriment. See Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, ¶12, 283 Wis. 2d 555, 699 N.W.2d 205. As stated by the trial court, MBS’s complaint implied that MBS “unwittingly relied on a statement implicit in the bills themselves, that is, that the charges had somehow been authorized by [MBS].” The court explained: “If [MBS was] unable to identify the unauthorized charges because of some deceptive manner in which they were included in the bills, and therefore they did not take notice and did not, in fact, notice the unauthorized charges, the plaintiffs may have justifiably relied on the bills in being accurate in making their payments.”
¶20 Having independently reviewed MBS’s claims and the charges involved, we agree with the trial court’s assessment that the clarity of the statements on the bills calls into question MBS’s ability to form the basis for a fraud claim.[10] As explained by the trial court:
If [customers] don’t read [their bills], I think they’re out of luck. It’s not that these bills are impossible to read. I don’t think that they’re presented to people who are incapable of reading, and therefore, I think they need to be read.
If they were printed in such tiny font that they could not physically be read by the naked eye, that might be the problem, but even with my poor eyesight, I could read the bills….
….
… The only question is if you read them, can you understand whether or not you authorized those charges? Given the rather specific and explicit nature of the charge, I do not believe a reasonable trier of fact could infer that a reasonable customer would have been deceived into believing that he or she or it had somehow authorized those services.
To the contrary the charges were stated with sufficient particularity that a reasonable customer would be startled to find such a charge on the bill.
The trial court
further noted that “[customers] would know whether they had ordered a listing
in [a national] directory or whether they had ordered internet services or
ordered a calling plan for calling in a Spanish speaking country….” We see no error in the trial court’s
conclusion. See Kaloti Enters., Inc.,
283
¶21 Consequently, we conclude that MBS’s claims were correctly
dismissed by the trial court. Because our
decision affirming the trial court’s dismissal is dispositive, we need not
address the issues ILD raises in its cross-appeal.[11] See State v. Blalock, 150
By the Court.—Orders affirmed.
Not recommended for publication in the official reports.
[1] The underlying lawsuit in this matter was filed in 2006. Because the current version of the statutory sections cited in this opinion are the same in all relevant respects, all references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[2] While this appeal was pending, two of the alleged service providers, AmericaTel Corp. and Local Biz, were dismissed.
[3] The trial court dismissed MBS’s claims under Wis. Stat. § 100.20(5) and for unjust enrichment. MBS does not challenge the dismissal of these claims.
[4] MBS does not dispute that it paid the allegedly unauthorized charges for fourteen months without protest.
[5] The
parties agreed that the telephone bills could be considered on the basis that
they were specifically referenced and thereby incorporated into the
complaint. The record is not clear
regarding whether the motions to dismiss were converted to motions for summary
judgment. Notwithstanding, the parties
appear to agree that we should treat the motions as motions to dismiss. For purposes of this appeal, we need not resolve
whether the trial court could have considered the telephone bills referenced in
the complaint without converting the motion to dismiss into one for summary
judgment. See Gross v. Hoffman,
227
[6] MBS stipulated to the dismissal of its claims for declaratory and injunctive relief against Wisconsin Bell and ILD, leaving only its claims seeking monetary damages.
[7]
[8] Justice Bablitch wrote:
Why should a customer protest the payment of a fee if it has no reason at the time of payment to believe that it is unreasonable and/or unconscionable? If that is the law, and the majority says it is, then all payees of all late fees pursuant to prior agreements regarding late fee payments, whether to banks, credit cards, bills for services, and the like, must automatically protest at the time of payment or lose the right to contest it. That is, of course, absurd. Yet it is the requirement set out by the majority.
Putnam v. Time Warner Cable of Se. Wis., 2002 WI 108, ¶61, 255 Wis. 2d 447, 649 N.W.2d 626 (Bablitch, J. concurring in part, dissenting in part).
[9] The trial court found that certain U.S. Connect “MONTHLY SVCS” charges were “vague enough and ambiguous enough … that even a reasonably attentive person looking at this might not understand exactly whether this was authorized or not,” such that the fraud exception to the voluntary payment doctrine may have applied. Those charges are not at issue on appeal. MBS’s claims relate only to ILD and Local Biz charges, which, the trial court found, could not form the basis for a fraud claim.
[10] A sample bill reflecting the type of charge at issue is attached to this opinion.
[11] Likewise,
because we affirm the dismissal of MBS’s claims based on the voluntary payment
doctrine, we need not address the alternative grounds for affirmance argued by
ILD and Wisconsin Bell. See Gross,
227