Is My Automatically Renewing Contract Enforceable?

The Wisconsin legislature, effective May 1, 2011, has implemented strict notice requirements for any automatically renewing “Business Contracts” entered into after May 1, 2011.

The rule is codified through Wis. Stat. 134.49, and sets forth that any automatically renewing contract that does not make the following disclosures, will be held to be unenforceable as to the renewing term.

1. A statement that the contract will be renewed or extended unless the customer declines renewal or extension.
2. A statement indicating the duration of the additional contract period that would result from an automatic renewal or extension period.
3. A statement indicating whether an increase in charges to the customer will apply upon an automatic renewal or extension.
4. A description of action the customer must take to decline renewal or extension.
5. The date of the deadline for the customer to decline renewal or extension.

The statute also imposes new obligations on contracts in existence prior to May 1, 2011 that have an initial term of more than one year. If your business utilizes, or intends to utilize automatically renewing contracts, you should contact a Wisconsin Lawyer to ensure that they are in compliance with Wis. Stat. 134.49 and that they will be enforceable.

There are two purposes for a contract: 1) is to make sure the parties understand the deal, and 2) make sure one party or the other can enforce the deal if need be. If you don’t have a well written contract, you may not accomplish either of those goals.

What lien rights do I have as a commercial sub-contractor?

The short answer is potentially a fair amount of rights, though as with many things it depends. In general residential work, the main mechanism for enforcing payment for both general contractors and sub-contractors is through the use of construction liens. This may not always be the case in commercial projects as it makes a difference as to what type of project it is to determine what lien rights, if any, exist for sub-contractors and what notice is required to be given.

According to the Wisconsin Courts,

A subcontractor is a person whose relation to the prime contractor is substantially the same for a part of the work as the prime contractor’s is to the owner for the entire job.

Farmer v. St. Croix Power Co. 117Wis. 76, 93 N.W. 830 (1903).

 The Wisconsin Statutes, 779.01(3), sets out the extent of who has lien rights:

Any person who performs, furnishes, or procures any work, labor, service, materials, plans, or specifications, used or consumed for the improvement of land, and who complies with s. 779.02 shall have a lien therefore on all interests in the land belonging to its owners.

It is noteworthy that the statute defines it as “any person,” not limiting those rights just to General Contractors. Therefore, within the scope of the rest of the Wisconsin statutes, sub-contractors may have certain lien rights.

What those lien rights are and what notice requirements there are depends on the type of project. A “public works” project, defined as any improvement or work undertaken by a unit of government, will potentially have different lien rights and notice requirements  for sub-contractors than a “large private” project (which may have notice requirements as short as 5 months from the date the work is performed). “Privately bonded” cases may eliminate all lien rights and instead require any claims to be made pursuant to the bonding contract.

In any case, if you are a sub-contractor and you believe you might have lien rights on a project, it is important to contact an attorney right away as the specifics of your project will bear on whether you have lien rights and what you have to do to preserve them.

 

 

 

What happens if I get sued? – Part 5 Trial

After all of the discovery, motions, and attempts at settlement are completed it is time to go to trial, where the case will be decided.

I have seen numerous reports making varied estimate, but the general consensus seems to be that only 2-5% of cases actually go to trial, the other 95-98% are resolved in some fashion before trial.

However, for those cases that get there, the trial is the opportunity for the “facts” of the case to be determined. Either the Judge or a jury will be the fact finder, but in either case, both parties, through their attorneys will present evidence to the fact finder. This will be in the form of testimony and exhibits. This part of the litigation process is what everyone imagines court to be like, jurors sitting in the jury box, witnesses in the witness stand, and the attorneys questioning and cross-examining each witness.

After all parties have presented their evidence the fact finder will render their findings on a number of issues that have been submitted by the parties prior to the trial. Thus, the fact finder does not come out and declare a winner and loser, but rather indicates how they have decided the specific jury questions that have been submitted for them to answer.

Depending on the outcome of the trial, and the in-trial rulings of the Judge during the case, each party has to decide whether or not it wants to appeal the outcome.

Part 4 of 5, “Mediation”

What happens if I get sued? – Part 4 Mediation

While mediation is voluntary, in most counties in Wisconsin, including Milwaukee and Waukesha County, the Court will order the parties to attend mediation. This does not mean that the parties must settle at mediation, only that they will attend.

What Happens at Mediation?

Mediation usually takes place after most of the discovery has been completed in the case, but before final pre-trial hearings or preparations have been done. The idea is that when you go to mediation, both parties know about the other parties case, but still have not made the final investment for their attorneys to get ready for trial.

Each party to the litigation, along with their attorneys, and the agreed upon mediator meet at a location they all agree on (usually one of the attorney’s offices or the mediators office) to discuss settling their case.

Each party usually submits a mediation report to the mediator, setting out the key high points of their case and the low points of the opposing party’s case. The mediator is not there to render a decision, but rather to encourage the parties to settle their dispute. This does not mean that the mediator will not express his/her opinion, or indicate how s/he thinks s/he would have decided the case. Most mediators are lawyers, and many are ex-judges.

By the end of the mediation session, the parties have either reached a voluntary agreement to settle the case, or they continue with the litigation and most likely begin preparing for trial. There are varying statistics, but various reports indicate that mediation is successful more often than not. From an attorneys standpoint mediation is always worthwhile, it either results in a settlement of the case or at the very least you get to learn something about the other side, and their position in the case.

Part 3 of 5, “Motions”

What happens if I get sued? -Part 3 Motions

While there are a number of motions that may be filed during and after the discovery process, such as motions to compel discovery, or motions for protective orders, what I want to talk about are motions which directly effect the outcome of the case. So even though the title of this section is titled “Motions” it should probably be titled “Dispositive Motions”.

The most common question that I am asked by my clients during litigation is a variation on “can’t the judge just decide this case?” This is especially true when one side feels the other side’s case is completely without merit (as opposed to those cases where there is merely a dispute about how much one party owes another, not “if” one party owes something to the other.) Like many things in the law, the answer is that it depends; there are times when the Judge may make dispositive decisions regarding the case, and times when he/she may not. (This explanation is regarding Judges making decision prior to trial in the case of a Court trial case)

The rule of thumb is that for any dispositive motions, the Judge cannot decide issues of fact, but rather can decide issues of law. Therefore, the only time that dispositive motions, such as a motion for summary judgment is appropriate, is when your attorney believes that through the pleadings or discovery process they can show to the Judge that there are no material issues of fact relating to the claim at issue.

A simple example of a claim for summary judgment would be in an instance where there are two claims and three defendants. The claims are Breach of Contract and Intentional Misrepresentation/Fraud against all three defendants. The Defendants are ABC, LLC, Mr. X and Mr. Y both co-owners of the company. A claim of Fraud can be pled directly against an individual, because it is an intentional tort, and therefore Mr. X and Mr. Y cannot hide behind the liability protection of the LLC. However, through the Discovery process it turns out that the Plaintiff only alleges that there was conduct on the part of Mr. X that would constitute Fraud. This may mean that there are no facts alleged against Mr. Y to meet the elements of the claim for Fraud, and therefore it may be appropriate to bring a motion for Summary Judgment in which the Judge could rule that the Fraud claim against Mr. Y is dismissed.

So, while the Judge may be able to address the claims alleged against Mr. Y, he/she is not allowed to determine the sufficiency or the validity of the claims against Mr. X. If the plaintiff through Discovery has alleged that Mr. X has made specific fraudulent representations, it will be up to the trier of fact to determine at trial whether or not those allegations are true, not the Judge at Summary Judgment.

For obvious reasons motions for Summary Judgment can be a powerful tool. The more you are able to narrow your opponents claims or get a decision on your own claims, the more leverage you may have to try and settle the case in mediation

Part 2 of 5, “Discovery”

Part 4 of 5, “Mediation”

What happens if I get sued? – Part 2- Discovery

After the initial pleadings are entered, there will generally be a scheduling conference between the Attorneys and the Judge to set the schedule for the case. Part of that schedule will include a date in which all discovery must be completed.

Litigation has been described as playing poker with everyone’s cards face up. While this is a decent analogy, I would say its more appropriate to say you get to see the other person’s cards only if you ask the right questions. Discovery is the opportunity for each party to ask questions and demand documents from the other side. In this way it is up to the attorneys to ensure that they ask the right questions and in the right way to ensure that they get everything they want. Conversely, it is the responding attorney’s job to comply with the requests in a way that reveals what is required, but does not give away more than what was requested.

This creates a back and forth situation where each attorney is trying to get as much information from the other side as possible while at the same time trying their best not to reveal more than the other side actually asked for.

The Discovery process includes interrogatories, requests to admit, requests for production of documents, depositions, and various other means of finding out information. While all of these methods of obtaining information are used by attorneys with varying frequency, if you, or your business, is a party to a litigation, at some point you will almost certainly be deposed.

In a deposition the other party’s attorney gets to ask you whatever questions they like (within reason, but they are given a lot of leeway) about yourself, your business, and the events surrounding the dispute. Unlike in trial where there are rules regarding hearsay or relevance of questions, in a deposition, even if your attorney objects to the question, you generally are still required to answer. You are put under oath and there is a court reporter there to take down in writing everything that is said.

After depositions there may be additional interrogatories (written questions) or document production requests, but at some point each party will be satisfied that they will have obtained all of the information they can reasonably get about the case. As the discovery process winds down either party may choose to amend their pleadings and add allegations, or file a cross or counterclaim, but once the pleadings and discovery process winds up, it is time for any motions to be filed.

Part 1 of 5, “Pleadings”

Part 3 of 5, “Motions”