Title: Office of Lawyer Regulation v. John C. Widule

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2003 WI 34 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
01-2157-D 
 
 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against John C. Widule, Attorney at Law: 
 
Office of Lawyer Regulation,  
 
Complainant-Respondent, 
 
v. 
John C. Widule,  
 
Respondent-Appellant. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST WIDULE 
 
 
OPINION FILED: 
May 8, 2003   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 6, 2003   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the respondent-appellant there were briefs by John C. 
Widule, Elm Grove, and oral argument by John C. Widule. 
 
For the complainant-respondent there was a brief by Robert 
G. Krohn and Roethe, Krohn, Pope, McCarthy & Haas, LLP, 
Edgerton, and oral argument by Robert G. Krohn. 
 
 
2003 WI 34 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  01-2157-D  
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against John C. Widule, Attorney at Law: 
 
Office of Lawyer Regulation,  
 
          Complainant-Respondent, 
 
     v. 
 
John C. Widule,  
 
          Respondent-Appellant. 
 
FILED 
 
MAY 8, 2003 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.  Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.   Attorney John C. Widule has appealed 
from the referee's findings of fact and conclusions of law 
entered after a public hearing following the filing of the 
Office of Lawyer Regulation's (OLR) complaint on August 10, 
No. 
01-2157-D   
 
2 
 
2001, 
alleging 
that 
Widule 
had 
committed 
four 
acts 
of 
professional misconduct:1 
Count 1:  Widule had knowingly advanced a factual 
position without a basis for doing so that was 
not frivolous in violation of SCR 20:3.1(a)(2).2 
Count 2: Widule took action on behalf of a client 
when it was obvious that such action would serve 
merely to harass or maliciously injure another, 
in violation of SCR 20:3.1(a)(3).3 
Count 3: Widule had a conflict of interest in 
simultaneously 
representing 
two 
clients 
and 
himself in violation of SCR 20:1.7(b).4 
                                                 
1 Effective 
October 
1, 
2000, 
Wisconsin's 
attorney 
disciplinary process was substantially restructured.  The name 
of the body responsible for investigating and prosecuting cases 
involving attorney misconduct was changed from the Board of 
Attorneys Professional Responsibility to the Office of Lawyer 
Regulation (OLR) and the supreme court rules applicable to the 
lawyer regulation system were also revised in part.  Although 
the conduct underlying this case arose prior to October 1, 2000, 
the complainant in this case will be referred to as the OLR but 
all references to supreme court rules will be to those in effect 
prior to October 1, 2000, unless otherwise noted in the opinion.  
2 SCR 20:3.1(a)(2)provides: "(a) In representing a client, a 
lawyer shall not:  (2) knowingly advance a factual position 
unless there is a basis for doing so that is not frivolous."  
3 SCR 20:3.1(a)(3) provides:  
(a) In representing a client, a lawyer shall not:  
(3) file a suit, assert a position, conduct a defense, 
delay a trial or take other action on behalf of the 
client when the lawyer knows or when it is obvious 
that such an action would serve merely to harass or 
maliciously injure another. 
4 SCR 20:1.7(b) provides:  
(b) A lawyer shall not represent a client if the 
representation 
of 
that 
client may 
be 
materially 
limited by the lawyer's responsibilities to another 
No. 
01-2157-D   
 
3 
 
Count 
4: Widule 
failed 
to 
provide 
competent 
representation in violation of SCR 20:1.1,5 by 
failing to research issues and to thoroughly 
investigate the documentary and factual premises 
of the lawsuit he had commenced. 
¶2 
The referee appointed to hear this matter, Attorney 
Charles J. Herro, found that Widule had committed the misconduct 
alleged in Counts 1, 3 and 4——i.e., that Widule had pursued a 
frivolous action, had a conflict of interest, and had failed to 
provide 
competent 
representation. 
 
The 
referee, 
however, 
absolved Widule of having acted maliciously.  Referee Herro 
recommended that Widule, who was admitted to practice law in 
this state in 1982 and who has never before been the subject of 
a disciplinary proceeding, be suspended from the practice of law 
for a period of three months.  
¶3 
On this appeal Widule challenges each of the referee's 
findings and conclusions of misconduct; he also appeals from the 
referee's recommendation that his license to practice law be 
suspended for a period of three months.  In essence, Widule 
maintains that there is no clear and satisfactory evidence to 
                                                                                                                                                             
client or to a third person, or by the lawyer's own 
interests, unless:  
(1) the lawyer reasonably believes the representation 
will not be adversely affected; and 
(2) the 
client 
consents 
in 
writing 
after 
consultation. . . . " 
5 SCR 20:1.1 provides: "Competence.  A lawyer shall provide 
competent representation to a client.  Competent representation 
requires 
the 
legal 
knowledge, 
skill, 
thoroughness 
and 
preparation reasonably necessary for the representation."  
No. 
01-2157-D   
 
4 
 
support the referee's conclusion that Widule had violated the 
three supreme court rules as alleged. 
¶4 
We determine that the referee's findings of fact and 
conclusions of law are supported by the satisfactory and 
convincing evidence presented at the hearing held in this 
disciplinary proceeding.  We further determine that Widule's 
misconduct warrants a suspension of his license to practice law 
in this state for six months; in addition, we direct, as the 
referee recommended, that Widule pay to the OLR all the costs 
connected with this disciplinary proceeding and appeal.  
¶5 
The events giving rise to these misconduct counts 
against Widule stem from his representation of Tim Ormson, d/b/a 
Ormson Financial Services (OFS).  In December 1992 Northern 
Plastics Inc. was in default on obligations it owed to the Royal 
Bank of Elroy which held a general business security agreement 
on the assets and a first mortgage on the company's real 
property.  The president of Northern Plastics, Larry Ormson, Tim 
Ormson's brother, negotiated a sale of the assets of the company 
to Royal Plastics, Inc., whose director and major shareholder 
was David Grams.  The sale proposal contemplated that Northern 
Plastics would voluntarily surrender its assets to Royal Bank in 
lieu of foreclosure, and that those assets would then be 
distributed at the closing to individuals and entities who 
claimed security interests in those assets.  
¶6 
Tim Ormson, who claimed to hold a security interest in 
the assets of Northern Plastics, was given notice of his 
brother's company's planned voluntary surrender of assets.  Dona 
No. 
01-2157-D   
 
5 
 
Merg, the attorney representing the bank, sent notice of the 
closing to Tim Ormson including a termination statement on which 
Tim Ormson was to indicate the amount of money he would accept 
in settlement of OFS's interest in Northern Plastics' assets 
which were to be distributed at the scheduled closing on 
December 18, 1992.  Tim Ormson did not attend that closing at 
which the assets of the plastics company were settled and 
allocated; instead, Tim's brother, Larry Ormson, appeared on 
Tim's behalf asserting that he had Tim's authority to do so.  
Larry Ormson brought with him the termination statement Tim had 
signed in blank; that termination statement identified no dollar 
amount that OFS would accept in settlement.  At that closing 
Larry Ormson agreed to accept on behalf of his brother Tim and 
OFS, the amount of $44,000; that amount was then inserted in the 
space that had been left blank on the settlement form.   A check 
in that amount was subsequently mailed to Tim Ormson and he 
later cashed that check on behalf of OFS. 
¶7 
On December 15, 1994, Widule filed a complaint in the 
Dane County Circuit Court on behalf of his client, Tim Ormson, 
against Attorney Dona Merg and the Royal Bank of Elroy.  That 
complaint asserted that Tim Ormson held a valid security 
interest in the assets of Northern Plastics and that the 
defendants 
had 
unlawfully 
defeated 
that 
interest 
at 
the 
settlement closing held on December 18, 1992.  The complaint 
prepared by Widule asserted four causes of action on behalf of 
his 
client, 
Tim 
Ormson, 
including: 
unjust 
enrichment, 
conversion, breach of fiduciary duty by trustee, and uniform 
No. 
01-2157-D   
 
6 
 
commercial code violations.  Specifically, the complaint alleged 
that Tim Ormson, d/b/a OFS, had a valid security interest in the 
assets of Northern Plastics and that Tim Ormson had executed a 
satisfaction of his interest in blank in order to allow the 
closing to proceed.  The complaint further alleged that Dona 
Merg, as the attorney for Royal Bank, and the bank, had caused 
Tim Ormson to terminate his security interest and satisfy a 
mortgage held on the assets and real property of Northern 
Plastics for an amount substantially less than Tim Ormson's 
claimed value of that security interest.  According to the 
complaint the actual value of Tim Ormson's interest in the 
assets of Northern Plastics ranged from $185,000 to $245,000; 
the complaint further alleged that Dona Merg had agreed to hold 
in trust, for Tim Ormson, the settlement satisfaction.  The 
complaint also alleged that Dona Merg had improperly allocated 
from the plastics company assets only $44,000 to OFS and had 
assigned to Tim Ormson a second mortgage on Larry Ormson's home.  
Although this complaint was premised on the existence of a 
promissory note and security agreement, no promissory note or 
any other documentation were attached to the complaint to 
support Tim Ormson's claim that he had a valid security interest 
in the assets of Northern Plastics in excess of the $44,000 he 
had already been paid.  
¶8 
On January 23, 1995, Merg and the bank served 
Interrogatories 
asking 
Widule 
and 
Tim 
Ormson 
to 
produce 
documents or to identify any verbal communications to support 
the claim that Tim Ormson, d/b/a OFS,  was entitled to at least 
No. 
01-2157-D   
 
7 
 
a $185,000 settlement payout from Northern Plastics' assets.  
The defendants also sought documents that would establish any 
indebtedness by Northern Plastics, Inc., to Tim Ormson or OFS 
including such things as security agreements, original notes, 
etc.  Widule, on behalf of Tim Ormson, declined to produce any 
documents, asserting that many of the requested documents were 
already in the possession of Merg or the bank.  
¶9 
The 
defendants 
filed 
a 
motion 
pursuant 
to 
Wis. Stat. § 804.01(3)(a)(2) 
(1995-96)6 
seeking 
a 
protective 
order precluding Widule and Tim Ormson from initiating any 
discovery until Tim produced written evidence confirming that he 
held any secured interest in the assets of Northern Plastics, 
Inc., which had not been paid or satisfied as a result of the 
closing on the voluntary transfer of assets held on December 18, 
1992.  At the March 9, 1995, hearing on that motion for a 
protective order, Widule, on behalf of Tim Ormson, submitted an 
affidavit from one Paul Martin; in that affidavit, Martin 
averred that Dona Merg had telephoned him and asked him to 
retrieve OFS's file from his employer, Royal Plastics, the 
entity that had purchased Northern Plastics, Inc.'s assets. 
According to Martin's affidavit, Merg asked him to forward that 
file to her, and he did so.  Based on that Widule argued that 
Tim Ormson could not produce evidence of any promissory notes or 
securities agreements because they were in that OFS file that 
Merg had already obtained from Martin.  
                                                 
6 All subsequent references to the Wisconsin Statutes are to 
the 1995-96 version unless otherwise indicated.  
No. 
01-2157-D   
 
8 
 
¶10 Martin's affidavit was countered by an affidavit from 
Dona Merg in which she averred that she had never seen or 
possessed any promissory notes to OFS or security agreements 
involving OFS. 
¶11 At the conclusion of the March 9, 1995, hearing the 
Dane County Circuit Court granted the defendants' motion for a 
protective order precluding Tim Ormson from initiating or 
conducting any discovery until he produced proof satisfactory to 
the court of the existence of a valid and properly perfected 
security interest in favor of OFS in Northern Plastics assets 
that would support his claim that OFS was entitled to more than 
the $44,000 OFS had already received following the December 18, 
1992, closing.  
¶12 By affidavit dated March 17, 1995, submitted in 
support of a motion asking the circuit court to reconsider its 
March 9, 1995, protective order, Tim Ormson averred that shortly 
after the circuit court hearing he had found the original 
business note and security agreement with Northern Plastics 
which established the value of his security interest greatly in 
excess of the $44,000 payout he had received.  According to Tim 
Ormson those documents had been located behind a file cabinet in 
his home immediately after the March 9, 1995, circuit court 
hearing and Tim Ormson attached those documents to his March 17, 
1995, affidavit and asserted that they established that OFS had 
a $240,000 security interest in Northern Plastics' assets.  
¶13 Tim Ormson also attached to that same affidavit a 
letter dated December 7, 1992, that his brother Larry Ormson had 
No. 
01-2157-D   
 
9 
 
purportedly received from David Grams.  In that letter David 
Grams wrote that he had reviewed the business notes and 
financing statements of Northern Plastics, and had discussed the 
matter with Attorney Merg; Grams wrote that Merg had offered to 
pay OFS at the upcoming closing a total of $185,000 which 
represented 75 percent of the plastics company's indebtedness to 
OFS.  Grams' letter, which was signed "Dave," asserted that the 
$185,000 
settlement 
offer 
was 
"very 
favorable 
for 
Tim."  
According to Widule he viewed Grams' letter as an outsider's 
confirmation that Dona Merg, in fact, had verbally acknowledged 
that Tim Ormson was entitled to a settlement amount greatly in 
excess of the $44,000 actually allocated at the closing.   
¶14 As noted, Grams' December 7, 1992, letter was appended 
to Tim Ormson's March 17, 1995, affidavit.  However, by 
affidavit dated April 12, 1995, David Grams denied that he had 
written or caused the December 7, 1992, letter to be authored; 
Grams asserted that he had not executed or signed the original 
of that document, and that the signature on that letter was not 
a true copy of his signature.  
¶15 Despite Grams' affidavit disavowing that December 7, 
1992, letter, 23 days later, on May 5, 1995, Widule, on behalf 
of Tim Ormson, filed an amended complaint against Dona Merg and 
the bank asserting claims of negligent and/or intentional breach 
of trust; negligent and/or intentional breach of fiduciary duty; 
misappropriation 
and 
conversion 
of 
properties; 
unjust 
enrichment; negligence and breach of fiduciary duty by bank; 
fraud; violation of 12 U.S.C. 1972; failure to comply with 
No. 
01-2157-D   
 
10 
 
Wis. Stat. §§ 409.504 and 409.507; breach of good faith under 
Wis. Stat. §§ 401.201(19) and 401.203; and, breach of contract.  
Attached to that amended complaint was a copy of that December 
7, 1992, letter purportedly written by Grams.  
¶16 Subsequently, at a circuit court hearing on June 26, 
1995, Widule withdrew the Grams' letter.  He later explained 
that until that time he thought that perhaps the Grams' letter 
had been signed by Grams' attorney on Grams' behalf.   
¶17 Subsequently, at a November 1, 1997, deposition, Paul 
Martin admitted that his earlier statement that he had retrieved 
the OFS file from Royal Plastics and sent it to Dona Merg as she 
had requested, was false; according to Martin, Larry Ormson had 
paid him $500 to make that false claim implicating Merg and 
asserting that she already had the documents supporting Tim 
Ormson's claim for a share of Northern Plastics in excess of 
$44,000. 
¶18 On March 4, 1998, the Dane County Circuit Court 
dismissed Tim Ormson's amended complaint against Merg and the 
bank with prejudice.  The defendants' request for sanctions 
pursuant to Wis. Stat. § 814.025 against Widule and Tim Ormson 
for bringing a frivolous action was transferred to Dane County 
Circuit Court Judge Richard Callaway for resolution.  After 
several days of hearings Judge Callaway on October 28, 1998, 
granted the defendants' motion for sanctions and entered 
judgment in favor of Dona Merg and Royal Bank of Elroy against 
John Widule personally in the amount of $102,373.75.   
No. 
01-2157-D   
 
11 
 
¶19 That sanction was imposed on Judge Callaway's specific 
findings that Widule knew that his client, Tim Ormson, had 
previously accepted the $44,000 payment in satisfaction of OFS's 
claimed interest in Northern Plastics' business assets, that Tim 
Ormson had not objected to that amount, and in fact had cashed 
the check.  In addition, the circuit court determined that 
Widule should have known that Tim Ormson had no promissory note 
or other documentation to support the existence of any larger 
security interest in Northern Plastics, and that Tim Ormson and 
Larry Ormson had colluded to produce fraudulent documents which 
Widule had then introduced in support of Tim Ormson's lawsuit 
against Merg and the bank.  
¶20 Judge Callaway further determined that Widule had 
acted with malicious intent based on the fact that nearly two 
years had passed without Tim Ormson objecting to the settlement 
payout he had received from the Northern Plastics' voluntary 
surrender of assets.  Then Widule filed Tim Ormson's lawsuit 
against Dona Merg and the bank the day after the bank and Merg 
had rebuffed Larry Ormson's attempt to repurchase the assets of 
Royal Plastics (Northern Plastics' successor) which was then in 
bankruptcy.  David Stauffacher, who was also Widule's client, 
and Larry Ormson had submitted various offers to purchase Royal 
Plastics' assets out of bankruptcy but their efforts were 
unsuccessful because the bank declined to provide any financing 
to Larry Ormson.   
¶21 Judge Callaway also determined that Merg's testimony 
had been credible, including her assertion that during the 
No. 
01-2157-D   
 
12 
 
pendency 
of 
the 
Royal 
Plastics' 
bankruptcy, 
Widule 
had 
threatened to claim that Merg had known at the time of the 
Northern Plastics' settlement closing that Larry Ormson had not 
been authorized to act on Tim Ormson's behalf at that closing.   
¶22 Widule appealed.  On April 12, 2000, the court of 
appeals, 
in 
Case 
No. 
98-3313, 
affirmed 
Judge 
Callaway's 
imposition of sanctions against Widule finding that the record 
supported the finding that Widule had acted maliciously to 
harass Merg after Stauffacher's attempts to purchase Royal 
Plastics' assets failed.  In that appeal, the court of appeals 
wrote: 
The trial court's finding that Widule had threatened 
Merg during the Royal Plastics' proceeding is not 
clearly erroneous, and supports the trial court's 
inference 
of 
malicious 
intent. 
 
Given 
Widule's 
improper motive for initiating the suit, it was not 
clearly erroneous for the trial court to also have 
found that Widule failed to adequately investigate the 
existence of [Tim] Ormson's claimed security interest 
in the Northern Plastics liquidation before filing 
suit the day after the Royal Plastics' assets were 
sold, and that the fraudulent nature of the documents 
which Ormson and his brother [Larry] conveniently 
produced when faced with a motion to dismiss ought to 
have been obvious.  We agree with the trial court's 
resulting conclusion that initiating and maintaining 
suit based on a security interest which reasonable 
investigation would have revealed never existed, in 
order to harass an attorney who did not cooperate in 
another proceeding, violated Wis. Stat. § 814.025 and 
merited an award of sanctions against counsel. 
Ormson v. Merg, No. 98-3313, unpublished order (Wis. Ct. App. 
April 12, 2000).  Widule's petition for review in that case was 
subsequently denied by this court.   
No. 
01-2157-D   
 
13 
 
¶23 Judge Callaway later held a hearing on Widule's motion 
that a portion of the $102,000 in sanctions imposed against him 
should be allocated against Tim Ormson.  An amended judgment was 
then entered reducing the amount of sanctions against Widule 
personally to $77,000.   
¶24 Widule again appealed.  On April 26, 2001, the court 
of appeals, in Case No. 99-2616, affirmed that amended judgment 
against Widule.  In that second appeal the appellate court 
addressed Widule's argument that all the sanctions should be 
allocated against Tim Ormson, and wrote: 
[Widule's] argument boils down to a claim he made on 
the previous appeal: that he should not have been 
sanctioned at all because he relied in good faith upon 
his 
client's 
assertions 
and 
did 
not 
know 
that 
documents his client produced were fraudulent.  We 
have already considered this claim and decided it 
against Widule.  We concluded that sanctions were 
appropriate under Wis. Stat. § 812.025 because Widule 
initiated and maintained a suit based on a security 
interest that reasonable investigation would have 
revealed never existed, in order to harass an attorney 
who did not cooperate in another proceeding.  We will 
not revisit that ruling.  
Ormson v. Merg, No. 99-2616, unpublished slip op., ¶4 (Wis. Ct. 
App. April 26, 2001). 
¶25 On July 18, 2001, this court denied Widule's petition 
for review in Case No. 99-2616.  Thereafter, the OLR filed its 
complaint against Attorney Widule in this court alleging the 
four counts of misconduct as described above.   
¶26 On this appeal Widule asks this court to revisit the 
sanctions imposed against him by Judge Callaway; Widule urges 
this court to consider reopening the judgments against him 
No. 
01-2157-D   
 
14 
 
because he believes Judge Callaway "made serious reversible 
[error] in the underlying litigation . . . ."  We decline the 
invitation.  The determination that sanctions were appropriately 
imposed against Widule for violating Wis. Stat. § 814.025 by 
initiating and maintaining a suit based on the security interest 
which a reasonable investigation would have revealed never 
existed, in order to harass an attorney who did not cooperate in 
another proceeding, has been twice affirmed by the court of 
appeals, and this court has twice denied Widule's petitions for 
review. That determination may not now be collaterally attacked 
in this disciplinary proceeding.  In re Disciplinary Proceedings 
Against Lauer, 108 Wis. 2d 746, 754, 324 N.W.2d 432 (1982).7 
¶27 Lauer was a disciplinary proceeding against a lawyer 
charged with knowingly maintaining a frivolous action as 
proscribed by then SCR 20.36.  Former SCR 20.36 is now found, in 
substantially the same form, in SCR 20:3.1, one of the rules the 
referee found that Widule had violated in this case.  
¶28 In the Lauer case, Attorney Lauer had been ordered to 
pay costs and reasonable attorney's fees by a circuit court 
pursuant 
to Wis. Stat. § 814.025 (1979-80) 
for 
bringing a 
frivolous 
claim. 
 
The 
Board 
of 
Attorneys 
Professional 
                                                 
7 Collateral 
estoppel 
which 
is 
now 
known 
as 
issue 
preclusion, Northern States Power Co. v. Bugher, 189 Wis. 2d 
541, 549, 525 N.W.2d 723 (1995), is applicable under appropriate 
circumstances 
in 
lawyer 
disciplinary 
matters 
to 
preclude 
relitigation of issues before a referee that were previously 
resolved in court.  See In re Disciplinary Proceedings Against 
Lucareli, 2000 WI 55, 235 Wis.2d 557, 611 N.W.2d 754. 
No. 
01-2157-D   
 
15 
 
Responsibility then filed a misconduct complaint against Lauer 
asserting that he had violated SCR 20.36 because he knew, or 
should have known, that the frivolous action he had commenced in 
circuit court was without any reasonable basis in law or equity 
and could not be supported by a good faith argument for the 
extension of modification or reversal of existing law.  The 
referee appointed in Lauer recommended that a private reprimand 
be issued.  Lauer appealed to this court arguing that the 
referee had improperly concluded that Lauer had violated SCR 
20.36 solely on the basis of the previous determination by the 
circuit court that Lauer had violated the frivolous claim 
statute, § 814.025.   
¶29 The Lauer court agreed that a finding of frivolousness 
under the statute could not, per se, constitute a violation of 
the disciplinary rule.  It was pointed out that although the 
statute and the rule were similar, they were not identical, and 
the assessment of costs under the statute does not, in and of 
itself, constitute a violation of the rule of professional 
responsibility.  The Lauer court explained: 
However, it does not follow that where there is a 
violation of the statute there must be a violation of 
the disciplinary rule.  To the extent they treat the 
same activity, the statute and the rule differ 
significantly.  A violation of the statute requires 
that a party or a party's attorney knew or should have 
known that the action, special proceeding, counter-
claim, defense or cross-complaint was without any 
reasonable basis in law or equity and could not be 
supported by a good faith argument for an extension, 
modification or reversal of existing law.  A violation 
of SCR 20.36 requires that the claim or defense 
No. 
01-2157-D   
 
16 
 
unwarranted under existing law must be knowingly 
advanced. . . . 
108 Wis. 2d at 757 (emphasis in original).  
¶30 Furthermore, the Lauer court noted that under the 
frivolous claim statute, the test applied is an objective one; 
in contrast, under the disciplinary rule, the appropriate test 
is a subjective one because the referee or reviewing court in a 
disciplinary action, must determine whether an attorney has 
violated a disciplinary rule that sets forth the minimum level 
of conduct below which no lawyer can fall without being subject 
to disciplinary proceedings.  In Lauer, the court wrote: 
In making that determination in the context of SCR 
20.36(1)(b), we find it appropriate to apply the 
subjective standard, that is, whether the attorney, in 
fact, knew the claim he was advancing was unwarranted 
under existing law and could not be supported by a 
good faith argument for an extension, modification or 
reversal of existing law.  Such knowledge is an issue 
of 
fact 
which 
in 
the 
context 
of 
an 
attorney 
disciplinary proceeding, must be established by clear 
and satisfactory evidence, . . . while a finding of 
frivolousness under § 814.025, Stats., must be based 
on a preponderance of the evidence . . . . 
108 Wis. 2d at 758 (emphasis added and internal citations 
omitted).  
¶31 Thus, in the instant matter, the focus of the inquiry 
before the referee, and now before this court with respect to 
the first count of the OLR's complaint against Widule, is 
whether there was clear and satisfactory evidence that Widule 
knowingly advanced a factual position without a basis for doing 
so that was not frivolous. 
No. 
01-2157-D   
 
17 
 
¶32 In this case Referee Herro in Finding of Fact #24 
wrote: 
24.The words frivolous and malicious have been 
the subject of discussion, definition and 
interpretation 
by 
our 
courts 
but 
remain 
subjective 
and 
dependent 
upon 
factual 
circumstances.  Was the respondent [Widule] 
frivolous in pursuing the matter of Tom [sic] 
Ormson versus Merg, or was he a zealot on a 
crusade?  The Referee finds that a well-
prepared 
attorney, 
not 
clouded 
by 
his 
contingent fee arrangement with a client who 
would pervert the facts, would recognize the 
frivolity of his pursuit.  Pursuing the Tim 
Ormson matter after: 
A. 
Tim 
finding 
an 
original 
business 
document which had been lost for 18 
months, 
B. 
The Grams recantation, and 
C. 
The Martin bribery statement, 
compels the Referee to find the actions of the 
Respondent to be frivolous. 
¶33 We uphold this finding because there is clear and 
satisfactory evidence in the record to support it.  The above 
quote reveals that the referee correctly recognized that the 
test to be applied is a subjective one.  We find it significant, 
as did the referee, that Widule filed the first amended 
complaint to which he appended the December 7, 1992, letter 
purportedly written by David Grams, 23 days after Grams had 
executed an affidavit specifically denying that he had authored 
or signed that letter.  Despite that disavowal Widule filed that 
first amended complaint using the Grams' letter as documentary 
support.  We recognize that Widule subsequently withdrew that 
No. 
01-2157-D   
 
18 
 
letter; however, he did not do so until June 26, 1995, more than 
two months after Grams' recantation affidavit was filed.  We are 
troubled, 
and 
certainly 
unpersuaded, 
by Widule's specious 
argument that he did not act earlier to withdraw Grams' letter 
because until then, he thought that perhaps Grams' attorney had 
signed the December 7, 1992, letter on Grams' behalf.  That 
claim is particularly unpersuasive in view of the signature 
"Dave" on that letter.  We think a lawyer signing a letter on 
behalf of a client would be unlikely to use such a casual or 
familiar diminutive.   
¶34 We agree with the referee and find that the evidence 
in 
this 
record 
is 
sufficient 
to 
support 
a 
subjective 
determination that Widule knowingly advanced a factual position 
without a basis for doing so that was not frivolous.  The 
referee's finding in this respect is supported by clear and 
convincing evidence and we adopt it.  
¶35 Moreover, Widule's own testimony before the referee 
provides sufficient evidence that he knowingly advanced a 
factual position without a basis for doing so that was not 
frivolous.  The transcript of the hearing before the referee on 
April 10, 2002, reveals that at the time he filed the first 
amended complaint with the Grams' letter attached, Widule knew 
that Grams had not written or signed that December 7, 1992, 
letter.8  Widule admitted that despite that knowledge, he had 
                                                 
8 The transcript of the hearing before the referee reflects 
the following exchange between the OLR's attorney and Widule on 
cross-examination.  
No. 
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19 
 
attached the letter as an exhibit and foundation for the first 
amended complaint.  This testimony, together with all the other 
evidence before the referee, constitutes clear and satisfactory 
evidence that Widule knowingly advanced a factual position 
without 
a 
basis 
for 
doing 
so 
that 
was 
not 
frivolous.  
Accordingly, we find the evidence to be more than sufficient to 
support the referee's first conclusion of law that Widule 
violated SCR 20.3.1(a)(2). 
¶36 We also find that there is clear and satisfactory 
evidence to support the referee's second conclusion that Widule 
violated SCR 20:1.7(b) by representing Tim Ormson while at the 
same time being under a retainer to another client——David 
Stauffacher——to the potential detriment of Stauffacher.  As with 
respect to the first count, we find that there was clear and 
satisfactory evidence in the record to support this finding and 
conclusion.  
¶37 The evidence before the referee established that David 
Stauffacher paid Widule a monthly retainer for his services 
which included, according 
to Widule, 
"business 
consulting 
services" and "ancillary legal services."  In his deposition 
                                                                                                                                                             
Q:[By the OLR attorney]: Well, you knew Grams didn't 
write the letter? 
A: [Widule]: I knew Grams did not sign or write the 
letter.  
Q: And yet you attached the letter as an exhibit as a 
foundation for your first amended complaint? 
A: Yes. 
No. 
01-2157-D   
 
20 
 
Stauffacher testified that the monthly retainer he paid Widule 
was for "legal services."  Stauffacher had invested money in 
Northern Plastics and then later in Royal Plastics, the 
successor to Northern Plastics.  When bankruptcy proceedings 
were subsequently commenced for Royal Plastics, Stauffacher and 
the Ormsons made several offers to purchase Royal Plastics' 
assets out of bankruptcy.  Those offers were unsuccessful 
because all involved financing from the Royal Bank of Elroy and 
the bank refused to participate or finance any endeavor 
involving Larry Ormson.  
¶38 Previously, at the December 1992 closing of the 
voluntary surrender of assets by Northern Plastics, a check had 
been issued to David Stauffacher, as a secured creditor of 
Northern Plastics, in the amount of $255,205.47.  At the 
subsequent sanction hearing before Judge Callaway, Widule argued 
that Stauffacher had been paid $5000 too much at that closing 
and that Stauffacher's interest was actually junior to that of 
Widule's other client, Tim Ormson.  Widule maintained before 
Judge Callaway that the excess $5000 Stauffacher had received 
came directly from Tim Ormson's rightful share in the settlement 
payout of Northern Plastics' assets.  
¶39 In his brief in this disciplinary proceeding Widule 
does not dispute that he made this argument before Judge 
Callaway; instead, he asserts that the OLR had not "very 
vigorously pursued . . . " that point before the referee.  In 
any event, Widule maintains that there was no risk to David 
Stauffacher and David Stauffacher had, in fact, consented to 
No. 
01-2157-D   
 
21 
 
Widule making that argument; finally Widule asserts that there 
was no conflict of interest by him simultaneously representing 
Tim Ormson and David Stauffacher.   
¶40 We are not persuaded by these arguments.  Although in 
his brief Widule repeatedly asserts that Stauffacher had 
consented "in writing" to Widule making this argument before 
Judge Callaway, there is no such written statement from David 
Stauffacher in the record before this court by which Stauffacher 
allegedly waived this apparent conflict.9  We think that it is 
self-evident that when Widule argued before Judge Callaway that 
his client Stauffacher had received too much of the plastic 
company's assets and that the excess came from rightful share of 
his other client, Tim Ormson, that Widule had a conflict.  
Arguing a position favorable to one client, at the expense of 
another client, constitutes a detrimental position with respect 
to the first client.  Widule could not reasonably believe that 
his responsibilities to his client Stauffacher were not, under 
these 
circumstances, 
materially 
limited 
by 
Widule's 
responsibility to his other client, Tim Ormson.  See SCR 
20:1.7(b)(1).  We agree that there is clear and convincing 
                                                 
9 At oral argument Widule acknowledged that he had no 
written consent from Stauffacher but claimed that he did not 
need it because he never took a position that was directly 
adverse to Stauffacher's interest.  Widule maintained that there 
was 
no 
requirement 
of 
consent 
if 
there 
is 
no 
adverse 
representation; according to Widule, Stauffacher did not view 
this argument as being adverse to him.  Widule noted that 
Stauffacher did not file a grievance against him. 
No. 
01-2157-D   
 
22 
 
evidence that Widule's actions in this respect violated SCR 
20:1.7(b). 
¶41 The referee also concluded that Widule had violated 
SCR 
20:1.1 
because 
Widule 
failed 
to 
provide 
competent 
representation to his client, Tim Ormson, by failing to research 
issues 
such 
as 
"accord 
and 
satisfaction," 
"waiver," 
and 
"estoppel," before filing suit on behalf of Tim Ormson.  We need 
not engage in a detailed analysis of these legal doctrines and 
who has the burden of proof with respect to establishing them 
because even though these may be affirmative defenses, in order 
for Widule to have provided competent representation to Tim 
Ormson before commencing the underlying litigation against Dona 
Merg 
and 
the 
bank, 
Widule 
should 
have 
investigated 
the 
possibility that such defenses could defeat the action he was 
commencing.  There is nothing in this record to establish that 
Widule even considered, let alone researched or analyzed, these 
issues before commencing the lawsuit on behalf of his client Tim 
Ormson. 
¶42 In any event, it is unnecessary to now determine 
whether the evidence with respect to this third count was clear 
and convincing because we are persuaded that the evidence on the 
other two counts, as found by the referee, is overwhelming.  
¶43 We turn now to the appropriate discipline to be 
imposed against Widule for his professional misconduct.  In its 
complaint the OLR asked the referee to recommend a six-month 
suspension of Widule's license to practice law.  Instead, the 
referee recommended only a three-month suspension.  Widule does 
No. 
01-2157-D   
 
23 
 
not specifically address the appropriateness of the recommended 
sanction because he maintains that no sanction at all should be 
imposed since he believes he committed no acts of professional 
misconduct.  On the other hand, the OLR in its responsive brief 
asserts that given the serious nature of Widule's violations and 
the effects his actions had on other individuals, especially 
Dona Merg who has incurred substantial attorney fees defending 
against Ormson's lawsuit that remained pending several years 
before it was finally dismissed, an appropriate suspension 
penalty is warranted.  
¶44 Although this court takes into account the referee's 
recommendation as to appropriate discipline, we do not accord 
the referee's recommendation any conclusive or great weight.  It 
is this court's responsibility to determine the appropriate 
discipline to be imposed for an attorney's misconduct; in making 
that determination this court is free to impose discipline more 
or less severe than that recommended by the referee.  In re 
Disciplinary Proceedings Against Elliott, 133 Wis. 2d 110, 394 
N.W.2d 313 (1986).   
¶45 In this case, in light of the seriousness of Widule's 
misconduct, we believe the three-month suspension recommended by 
the referee to be too lenient; instead, given the egregiousness 
of Widule's behavior in commencing and maintaining what was 
found to be a malicious and frivolous action pursued over a 
several year period, and in light of his admitted failure to pay 
the sanctions ordered by the circuit court in the underlying 
litigation, and in light of Widule's misconduct in violation of 
No. 
01-2157-D   
 
24 
 
at least two specific rules of professional responsibility, we 
conclude a minimum six-month suspension of Widule's license to 
practice law in this state is called for.  We hope that that 
period of suspension will help Widule understand and accept the 
responsibilities of the legal profession and the ethical 
constraints placed upon its practice.10 
¶46 The 
referee's 
conclusions 
that 
Widule's 
actions 
violated provisions of the Rules of Professional Conduct for 
Attorneys were based on findings of fact that are not clearly 
erroneous.  The referee's findings of fact and conclusions of 
law regarding Widule's professional misconduct as established in 
this proceeding are proper, and we adopt them. 
¶47 Under the totality of the circumstances, we determine 
that a six-month suspension of John C. Widule's license to 
practice law is appropriate discipline for his misconduct.  That 
                                                 
10 We have not asked the parties to brief the issue of the 
appropriateness of increasing the sanction from that recommended 
by the referee.  Although we have done so in several cases, 
there are also cases in which this court has increased the 
sanction recommended by the referee without first asking the 
parties to comment either by brief or order to show cause.  See, 
e.g. In re Disciplinary Proceedings Against Frank, 206 Wis. 2d 
233, 556 N.W.2d 717 (1996); In re Disciplinary Proceedings 
Against Wentzel, 204 Wis. 2d 285, 554 N.W.2d 669 (1996); In re 
Disciplinary Proceedings Against Rutgers, 176 Wis. 2d 811, 500 
N.W.2d 673 (1993); In re Disciplinary Proceedings Against Cook, 
164 Wis. 2d 484, 476 N.W.2d 18 (1991); In re Disciplinary 
Proceedings Against Oppitz, 157 Wis. 2d 266, 459 N.W.2d 569 
(1990); and, In re Disciplinary Proceedings Against Eisenberg, 
144 Wis. 2d 284, 423 N.W.2d 867 (1988).  We have not asked for 
additional briefs in this case because the six-month suspension 
we now impose is consistent with what the OLR initially sought 
in its disciplinary complaint.   
No. 
01-2157-D   
 
25 
 
six-month suspension will require him to petition this court for 
reinstatement under SCR 22.28(3). 
¶48 IT IS ORDERED that the license of Attorney John C. 
Widule to practice law in Wisconsin is suspended for six months 
commencing June 12, 2003, as discipline for his professional 
misconduct.  
¶49 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, John C. Widule pay to the Office of Lawyer 
Regulation all the costs of this proceeding.  If the costs are 
not paid within the time specified and absent a showing to this 
court of his inability to pay the costs within that time, the 
license of John C. Widule to practice in Wisconsin shall remain 
suspended until further order of the court.  
¶50 IT IS FURTHER ORDERED that John C. Widule comply with 
the provisions of SCR 22.26 concerning the duties of a person 
whose license to practice law in Wisconsin has been suspended.  
 
No. 
01-2157-D   
 
 
 
1