Court Opinion

ID: 9738238
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:46:31.200042+00
Date Added: 2024-06-11T07:24:03.953798
License: Public Domain

*363ANNETTE KINGSLAND ZIEGLER, J.
¶ 200. (concurring in part, dissenting in part). I agree with the majority opinion that the circuit court erroneously exercised its discretion when it permitted the corporation, Evald Moulding, Inc. (Evald), to pay Jon Hauser's litigation expenses. Majority op., ¶¶ 111-113. However, I otherwise dissent from the majority opinion, which remands this case to the circuit court for the appointment of a receiver. I would instead remand the case to the circuit court for full development of the record.
¶ 201. Of great concern to me is the circuit court's appointment of a "special magistrate" who did not function purely as a referee or an expert witness and instead acted, without forewarning to the parties, as a hybrid of both. When a court appoints a referee or an expert witness, that appointee is subject to certain requirements which provide the parties with adequate safeguards and the ability to make a record. The procedures that provide these safeguards, however, are different depending on the type of appointment. In the case at issue, if the special magistrate was indeed appointed as a referee, the parties were denied those safeguards and thus were precluded from making a full record regarding the referee's actions. If, on the other hand, the special magistrate was appointed as an expert witness, the parties were denied their statutorily-imposed opportunity to depose and fully cross-examine him. A court that appoints such an individual should always ensure that the parties fully understand the role and scope of the appointee, and the appointee's involvement should never effectuate as a denial of the parties' right to fully develop the case and make a complete record. Here, I dissent because the parties were deprived of the opportunity to fully develop evidence and make a complete record.
*364¶ 202. In addition, I believe that the majority opinion errs by concluding that it "need not resolve whether the buyout agreement is indefinite, ambiguous, neither, or both because resolution of that question would not change the outcome of this case." Majority op., ¶ 59. If the agreement is ambiguous, then this case should return to the circuit court for a trial on the determination of the ambiguous language. In contrast, if the agreement is indefinite, then it is unenforceable. However, since the parties were deprived of the opportunity to develop their case below, I would reserve that issue and remand this case to the circuit court for discovery and for a determination after the parties have been allowed the opportunity to fully develop their arguments. For those reasons, I respectfully dissent.
¶ 203. In this case, the circuit court appointed Del Chmielewski, a certified public accountant, as a "special magistrate" to "determine Evald's March 31, 2001 book value using generally accepted accounting principles [GAAP] which are appropriate for the size, function and structure of this corporation." The circuit court further instructed the special magistrate to "advise the Court of any departures from GAAP in his report to the Court" and to "report any substantial inconsistencies in the reporting methodology used by Evald in 2001 vis á vis the previous two years." As the majority opinion points out, see ¶ 27, it is not clear under what authority the circuit court appointed the special magistrate. From the record now before this court, it appears that the special magistrate did not function purely as a referee or an expert witness and instead morphed into a hybrid of both with the parties being deprived of the safeguards of each.
¶ 204. The statutes providing for court-appointed referees and expert witnesses are rife with procedural *365safeguards that ensure litigants due process of law. Mandating that court-appointed referees "shall be the exception and not the rule," Wis. Stat. § 805.06 permits the court to appoint a referee "when the issues are complicated," including "matters of account and of difficult computation of damages." See §§ 805.06(1), (2). Relevant to this case, the court may direct the referee "to receive and report evidence only," § 805.06(3), but the referee must prepare a report upon the matters submitted by the court's order and "shall file the report with the clerk of the court," § 805.06(5)(a). "Within 10 days after being served with notice of the filing of the report any party may serve written objections thereto upon the other parties." § 805.06(5)(b).
¶ 205. On the other hand, pursuant to Wis. Stat. § 907.06, the court may appoint an expert witness. The court-appointed expert witness "shall be informed of the witness's duties by the judge in writing, a copy of which shall be filed with the clerk, or at a conference in which the parties shall have opportunity to participate." § 907.06(1). The court-appointed expert witness "shall advise the parties of the witness's findings" and may be deposed by any party, may be called to testify by the judge or any party, and "shall be subject to cross-examination by each party." Id.
¶ 206. From the record before this court, it appears that the court-appointed "special magistrate" was a referee turned expert witness. The circuit court appointed the special magistrate to determine Evald's March 31, 2001 book value, which arguably is a "matter[] of account" for which a referee is appointed under Wis. Stat. § 805.06(2). The circuit court instructed the parties that they are "required to answer inquiries of the Special Magistrate" but clarified that it does not want advocacy. Furthermore, in a statement latched *366onto by both the court of appeals, Ehlinger v. Hauser; 2008 WI App 123, ¶ 42, 313 Wis. 2d 718, 758 N.W.2d 476, and the majority opinion, see ¶ 85, the circuit court denied that the special magistrate was "anybody's expert witness."
¶ 207. Nevertheless, the special magistrate emerged as at least a quasi expert witness. He was called to testify, and the circuit court permitted the parties to conduct a limited cross-examination of him:
Regarding calling the special magistrate as witness, I didn't talk to Mr. Chmielewski about this, but I would allow either of you to question him regarding just a couple of things which are essentially clarification of his reports. One is any arithmetical calculation he's made; two is what, what sources he had as a base to the figures that he used; and third, the opinions that he made in his report to the Court. He's not anybody's expert witness; but I would, if you have questions just on those aspects of his report, allow him to testify.
Indeed, during the limited cross-examination, the special magistrate was asked whether he was able to form an opinion on Evald's March 31, 2001 book value "to a reasonable degree of accounting certainty." A degree of certitude is a requirement placed on expert witnesses. See Drexler v. All Am. Life & Cas. Co., 72 Wis. 2d 420, 432, 241 N.W.2d 401 (1976) (citing State v. Wind, 60 Wis. 2d 267, 273, 208 N.W.2d 357 (1973)). Finally, the special magistrate never filed his report, or any accompanying transcripts or exhibits, with the clerk of court as statutorily required of referees under Wis. Stat. § 805.06(5)(a).1 Without the requisite filing, the parties *367could not have been clear as to the special magistrate's role and their rights and obligations thereto, including the opportunity to object "[w]ithin 10 days after being served with notice of the filing." See § 805.06(5)(b).
¶ 208. Despite acknowledging these "certain procedural irregularities," majority op., ¶ 88, the majority opinion nevertheless concludes that "[t]he record does not evince an understanding by the parties that the special magistrate was appointed as an expert witness," id., ¶ 83. The majority opinion further concludes that "Hauser forfeited his right to object to the procedures specified by the court in the reference." Id., ¶ 87. The majority opinion opportunely frames Hauser's objection as one aimed at the procedures in the court's reference. By doing so, the majority evades the fact that if indeed the special magistrate was appointed as a referee, Hauser had "10 days after being served with notice of the filing of the report" to object. See Wis. Stat. § 805.06(5)(b). It is undisputed that the special magistrate never filed his report with the clerk of court.
¶ 209. Accordingly, if the special magistrate was indeed appointed as a referee, the parties were precluded from making a full record regarding the referee's actions. If, on the other hand, the special magistrate was appointed as an expert witness, the parties were not given their statutorily-imposed opportunity to depose and fully cross-examine him. Without the benefit of either of those requirements, the majority concludes that the case should be remanded for the appointment *368of a receiver. Because the parties were deprived of the opportunity to fully develop evidence and make a complete record, I would instead remand the case to the circuit court for full development of the record.
¶ 210. In addition, I dissent from the majority opinion's conclusion that it "need not resolve whether the buyout agreement is indefinite, ambiguous, neither, or both because resolution of that question would not change the outcome of this case." Majority op., ¶ 59. To the contrary, if words or phrases in an agreement are ambiguous, as in reasonably susceptible of more than one meaning, then it is the court's duty to determine the parties' intent at the time the agreement was entered into. Capital Invs., Inc. v. Whitehall Packing Co., Inc., 91 Wis. 2d 178, 189-90, 280 N.W.2d 254 (1979) (citing Patti v. W. Mach. Co., 72 Wis. 2d 348, 351-52, 241 N.W.2d 158 (1976)). To make that determination, the court "may look beyond the face of the contract and consider extrinsic evidence." Id. at 190. Such extrinsic evidence may include the parties' own testimony regarding what they intended the agreement to mean. Patti, 72 Wis. 2d at 354-55. Consequently, the majority opinion is incorrect when it concludes that the agreement need not be adjudged ambiguous "[because] the contract cannot be enforced regardless of how the term ['book value'] could be defined." Majority op., ¶ 59. If the agreement is determined to be ambiguous, then this court should remand the case for a full trial on the determination of the ambiguous language — not remand for the appointment of a receiver.
¶ 211. However, if the agreement is indefinite, as the concurrence, Justice Patience Drake Roggensack, concludes, then "no enforceable agreement has been made because the parties have not agreed to their particularized obligations." Justice Roggensack's con*369currence, ¶ 134 (citing Shetney v. Shetney, 49 Wis. 2d 26, 38, 181 N.W.2d 516 (1970); 1 Joseph M. Perillo, Corbin on Contracts § 4.13, 634-37 (rev. ed. 1993)).
¶ 212. Here, since the parties were deprived of the opportunity to develop their case below, I would reserve the issue of whether the agreement is ambiguous or indefinite and remand this case to the circuit court for discovery and for a determination after the parties have been allowed the opportunity to fully develop their arguments. For the foregoing reasons, I respectfully concur in part and dissent in part.
¶ 213. I am authorized to state that Justice MICHAEL J. GABLEMAN joins this dissent ¶¶ 201— 212 of this opinion.

 In its entirety, Wis. Stat. § 805.06(5)(a) provides:
The referee shall prepare a report upon the matters submitted by the order of reference and, if required to make findings of fact and *367conclusions of law, the referee shall set them forth in the report. The referee shall file the report with the clerk of the court and in an action to be tried without a jury, unless otherwise directed by the order of reference, shall file with it a transcript of the proceedings and of the evidence and the original exhibits. The clerk shall forthwith mail to all parties notice of the filing.