Court Opinion

ID: 9674045
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:22:18.941571+00
Date Added: 2024-06-11T18:16:25.348295
License: Public Domain

PATIENCE DRAKE ROGGENSACK, J.
¶ 103. (concurring in part and dissenting in part). While I agree with the majority's decision to reverse and remand to the circuit court because the court was not required to apply Wis. Stat. § 802.05 (2005-06) to Scott Oil Company, Inc.'s (Scott) claim, majority op., ¶ 7, I write separately because I disagree with the majority's analysis and also because I conclude that it is Wis. Stat. § 814.025 (2003-04)1 that the circuit court should apply on remand, if Scott proves its claim that Trinity Petroleum, Inc. (Trinity) commenced or continued a frivolous action.
¶ 104. The majority opinion's analysis omits three necessary determinations: (1) it fails to analyze and *341decide whether Scott's claim under Wis. Stat. § 814.025 is a substantive claim that accrued prior to July 1, 2005; (2) it fails to analyze the effect of Wis. Stat. § 990.04 and Supreme Court Order 03-06 on Scott's § 814.025 claim; and (3) it fails to apply the test we set out in Kurtz v. City of Waukesha, 91 Wis. 2d 103, 109, 280 N.W.2d 757 (1979), the Chevron/Kurtz test, to determine whether Supreme Court Order 03-06 ought not be applied retroactively. Instead, it focuses on whether the circuit court is required to apply Wis. Stat. § 802.05 on remand. The determinations I outline are necessary to analyzing the parties' rights and obligations in the case before the court.
¶ 105. Because I conclude that: (1) Scott's claim for relief under Wis. Stat. § 814.025 is a substantive claim that accrued before July 1, 2005; (2) Wis. Stat. § 990.04 precludes applying Wis. Stat. § 802.05 or Supreme Court Order 03-06 to negate Scott's § 814.025 claim; and (3) under the Chevron/Kurtz test, Supreme Court Order 03-06 should not be applied retroactively to preclude Scott's claim under § 814.025,1 respectfully dissent from the analysis of the majority opinion. However, I do concur in its decision to reverse and remand to the circuit court, where I would direct the court to apply § 814.025 if Scott proves its claim.
I. BACKGROUND
¶ 106. Scott and Trinity had a contractual relationship wherein Trinity agreed to deliver petroleum products to Scott's customers for a period of five years. The terms of the contract permitted cancellation if Trinity did not perform to the "customer's satisfaction." After Scott received several complaints from its customers about the poor delivery services Trinity was providing, Scott gave notice to Trinity that it was terminating the contract.
*342¶ 107. On April 6, 2004, Trinity commenced an action against Scott for breach of contract. It is out of Trinity's lawsuit for breach of contract that Scott's claim under Wis. Stat. § 814.025 arose. Over the course of the litigation — during mediation proceedings and circuit court proceedings — Scott repeatedly asserted to Trinity that its claim was frivolous to file and frivolous to continue.
¶ 108. On May 5, 2005, Scott moved for summary judgment of dismissal. A hearing was set for June 6, 2005, but was postponed until July 5, 2005, because certain deposition transcripts could not be made available in sufficient time for Trinity to reply to Scott's motion.
¶ 109. On July 5, 2005, the circuit court granted Scott summary judgment of dismissal, and Scott orally moved for costs and fees, claiming Trinity commenced and continued a frivolous action. The circuit court asked that Scott place its motion in writing, which it did on July 21, 2005, alleging violations of Wis. Stat. § 814.025 and Wis. Stat. § 802.05 (2003-04).
¶ 110. During the course of Trinity's lawsuit against Scott, this court engaged in rule-making under the authority granted in Wis. Stat § 751.12(1).2 Rule-making is a quasi-legislative function wherein the court is empowered to regulate pleadings, practice and procedure before the courts. See Wick v. Mueller, 105 *343Wis. 2d 191, 313 N.W.2d 799 (1982).3 The rule-making process was commenced by a petition from members of the State Bar of Wisconsin. They requested the court to ’'repeal’’ Wis. Stat. § 814.025 and Wis. Stat. § 802.05 (2003-04) and to recreate § 802.05 in parallel form with Fed. R. Civ. E 11.
¶ 111. In 1978, this court created the original version of Wis. Stat. § 802.05 during rule-making under Wis. Stat. § 751.12(1), which permits the court to legislate to regulate "pleading, practice, and procedure in judicial proceedings in all courts." § 751.12(1). However, Wis. Stat. § 814.025 was not created by this court. Section 814.025 was created by the legislature.
¶ 112. Thomas S. Hanson, who was a member of the Wisconsin State Assembly in 1978 when the legislature enacted Wis. Stat. § 814.025, wrote to the court during its rule-making process in 2004. He said that he had been the author of 1977 Assembly Bill 237 that began the legislative creation of § 814.025. Mr. Hanson explained to the court that by enacting § 814.025, it was the intent of the legislature to establish a mandatory make-whole remedy for persons victimized by frivolous lawsuits. See Letter from Thomas S. Hanson to the Supreme Court (Oct. 29, 2004). He explained that ”[m]aking sanctions discretionary and permitting something less than a ’make whole’ recovery for the victim are clearly contrary to what I intended when we passed § 814.025." Id. Mr. Hansen said that by enacting *344§ 814.025, the legislature intended to create a "substantive right of recovery" for members of the public who are victimized by frivolous lawsuits. Id. He asked the court to deny the lawyers' petition to "repeal" § 814.025. Id.
¶ 113. This court did as requested by the lawyer-petitioners. In Supreme Court Order 03-06, it "repealed" Wis. Stat. § 802.05 and Wis. Stat. § 814.025 (2003-04) and recreated § 802.05 in parallel form to Fed. R. Civ. E 11. Supreme Court Order 03-06, 2005 WI 38, 278 Wis. 2d xiii-xiv (eff. Mar. 31, 2005). In so doing, it ignored the fact that § 814.025 was not a judicial rule subject to the court's rule-making powers. It also ignored the strong dissents of three members of the court. Supreme Court Order 03-06, 278 Wis. 2d at xxvi-xxxiii. This is the first time this court has struck down an act of the legislature that was not held unconstitutional. The court's new version of § 802.05 became effective July 1, 2005.4
¶ 114. In deciding Scott's motion alleging that Trinity commenced and continued a frivolous action, *345the circuit court concluded that it could not award sanctions because Wis. Stat. § 802.05 must be applied. The circuit court reasoned that the new § 802.05 applied because it was a procedural statute; the motion was filed after July 1, 2005, the effective date of § 802.05; and the new § 802.05 required a 21-day notice of intent to file a claim alleging the action was frivolous, which notice Scott had not given. The court of appeals affirmed the circuit court, and we accepted Scott's petition for review.
II. DISCUSSION
A. Standard of Review
¶ 115. Deciding when a claim for relief accrues based on undisputed facts is a question of law. See Meracle v. Children's Serv. Soc. of Wis., 149 Wis. 2d 19, 25-26, 437 N.W.2d 532 (1989). Whether a statute is procedural or has substantive components is also a question of law for our independent review. See Matthies v. Positive Safety Mfg. Co., 2001 WI 82, ¶¶ 15, 21, 244 Wis. 2d 720, 628 N.W.2d 842; Schulz v. Ystad, 155 Wis. 2d 574, 596, 456 N.W.2d 312 (1990).
¶ 116. The interpretation of Wis. Stat. § 990.04 and its application to a particular set of facts are legal questions for which we do not defer to the decisions of other courts. Warehouse II, LLC v. DOT, 2006 WI 62, ¶ 4, 291 Wis. 2d 80, 715 N.W.2d 213. However, we are aided by the prior analyses of the court of appeals and the circuit court. Spiegelberg v. State, 2006 WI 75, ¶ 8, 291 Wis. 2d 601, 717 N.W.2d 641.
¶ 117. Whether a judicial holding, such as Supreme Court Order 03-06, should be applied retroactively or prospectively is a question of policy for our independent review. Kurtz, 91 Wis. 2d at 108.
*346B. Scott's Claim
¶ 118. The majority opinion spends most of its energy addressing whether Wis. Stat. § 802.05 is procedural or substantive. It does not analyze whether Scott had a substantive right of action under Wis. Stat. § 814.025 that had accrued before the statute was "repealed." Instead, it summarily asserts that § 814.025 "did not create a substantive, vested right to costs and reasonable attorney fees." Majority op., ¶ 48. The majority opinion is heavily invested in concluding that § 814.025 has no substantive component;5 therefore, its attempt to shift the reader's focus to analyzing § 802.05 is understandable. However, an analysis of the remedies available under § 814.025 before its "repeal" is required by the case before us.
¶ 119. Wisconsin Stat. § 814.025(1) states in relevant part:
If an action or special proceeding commenced or continued by a plaintiff or a counterclaim, defense or cross complaint commenced, used or continued by a defendant is found, at any time during the proceedings or upon judgment, to be frivolous by the court, the court shall award to the successful party costs determined under s. 814.04 and reasonable attorney fees.
It provided substantive rights and remedies that should be held to apply to Scott's claim because Scott had a claim capable of present enforcement (that Trinity *347commenced and continued a frivolous action) and a suable party (Trinity) against whom it could enforce its claim before the "repeal" of § 814.025. Meracle, 149 Wis. 2d at 26 (citing Barry v. Minahan, 127 Wis. 570, 573, 107 N.W. 488 (1906)).
¶ 120. Determining whether a statute is procedural or has substantive components can have profound implications. See Snopek v. Lakeland Med. Ctr., 223 Wis. 2d 288, 294, 588 N.W.2d 19 (1999); State ex rel. Schmidt v. Dist. No. 2, Town of Red Springs, 237 Wis. 186, 190, 295 N.W. 36 (1941). Substantive statutes create, define or regulate rights or obligations. Betthauser v. Med. Protective Co., 172 Wis. 2d 141, 147-48, 493 N.W.2d 40 (1992) (citing City of Madison v. Town of Madison, 127 Wis. 2d 96, 102, 377 N.W.2d 221 (Ct. App. 1985)). A statute cannot be procedural if it takes away "vested rights." Id. A vested right can be a remedy that is available, but not yet awarded, to a party who could successfully petition the court for the remedy. See Schulz, 155 Wis. 2d at 598.
¶ 121. We discussed this concept in Schulz when we considered Wis. Stat. § 767.32(lm), which eliminated a child support obligor's right to petition for the remedy of retroactive modification of support, when previously the "circuit courts had discretion to modify, reduce, or eliminate accumulated child support arrearages." Id. We concluded that § 767.32(lm) was substantive because it worked "such a substantial change in the legal rights and obligations of a child support obligor." Id. So too in the case before us, the "repealing" of Wis. Stat. § 814.025 changed legal rights and remedies that had previously existed.
¶ 122. The majority asserts that Scott had no "vested right" under Wis. Stat.. § 814.025 to recover reasonable attorney fees if Trinity's conduct were held *348to be frivolous "until a circuit court made a finding of frivolousness." Majority op., ¶ 62. The majority opinion's assertion, for which it cites no authority, is contrary to controlling precedent because the right to a non-discretionary remedy is "vested" before a court makes a finding that supports an order for the remedy. Matthies, 244 Wis. 2d 720, ¶ 22. The right to a remedy is vested when a right to the remedy "accrues" under the facts of the case. Id. A claim "accrues" when there exist "a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it." Meracle, 149 Wis. 2d at 26 (quoting Barry, 127 Wis. at 573).
¶ 123. In Matthies, we reviewed whether a statute on comparative negligence that was amended after Matthies was injured, but before he filed his lawsuit, applied to limit the damages he could collect to an amount representative of each tortfeasor's causal negligence. Matthies, 244 Wis. 2d 720, ¶ 1. In our analysis of the question presented, we first determined when Matthies' claim for relief accrued. Id., ¶¶ 21-22.
¶ 124. Matthies asserted his claim accrued at the time of his injury, and the tortfeasors asserted "Mat-thies ha[d] no vested or accrued right in a particular remedy" until a final judgment. Id., ¶ 21. We disagreed with the tortfeasor's contention. Id. And even though Matthies had not yet filed his lawsuit when the law was changed from joint and several liability for negligence to comparative negligence, we held that "Matthies d[id] have a vested right to recover all of his damages that are adjudged due to him from any defendant that may be jointly and severally liable for his injuries." Id.
¶ 125. We reasoned that "Matthies ha[d] a vested right in his claim for negligence" because his claim "accrued on the date of his accident and injury" and it *349was the "date of injury which [was] the triggering event with respect to the application of Wis. Stat. § 895.045(1)." Id., ¶ 22. We then explained that because he was entitled to recover under the doctrine of joint and several liability when his claim accrued, the statutory change in forms of liability affected vested rights. Id., ¶ 23.
¶ 126. Applying Matthies to the question of whether Trinity has a claim to a substantive remedy under Wis. Stat. § 814.025 that accrued before it was "repealed" on July 1, 2005,1 look to the injury-producing conduct, just as we did in Matthies. It is alleged that Trinity injured Scott by commencing and continuing a frivolous lawsuit. Trinity's injury-producing conduct occurred before July 1, 2005. Therefore, under Matthies, Scott's claim for the mandatory make-whole remedy as set out in § 814.025 accrued prior to July 1, 2005 and it became a vested right at that time. Id., ¶ 22; Schulz, 155 Wis. 2d at 598 (concluding that a change in legal rights and obligations is prospective only). Therefore, the circuit court should apply the remedy of § 814.025 on remand, if Scott proves its claim.6
¶ 127. My conclusion that the circuit court should apply Wis. Stat. § 814.025 on remand if Scott proves its claim finds further support in Niesen v. State, 30 Wis. 2d 490, 141 N.W.2d 194 (1966). In Niesen, the plaintiff brought an action for damages alleging that "the state highway commission, during the construction of Highway 1-94 in the fall of 1963, blocked the highway ditch and failed to provide the proper drainage, causing the flooding of the plaintiffs land in the spring of 1964 and thereby rendering it useless for planting." Id. at 491. During 1964, Wis. Stat. § 88.38(2) (1961-62), which *350permitted a suit for damages under factual circumstances such as Niesen presented, was repealed and recreated as Wis. Stat. § 88.87 by ch. 572, Laws of 1963. Id. at 492. It became effective June 13, 1964. Id. It did not permit a claim for damages directly against the State as § 88.38(2) (1961-62) had. Id.
¶ 128. We concluded that Niesen's claim for relief arose prior to the effective date of the new statute because the State's negligent conduct preceded the effective date of the statutory change. Id. at 493. We also concluded that there was no statement in the new statute that the legislature intended by the repeal of Wis. Stat. § 88.38(2) (1961-62) to terminate rights of action that had accrued before the statutory change. Id. at 493-94. Accordingly, we looked to the effect of Wis. Stat. § 990.04 on Niesen's claim under the repealed statute. Id. at 493-95. We held that Niesen could maintain his suit for damages because the "rights which had arisen in favor of the plaintiff under sec. 88.38(2), Stats., prior to its being repealed are preserved to Mr. Niesen by sec. 990.04." Id. at 495.
¶ 129. Here, Scott's right to make a claim under Wis. Stat. § 814.025 arose at the time of Trinity's conduct of allegedly filing and continuing a frivolous lawsuit. This occurred before July 1, 2005. There was no discussion at the rule-making hearing prior to the "repeal" of § 814.025 that the court intended to cut off rights of action that had accrued before July 1, 2005. Accordingly, as under Niesen, on remand, the circuit court should apply § 814.025 if Scott proves its claim.7 Id. at 493-95.
*351C. Wisconsin Stat. § 990.04
¶ 130. The majority opinion discards Scott's claimed application of Wis. Stat. § 990.04 in a footnote. Majority op., ¶ 48 n.35. Section 990.04 states in relevant part:
The repeal of a statute hereafter shall not remit, defeat or impair any civil or criminal liability for offenses committed, penalties or forfeitures incurred or rights of action accrued under such statute before the repeal thereof, whether or not in course of prosecution or action at the time of such repeal; but all such offenses, penalties, forfeitures and rights of action created by or founded on such statute, liability wherefore shall have been incurred before the time of such repeal thereof, shall be preserved and remain in force notwithstanding such repeal, unless specially and expressly remitted, abrogated or done away with by the repealing statute.
As I have explained above, Trinity's allegedly frivolous acts occurred before the "repeal" of Wis. Stat. § 814.025; and therefore, Scott's "right of action" accrued before the statute was struck down.
¶ 131. We construed and applied Wis. Stat. § 990.04 in Jackson County Iron Co. v. Musolf, 134 Wis. 2d 95, 396 N.W.2d 323 (1986). In Jackson County Iron, we reviewed § 990.04 in the context of a court of appeals decision that held the repeal of Wis. Stat. § 70.94(3)(a) (1975) deprived Jackson County Iron of its *352administrative appeal. Id. at 104. We concluded that the court of appeals erred because "it is the clear intention of sec. 990.04 to preserve all rights which may have arisen before the repeal of a statute unless such rights are 'specially and expressly remitted, abrogated or done away with by the repealing statute.'" Id. (quoting Niesen, 30 Wis. 2d at 493). We also explained that "an act which repeals or modifies a remedy does not affect a pending action." Id. (citing Bratton v. Town of Johnson, 76 Wis. 430, 434, 45 N.W. 412 (1890)).
¶ 132. As was the case in Jackson County Iron, Scott's right of action against Trinity arose before Wis. Stat. § 814.025 was "repealed." By the statute's plain wording, which we described in Jackson County Iron as "the clear intention" of Wis. Stat. § 990.04, id., Scott's claim against Trinity was unaffected by the "repeal" of § 814.025. Accordingly, I conclude that § 990.04 provides additional support for the conclusion that Scott's claims under § 814.025 should be addressed upon remand of this action.
D. The Chevron/Kurtz Standards
¶ 133. The majority opinion repeatedly focuses on whether Wis. Stat. § 802.05 was required to be applied retroactively to Scott's claim that Trinity commenced and continued a frivolous action. Majority op., ¶¶ 4, 7, 8, 32-39, 52-62. In so doing, it does not analyze whether Supreme Court Order 03-06, that "repealed" Wis. Stat. § 814.025 and Wis. Stat. § 802.05 (2003-04), should be applied to eliminate rights that would otherwise affect a claim that had accrued under § 814.025 in an action that had commenced.
¶ 134. In my view, Supreme Court Order 03-06 is not a judicial holding such that the Chevron/Kurtz test applies, nor do any of the order's conclusions about Wis. *353Stat. § 814.025 establish precedent. The majority opinion agrees that Chevron/Kurtz does not apply to the issues presented. Majority op., ¶ 78. However, it comes to that conclusion by shifting the reader's focus to Wis. Stat. § 802.05 and asserting that Chevron/Kurtz is not the correct test for determining whether a statute should be applied prospectively or retroactively. Majority op., ¶ 79.
¶ 135. However, one must note that it was Supreme Court Order 03-06 that eliminated the rights established by Wis. Stat. § 814.025 by "repealing" it. There is nothing in Wis. Stat. § 802.05 that even mentions § 814.025, let alone "repeals" it. By shifting the reader's focus from Supreme Court Order 03-06, the majority opinion ducks the issue of how it is actually employing Supreme Court Order 03-06 in its decision. That is, the majority opinion does treat Supreme Court Order 03-06 as though it were a judicial holding when it relies on the majority's prior determination during rule-making that § 814.025 has no substantive components.8 Majority op., ¶ 42. However, since the rule-making proceeding appears to have caused Supreme Court Order 03-06 to become a "judicial holding," the Chevron/Kurtz test should be applied to determine whether that holding in regard to § 814.025 should have retroactive effect.
¶ 136. In Kurtz, this court analyzed how to decide whether a "judicial holding" should or should not be applied retroactively. Kurtz, 91 Wis. 2d at 108-09. The court quoted and then applied a three-factor test em*354ployed by the United States Supreme Court in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) to determine whether a holding ought not be applied retroactively:
First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second,... "we must... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation." Finally, we ... weight] the inequity imposed by retroactive application, for "[w]here a decision of the Court could produce substantial inequitable results if applied retroactively, [we avoid] 'injustice or hardship1 by a holding of nonretroactivity."
Id. at 109 (quoting Chevron Oil, 404 U.S. at 106-07) (further citations omitted). When the court applied the Chevron test, it concluded that the judicial holdings then under consideration did not satisfy the test's three factors and therefore they were applicable to the claims before the court. Id.
¶ 137. If Supreme Court Order 03-06 is a "judicial holding," then we should analyze it under the Chevron/Kurtz test. In applying the Chevron/Kurtz test to the court's 03-06 Order, I conclude that it should not be applied to preclude the application of Wis. Stat. § 814.025 to Scott's claim because the order established a new rule that changed the law; there are significant demerits in applying it here; and applying the order to negate Scott's claims would be inequitable.
¶ 138. The "repeal" of Wis. Stat. § 814.025 creates a new rule under Chevron/Kurtz for several reasons. First, § 814.025 provided that, as a sanction for filing or *355continuing a frivolous claim, reasonable attorney fees must be paid to the prevailing party.9 Jandrt v. Jerome Foods, Inc., 227 Wis. 2d 531, 576, 597 N.W.2d 744 (1999); Sommer v. Carr, 99 Wis. 2d 789, 799, 299 N.W.2d 856 (1981); Stoll v. Adriansen, 122 Wis. 2d 503, 511, 362 N.W.2d 182 (Ct. App. 1984). Under the rule established by Supreme Court Order 03-06, the circuit court may, but is not required, to award attorney fees as a sanction for filing a frivolous action. Second, § 814.025 required that any sanctions ordered must be paid to the person injured. Jandrt, 227 Wis. 2d at 577. Under the rule established by Supreme Court Order 03-06, any sanction ordered may be paid to the court, rather than to the prevailing party. Third, § 814.025 applies to one who commences or continues a frivolous action, while the rule established by Supreme Court Order 03-06 applies only to commencing a frivolous action. Therefore, under the court's new rule, no sanctions are available if the action was not frivolous when commenced, but at some point in the litigation it became frivolous to continue it. See id. at 547 (concluding that wording identical to that in Wis. Stat. § 802.05 does not "authorize [] the imposition of sanctions upon a party maintaining a frivolous action"). This last change in the law could be important to Scott, as it was in Jandrt. In Jandrt, we concluded that Jandrt did not violate Wis. Stat. § 814.025 when she filed the action, but that she *356should have known the action was frivolous when she continued it. Id. at 564.
¶ 139. In addition, under the second Chevron/Kurtz factor, there are significant demerits in applying Supreme Court Order 03-06 to preclude the use of Wis. Stat. § 814.025 for Scott's claim. Because the change in law that was caused by Supreme Court Order 03-06 occurred during judicial rule-making, the change in the law did not receive the public notice that other legal issues this court has addressed have received when a change in the law occurred as part of a case-opinion of this court. For example, there was no petition for review of another court decision; there was no announcement in the popular press that we had accepted for review the potential "repealing" of § 814.025, as the court routinely does through the court information office when petitions for review are accepted; there was no press coverage to inform members of the public that we were considering striking down § 814.025; and there were no briefs filed with the court on both sides of the petition to "repeal" § 814.025, so that the court could examine in a full adversarial posture whether § 814.025 contained remedies that were substantive.
¶ 140. Finally, under the third Chevron/Kurtz factor, applying Supreme Court Order 03-06 to preclude Scott's claim under Wis. Stat. § 814.025 would produce inequitable results, such as the circuit court being without the power to make Scott whole if it concludes Trinity's action was not frivolous when filed or frivolous when continued. Accordingly, under the Chevron/Kurtz test, Supreme Court Order 03-06 should not be applied retroactively to Scott's claim under § 814.025, which is a substantive claim to a make-whole remedy that had accrued before this court entered its order.
*357III. CONCLUSION
¶ 141. Because I conclude that: (1) Scott's claim for relief under Wis. Stat. § 814.025 is a substantive claim that accrued before July 1, 2005; (2) Wis. Stat. § 990.04 precludes applying Wis. Stat. § 802.05 or Supreme Court Order 03-06 to negate Scott's § 814.025 claim; and (3) under the Chevron/Kurtz test, Supreme Court Order 03-06 should not be applied retroactively to preclude Scott's claim under § 814.025,1 respectfully dissent from the analysis of the majority opinion. However, I do concur in its decision to reverse and remand to the circuit court, where I would direct the court to apply § 814.025, if Scott proves its claim.
¶ 142. For the foregoing reasons, I concur in part and dissent in part.
¶ 143. I am authorized to state that Justices JON E WILCOX and DAVID T. PROSSER join this concurrence/dissent.

 All subsequent references to Wis. Stat. § 814.025 are to the 2003-04 version. All subsequent references to other statutes are to the 2005-06 version unless otherwise noted.

 Wisconsin Stat. § 751.12(1) states:
The state supreme court shall, by rules promulgated by it from time to time, regulate pleading, practice, and procedure injudicial proceedings in all courts, for the purposes of simplifying the same and of promoting the speedy determination of litigation upon its merits. The rules shall not abridge, enlarge, or modify the substantive rights of any litigant.

 The court's power in rule-making is limited. For example, although the supreme court could by rule establish the point at which the time for appeal would begin to run, it could not establish by rule whether a particular type of order was appealable. Wick v. Mueller, 105 Wis. 2d 191, 196-97, 313 N.W.2d 799 (1982). The legislature has the sole prerogative to legislate whether a particular order is appealable. Id. at 196.

 In response to the court's "repealing" Wis. Stat. § 814.025, the legislature passed 2005 Senate Bill 501. This new legislation attempted to reinstate the make whole remedy the legislature had created in 1978. According to the analysis prepared by the Legislative Reference Bureau, 2005 S.B. 501:
requires a court to award a successful party the actual costs of the action, including reasonable attorney fees, if the court finds that the action is frivolous. The bill uses the same standards for determining if an action is frivolous as were used in the law before July 1, 2005.
Legislative Reference Bureau Analysis of 2005 S.B. 501. Both houses of the legislature passed 2005 S.B. 501 and presented it to the governor for his signature; however, he vetoed it. The senate could not muster the two-thirds majority needed to override the governor's veto. Bill history for 2005 S.B. 501.

 While this court has been delegated a rule-making function by the legislature, that delegation is limited. Under Wis. Stat. § 751.12(1), which this court cited as its authority for the actions taken in Supreme Court Order 03-06, the rules this court creates "shall not abridge, enlarge, or modify the substantive rights of any litigant." § 751.12(1). Therefore, the only way this court can assert it had authority to strike down Wis. Stat. § 814.025 is if that statute does not encompass any substantive rights.

 The Wis. Stat. § 814.025 make-whole remedy is a non-discretionary remedy. Jandrt v. Jerome Foods, Inc., 227 Wis. 2d 531, 576, 597 N.W.2d 744 (1999).

 The majority asserts that Wis. Stat. § 802.05 is the "governing provision" when comparing it with Wis. Stat. § 814.025. Majority op., ¶ 24.1 am uncertain what a "governing provision" is. However, we have concluded that when an action is proved frivolous, the relief accorded to those victimized by a frivolous *351action is the mandatory make-whole remedy of § 814.025. Jandert, 227 Wis. 2d at 563. As we explained:
Costs and reasonable attorney fees must be awarded [] if the court is satisfied that the [law] firm knew or should have known that its allegation of causation was "without any reasonable basis in law or equity."

Id.

 Until today, we have never held or implied that we establish binding precedent for this or any other court by rule-making. Our rules remain subject to interpretation and testing, just as any other legislation does. However, the majority refuses to test its own rule here.

 In the absence of a statute or contract that authorizes payment of attorney fees to the prevailing party, Wisconsin follows the American Rule where each party pays its own attorney fees. Sommer v. Carr, 99 Wis. 2d 789, 798, 299 N.W.2d 856 (1981). Therefore, a party's opportunity to receive compensation under Wis. Stat. § 814.025 for attorney fees generated by required participation in a frivolous lawsuit was a significant departure from the common law. Id.