Court Opinion

ID: 9849750
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:45:33.485634+00
Date Added: 2024-06-11T09:20:25.657481
License: Public Domain

LUNDSTEN, PJ.
¶ 41. (dissenting). I agree with the majority that rescission, not cancellation, is the *202pertinent issue in this case. We part company over the majority's conclusion that, as a matter of common law and statutory interpretation, the circuit court had the power to order rescission of the time-share contract. As I see it, the Otts' failure to show that they were "adversely affected" by any of Peppertree's violations of Wis. Stat. ch. 707 (2003-04) requires reversal of the circuit court's decision to order rescission.1 The majority first discusses common law rescission, but I begin with rescission under Wis. Stat. § 707.57(l)(a).
¶ 42. There is nothing complicated or ambiguous about the statutory language at issue here. If a timeshare seller subject to Wis. Stat. ch. 707 fails to comply with the requirements in that chapter or fails to comply with a time-share instrument covered by that chapter, any person "adversely affected by the failure to comply has a claim for appropriate relief, including but not limited to damages, injunctive or declaratory relief, specific performance and rescission." Wis. Stat. § 707.57(1)(a). Thus, under the statute's plain language, a requirement for obtaining relief is that the complaining person be "adversely affected by the [timeshare seller's] failure to comply." Merely proving a failure to comply is not sufficient; the claimant must show that he or she was "adversely affected by the failure." Id. (emphasis added).
¶ 43. Here, the Otts demonstrated statutory violations, but no resulting adverse effect. The Otts do not allege that any of Peppertree's violations affected, much less adversely affected, their decision to purchase the time-share. They do not allege that they got something other than what they thought they were getting. They *203allege no harm whatsoever. Rather, after about five years, the Otts decided to sell and had difficulty finding a buyer. They then hired a smart attorney, sued Pep-pertree, and eventually proved that during the contracting process Peppertree failed to comply with some statutory provisions of no consequence to the Otts.
¶ 44. Therefore, because the Otts suffered no "adverse effect" as a result of Peppertree's violations, I conclude that the Otts do not qualify for a remedy under Wis. Stat. § 707.57(l)(a). I turn my attention to the majority's statutory analysis.
¶ 45. The majority concludes that the phrase "adversely affected" in Wis. Stat. § 707.57(l)(a) is essentially a standing requirement that "serves to exclude those who have not entered into a transaction with a timeshare seller from bringing suit for the seller's violations of Wis. Stat. ch. 707." Majority, ¶ 23. I cannot agree, however, that the legislature would use the words "adversely affected" to convey the very limited notion that parties transacting with a time-share seller need only show some violation of Wis. Stat. ch. 707 in order to obtain rescission or some other "appropriate relief." Wis. Stat. § 707.57(l)(a). This interpretation, at a minimum, has the effect of nullifying the word "adversely."
¶ 46. The majority notes that the word "affected" is defined in part as "acted upon," and the word "adverse" denotes "acting against" or "opposed to" a person's interests. Majority, ¶ 21. So far so good. But then the majority simply declares that all persons transacting with timeshare sellers are "adversely affected" by a violation of Wis. Stat. ch. 707 by the sellers.2 Majority, ¶ 21. From *204this declaration flows the majority's conclusion that the legislature intended to employ the phrase "adversely affected" to denote nothing more than the convergence of a party who has "transacted" with a time-share seller and a seller's violation of some provision of ch. 707. But if the legislature's goal were so limited, it surely would have used language different than "adversely affected." Indeed, even if I could accept the fiction that the Otts were "affected" by Peppertree's violations in some technical sense, the use of the word "affected" alone would achieve this narrow purpose. How then does the majority explain the legislature's use of the phrase "adversely affected by the failure [emphasis added]"? It does not.,
¶ 47. The majority finds support for its interpretation of Wis. Stat. § 707.57(l)(a) in two other consumer protection statutes: Wis. Stat. §§ 100.18(11) and 100.20(5). These statutes, respectively, authorize private remedies for "fraudulent representations" and improper "methods of competition and trade practices." The majority points out that, unlike § 707.57(l)(a), these statutes require that a plaintiff show "pecuniary loss" in order to maintain an action. The majority concludes that the legislature's choice not to use a "pecuniary loss" requirement in § 707.57(1) (a) indicates *205the legislature's intent that there be no "harm" requirement. Majority, ¶ 24. I fail to see the connection.
¶ 48. Wisconsin Stat. §§ 100.18(ll)(b) and 100.20(5) authorize private actions for damages only. When the only authorized remedy is damages, it makes sense to require that a plaintiff show "pecuniary loss." In contrast, the remedies available under Wis. Stat. § 707.57(l)(a) are not limited to damages. The timeshare remedy statute authorizes "appropriate relief, including but not limited to damages, injunctive or declaratory relief, specific performance and rescission." A "pecuniary loss" requirement would be a poor match with remedies such as specific performance or injunctions. Why should a party be required to show a pecuniary loss in order to compel a violating time-share seller to perform as the law requires? What about the time-share owner who seeks an injunction to prevent pecuniary loss?
¶ 49. I am equally unpersuaded by the majority's comparison with Wis. Stat. § 707.57(2)(a). The majority notes that when a government actor obtains injunctive relief based on a time-share seller's failure to comply with Wis. Stat. ch. 707, the circuit court may also " 'restore to any person any pecuniary loss suffered.'" Majority, ¶ 24 (quoting § 707.57(2)(a) (emphasis deleted)). Why does the authorization of compensation for pecuniary loss in this separate remedial subsection have any bearing on the meaning of "adversely affected" in § 707.57(l)(a)? I do not find the answer in the majority's decision.
¶ 50. In sum, I do not see why a legislative decision elsewhere in the statutes to impose the burden of showing a "pecuniary loss" as a prerequisite to an award of damages sheds light on the legislature's thinking when it imposed the more general "adversely affected" *206requirement in a statute that authorizes "appropriate relief," including, but not limited to, injunctive relief, declaratory relief, and specific performance. Wis. Stat. § 707.57(l)(a).
¶ 51. The majority's statutory holding can be summarized as follows: under Wis. Stat. § 707.57(l)(a), the Otts are eligible for rescission of their time-share contract solely because (1) the Otts transacted with Pepper-tree under Wis. Stat. ch. 707, and (2) Peppertree failed to comply with at least one provision in ch. 707, regardless whether the violation had any adverse effect, indeed regardless whether it had any effect, on the Otts. The wisdom of imposing this sort of strict liability on timeshare sellers — that is, liability without regard to consequences — is something reasonable people may debate. I can imagine the legislature reasonably determining that this type of strict liability would create a powerful and desirable incentive for time-share sellers to comply with the dictates of ch. 707. The problem is that the legislature plainly has not done so.3
¶ 52. Therefore, I conclude the majority errs when it holds that the Otts are eligible for rescission under Wis. Stat. § 707.57(l)(a), and turn my attention to an alternative basis the majority relies on to affirm the circuit court's rescission order.
¶ 53. In section I of its decision, the majority concludes that, apart from remedies that might be *207authorized by Wis. Stat. § 707.57(1)(a), common law principles support the rescission order. In this section, the majority begins by addressing Peppertree's argument that the circuit court erred when it allowed the Otts to cancel their time-share contract under Wis. Stat. § 707.47(2). The majority notes Peppertree's concessions that it did not sign the purchase contract and that a valid time-share purchase contract must include the signature of both parties. The majority concludes that Peppertree's failure to sign the contract resulted in there being no valid purchase contract between the parties for two reasons: first, because Wis. Stat. § 706.02(1) requires that a contract for the purchase of real estate, such as a time-share contract, must be "signed by or on behalf of' the grantor in order to be valid and, second, because Wis. Stat. § 707.46(l)(a) requires that a time-share purchase contract contain the "actual date that the contract is executed by each party," Peppertree's failure to sign the contract resulted in no date of execution.
¶ 54. Having concluded that there is no "valid" contract, the majority's common law analysis proceeds as follows:
1. "[I]rrespective of any statutory right to 'cancel' a valid contract, a party to an invalid contract may, under the common law, have it rescinded and be restored to the status quo ante."
2. "Peppertree concedes ... that rescission is potentially available to the Otts, at least as a common-law equitable remedy, if their time-share purchase contract was invalid for lack of Peppertree's signature ...."
3. Regardless of the availability of rescission under Wis. Stat. § 707.57(l)(a), "the circuit court did not *208err as a matter of law in ordering rescission and directing Peppertree to refund the Otts' payments."
Majority, ¶¶ 15-16. The problem with this analysis is that granting rescission requires an exercise of discretion by the circuit court, and that did not occur here.
¶ 55. Common law rescission of a contract is an equitable remedy. See Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶ 36, 270 Wis. 2d 146, 677 N.W.2d 233. Whether to grant rescission of a contract is a discretionary call. See Mueller v. Michels, 184 Wis. 324, 341, 197 N.W. 201 (1924). This exercise of discretion necessarily involves weighing factors in a particular case hearing on the fairness of granting rescission. For example, in Tam v. Luk, 154 Wis. 2d 282, 453 N.W.2d 158 (Ct. App. 1990), a case in which a party sought rescission based on misrepresentation, we concluded that rescission would not be granted absent a showing of "prejudice, damage or detriment" to the party seeking rescission. Id. at 288-89. We went on to quote A.L.R.: " 'The proposition that a purchaser cannot rescind unless the thing of which he [or she] claims is of practical consequence from some point of view is not difficult to maintain.'" Tam, 154 Wis. 2d at 289 (quoting Annotation, 106 A.L.R. 125, at 129).
¶ 56. The majority does not and could not discuss whether the circuit court properly exercised its discretion to order rescission because the circuit court did not view this topic as one involving discretion. The obvious reason for this omission is that the parties never argued that a discretionary decision under common law principles was on the table. So far as my review of the parties' arguments before the circuit court reveals, the Otts sought rescission solely under Wis. Stat. § 707.57(l)(a), and solely on the theory that rescission *209was theirs for the asking if they demonstrated that Peppertree violated Wis. Stat. ch. 707. Peppertree, in turn, argued only that rescission was not available under § 707.57(l)(a).
¶ 57. Thus, when the circuit court ruled in favor of the Otts, it effectively held that rescission automatically followed its finding that Peppertree violated provisions of Wis. Stat. ch. 707. The circuit court's complete ruling on this topic is short: "[T]he [Otts] under [Wis. Stat. § 707.57(l)(a) are] entitled to appropriate relief which includes rescission and that... is so ordered ...." I find nothing in the record indicating that the circuit court considered whether to order rescission.
¶ 58. How then does the majority avoid discussing whether ordering common law rescission is supported by the record in this case? The answer is found in paragraph 27 of the majority's decision. There, the majority explains that it is affirming rescission because "Peppertree does not argue in the alternative, that, even if the Otts were entitled to obtain some type of relief under § 707.57(1), the court erroneously exercised its discretion in granting the Otts the remedy of rescission on the present record." Majority, ¶ 27. I interpret this explanation to mean that the majority thinks it is also appropriate to affirm rescission under the common law principles because of Peppertree's failure to argue otherwise. But, with respect to common law rescission, this explanation ignores how the rescission issue was presented to the circuit court.
¶ 59. As is obvious by now, under my construction of the phrase "adversely affected," Peppertree's failure to argue, in the alternative, that the circuit court should have exercised discretion whether to order rescission under the statute is both beside the point and understandable. Since I agree with Peppertree that, *210under the facts in this case, rescission is not available, the omission of the alternative argument is beside the point. But the omission is also understandable because of the close link between Peppertree's statutory-interpretation argument and the fairness of ordering rescission. When Peppertree argues that it makes no sense under the statute to say that the Otts are entitled to rescission if they have not been "adversely affected," Peppertree also effectively argues that there is no basis on which a court could properly exercise its discretion to order rescission. In other words, there is no harm to remedy with rescission.
¶ 60. More to the point here, the Otts sought rescission solely under Wis. Stat. § 707.57(l)(a), perhaps because that statute authorizes payment of their attorney fees should they prevail. Further, the Otts' statutory rescission theory was that rescission was theirs for the asking if they demonstrated a Wis. Stat. ch. 707 violation. Thus, Peppertree can hardly be blamed for failing to both raise and knock down the proposition that, apart from ch. 707, the Otts might be entitled to rescission under common law principles.
¶ 61. Moreover, it is obvious what Peppertree's response would have been; namely, that the Otts cannot show that the record supports an exercise of discretion in ordering rescission because nothing indicates that Peppertree's violations had an effect on the Otts, much less an adverse effect.
¶ 62. To sum up, the majority's common law rescission discussion raises and applies a theory for affirming the circuit court that the Otts have not advanced and that Peppertree, understandably, did not address. Under these circumstances, I would not hold that Peppertree loses because it failed to address the topic.
*211¶ 63. Finally, I wonder whether the majority's decision amounts to a rejection of the Otts' apparent argument that rescission was theirs for the asking, without regard to whether the rescission order remedies an actual harm suffered. Parts of the decision might be read that way because they suggest that, even under the time-share statutes, rescission is an equitable remedy requiring a circuit court's exercise of discretion. But since the majority concludes that the Otts need not show harm to be entitled to rescission under the statute, then I suppose it makes sense to say that rescission under the statute is automatically triggered merely by a demonstrated violation and a request for rescission. When there is no actual harm or potential harm shown, what is there for a circuit court to balance? It seems resolution of this question awaits a case in which the parties squarely address it, something that has not been done here.
¶ 64. For these reasons, I respectfully dissent.

 For reasons that are not apparent, the majority speaks in terms of whether a violation influenced a purchase decision. Specifically, the majority states, "any violations by a time-share *204seller of the purchaser protections enacted in Wis. Stat. ch. 707 'act upon' the prospective purchaser and are 'opposed' or 'contrary' to the prospective purchaser's 'interests,' even when the violations cannot be shown to have specifically influenced a purchase decision." Majority, ¶ 21 (emphasis added). What is not apparent to me is why the majority singles out effects on purchase decisions. I understand the majority to be holding that all violations of ch. 707 by time-share sellers, regardless of any consequence, satisfy the "adversely affected" requirement in Wis. Stat. § 707.57(l)(a).

 In this paragraph, I have intentionally characterized the majority as holding that the Otts are eligible for rescission, rather than entitled to it. The reason I do so is because the majority avoids directly addressing whether the Otts were entitled to rescission by effectively holding that Peppertree waived any argument that the Otts were not entitled to rescission. This is a topic I address later in my dissent.