In a 5-1 decision authored by Justice Ziegler and joined by Justices Crooks, Bradley, Prosser, and Gableman (Chief Justice Abrahamson dissenting and Justice Roggensack not participating), the Wisconsin Supreme Court handed the self-proclaimed “Lemon Law King” a defeat by refusing to award him attorney’s fees in a lawsuit. The case is Betz v. Diamond Jim’s Auto Sales, 2014 WI 66.

Background

The plaintiff, Randy Betz, purchased a used vehicle from Diamond Jim’s Auto Sales. Betz experienced problems with the automobile and ultimately sued Diamond Jim’s. Betz hired plaintiff attorney Vince Megna, the self-proclaimed “Lemon Law King.” Under one of the statutes (Wis. Stat. § 100.18(11)) that Megna sued under allowed for attorney’s fees for the plaintiff (commonly referred to as a “fee-shifting” provision).

However, before the case went to trial, Betz and the general manager of Diamond Jim’s entered into a settlement agreement without their attorneys’ knowledge. The settlement agreement did not include attorney’s fees for Megna.

Megna intervened in the case as a plaintiff arguing that the right to cover attorney’s fees under the statute belonged to him as a lawyer, not the client. The circuit court dismissed Megna’s lawsuit. The court of appeals reversed.

Wisconsin Supreme Court Decision

The Court reversed the court of appeals and held that the plaintiff (Megna’s client) did not assign his right to recover the attorney’s fees under statute to Megna in the fee agreement between Megna and Betz. Therefore, the Court held that Megna could not seek the statutory attorney’s fees directly from Diamond Jim’s (the defendant).

In reaching its decision, the Court stated that there were two issues to be decided: 1) whether Betz assigned his statutory right to recover attorney’s fees to Megna under their fee agreement, and 2) whether Diamond Jim’s had notice of the assignment at the time of the settlement.

Looking at the language of the fee agreement between Megna and his client, the Court determined that the language could not “be fairly characterized as a written assignment of Betz’s statutory authority right to recover fees.”

The Court went out of its way to give attorneys advice in how to properly draft their contracts with plaintiffs. Specifically, the Court stated that “attorneys are cautioned to clearly draft a fee agreement so that it unambiguously assigns the client’s statutory right to recover attorney’s fees from the defendant.” According to the Court, a “more clearly drafted fee agreement [between Megna and his client (Betz)] … would have resolved the problem without the necessity of additional litigation.”