Krekeler Strother SC v. Veronika McCarthy

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
February 10, 2022
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2021AP1633 Cir. Ct. No. 2016SC6915

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

KREKELER STROTHER SC,

PLAINTIFF-RESPONDENT,

V.

VERONIKA MCCARTHY,

DEFENDANT,

FRANK P. GAURA,

DEFENDANT-APPELLANT.

APPEAL from a judgment of the circuit court for Dane County:
JUAN B. COLÁS, Judge. Affirmed.
No. 2021AP1633

¶1 KLOPPENBURG, J.1 The circuit court entered a money judgment
in a small claims case in favor of creditor Krekeler Strother, S.C. and against
debtors Frank Gaura and Veronika McCarthy, after Gaura and McCarthy failed to
make timely payments under a stipulation and settlement agreement (agreement).
Gaura appeals, arguing that the court erred in awarding pre-agreement interest,
awarding post-hearing attorney fees, considering post-hearing affidavits filed by
Krekeler, and rejecting Gaura’s “equitable arguments” in favor of a reduced
judgment. I reject Gaura’s arguments as refuted by the record and, therefore,
affirm.

BACKGROUND

¶2 Krekeler commenced this action by filing a small claims complaint
in November 2016, seeking a money judgment against McCarthy for services
rendered and to enforce the personal guaranty by Gaura of McCarthy’s account
with Krekeler. The complaint alleged that Gaura and McCarthy had failed to pay
for those services and were in default as of November 2010. The complaint
sought the principal amount due plus prejudgment interest since 2010 and costs
and attorney fees as allowed by law.

¶3 The parties entered into an agreement in February 2018 which,
among other terms, set a monthly payment schedule, provided that no additional
interest would accrue so long as the payments were made, and provided for
dismissal of the action. The agreement also provided that, if Gaura and McCarthy
failed to comply with the payment schedule, Krekeler was entitled to reopen the

1
This appeal is decided by one judge pursuant to WIS. STAT. § 752.31(2)(a) (2019-20).
All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise noted.

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action and seek a money judgment that would include “retroactive” interest and
post-default attorney fees and costs. The agreement further provided that it could
be amended only in writing.

¶4 Gaura and McCarthy ceased making payments in November 2020,
and Krekeler moved to reopen the case and for a default judgment. Gaura
objected and the circuit court held a hearing on the motion. At the conclusion of
the hearing, the court granted the motion and ordered that judgment be entered in
favor of Krekeler. The court directed Krekeler’s counsel to prepare a proposed
judgment that properly calculated interest and costs. Counsel filed a proposed
judgment along with affidavits supporting the itemized amounts comprising the
proposed judgment.

¶5 Gaura filed a letter objecting to the proposed judgment, which the
circuit court construed as a request for another hearing. The court denied the
request, explaining that Gaura did not make particularized objections supported by
citations to the record showing that the proposed judgment was inconsistent with
either the agreement or the court’s ruling.

¶6 The court entered judgment consistent with the proposed judgment.2

¶7 Gaura appeals.3

2
The final judgment entered by the circuit court was an amended judgment that added
language that does not matter to the issues on appeal.
3
McCarthy did not appear at the hearing and did not sign any of the post-hearing
submissions filed by Gaura in the circuit court. McCarthy also does not appear as an appellant.
Accordingly, in the remainder of this opinion I will refer solely to Gaura.

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DISCUSSION

¶8 Gaura does not challenge the circuit court’s decision granting
Krekeler’s motion to reopen, in that he does not oppose the circuit court’s findings
that it was undisputed that payments under the agreement ceased and that the
agreement was not modified. Nor does Gaura argue that Krekeler was not entitled
to any judgment as a result of the default. Rather, Gaura challenges the inclusion
of several of the itemized amounts in the judgment that was entered. Specifically,
he argues that the court erred in awarding pre-agreement interest, awarding post-
hearing attorney fees, and considering the post-hearing affidavits filed by
Krekeler. Gaura also argues that the circuit court erred in rejecting without
explanation his “equitable arguments” in favor of a reduced judgment. As I
explain, each argument fails because it is premised on a fundamental
misunderstanding of the record. I first provide additional background and then
address each argument in turn.

A. Additional Background

¶9 In the November 2016 complaint, Krekeler alleged that Gaura was in
default as of November 24, 2010, and sought judgment for the sum of the principal
of $3,465.48; prejudgment interest in the amount of $1,053.83 from November 24,
2010 through December 22, 2016; and costs and attorney fees as allowed by law.

¶10 In the 2018 agreement, the parties agreed to payment of “the sum of
$3465.48 plus interest in the amount of $1258.43 [from November 24, 2010
through February 26, 2018], costs of $259.30 for a total amount due and owing of
$4983.21, plus interest accruing at the rate of $.4747 per day after February 26,
2018, until this Settlement Agreement and the stipulation are signed.” The
agreement documents were signed on February 27, 2018.

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¶11 The agreement established a payment schedule of $50.00 per month
and provided that no further interest would accrue once the agreement was signed
so long as the monthly payments were made. The agreement also stated:

In the event of default, [Krekeler] shall be entitled to retain
the payments received, pursuant to this Settlement
Agreement and Stipulation, and to retroactively apply
interest or other charges to which it may be lawfully
entitled, as well as all actual attorney’s fees and costs after
default.

¶12 The agreement further stated that, if the monthly payments were not
made or any other terms of the agreement were violated,

[Krekeler] shall be entitled to entry of a money judgment in
accordance with the original Complaint, plus interest
thereon, plus actual attorney’s fees and costs after default
but with a credit to [Gaura] for any and all payments made
hereunder.

¶13 After the payments ceased under the agreement and Krekeler moved
to reopen the case and for a default judgment, the circuit court entered the 2021
judgment, which contains the following itemized amounts:

Amount of Judgment: $ 3,465.48

Interest: 1,855.59

Attorney Fees: 3,226.11

Service Fee: 174.50

Other costs: - 1,588.00
[the payments made under the agreement]

Total Money Judgment: $ 7,133.68

B. Interest

¶14 Gaura argues that the circuit court erred in including interest of
$1,855.59 in the judgment. In his appellant’s brief, he argues that this amount

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“double-count[ed]” the $1,258.43 of pre-agreement interest (for the period 2010-
2018) itemized in the agreement. This argument is premised on Gaura’s mistaken
belief that the judgment added interest of $1,855.59 (which incorporated
$1,258.43 of pre-agreement interest) to the total amount of the agreement, which,
as stated above, was $4,983.21. Gaura argues that because the total amount of the
agreement already included the $1,258.43 of pre-agreement interest, and the
circuit court added $1,855.59 of interest to that amount, the judgment counted the
pre-agreement interest twice. However, the judgment clearly denominated the
$3,465.48 as the principal to which the total interest of $1,855.59 was to be added.
Similarly, the complaint and agreement both started with $3,465.48 as the
principal amount owed to which interest was to be added. Thus, the $1,258.40 of
pre-agreement interest was properly included in the interest itemized in the
judgment, and there was no “double-counting.”4

¶15 In his reply brief, Gaura clarifies that what he actually argued to the
circuit court, and again argues on appeal, is that the amount of $1,855.59 in
interest improperly included the pre-agreement interest itemized in the agreement
because Krekeler was not entitled to the pre-agreement interest upon default. This
argument proceeds as follows: (1) the complaint designated interest from 2010 to
2016 as “prejudgment” interest, not “retroactive” interest; (2) the agreement
entitled Krekeler only to “retroactive” interest from 2018 as a result of Gaura’s
default; (3) therefore, the agreement excluded all “prejudgment” interest prior to
the agreement (all pre-agreement interest). This argument is incorrect because the

4
Gaura makes the same double-counting argument as to the service fee. However, the
service fee was added to the $3,465.48 principal in both the agreement and in the judgment, in the
same manner as the interest was added to that principal in both documents. Hence, the service
fee was not “double-counted.”

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No. 2021AP1633

agreement entitled Krekeler not only to retroactive interest from 2018 to 2020
(corresponding to the time of Gaura’s payments when no additional interest was
accruing), but to all prejudgment interest on the judgment as sought in the
complaint, from 2010 to entry of the 2021 judgment.

¶16 Gaura seems to be arguing that the agreement entitled Krekeler only
to “retroactive” interest, which Gaura takes to mean the interest that did not accrue
from 2018 to 2020 when Gaura was making the monthly payments, plus the
prejudgment interest from the 2020 default to the 2021 judgment. However,
Gaura provides no evidence or authority, in the record or the agreement or the law,
that eliminated the prejudgment interest sought in the complaint from initial
default in 2010 to final judgment in 2021, or that limited interest only to the sum
of the retroactive interest from 2018 to Gaura’s default in 2020 plus the
prejudgment interest from the 2020 default to the entry of the 2021 judgment.

¶17 Gaura asserts that the inclusion in the judgment of the pre-agreement
interest was contrary to the circuit court’s ruling at the hearing. Specifically, the
court stated that “judgment cannot include retroactive interest from before the date
of the settlement agreement. In other words, the starting point is that starting
balance in the settlement agreement, which already incorporated all the interest
from 2010 to 2016 [sic].” As explained above, the 2021 judgment maintained the
same breakdown, of principal and interest, as the agreement; the only difference
was that the interest in the judgment was the total prejudgment interest as of the
date of entry of the 2021 judgment, comprising the sum of the pre-agreement
interest from 2010 to 2018, the retroactive interest from 2018 to 2020 that did not
accrue while Gaura made the monthly payments, and the prejudgment interest
from 2020 to the date of the 2021 judgment. A careful reading of the transcript
establishes that the circuit court only sought to ensure that the pre-agreement

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No. 2021AP1633

interest was not included twice in the judgment; as explained above, it was not.5
There is nothing in the transcript that indicates that the court intended to relieve
Gaura from paying all of the prejudgment interest sought by Krekeler, or any other
component of the judgment to which Krekeler was entitled under the agreement.
To the contrary, as explained in section E. below, the court expressly rejected
Gaura’s equitable arguments seeking just that relief.

C. Attorney Fees

¶18 Gaura argues that the circuit court erred in including “post-hearing”
attorney fees in the judgment. The record establishes that Krekeler incurred the
fees when preparing the proposed judgment and supporting documentation as
directed by the circuit court in order to ensure that no interest or costs are double-
counted (not, as stated by Gaura, in support of a motion for reconsideration).
While Gaura argues that the circuit court did not explain why the judgment
includes attorney fees, no explanation was necessary because the agreement
provided that, in the event of default, Krekeler would be entitled to its actual
attorney fees, and the court was simply enforcing the agreement to which the
parties were bound.

¶19 Gaura does not point to any basis in the record for asserting that the
amount in the judgment did not correspond to Krekeler’s actual attorney fees.
Rather, he argues that the attorney fees were unwarranted because Krekeler
incurred the post-hearing attorney fees due to “confusion” created by Krekeler.
However, it was Gaura who raised the double-counting issue at the hearing, which

5
For the same reasons, there is no merit to Gaura’s assertion that the inclusion in the
judgment of the pre-agreement interest was contrary to Krekeler’s pre-hearing submissions.

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No. 2021AP1633

prompted the circuit court to direct Krekeler to ensure that the proposed judgment
did not include any double-counting. Gaura does not persuasively argue that it
was unreasonable for Krekeler to incur additional attorney fees in providing
documentation to show the court that the proposed judgment did not include any
double-counting as directed.

¶20 Finally, Gaura argues that the attorney fees should have been
reduced in the interest of fairness. His fairness argument is based on the faulty
premise that the circuit court intended to reduce the judgment based on Gaura’s
double-counting argument at the hearing. As explained above, the record
establishes that the court did no such thing; instead the court directed Krekeler to
ensure that the judgment did not include any double-counting, and it did not.

D. Affidavits

¶21 Gaura argues that the circuit court erred in accepting Krekeler’s
post-hearing affidavits. He argues that those affidavits were essentially a motion
to reconsider unsupported by any showing of newly discovered evidence or
manifest error of law or fact. However, as explained above, the court made no
ruling that Krekeler sought to reconsider; rather, Krekeler submitted the affidavits
to document the amounts in the proposed judgment, consistent with the court’s
directive that the proposed judgment not include any double-counting.

E. Equitable Arguments

¶22 Gaura argues that the circuit court erred in rejecting his equitable
arguments without explanation. Gaura clarifies that he sought not “absolution
from the agreement” but “an order that would factor in the loss of his entire
household’s income during the COVID-19 pandemic,” by, for example, not

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No. 2021AP1633

awarding interest before 2020, as he argued to the circuit court, or not awarding
attorney fees, as he argues on appeal. The record establishes that the circuit court
did consider Gaura’s equitable arguments and explain, expressly and implicitly,
why it rejected them.

¶23 The circuit court began the hearing by establishing that it was
undisputed that there was no written modification of the agreement and that Gaura
had ceased making payments under the terms of the agreement. The court next
turned to Gaura’s arguments as to the calculation of the judgment to which
Krekeler was entitled under the agreement. The court then heard Gaura’s
equitable arguments. Gaura explained to the court that he lost his job in May 2020
due to the pandemic, made payments under the agreement until October 2020, and
found a new job in March 2021. Gaura argued that the pandemic-related loss of
income was beyond his control and rendered performance of the agreement
impossible, and he asked that the court in fairness award Krekeler only interest
from November 2020.

¶24 The circuit court responded that the pandemic and Gaura’s job loss
did not excuse him from the debt or from performance under the agreement that he
signed. The court explained that Gaura had not presented any evidence, including
his efforts to find a new job, what he was qualified to do, or what his assets were,
to justify excusing him from his debt or from performance under the agreement
that he signed. When the parties subsequently brought up their unsuccessful
efforts to reach a new agreement, the court reiterated that it was undisputed that
the agreement had not been modified, implicitly indicating that the court was not
authorized to order terms inconsistent with the agreement.

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No. 2021AP1633

¶25 It is clear that Gaura disagrees with the circuit court’s rejection of
his equitable arguments, but the record refutes his argument that the court did so
without explanation. As summarized above, the record establishes that the court
explained, both expressly and by reasonable inference, that Gaura was bound by
the terms of the agreement that he made, that under the agreement he owed the full
principal and all prejudgment interest, and that he presented no evidence to justify
overriding the agreement on equitable grounds by excusing him from any part of
the debt incurred since 2010.

CONCLUSION

¶26 For the reasons stated, I reject Gaura’s challenges to the judgment as
refuted by the record and, therefore, affirm.

By the Court.—Judgment affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)4.

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