Thunderbird Engineering, Inc. v. American Design, Inc.

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.
July 7, 2023
A party may file with the Supreme Court a
Samuel A. Christensen 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. 2021AP1985 Cir. Ct. No. 2019CV2861

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

THUNDERBIRD ENGINEERING, INC.,

PLAINTIFF-APPELLANT,

V.

AMERICAN DESIGN, INC. AND JOHN T. WILLIAMS,

DEFENDANTS-RESPONDENTS.

APPEAL from an order of the circuit court for Dane County:
STEPHEN E. EHLKE, Judge. Affirmed.

Before Fitzpatrick, Graham, and Nashold, JJ.

Per curiam opinions may not be cited in any court of this state as precedent or

authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

¶1 PER CURIAM. Thunderbird Engineering, Inc. (“Thunderbird”)
appeals an order denying its request for exemplary damages and partially denying
No. 2021AP1985

its request for attorney fees pursuant to WIS. STAT. § 895.446(3) (2021-22).1
Thunderbird also appeals the circuit court’s ruling denying its requests for attorney
fees under WIS. STAT. § 802.05(3) associated with responding to an unsuccessful
request for sanctions filed by American Design, Inc. (“American Design”) and John
Williams (collectively, “Defendants”), and under WIS. STAT. § 804.12(2) for
Defendants’ alleged discovery violations. We affirm.

BACKGROUND

¶2 This appeal arises in a somewhat unique procedural posture. The
circuit court granted summary judgment to Thunderbird on its breach-of-contract
and theft-by-contractor claims after Defendants failed to respond to Thunderbird’s
requests for admission. Defendants do not challenge the court’s order granting
summary judgment against them. Instead, Thunderbird appeals the court’s denial
of its request for exemplary damages and the court’s award of only partial attorney
fees on Thunderbird’s theft-by-contractor claims. Therefore, the following
background focuses on facts relevant to these limited issues.

¶3 American Design is an architectural firm, with Williams as its
president, majority owner, and sole active officer. In 2018, American Design
entered into contracts to serve as the prime contractor for the renovation of two
buildings in Milwaukee: the Andrew S. Douglas School (“Douglas project”),
owned by the Milwaukee Public Schools (“MPS”); and the Merchant & Farmers
State Bank Building (“Bader project”), owned by Bader Philanthropies, Inc.

1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.

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¶4 American Design hired Thunderbird as one of its subcontractors, to
perform HVAC, plumbing, and electrical services on both projects. Shawn Woldt
is the president of Thunderbird.

¶5 American Design and Thunderbird entered into contracts for the
Douglas and Bader projects (the “Douglas contract” and “Bader contract,”
respectively). The Douglas contract required that American Design “attempt” to
pay Thunderbird for its services within thirty days of receiving payment from MPS.
The Bader contract required that American Design pay Thunderbird “promptly”
after receiving payments from Bader Philanthropies, Inc. In addition, each contract
required Thunderbird to name each project owner, MPS and Bader Philanthropies,
respectively, as an additional insured under its general liability and umbrella
liability insurance policies. Thunderbird’s failure to comply with these insurance
requirements could result in American Design being in breach of its contract with
the project owners.

¶6 Over the course of the projects, MPS and Bader Philanthropies timely
paid American Design approximately $380,000. Out of those funds, American
Design would ultimately owe Thunderbird a total of $87,495 for its work on the
Douglas project and $41,520 for its work on the Bader project.

Douglas Project

¶7 Thunderbird’s work on the Douglas project began in late 2018 or early
2019, with most of the work completed by August 2019. On October 3, 2018,
American Design’s office manager, Beverly Helbling, emailed Thunderbird’s
business manager, requesting that Thunderbird send Helbling a copy of
Thunderbird’s certificate of insurance (“COI”) naming MPS as an additional
insured on its policies, as the contract required. Helbling repeated this request in

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emails sent on December 10 and 12, 2018. Despite Thunderbird’s attempts to
rectify the insurance issues, as of April 4, 2019, Thunderbird still had not satisfied
the contract requirement that MPS be included as an additional insured. In addition,
as the circuit court found, there continued to be “legitimate concerns regarding
insurance in the months after April of 2019,” which “[e]ven Mr. Woldt admitted
[to] in his deposition testimony.” Thunderbird did not produce a COI for the
Douglas project containing the correct “additional insured” language until
March 12, 2021, a few weeks before trial.2

¶8 In addition to the insurance issues, there were also issues involving
Thunderbird’s failure to sign the Douglas contract. In November 2018, Helbling
notified Thunderbird that American Design had not yet received a signed copy of
the contract and Helbling twice emailed Thunderbird the contract for signature.
About seven months later, in June 2019, following Woldt’s complaints to American
Design about payment delays, Williams explained that he had needed to apply his
“executive override” to pay Thunderbird because Woldt had not signed the contract.
Williams requested that Woldt sign the contract. In July 2019, there were still
ongoing emails and discussions about getting the Douglas contract signed, with
Thunderbird ultimately signing the contract on July 23, 2019.

2
Defendants state that, by the start of trial, American Design had asked Thunderbird to
provide a compliant COI nine times but never received one. Thunderbird argues that this is a
“blatant mischaracterization of the evidence.” However, in support of this assertion, Thunderbird
cites, among other things, Woldt’s own testimony at trial in which he twice agreed that Defendants
had requested the insurance information nine times before receiving it. We therefore question
Thunderbird’s characterization of Defendants’ statement as a “blatant mischaracterization.” It is
unnecessary for purposes of our decision in this case, however, to determine the exact number of
times that Defendants requested the COI. The circuit court concluded that there were ongoing
“legitimate” concerns about the insurance issues, extending up through and after April 2019.
Although Thunderbird argues that the insurance concerns expressed by Defendants were only a
“pretext to cover up Defendants’ misuse of the project funds,” Thunderbird has not shown—or
even argued—that the court’s contrary finding that Defendants’ insurance concerns were
“legitimate” is clearly erroneous. See WIS. STAT. § 805.17(2).

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¶9 During the same time period in which the parties were attempting to
resolve the insurance and contract signature issues, Thunderbird was also attempting
to obtain payments from American Design for work that Thunderbird had
performed. In November 2018, Thunderbird attempted to send its first invoice to
American Design but sent it to the wrong email address. Although the contract
required that invoices be sent to Helbling, Woldt either attempted to or did email
the November invoice to Williams instead. In an email from Williams to Woldt on
January 29, 2019, Williams stated that American Design had not received any
invoices from Thunderbird and, in a follow-up email in February 2019, he stated
that American Design received its first invoice at the very end of January 2019.
Woldt responded, “It is our issue as my bookkeeper was not doing their job which
was to verify the invoice was accepted.” Woldt also admitted during his trial
testimony that the November invoice was not submitted properly and that
Defendants had not received it when originally sent. American Design paid this
invoice in March 2019.

¶10 Although some or all of the payments were overdue, by April 12,
2019, American Design had paid Thunderbird fifty percent of the total that
Thunderbird was owed regarding the Douglas contract. The circuit court credited
Williams’ testimony that American Design made these payments to Thunderbird
despite the deficiencies in Thunderbird’s insurance policies because Williams
believed Thunderbird would eventually come into compliance with the contract and
because he wanted to help a fellow minority-owned firm. The court also credited
Williams’ testimony, supported by contemporaneous emails, that in May and June
of 2019, Williams repeatedly traveled to San Diego to spend time with his sick
mother and that, as summarized by the court, “[o]nce things settled down, he had a
chance to look things over and he decided that before they paid more on the

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[Douglas] contract, they needed to get the contract signed and make sure everything
else was in order.”

¶11 As the circuit court found, on July 31, 2019, “things came to a head”
when Woldt sent an email to Sean Kane, an administrator with MPS, complaining
about Defendants’ nonpayment of invoices on the Douglas contract, with Williams
copied on the email. After Kane asked the pair to work out their issues, Williams
sent an email to Woldt on August 1, 2019, identifying the following problems:
(1) Thunderbird’s third-party vendors failed to submit timely invoices;
(2) Thunderbird failed to timely sign the Douglas contract; and (3) Thunderbird’s
COI was still deficient. Williams closed his email by saying he was out of town on
a personal family emergency.

¶12 Also on August 1, 2019, Woldt emailed Williams advising that he
would be filing suit as a result of Defendants’ failure to pay invoices. At some point
after Williams read this August 1 email, he informed Woldt that any future
communication between them must be through Williams’ attorney.

¶13 As of Thunderbird’s July 2020 summary judgment motion,
Defendants owed Thunderbird $46,050 on the Douglas project. This remaining
amount was not paid until December 2020, after the circuit court granted summary
judgment to Thunderbird, awarding it damages in that amount.

Bader Project

¶14 Thunderbird’s work on the Bader project began in late 2018 or early
2019, with most of the work completed in 2019. Thunderbird sent its first invoice
to American Design on March 21, 2019, for $12,975; a second invoice on April 22,
2019, for $25,950; and a third invoice on May 17, 2019, for $2,595. These invoices,

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No. 2021AP1985

reflecting the total of $41,520 owed on the Bader project, were paid between
September 26, 2019 and October 18, 2019.

¶15 As with the Douglas project, problems occurred with the COI for the
Bader project. On September 12, 2019, Thunderbird’s business manager emailed a
copy of Thunderbird’s COI to Helbling and another American Design employee.
That American Design employee emailed the Thunderbird manager, informing him
that the COI lacked the language required by the Bader contract, and requested a
proper COI. A few days later, an American Design employee followed up with
Woldt and the Thunderbird manager, providing them with sample language from
another subcontractor’s COI that complied with the Bader contract. On
September 17, 2019, Thunderbird submitted a compliant COI for the Bader project.
Once it received the compliant COI, American Design paid all of the outstanding
Bader invoices, with all payments sent within thirty days of Thunderbird achieving
compliance.

American Design’s Line of Credit

¶16 At trial, Williams testified regarding an open line of credit supplied
by a family trust that American Design had used for decades due to the difficulties
that Black-owned firms face in obtaining credit from traditional banks in
Milwaukee. He testified that American Design used this “very common” financing
tool in conjunction with its central bank account to manage the payments that it
needed to make. Williams further testified that, between the bank account and line
of credit (which varied but was around $100,000), American Design “always had
the ability to pay Thunderbird’s invoices.” The circuit court found that “Williams
testified convincingly and without contradiction regarding the line of credit.”

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Lawsuit Leading to Appeal

¶17 On October 15, 2019, Thunderbird filed suit against Defendants,
alleging four counts of theft by contractor (one for each defendant for both the
Douglas and the Bader projects) and one count of breach of contract against
American Design. Thunderbird sought exemplary damages and attorney fees from
both Defendants on its theft-by-contractor claims, pursuant to WIS. STAT.
§ 895.446(3).

¶18 From March through June 2020, Thunderbird served Defendants with
multiple discovery requests, including requests for admission. Defendants did not
respond to any of Thunderbird’s discovery requests. Defendants also failed to
appear for noticed depositions. Williams later represented that this failure to
respond was on the advice of prior counsel, who advised that the contracts required
Thunderbird to engage in arbitration or mediation.

¶19 Among the unanswered discovery requests served on Defendants
were requests for Defendants to admit that American Design breached its contracts
with Thunderbird, that Defendants “committed theft by contractor,” and that
Williams was “liable for civil theft.”

¶20 The parties subsequently filed cross-motions for summary judgment.
Defendants’ primary argument was that Thunderbird could not bring its claims due
to arbitration and mediation provisions in the contracts, and that Thunderbird’s
theft-by-contractor claims against Williams were improper because Williams was
not individually a party to the contracts. In their summary judgment submissions,
Defendants also requested sanctions against Thunderbird pursuant to WIS. STAT.
§ 802.05(2) for filing a “frivolous lawsuit.”

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No. 2021AP1985

¶21 For its part, Thunderbird argued that its requests for admission were
deemed admitted and that these admissions disposed of the entire case. In addition
to actual damages, Thunderbird also requested exemplary damages and reasonable
litigation costs in an amount to be determined, including attorney fees, pursuant to
WIS. STAT. § 895.446(3) on its theft-by-contractor claims. In its reply, Thunderbird
also requested attorney fees under WIS. STAT. § 802.05(3)(a)1. associated with
responding to Defendants’ sanctions motion, alleging that the motion did not
comply with statutory requirements.

¶22 On October 14, 2020, the circuit court denied Defendants’ motion for
summary judgment but granted summary judgment to Thunderbird on its breach-
of-contract and theft-by-contractor claims based on Defendants’ failure to respond
to Thunderbird’s requests for admission. The court also denied Defendants’ request
for sanctions under WIS. STAT. § 802.05(3) on the ground that Defendants had not
complied with that statute’s requirement that a motion for sanctions be made
separately from other motions. The court reserved ruling on Thunderbird’s request
for attorney fees associated with responding to Defendants’ improper sanctions
motion.

¶23 The circuit court awarded Thunderbird actual damages of $46,050. It
reserved ruling, however, on Thunderbird’s request for exemplary damages and
reasonable litigation costs (including attorney fees) on the theft-by-contractor
claims under WIS. STAT. § 895.446(3), stating that it was “loath to award” those
damages, given the procedural posture of the case, which the court compared to a
default situation due to Defendants’ failure to answer the admission requests. The
court also instructed the parties to attempt to resolve these remaining issues,
particularly given that Defendants’ new counsel had only been handling the case for

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No. 2021AP1985

a week. When efforts at resolving the case failed, the court held a two-day trial on
the issues of exemplary damages and attorney fees.

¶24 Following the two-day trial and post-trial briefing, the circuit court
denied Thunderbird’s request for exemplary damages and awarded partial attorney
fees of $14,630 under WIS. STAT. § 895.446(3).

¶25 The circuit court also denied Thunderbird’s request for attorney fees
related to Defendants’ request for sanctions under WIS. STAT. § 802.05(3). As
discussed separately below, the court likewise denied Thunderbird’s request for
attorney fees under WIS. STAT. § 804.12(2) for alleged discovery violations related
to Defendants’ failure to produce bank records.

¶26 Thunderbird appeals.

DISCUSSION

I. Exemplary Damages and Attorney Fees for Theft by
Contractor Under WIS. STAT. § 895.446(3).

¶27 Thunderbird challenges the circuit court’s denial of its request for
exemplary damages and the court’s partial denial of attorney fees under WIS. STAT.
§ 895.446(3), arguing that the court’s determinations were the result of an erroneous
exercise of discretion. For the reasons that follow, we disagree.

A. Criminal theft by contractor, remedies, and standard of review.

¶28 WISCONSIN STAT. § 779.02(5) is the civil theft by contractor
provision. This provision states, in relevant part:

[A]ll moneys paid to any prime contractor … by any owner
for improvements, constitute a trust fund … to the amount
of all claims due or to become due or owing from the prime
contractor … for labor, services, materials, plans, and

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specifications used for the improvements, until all the claims
have been paid …. The use of any such moneys by any
prime contractor … for any other purpose until all claims,
expect those which are the subject of a bona fide dispute and
then only to the extent of the amount actually in dispute,
have been paid in full or proportionally in cases of a
deficiency, is theft by the prime contractor ….

Id.3 “By its terms, … § 779.02(5) makes misappropriation of contractor trust funds
punishable as a theft under WIS. STAT. § 943.20.” Tri-Tech Corp. of Am. v.
Americomp Servs., Inc., 2002 WI 88, ¶2, 254 Wis. 2d 418, 646 N.W.2d 822.
Section 943.20(1)(b), in turn, provides criminal penalties for whoever, “[b]y virtue
of his or her office, business or employment,” has “possession or custody of money
… of another” and “intentionally uses, transfers, conceals, or retains possession of
such money, … without the owner’s consent, contrary to his or her authority, and
with intent to convert to his or her own use or to the use of any other person except
the owner.”

¶29 In addition to criminal penalties for violations of WIS. STAT. § 943.20,
civil remedies may also be awarded for such violations. WISCONSIN STAT.
§ 895.446(3) “provides a civil treble damages remedy to victims of certain
intentional property crimes [and] includes … § 943.20 as one of the predicate
criminal offenses for which the remedy is available.” Tri-Tech, 254 Wis. 2d 418,
¶2.4 Section 895.446(1) provides that “[a]ny person who suffers damage or loss by

3
This case also involves WIS. STAT. § 779.16, the theft-by-contractor statute for public
projects, because the Andrew S. Douglas School is owned by the public. However, WIS. STAT.
§§ 779.02 and 779.16 are substantially the same. See Century Fence Co. v. American Sewer
Serv., Inc., 2021 WI App 75, ¶9 n.6, 399 Wis. 2d 742, 967 N.W.2d 32. Therefore, we do not
separately address § 779.16.
4
In Tri-Tech Corp. of America v. Americomp Services, Inc., 2002 WI 88, ¶2, 254 Wis. 2d
418, 646 N.W.2d 822, the court refers to WIS. STAT. § 895.80 (2001-02), which was amended in
2004 by 2003 Wis. Act 138, §§ 19-25, and renumbered to WIS. STAT. § 895.446 by 2005 Wis. Act
155, § 70. As to attorney fees, both versions of the statute allow for recovery of “[a]ll costs of

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reason of intentional conduct … that is prohibited under [§] 943.20 … has a cause
of action against the person who caused the damage or loss.” “The burden of proof
in a civil action under sub. (1) is with the person who suffers damage or loss to prove
a violation of [§] 943.20 … by a preponderance of the credible evidence.”
Sec. 895.446(2).

¶30 WISCONSIN STAT. § 895.446(3) authorizes the following damages and
costs for violations under § 895.446(1):

(3) If the plaintiff prevails in a civil action under
sub. (1), he or she may recover all of the following:

(a) Actual damages, including the retail or
replacement value of damaged, used, or lost property,
whichever is greater, for a violation of [§] 943.20 ….

(b) All costs of investigation and litigation that were
reasonably incurred, including the value of the time spent by
any employee or agent of the victim.

(c) Exemplary damages of not more than 3 times the
amount awarded under par. (a). No additional proof is
required under this section for an award of exemplary
damages under this paragraph.

investigation and litigation that were reasonably incurred.” See § 895.446(3)(b); WIS. STAT.
§ 895.80(3)(b) (2001-02). Regarding exemplary damages, the only difference between the two
versions of the statutes is that the prior version allowed for recovery of “treble damages,” whereas
the current version allows for recovery of “[e]xemplary damages of not more than 3 times the
amount awarded under par. (a) [actual damages].” See § 895.446(3)(c); § 895.80(3)(a) (2001-02).
The parties do not argue that this statutory change makes any difference to our interpretation of
Tri-Tech or to the outcome in this matter. In discussing Tri-Tech, this opinion substitutes the
current numbering of the statute for the prior numbering.

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“[A]ttorney fees are included with the meaning of ‘costs of investigation and
litigation’ under … § 895.446(3)(b).” Estate of Miller v. Storey, 2017 WI 99, ¶49,
378 Wis. 2d 358, 903 N.W.2d 759 (quoted source omitted).5

¶31 In Tri-Tech, our supreme court examined the interplay between WIS.
STAT. §§ 779.02(5), 943.20, and 895.446. The court concluded that “the treble
damages remedy of WIS. STAT. § [895.446] is available for civil theft by contractor
under … § 779.02(5), by operation of WIS. STAT. § 943.20.” Tri-Tech, 254 Wis. 2d
418, ¶43.

¶32 However, the supreme court further concluded that specific
requirements must be satisfied in order to establish a violation of the criminal
theft-by-contractor provision and thereby unlock exemplary damages under WIS.
STAT. § 895.446(3). See id., ¶¶24, 43. Specifically, in order to qualify for
exemplary damages, “the elements of both the civil and the criminal statutes [must
be] proven, albeit to the civil preponderance burden of proof.” Id., ¶24. “Stated
differently, the basis of liability for criminal theft by contractor is a violation of the
trust fund provisions of WIS. STAT. § 779.02(5), plus the criminal intent required by
WIS. STAT. § 943.20(1)(b).” Id., ¶24 (alteration to original) (citing State v. Wolter,
85 Wis. 2d 353, 362-63, 270 N.W.2d 230 (Ct. App. 1978), for the proposition that
criminal intent is the difference between civil and criminal theft by contractor).
“Indeed, it is specific criminal intent that makes the civil offense punishable
criminally: ‘some additional element of culpability, whether it be denominated as
wrongful, criminal, fraudulent, felonious, or wrongfully fraudulent, must be shown

5
For ease of reading, going forward, this opinion refers to “attorney fees” when discussing
WIS. STAT. § 895.446(3)(b).

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No. 2021AP1985

to sustain a criminal conviction for theft by contractor.’” Id., ¶30 (quoted source
omitted).

¶33 The intent element for criminal theft by contractor under WIS. STAT.
§§ 943.20(1)(b) and 779.02(5) is “specific criminal intent, to-wit, that the defendant
knowingly retained possession of or used contractor trust funds without the owner’s
consent, contrary to [the defendant’s] authority, and with intent to convert such
funds for [the defendant’s] own use or the use of another.” Id., ¶2.

¶34 As we discuss in more detail below, the parties agree—and the circuit
court determined—that an award of exemplary damages and attorney fees under
WIS. STAT. § 895.446(3) is discretionary rather than mandatory. See, e.g.,
§ 895.446(3) (“If the plaintiff prevails in a civil action under sub. (1), he or she may
recover” actual damages, all costs of investigation and litigation reasonably
incurred, and “exemplary damages of not more than 3 times” the actual damages.
(emphasis added)). The parties further agree that the court’s decision denying
exemplary damages and partially denying attorney fees is reviewed for an erroneous
exercise of discretion.

B. The circuit court’s decision.

¶35 In reaching its determinations, the circuit court first explained that
awards of exemplary damages and attorney fees are discretionary rather than
mandatory. The court then separately addressed Thunderbird’s requests for
exemplary damages and attorney fees. With regard to exemplary damages, the court
concluded that Thunderbird had not established the type of “egregious conduct
necessary to warrant” their imposition, and that “[n]othing about the course of
conduct related to those contracts justifies the imposition of exemplary damages.”
The court noted Defendants’ “ongoing” and “legitimate” concerns regarding

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insurance issues and “needing the [Douglas] contract to be signed.” The court also
observed that “[b]oth [parties] agree that defendant[s] [were] not required to
segregate the funds [they] received for each project in this case” but that “it seems
to be an open question in Wisconsin whether having a line of credit available to pay
any subcontractors satisfies the requirement that the assets of the trust be preserved.”
After discussing pertinent case law, the court stated that “because the law is
uncertain on this point, I am not going to impose exemplary damages on defendants
for [their] use of this method.” The court also found that Williams “testified
convincingly and without contradiction regarding the line of credit and so I conclude
his use of funds in his co-mingled account while having available a line of credit is
not the type of conduct which deserves imposition of exemplary damages.”

¶36 Regarding attorney fees, the circuit court stated it would not award
Thunderbird all of the fees requested, such as those related to the original filing or
for the two-day hearing on exemplary damages and attorney fees. Again, the court
noted that “there were legitimate issues” that would make attorney fees for this part
of the litigation inappropriate. However, the court awarded Thunderbird attorney
fees incurred for addressing Defendants’ arguments on summary judgment. The
court stated that, “given the posture of this case with requests for admissions on file
with no response,” “[i]t was clear once that motion [for summary judgment] had
been filed [by Thunderbird, that Thunderbird] was going to recover and the
[Defendants’] briefing and response was no response at all, practically, and
[Thunderbird] then had to file a reply.”

¶37 Both parties construe the circuit court’s decision on exemplary
damages and attorney fees to have been based, at least in part, on a conclusion that
Thunderbird had not established the requisite intent element as required by Tri-

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Tech, discussed above. Based on this assumption, Thunderbird argues that the court
erroneously exercised its discretion in reaching this conclusion, whereas Defendants
argue that the court properly exercised its discretion in this regard.

¶38 But Defendants also argue (as they did in their post-trial circuit court
brief) that, even if Thunderbird had satisfied the intent element, the court could
nevertheless, in its exercise of discretion, decline to award exemplary damages (and
presumably, attorney fees).6 It is clear from the court’s statements that the court
based its ruling at least in part on its conclusion that the award of exemplary
damages and attorney fees under WIS. STAT. § 895.446(3) is discretionary rather
than mandatory, even assuming the intent element as articulated in Tri-Tech is
satisfied. For example, the court led its discussion on these issues by observing that
§ 895.446(3) states that a court “may” make such awards, which the court stated
“ordinarily suggests that the recovery is permitted, not required, and thus is subject
to the exercise of discretion.” The court also discussed pertinent case law, which
we discuss in more detail below, that supports the conclusion that such awards are
discretionary. In denying exemplary damages, the court summarized its rationale
as follows: “In sum, I conclude [that Thunderbird] has failed to establish the type
of egregious conduct necessary to warrant the imposition of exemplary damages.”

¶39 In addition, during a pretrial ruling in which the circuit court allowed
Defendants to introduce emails and other evidence at trial, the court stated that the
evidence was relevant to the issue of intent as explained in Tri-Tech, but the court
also offered another basis for its admission: “I’m also allowing … this evidence

6
The parties do not separately discuss exemplary damages and attorney fees under WIS.
STAT. § 895.446(3). Rather, the parties’ arguments appear to focus on the issue of exemplary
damages while presuming that all of the arguments pertaining to that issue also pertain to the issue
of attorney fees.

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because exemplary damages and attorney’s fees are discretionary with the court and
the evidence may bear on the exercise of the court’s discretion.” This further
demonstrates that the court considered Defendants’ culpability and the
egregiousness of the conduct, not simply for purposes of determining the intent issue
under Tri-Tech, but also for purposes of exercising its discretion apart from the Tri-
Tech analysis.7

¶40 Moreover, the circuit court awarded partial attorney fees under WIS.
STAT. § 895.446(3), which both the court and the parties appear to agree also
requires a finding of the requisite intent under Tri-Tech. Thus, if the court
concluded that Thunderbird failed to establish intent, it is unclear why it would have
awarded attorney fees under § 895.446(3). For purposes of this decision, however,
we need not determine whether the court did or did not conclude that Thunderbird
proved intent. First, Defendants do not challenge the court’s award of partial
attorney fees on the ground that intent was not established. Second, our decision in
this case does not rest on the issue of intent, but instead on whether—assuming the
intent element was satisfied—the court properly exercised its discretion.

¶41 For the reasons we now discuss, we conclude that Thunderbird has
failed to show that the circuit court erroneously exercised its discretion in denying
exemplary damages and awarding only partial attorney fees under WIS. STAT.
§ 895.446(3). Accordingly, we do not address the parties’ various arguments
regarding intent. See Barrows v. American Fam. Ins. Co., 2014 WI App 11, ¶9,

7
Putting aside the issue of specific, legal intent as defined in Tri-Tech, an individual’s
subjective intent or state-of-mind is indisputably relevant to that person’s level of culpability and
the egregiousness of the conduct at issue. Thus, although the court stated that “[t]he ongoing
concerns regarding insurance coverage and signing the contract demonstrate there was not specific
intent to steal [Thunderbird’s] money which was owed,” it is not clear that this statement is a
specific conclusion that the intent element under Tri-Tech was not satisfied.

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352 Wis. 2d 436, 842 N.W.2d 508 (2013) (“An appellate court need not address
every issue raised by the parties when one issue is dispositive.”); Maryland Arms
Ltd. P’ship v. Connell, 2010 WI 64, ¶48, 326 Wis. 2d 300, 786 N.W.2d 15
(“Typically, an appellate court should decide cases on the narrowest possible
grounds.”).

C. Thunderbird fails to show that the circuit court erroneously exercised its
discretion in denying exemplary damages and in awarding only partial attorney
fees under WIS. STAT. § 895.446(3).

¶42 As stated, Defendants argue that, even if Thunderbird had satisfied the
intent and other elements of criminal theft by contractor, the circuit court’s
determinations should nevertheless be affirmed because the court was not required
to award exemplary damages or full attorney fees; rather, as the court concluded,
such awards are discretionary. As also noted, we conclude that the court’s denial of
exemplary damages and its partial award of attorney fees were based, at least in part,
on the court’s exercise of this discretion separate from any conclusion it may have
reached regarding the intent element in Tri-Tech.

¶43 Thunderbird does not dispute Defendants’ argument that a court may
decline to award exemplary damages and attorney fees even when the elements of
criminal theft by contractor are satisfied. Thunderbird agrees that the awards at
issue are discretionary or, as Thunderbird states, “permissive” rather than
mandatory. See Schlieper v. DNR, 188 Wis. 2d 318, 322, 525 N.W.2d 99 (Ct. App.
1994) (we may treat as a concession a proposition asserted in a respondent’s brief
and not disputed in the reply brief). Although we could rely exclusively on
Thunderbird’s concession on this point, we further note that case law and persuasive
authority support the conclusion that exemplary damages and attorney fees under
WIS. STAT. § 895.446(3) are discretionary and are not required to be awarded, even

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No. 2021AP1985

when the requisite elements of criminal theft by contractor, including intent, are
established. The case that most succinctly makes this point is Hookstead v. Beal,
No. 2020AP895, unpublished slip op. ¶52 (WI App Aug. 5, 2021),8 which states:
“Exemplary damages are not automatically awarded under § 895.446(3) to a
plaintiff who has met each of the elements of his or her claim under sub. (1), nor are
the damages necessarily trebled.”

¶44 Similarly, as the circuit court observed, our supreme court in Storey
also discusses the discretionary nature of exemplary damages under WIS. STAT.
§ 895.446(3)(c). See Storey, 378 Wis. 2d 358, ¶69. In Storey, a circuit court
awarded exemplary damages after a jury awarded actual damages. On appeal, the
supreme court reversed the circuit court’s exemplary damage award, concluding that
the issue was one for the jury. The supreme court discussed the standard for
awarding exemplary damages, which it determined were synonymous with punitive
damages. Id., ¶69 & n.32. Relying on a prior decision involving punitive damages,
the court concluded:

The judge has the duty to act as the “gatekeeper”
when determining whether the issue of punitive damages is
properly before the jury. Once the judge has determined that
the issue of punitive damages is properly before the jury,
whether to actually award punitive damages in a particular
case is entirely within the discretion of the jury.

Id., ¶69 (footnote and quoted source omitted). In other words, “[a]lthough the judge
initially determines whether exemplary damages are an appropriate issue to be
presented to the trier of fact, it is within the discretion of the trier of fact [in that
case, the jury] to determine whether to actually award exemplary damages [under

8
See WIS. STAT. RULE 809.23(3)(b) (an unpublished opinion that is authored by a member
of a three-judge panel on or after July 1, 2009, may be cited for persuasive authority).

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No. 2021AP1985

§ 895.446(3)(c)] and, if so, in what amount.” Id. The court further noted that “in
some instances, the judge is also the trier of fact and it would be appropriate in that
instance for the judge to determine whether to award exemplary damages and the
amount of the award.” Id., ¶70 n.33. We agree with the circuit court in this case
that Storey “strong[ly] … support[s] the notion that [§] 895.446(3) should be
interpreted as discretionary rather than mandatory.”

¶45 The circuit court also relied on a case cited by Defendants, Stangel v.
Stangel, 593 B.R. 607, 617 (Bankr. E.D. Wis. 2018), in which an Eastern District
of Wisconsin bankruptcy court interpreted Storey as conclusively resolving the
issue of whether WIS. STAT. § 895.446(3) is discretionary or mandatory. In Stangel,
the court analyzed Storey and two other Wisconsin cases (discussed below), and
concluded, “[T]he case law is clear that exemplary damages under WIS. STAT.
[§] 895.446(3)(c) are discretionary, and that the Court must make a reasonable
inquiry and examination of the facts … to determine whether exemplary damages
are appropriate.” Stangel, 593 B.R. at 617 (alteration to original).

¶46 The two other Wisconsin cases upon which the Stangel court relied
likewise support the position that an award of exemplary damages is within the
circuit court’s discretion. In Shopko Stores, Inc., this court interpreted a provision,
WIS. STAT. § 943.51(2) (1987-88),9 with language nearly identical to that in WIS.

9
At that time, WIS. STAT. § 943.51(2) (1987-88) provided:

In addition to sub. (1) [providing for actual damages], if the person
who incurs the loss prevails, the judgment in the action may grant
any of the following:

(a) 1. Exemplary damages of not more than 3 times the
amount under sub. (1)(a) and (b).

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No. 2021AP1985

STAT. § 895.446(3)(c), and concluded that “may” in that provision means
“exemplary damages are not mandatory.” Shopko Stores, Inc. v. Kujak, 147
Wis. 2d 589, 600, 433 N.W.2d 618 (Ct. App. 1988). We further concluded that the
plaintiff’s claim for exemplary damages in that case “cannot be resolved in a
principled fashion on summary judgment,” explaining:

Because punitive or exemplary damages are
analyzed by considering the nature of the wrongdoer’s
conduct, … there is always the question of whether they
shall be awarded at all…. “It is a generally accepted rule
that once the court determines that the evidence merits
submitting the punitive damage issues to the jury, it is
entirely within the discretion of the jury to determine
whether damages should be awarded at all and to determine
the amount which should be awarded.”

Thus, while proof of [the defendant’s] retail theft is
sufficient to subject her to exemplary damages, she may
escape an award of such damages altogether if, in the
judgment of the fact-finder, her offense does not warrant
“the added sanction of a punitive damage to deter others .…”
Jean Valjean, for example, if sued in a civil action under a
statute such as [§] 943.51 [(1987-88)], might have escaped
punitive damages for his theft of bread to feed his family.

Id. at 601-02 (citations and quoted sources omitted). Similarly, in Stathus v. Horst,
2003 WI App 28, 260 Wis. 2d 166, 659 N.W.2d 165, we concluded:

Whether to award treble damages under [the prior version
of] WIS. STAT. § 895.446(3)(a), is a matter left to the
discretion of the trial court. We will uphold that ruling as
long as the trial court did not erroneously exercise its
discretion, which requires a “reasonable inquiry and
examination of the facts” to reach a reasonable conclusion.

2. No additional proof is required for an award of
exemplary damages under this paragraph.

Shopko Stores, Inc. v. Kujak, 147 Wis. 2d 589, 591 & n.1, 433 N.W.2d 618 (Ct. App. 1988).

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No. 2021AP1985

(Footnote omitted); see also Laughland v. Beckett, 2015 WI App 70, 365 Wis. 2d
148, ¶34, 870 N.W.2d 466 (an “award of punitive damages is within the discretion
of the factfinder”).

¶47 Although these cases address exemplary damages pursuant to WIS.
STAT. § 895.446(3), we see no principled rationale for distinguishing an award of
attorney fees under that same statute, nor do the parties advance any such
distinction.

¶48 As noted, Thunderbird does not dispute that the circuit court was not
required to award exemplary damages or all attorney fees, even upon a finding of
the requisite intent. Instead, Thunderbird argues that the court nevertheless
erroneously exercised its discretion because its decision was based on a series of
legal errors. But all of the legal errors Thunderbird alleges relate only to whether
the court erred in determining that the intent element of criminal theft by contractor
was not satisfied, not to the court’s inherent exercise of its discretion, assuming that
the intent element was satisfied. Thunderbird makes no separate argument as to
how any of its alleged legal errors affect our analysis of whether the court properly
exercised its discretion assuming intent was established. And based on the court’s
comments, we cannot conclude that its discretionary determinations were predicated
on a determination that Thunderbird failed to establish the intent element as set forth
in Tri-Tech.

¶49 Thunderbird’s only response with respect to the discretionary nature
of such awards is the conclusory assertion that “the circuit court had a developed
record before it, including a history of discovery misconduct by Defendants and
unanswered admissions. This is an appropriate exemplary damages case.”
Thunderbird’s argument on this point is undeveloped and need not be considered.

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No. 2021AP1985

See State v. Pettit, 171 Wis. 2d 627, 646, 492 N.W.2d 633 (Ct. App. 1992) (we need
not address undeveloped arguments). Thunderbird does not explain, for example,
how Defendants’ conduct during the litigation, including purported discovery
violations, relate to a discretionary determination of whether exemplary damages
(or attorney fees) should be awarded as a remedy for its violation of the criminal
theft by contractor statute.

¶50 Based on the record and Thunderbird’s lack of any developed
argument on this point, we conclude that Thunderbird fails to show that the circuit
court erroneously exercised its discretion with respect to either exemplary damages
or attorney fees. See Gaugert v. Duve, 2001 WI 83, ¶44, 244 Wis. 2d 691, 628
N.W.2d 861 (We sustain a discretionary act where the trial court “‘examined the
relevant facts, applied a proper standard of law, and, using a demonstrated rational
process, reached a conclusion that a reasonable judge could reach.’” (quoted source
omitted)).

II. Attorney Fees Under WIS. STAT. § 802.05(3)
and WIS. STAT. § 802.12(2).

¶51 Thunderbird argues that the circuit court erroneously exercised its
discretion in failing to grant Thunderbird’s request for attorney fees under WIS.
STAT. §§ 802.05(3) and 802.12(2). Whether to award attorney fees under these
provisions is left to the court’s discretion and is therefore reviewed by this court for
an erroneous exercise of discretion. See Ten Mile Invs., LLC v. Sherman, 2007 WI
App 253, ¶1 n.2, 306 Wis. 2d 799, 743 N.W.2d 442 (addressing § 802.05(3)); Alt v.
Cline, 224 Wis. 2d 72, 92-93, 589 N.W.2d 21 (1999) (addressing § 802.12(2)).

¶52 Thunderbird’s argument is predicated almost exclusively on its
assertion that the circuit court “forgot” to rule on these requests. It asks that we

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No. 2021AP1985

“reverse and remand for consideration of those motions.” Because we conclude that
Thunderbird’s predicate assertion is not supported, and Thunderbird does not
advance any other developed argument in support of its position, its arguments fail.
Before explaining our conclusion, we first provide additional background.

¶53 As to Thunderbird’s request for attorney fees under WIS. STAT.
§ 802.05(3), we reiterate the following. In their motion for summary judgment,
Defendants requested sanctions against Thunderbird under § 802.05(3) for filing
what Defendants claimed was a meritless complaint. In response, Thunderbird
argued that it should be awarded attorney fees pursuant to that provision for having
to respond to Defendants’ meritless sanctions request. See § 802.05(3) (“If
warranted, the court may award to the party prevailing on the motion [under
§ 802.05] reasonable expenses and attorney fees incurred in presenting or opposing
the motion.”). The circuit court denied Defendants’ request for sanctions, stating
that Defendants had not complied with the requirement in § 802.05(3)(a)1. that a
request for sanctions be filed by separate motion. The court deferred ruling on
Thunderbird’s request for attorney fees related to its response to Defendants’
sanctions request.

¶54 With regard to Thunderbird’s request for attorney fees under WIS.
STAT. § 802.12(2) as a sanction for alleged discovery violations, the pertinent facts
are as follows. Approximately a month prior to the circuit court’s order granting
summary judgment to Thunderbird, Thunderbird issued a subpoena duces tecum to
BMO Harris Bank for certain bank records of Defendants. Defendants moved to
quash the subpoena and Thunderbird filed a response. A day later, the court issued
its ruling on summary judgment and reserved ruling on the bank records issue,
urging the parties to attempt to resolve this issue, along with the issues of exemplary
damages and attorney fees on the theft-by-contractor claims.

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No. 2021AP1985

¶55 Following additional submissions from the parties, the circuit court
held a hearing on the motion to quash. The court again reserved ruling on the motion
and instead ordered Defendants to “provide responses to [Thunderbird’s] previously
served written discovery,” and to produce Williams for deposition. The court stated
that it was “trying to thread the needle” in terms of allowing Thunderbird “a fair
opportunity for discovery,” while recognizing that the bank documents could
contain “other information that has nothing to do with this.” At one point, the court
also directed the following inquiry to Thunderbird’s counsel: “It does seem like a
very broad request. I mean it’s a given that the payment wasn’t made, so what
interest does [Thunderbird] have in knowing about all the other things that might be
contained in those bank records?” The court stated that if the parties were not able
to resolve the discovery issues, the court would revisit the motion to quash.

¶56 Defendants filed a response to discovery. Defendants objected on
various grounds to Thunderbird’s request to “[p]rovide copies of all bank statements
for American Design from January 1, 2018 to the present,” stating they would
“produce documentation sufficient to show when it received payment from MPS.”
Defendants also provided redacted bank statements.

¶57 A few weeks prior to trial, Thunderbird moved for sanctions,
including attorney fees, pursuant to WIS. STAT. § 804.12, based on what
Thunderbird alleged were Defendants’ discovery violations for failing to produce
the bank records. Thunderbird requested default judgment granting Thunderbird
treble damages and reasonable litigation costs under WIS. STAT. § 895.446(3). In
the alternative, it requested an order granting Thunderbird an adverse inference that
the withheld information would conclusively support a finding of the requisite intent
to support exemplary damages and attorney fees under that provision. Thunderbird
also requested an order prohibiting Defendants from relying on any documents in

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No. 2021AP1985

further proceedings that had not been produced, and an order granting Thunderbird
attorney fees and costs incurred for bringing its motions for sanctions.

¶58 At a pretrial hearing primarily addressing other issues, the circuit
court also addressed the pending motions, noting:

I know there’s the motion for sanctions and so forth. I’m not
going to rule on that right now … but I will tell you I’m
unlikely to grant a default as requested. That would be in
the unlikely category. And on the other ones, it’s hard to
rule in the abstract. I mean, I can read your brief. I
understand what you’re saying and why you’re asking for it,
but I’m reserving on the request, because [counsel for
Defendants] might use a document one way versus another
way. And if he did it in the first way, maybe your motion
will be well-founded, but maybe if he’s using that document
for a second purpose, it might not be. So it’s just very
difficult, at least in my opinion, to make advanced rulings on
those sort of things. I’m not denying anything, I’m just
holding that in abeyance pending the actual trial playing out,
okay?

In response, counsel for Thunderbird stated: “We kind of expected that, your
Honor. We understand that. We’re obviously not—we’re maintaining our motions,
but we understand the court won’t probably rule on those until later.” On the same
day of the pretrial conference, Defendants provided additional bank records, again
with redactions.

¶59 A few months after trial, the circuit court issued its oral ruling on the
issue of exemplary damages and attorney fees under WIS. STAT. § 895.446(3).
Following the court’s ruling granting partial attorney fees under that provision, the
following exchange occurred:

[THUNDERBIRD’S COUNSEL]: There were
related motions, you know, motions to dismiss and motions
for sanctions that we raised around the same time that we did
the summary judgment. I don’t know if the court is taking a
position on whether those are included in what is being
awarded.

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No. 2021AP1985

THE COURT: I forgot about the motion for
sanctions and so forth. Let’s put it this way, the original
putting together the motion for summary judgment I’ll not
award, okay? But once that was in the lap, so to speak, of
the defendants and they reviewed your motion and then
based on what they did thereafter, you shouldn’t have had to
keep responding until the point where the summary
judgment was granted; does that help?

[THUNDERBIRD’S COUNSEL]: Yeah, we’ll take
a shot at trying to figure out what that is, your Honor.

THE COURT: I’m sorry I can’t be more exact, but
if you guys can’t figure out a number, come back to me and
I’ll decide whatever it is, okay?

[THUNDERBIRD’S COUNSEL]: Fair enough,
your Honor.

Thus, the record shows that, when reminded by Thunderbird’s counsel of the
remaining requests for attorney fees, the court took up the issue and again
determined that the attorney fees it had awarded under § 895.446(3) were
appropriate. In other words, the court denied Thunderbird’s requests for additional
attorney fees, awarding no further amounts under WIS. STAT. § 802.05(3) or WIS.
STAT. § 802.12(2), a determination that was consistent with the court’s prior stated
concerns about the broad nature of the request and the relevance of the bank records.
We therefore disagree with Thunderbird’s statements that “no ruling on attorney
fees for those motions was ever provided” and that the court “never addressed
Thunderbird’s sanctions motions in spite of requests to do so.” As a result, to the
extent that Thunderbird’s argument is predicated on the premise that the court
erroneously exercised its discretion because it “forgot” to rule on the motions, that
argument is unfounded.

¶60 We also reject Thunderbird’s arguments for additional reasons. First,
we note that Thunderbird focuses almost exclusively on its request for attorney fees
as a result of alleged discovery violations under WIS. STAT. § 802.12(2). With

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No. 2021AP1985

respect to its request for attorney fees under WIS. STAT. § 802.05(3), Thunderbird
presents no developed argument as to how the circuit court erroneously exercised
its discretion. It argues only that the court “forgot” to rule on this issue, an argument
we’ve already rejected, and makes a conclusory argument that Defendants’ “motion
for frivolous action sanctions was completely without basis and was denied by the
circuit court.” We decline to consider this inadequately developed argument. See
Pettit, 171 Wis. 2d at 646.

¶61 As to attorney fees for alleged discovery violations under WIS. STAT.
§ 802.12(2), aside from its now-rejected argument that the circuit court “forgot” to
address this issue, Thunderbird likewise fails to develop an argument supporting its
position that the court’s denial constituted an erroneous exercise of discretion. It
argues that “Thunderbird’s motion for discovery sanctions was far from trivial. It
was based on repeated egregious discovery violations” and that “[n]ot only did
Defendants suffer no consequences for these violations, they benefitted greatly
because Defendants successfully prevented crucial damning evidence from entering
the record.” This does not constitute a developed argument that the court
erroneously exercised its discretion in declining to award additional attorney fees
for alleged discovery violations. See Pettit, 171 Wis. 2d at 646.

¶62 Further, as noted, at the time of the circuit court’s ruling on additional
attorney fees, Thunderbird had already been granted summary judgment on its
breach-of-contract and theft-by-contractor claims due to Defendants’ failure to
respond to Thunderbird’s admission requests. The only issues remaining for trial
were related to exemplary damages and attorney fees. Although Thunderbird states
that the bank records were “crucial damning evidence” and that Defendants’
“benefitted greatly” by their absence, it fails to articulate any connection between
the bank records and the court’s discretionary determination on the remaining issues

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No. 2021AP1985

for trial, particularly given Defendants’ use of a line of credit and Williams’
testimony—credited by the court—that American Design always had the ability to
pay Thunderbird.

¶63 Finally, we agree with Defendants that attorney fees were not
warranted because there was not a determination that Defendants engaged in
discovery violations with respect to the bank records. Without such a finding, there
can be no attorney fees awarded as a sanction. In response to this argument from
Defendants, Thunderbird argues that this “is Thunderbird’s point—the circuit court
‘forgot’ about Thunderbird’s sanctions motions and made no reasoned ruling on that
issue.” As shown above, however, to the extent the court did not explicitly rule on
whether discovery violations had actually occurred with respect to the bank records,
Defendants had several opportunities to request a more explicit ruling on that issue
but did not do so.

¶64 In sum, Thunderbird fails to establish that the circuit court erroneously
exercised its discretion in denying Thunderbird additional attorney fees under either
WIS. STAT. § 803.05(3) or WIS. STAT. § 802.12(2).

CONCLUSION

¶65 For the reasons stated, we affirm the circuit court order denying
exemplary damages and awarding partial attorney fees under WIS. STAT. § 895.446,
and its ruling denying additional attorney fees under WIS. STAT. §§ 802.05(3) and
802.12(2).

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT. RULE
809.23(1)(b)5.

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No. 2021AP1985

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