Advocate Claim Service, LLC v. Staz Investments, LLC ( 2024 )

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.
June 12, 2024
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. 2023AP1248 Cir. Ct. No. 2023CV434
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II
ADVOCATE CLAIM SERVICE, LLC,
PLAINTIFF-APPELLANT,
V.
STAZ INVESTMENTS, LLC,
DEFENDANT-RESPONDENT.
APPEAL from a judgment and order of the circuit court for
Waukesha County: BRAD SCHIMEL, Judge. Affirmed in part; reversed in part
and cause remanded for further proceedings.
Before Gundrum, P.J., Grogan and Lazar, 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).
No. 2023AP1248
¶1 PER CURIAM. Advocate Claim Service, LLC (“ACS”) appeals a
circuit court judgment dismissing its amended complaint with prejudice for failing
to state a claim upon which relief can be granted. It also appeals an order denying
its motion for reconsideration. For the reasons explained below, we conclude the
circuit court properly dismissed ACS’s equitable claims for quantum meruit and
unjust enrichment; however, we conclude ACS’s remaining causes of action
survive the dismissal motion. We therefore affirm in part, reverse in part and
remand for further proceedings.
BACKGROUND
¶2 According to the amended complaint,1 in November 2022, Staz
Investments, LLC’s (“Staz”) commercial property was damaged in a fire. On
January 3, 2023, Staz entered into a contract with ACS to provide public adjuster
services in relation to the fire. ACS attached a copy of its contract to the amended
complaint. After the contract was signed, ACS worked on the insurance claim and
client directives for “many dozens of hours.” The contract provided that Staz
would pay ACS ten percent of the insurance proceeds. At some point, the parties
agreed ACS would cap its fee at $150,000 in exchange for a future credit of
$10,000 in legal services.2
¶3 On February 18, 2023, Staz emailed ACS asking ACS to outline “the
coverages from our policy that apply to our loss and the applicable values” and
1
Because this is a review of a motion to dismiss, we take the facts from the amended
complaint. See Data Key Partners v. Permira Advisers LLC, 2014 WI 86, ¶18, 356 Wis. 2d 665,
676, 849 N.W.2d 693.
2
Staz’s owner is an attorney.
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“[d]raft of our first-party claim.” In response, ACS “reached out to [Staz] via
phone and email, several times, asking for clarification of what was being sought.”
Two days later, on February 20, Staz emailed ACS, informing ACS that:
Client has requested ACS deliver on the ACS contract and
provide the adjusting services as outlined per Wisconsin
Statute. ACS has failed to deliver the services to Client and
is in default under the ACS contract. ACS shall take this
email as written notice of its default.
¶4 On February 21, ACS, via counsel, wrote to Staz, disputing the
default and suggesting that “it appeared as though Staz was trying to avoid paying
the agreed upon fee.”
¶5 According to the amended complaint, Staz collected $547,710.32
with ACS’s assistance and that amount is subject to the ten-percent fee under the
contract. ACS alleged that it was anticipated that Staz has or would receive
another $207,196.70 that “ACS assisted in obtaining and for … which a fee is due
for under the contract.” ACS presented Staz with a bill pursuant to their contract
to be paid in thirty days. Staz did not pay the bill within thirty days.
¶6 Ultimately, ACS brought suit against Staz. ACS’s amended
complaint included contractual based theories of recovery as well as causes of
action for quantum meruit, unjust enrichment, and account stated.
¶7 In lieu of an answer, Staz moved to dismiss ACS’s amended
complaint. Staz argued ACS’s breach-of-contract claims were insufficiently pled
because: (1) the amended complaint failed to establish the existence of a valid
contract between ACS and Staz; and (2) the amended complaint did not include
allegations of the existence of a condition precedent needed to enforce the
contract. Staz argued the equitable claims of quantum meruit and unjust
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enrichment were unavailable to ACS because the legislature only permitted
someone to perform public adjuster services with a written contract. Staz also
argued ACS did not plead sufficient facts to establish a claim for account stated.
¶8 At a hearing on Staz’s motion to dismiss, the circuit court
determined the amended complaint failed to establish the existence of a valid
contract. Specifically, the court observed there was no allegation in the complaint
that ACS had complied with the notice requirement under WIS. STAT. § 629.04(5)
(2021-22).3 Section 629.04(5) requires a public adjuster to “include with the
contract … a notice of the insured’s right to file a complaint with the
commissioner about an insurance problem.” The court determined that because
ACS’s “contract needed to include this and it didn’t … [,] this contract does not
meet the legal requirements” and was void. Because the contract was void, the
court concluded there was no basis under which ACS could recover, and it
dismissed ACS’s breach of contract claims against Staz.
¶9 The circuit court then dismissed ACS’s other causes of action. The
court observed that the legislature has only permitted someone to perform public
adjuster services if there is a contract in place, see WIS. STAT. § 629.04(1), and as
a result no common law claims could apply. The court reasoned, “[I]f there is no
contract, [ACS] couldn’t act as a public adjuster and without compliance with
[§ 629.04](5), this contract is not legal and therefore not enforceable.” The court
entered an order dismissing Staz’s claims with prejudice. ACS appeals.
3
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
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No. 2023AP1248
DISCUSSION
¶10 To provide context for the contract at issue in this case we begin
with WIS. STAT. ch 629. The legislature enacted ch. 629, titled “Public Adjusters”
in 2019. 2019 Wis. Act 129. Generally, a public adjuster is someone who acts on
behalf of a policyholder, for compensation, in the filing and negotiating of a
property insurance claim. See WIS. STAT. § 629.01. “A public adjuster may not
perform any adjusting service for an insured prior to entering into a contract with
the insured.” Sec. 629.04(1).
¶11 The legislature has outlined the requirements of a public adjuster
contract. WIS. STAT. § 629.04(1). The contract “shall be in writing, be titled
‘Public Adjuster Contract,’ and be on a form filed with the commissioner.” Id.
The contract shall include all of the following:
(a) The public adjuster’s full name, state of residence,
permanent principal business street address, telephone
number, and, if applicable, registration number assigned by
the commissioner.
(b) The insured’s full name, street address, insurer
name, and policy number.
(c) A description of the loss and its location.
(d) The date and time the contract was signed by the
public adjuster and the insured.
(e) An attestation by the public adjuster that he or she is
fully bonded pursuant to state law.
(f) A disclosure of the compensation the public adjuster
is to receive in accordance with [WIS. STAT. §] 629.05.
(g) A provision allowing the insured to void the
contract in accordance with sub. (3).
(h) A statement that the contract shall constitute the
entire agreement between the public adjuster and the
insured.
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Id.
¶12 There are also certain things that the contract may not require an
insured to do. See WIS. STAT. § 629.04(2). The insured has the option to void the
contract “no later than 5 business days after the contract’s execution.”
Sec. 629.04(3). The contract must be executed in duplicate with an original
provided to the public adjuster and the insured. Sec. 629.04(4). Additionally, the
public adjuster:
shall include with the contract … a notice of the insured’s
right to file a complaint with the commissioner about an
insurance problem. The notice shall be on a single piece of
paper that is separate from the contract and shall include all
of the following:
(a) The information described in sub. (1)(a) [i.e., the
public adjuster’s full name, state of residence, permanent
principal business street address, telephone number, and, if
applicable, registration number assigned by the
commissioner].
(b) A clear statement of the insured’s right to file a
complaint.
(c) Information on how the insured may obtain a
complaint form by contacting the office of the
commissioner or from the office’s Internet site.
(d) The office of the commissioner’s mailing address
and phone numbers and the address of the office’s Internet
site.
Sec. 629.04(5).
¶13 With that background, we turn to the amended complaint in this case
and the review of the motion to dismiss that is currently before us. “A motion to
dismiss for failure to state a claim tests the legal sufficiency of the complaint.”
Data Key Partners v. Permira Advisers LLC, 2014 WI 86, ¶19, 356 Wis. 2d 665,
676, 849 N.W.2d 693 (citation omitted). “When we review a motion to dismiss,
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No. 2023AP1248
factual allegations in the complaint are accepted as true for purposes of our
review.” Id., ¶18. “However, legal conclusions asserted in a complaint are not
accepted, and legal conclusions are insufficient to withstand a motion to dismiss.”
Id. A plaintiff must allege facts that, if true, plausibly suggest a violation of
applicable law. Id., ¶21.
¶14 Here, in broad strokes, ACS alleged it had a contract with Staz, Staz
breached the contract, and ACS was entitled to damages. The circuit court granted
Staz’s motion to dismiss because ACS failed to plead sufficient facts in its
amended complaint to establish it had a valid contract with Staz. It appears the
circuit court determined ACS was required to plead factual compliance with every
element of WIS. STAT. § 629.04 in order for its complaint to survive a motion to
dismiss. Because ACS failed to plead that, when it delivered the contract to Staz,
it also gave Staz notice of its right to file a complaint with the commissioner of
insurance about an insurance problem—which it is required to do under WIS.
STAT. § 629.04(5)—the circuit court determined ACS failed to establish the
existence of a valid contract and the amended complaint needed to be dismissed.
¶15 We disagree with the circuit court’s technical pleading requirement.
Wisconsin is a notice-pleading state. United Concrete & Const., Inc. v. Red-D-
Mix Concrete, Inc., 2013 WI 72, ¶21, 349 Wis. 2d 587, 836 N.W.2d 807. “As a
notice pleading state, Wisconsin law requires only that a complaint ‘set forth the
basic facts giving rise to the claims.’” Id. (citation omitted). “The purpose of a
complaint in a notice pleading jurisdiction is to provide ‘sufficient detail’ such
‘that the defendant, and the court, can obtain a fair idea of what the plaintiff is
complaining, and can see that there is some basis for recovery.’” Id. (citation
omitted). We conclude that, considering all of the facts that ACS alleges in its
amended complaint as true, along with the reasonable inferences from those
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allegations, see Data Key Partners, 356 Wis. 2d 665, ¶19, the complaint satisfies
the statutory standard as to the purported breach of contract theories of recovery.4
We therefore reverse and remand the circuit court’s dismissal order in this regard.5
¶16 However, we agree with the circuit court that the unjust enrichment
and quantum meruit claims are legally insufficient to survive a motion to dismiss.
“[R]ecovery for unjust enrichment is based upon the inequity of allowing the
defendant to retain a benefit without paying for it, recovery in quantum meruit is
based upon an implied contract to pay reasonable compensation for services
rendered.” Ramsey v. Ellis, 168 Wis. 2d 779, 785, 484 N.W.2d 331 (1992). Here,
the legislature has explicitly prohibited individuals from providing public adjuster
4
In this case, ACS’s “account stated” claim is a contract-based theory of recovery. See
Newgard v. Bank of Am., 2007 WI App 161, ¶12, 303 Wis. 2d 466, 735 N.W.2d 578 (“A claim
for ‘account stated’ is essentially a contract claim seeking to enforce an agreement to settle a
disputed debt.”).
5
We reject Staz’s alternative arguments of ways to affirm the circuit court’s dismissal
order. Staz acknowledges the circuit court rejected its alternative arguments. On appeal, Staz
first argues the contract illegally requires Staz to make payment to ACS without ACS performing
adjusting services and illegally states ACS will provide professional services as opposed to
adjusting services. The circuit court rejected these arguments, concluding Staz’s arguments were
hypertechnical readings of the contract. We agree. Additionally, these arguments are
inappropriate in the context of a motion to dismiss for failure to state a claim. See United
Concrete & Const., Inc. v. Red-D-Mix Concrete, Inc., 2013 WI 72, ¶21, 349 Wis. 2d 587, 836
N.W.2d 807.
Staz also argues the amended complaint should be dismissed because it failed to allege
that ACS:
was performing adjusting services pursuant to “written client
directives.” Working on unspecified “client directives” as
referenced in the amended complaint is not sufficient for
alleging compliance with the ACS Contract.
We disagree. Again, we emphasize Wisconsin is a notice-pleading state. See id. The amended
complaint was sufficient to put Staz on notice such that Staz could “obtain a fair idea of what the
plaintiff is complaining, and can see that there is some basis for recovery.” See id.8
No. 2023AP1248
services in Wisconsin without a contract. See WIS. STAT. § 629.04(1). By
allowing ACS, or any other individual, to receive compensation for public adjuster
services on an equitable theory instead of a contractual one, it would effectively
nullify the legislature’s decree that “A public adjuster may not perform any
adjusting service for an insured prior to entering into a contract with an insured.”
See § 629.04(1). Given the legislature’s pronouncement, there is no inherent
inequity as a matter of law in denying payment for public adjuster services without
a valid contract.
¶17 We anticipate that on remand the validity of the public adjuster
contract will be challenged through a dispositive motion. Given the briefing that
occurred in this case on appeal, we offer two points to assist the parties on remand.
First, regardless of whether the Office of the Commissioner of Insurance approved
the contract, nothing precludes the circuit court in this breach-of-contract case
from determining whether the contract complies with the statutory requirements of
WIS. STAT. § 629.04. The circuit court has subject matter jurisdiction in this case.
Even if the contract came to the circuit court in the posture of a WIS. STAT. ch. 227
administrative review,6 the agency’s determination of whether the contract
complied with § 629.04 is a question of law to which the circuit court would owe
no deference to the agency. See WIS. STAT. § 227.57(11) (“[T]he court shall
accord no deference to the agency’s interpretation of law.”).
¶18 Second, although we are limited to the pleadings in the context of
this motion to dismiss, if discovery establishes that ACS did not deliver notice to
6
We remind ACS that Staz is the defendant in this breach-of-contract action, not a
plaintiff seeking a declaratory judgment in lieu of administrative review. See Nodell Inv. Corp.
v. City of Glendale, 78 Wis. 2d 416, 417, 254 N.W.2d 310 (1977).
9
No. 2023AP1248
Staz along with its executed contract as required by WIS. STAT. § 629.04(5), the
parties and the circuit court will have to determine whether that failure is technical
or material and the appropriate remedy.
By the Court.—Judgment and order affirmed in part; reversed in part
and cause remanded for further proceedings.
This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.
10