Estate of Kriefall v. Sizzler: Fee Shifting Under the Weinhagen Rule

16 August 2012 Wisconsin Appellate Law Blog

June’s decision from the Supreme Court of Wisconsin in Estate of Kriefall v. Sizzler contains a brief exposition on fees that’s worth noting.

It establishes that fees cannot be shifted under the 1922 Weinhagen rule, which held that an innocent party, wrongfully drawn into litigation with a third party, can recover fees against the wrongdoer.

Here, the party seeking fees (Sizzler) was found to be 0% negligent with respect to the E. coli contamination that led to the claims, but the court said that the wrongfulness that could give rise to fees under Weinhagen is not satisfied merely because the party that seeks to recover fees has been found non-negligent.

The rule requires that the “innocent” party have been sucked into the need to defend itself by the breach of fiduciary duty or fraud of the party from which recovery is sought (or wrongful conduct of that nature).

What makes this aspect of the case particularly noteworthy is that the court disapproves of the Seventh Circuit’s reading of Weinhagen in a 1988 case called Fidelity and notes, therefore (quite correctly), that Fidelity does not state Wisconsin law.

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