On October 16, the Court of Appeals, Dist. I, held that a settlement reached between the plaintiff and the defendant, which excluded attorney’s fees for the plaintiff’s attorney, was void on public policy grounds. The case is Betz v. Diamond Jim’s Auto Sales.

The case involved a lawsuit filed by the self-proclaimed Lemon Law King, Vince Megna, against Diamond Jim’s Auto Sales involving the sale of a used car to the plaintiff, Randy Betz.

The lawsuit alleged intentional fraud, advertising injury, and violation of the statute licensing automobile dealers. The plaintiff sued under statues that contain fee shifting provisions, which allow the court to award attorney’s fees to the plaintiff’s attorney in the event the plaintiff prevails in the case.

The plaintiff and defendant reached a settlement without the knowledge of their respective attorneys. The parties agreed that Diamond Jim’s would pay Betz $15,000 in return for Betz dismissing the lawsuit.

Upon learning of the settlement, Attorney Megna moved the court to file as an “intervening plaintiff” against his own client and sought attorney’s fees. The circuit court dismissed Megna’s motion and held that the agreement between the parties was valid.

The court of appeals reversed the lower court and voided the settlement agreement between the plaintiff and defendant based on public policy. In addition, the court of appeals awarded Megna attorney’s fees.

According to the court, “to permit one side to go behind the backs of the other side’s lawyers in order to get a settlement that removed the fee-shifting incentives that prompted the lawyers to take the case, would nullify the legislative fee-shifting scheme.”

This post was origionally published by the Wisconsin Civil Justice Council on its Court Watch blog.