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Production Credit Asso. of Madison v. Laufenberg (1988) – Case Brief Summary (Wisconsin)

In Production Credit Asso. of Madison v. Laufenberg, 420 N.W.2d 778, 779 (Wis. Ct. App. 1988), a creditor claimed that it was entitled to post-judgment attorney's fees based on the provisions of its loan agreement with the debtors, which provided, in pertinent part, that the creditor was authorized to pay for certain expenses from the debtors' account, including the following:

Except where and to the extent prohibited by applicable law, promptly pay or reimburse the creditor for all expenses, fees, and disbursements, including reasonable attorneys' fees, incurred either before or after any default in connection with: this Agreement and the documents related to it, the perfection of the creditor's security interest or other lien in collateral, or incurred in connection with protecting or enforcing its rights with respect to collateral or foreclosing against the same as more fully detailed in any security agreements, mortgages, or other collateral documents given in accordance with Section 5.0 of this Agreement. Id. at 779.

The Wisconsin Court of Appeals observed that attorney's fees are only recoverable if "such liability arises from a specific statute or the contract of the parties," and, that, under the doctrine of merger, "upon entry of judgment, the contract sued upon loses all of its vitality and ceases to bind the parties to its execution." Id.

The Court cited to Restatement (Second) Judgments § 18 and concluded that the creditor could not recover attorney's fees incurred after the entry of judgment on the loan agreement because, at that point, the creditor no longer had a contractual right to those fees. Id. at 780.