Arbitration Clause – Questions of “Arbitrability”
Mortimore v. Merge Techs. Inc., 2012 WI App 109 (filed 18 Sept. 2012) (ordered published 31 Oct. 2012)
This case involves an employment-contract dispute between Mortimore and a company he founded, Merge Technologies. Merge received anonymous whistleblower allegations and it eventually asked Mortimore to resign. Mortimore then filed suit against Merge, alleging, among other claims, breach of contract. Merge moved to dismiss some of Mortimore’s claims and to stay resolution of the others, pending arbitration of the breach-of-contract claim. A 2004 contract contained an arbitration clause, but Mortimore contended that it had been superseded in 2006 by an oral contract that eliminated the arbitration requirement. After an evidentiary hearing, the circuit court ruled that the 2006 contract superseded the 2004 contract.
The court of appeals reversed in an opinion written by Judge Kessler. First, the “plain language” of the 2004 contract required that any amendments or revisions were binding only if made in writing. “Any determination that an alleged oral agreement superseded the 2004 contract and eliminated the requirement to arbitrate Mortimore’s breach of contract claims is a determination on the merits of Mortimore’s claim” (¶ 19).
“Second, the 2004 contract specifically adopts the AAA Commercial Arbitration Rules, which provide that decisions as to the arbitrability of a claim are to be determined by arbitrators…. The act of incorporating the AAA rules suggests that the parties intended to leave the question of arbitrability of Mortimore’s claims to an arbitrator. Many other jurisdictions that have considered this issue agree ‘that an arbitration provision’s incorporation of the AAA Rules or other rules giving arbitrators the authority to determine their own jurisdiction is a clear and unmistakable expression of the parties’ intent to reserve the question of arbitrability for the arbitrator and not the court.’ … Given Wisconsin’s strong policy promoting arbitration, we conclude, like many other jurisdictions, that the parties’ adoption of the AAA Rules in the 2004 contract required arbitration of the question of whether an oral agreement superseded the 2004 contract” (¶ 20).
Personal Jurisdiction – Long-Arm Statute
Johnson Litho Graphics v. Sarver, 2012 WI App 107 (filed 6 Sept. 2012) (ordered published 31 Oct. 2012)
Johnson Litho Graphics, an Eau Claire-based printer, sued Sarver to collect on a debt. Sarver was an Illinois resident who had contracted with Johnson Litho by fax and email over the years. The trial judge dismissed the lawsuit, concluding that although Wisconsin’s long-arm statute applied to Sarver, due process prohibited the court from exercising jurisdiction.
The court of appeals reversed in an opinion authored by Judge Higginbotham. First, the court held that the long-arm statute applies to Sarver. “We conclude that the meaning of the phrase ‘to the defendant’ in Wis. Stat. § 801.05(5)(d) includes shipping goods from Wisconsin to third parties at the defendant’s order or direction. This construction of § 801.05(5)(d) is consistent with the admonition that courts are to construe the long-arm statute liberally in favor of exercising jurisdiction” (¶ 6).
Second, due process did not preclude jurisdiction. “Here … Sarver had multiple contacts with Johnson Litho over a six-year period that gave rise to numerous contracts containing reciprocal obligations. Sarver had multiple contacts each time he placed an order by faxing quote forms, approving changes, directing shipments, and making payments. … This was not a one or two time business relationship. Accordingly, Sarver’s contacts ‘cross[ed] the threshold from offending due process to sufficient minimum contacts’” (¶ 24).
Finally, the court of appeals held that the exercise of personal jurisdiction did not “offend notions of fair play and substantial justice” (¶ 32). The court assessed several factors, including the state’s interest, the plaintiff’s interest in obtaining convenient relief, Sarver’s burden of defending this lawsuit, “interstate” interests in efficient dispute resolution, and the “shared interest of the several States in furthering fundamental substantive social policies” (¶¶ 32-39).
Adequate Provocation – In Camera Testimony
State v. Schmidt, 2012 WI App 113 (filed 5 Sept. 2012) (ordered published 31 Oct. 2012)
A jury convicted the defendant of first-degree intentional homicide for the death of his estranged wife, whom he shot several times. The trial judge refused to instruct the jury on adequate provocation and second-degree intentional homicide because, the judge said, the defendant had not presented sufficient evidence as to these issues.
The court of appeals affirmed in an opinion written by Judge Hoover. First, the court of appeals held that the circuit court properly declined to give an adequate-provocation instruction. The statute requires the defense to come forward with “some evidence” of provocation, a concededly “low bar” but one that is not tantamount to the defendant’s suggested standard, “any evidence that is relevant to a mitigation defense” (¶ 11). If the some-evidence threshold is satisfied, the jury may hear evidence of provocation, otherwise not (see ¶ 12).
The court next rejected the state’s contention that provocation proof is limited to “conduct which occurs just prior to the crime” (¶ 13). Provocation is defined by Wis. Stat. section 939.44(1)(b), which imposes no temporal limits (see ¶ 18).
Having set the standard, the court of appeals held that the defense had not come forward with sufficient evidence of provocation, although it was a “close question” (¶ 34). This fact-intensive analysis will not be further summarized here.
More generally, however, the court rejected the state’s overly rigid construction of the reasonableness prong of provocation, noting that “[n]o reasonable person ever reacts to any provocation by killing the provocateur. No doubt, that is why the adequate provocation defense – unlike self-defense – is not a complete defense, but only mitigates the severity of the crime. Instead, Schmidt needed to show only that Wing-Schmidt’s provocation could have caused a reasonable person to completely lose self-control at the time of the murder. See Wis. Stat. § 939.44(1). Stated otherwise, he needed to demonstrate that Wing-Schmidt’s conduct was sufficient to induce the ‘highest degree of anger, rage, or exasperation’ in an ordinarily constituted individual. See Wis JI – Criminal 1012 (2006)” (¶ 35).
A second issue in this case involved an in camera hearing on the provocation issue at which the defendant testified concerning the events leading up to the shooting. The court permitted only defense counsel, not the prosecutor, to be present, but ruled that the defendant’s lawyer could not ask the defendant questions or otherwise participate. The court of appeals held that such in camera procedures comported with case law, noting that the defendant’s testimony was ex parte and in no way foreclosed the presentation of other evidence on provocation (see ¶ 47). The court further observed that the defendant was permitted to consult with counsel during a recess.
Postconviction Remedies – Writ of Coram Nobis
State ex rel. Patel v. Wisconsin, 2012 WI App 117 (filed 11 Sept. 2012) (ordered published 31 Oct. 2012)
Patel appealed a judgment, entered pursuant to his guilty plea, convicting him of one count of child enticement. He also appealed the order denying his postconviction motion for a writ of coram nobis (the writ). Specifically, Patel argued that the circuit court erred in denying his motion for the writ because his petition stated two grounds that were properly within the writ’s scope: 1) he did not knowingly plead guilty to the child enticement charge, and 2) the circuit court failed to recognize that Patel’s English-language comprehension was limited such that he required an interpreter at his plea hearing. In a decision authored by Judge Curley, the court of appeals affirmed.
“The writ of coram nobis is a discretionary writ of ‘very limited scope’ that is ‘addressed to the trial court.’ … ‘The purpose of the writ is to give the trial court an opportunity to correct its own record of an error of fact not appearing on the record and which error would not have been committed by the court if the matter had been brought to the attention of the trial court’” (¶ 12) (citations omitted).
“‘A person seeking a writ of coram nobis must pass over two hurdles.’ … First, the individual must establish that no other remedy is available. … For example, a criminal defendant seeking the writ must not be in custody because in that case Wis. Stat. § 974.06 would provide a remedy. … ‘Second, the factual error that the petitioner wishes to correct must be crucial to the ultimate judgment and the factual finding to which the alleged factual error is directed must not have been previously visited or “passed on” by the trial court.’ … In other words, ‘there must be shown the existence of an error of fact which was unknown at the time of [the plea] and which is of such a nature that knowledge of its existence at the time ... would have prevented the entry of judgment.’ … The writ does not ‘correct errors of law and of fact appearing on the record since such errors are traditionally corrected by appeals and writs of error’” (¶ 13) (citations omitted).
In this case, the petitioner cleared the first of the two hurdles described above because he was no longer in custody. However, he did not clear the second. The alleged defect in his plea hearing (that is, that the circuit court failed to determine the existence of one element of the child enticement crime) is easily discernible from a review of the record and is the type of error to be corrected by appeal (see ¶ 23).
“Turning next to Patel’s contention that he required an interpreter, we conclude that the trial court properly denied the writ regarding this alleged error because: (1) it is a legal issue; and (2) it is an error appearing on the record” (¶ 25). For these reasons, the court of appeals concluded that the circuit court did not err in denying the petition for a writ.
Marital Property Agreements – Powers of Appointment
Czaplewski v. Shepherd, 2012 WI App 116 (filed 12 Sept. 2012) (ordered published 31 Oct. 2012)
Donald and Lulu Mae Shepherd were married in 1947. They had three children, Daniel, Steven, and Ramona. In 2002, Donald and Lulu Mae entered into a marital property agreement (MPA), one provision of which governed the disposal of their property at death: it was to be divided equally among their three children. The MPA permitted the revision of the property distribution, as long as any subsequent instrument made specific reference to the power of appointment in the MPA. [A power of appointment is a power, created or reserved by a person having property subject to his or her disposition, that enables the donee of the power to designate, within such limits as may be prescribed, the transferees of the property. See Wis. Stat. § 702.01(4).]
Lulu Mae died in 2005. In 2007, Donald properly exercised his powers under the MPA to execute a will (the 2007 will) that altered the property distribution in the MPA by dividing Ramona’s one-third of the property equally among Ramona and her two daughters. In March 2010, Donald executed a codicil to the 2007 will, changing the personal representative from his son Daniel to his son Steven.
Less than one month later, Donald executed a new will (the 2010 will), which reinstated Daniel as personal representative and also revoked all former wills and codicils. The 2010 will made no reference to the MPA provision governing the power of appointment but it otherwise maintained the property distribution specified in the 2007 will.
Donald died later in 2010. Daniel applied for the informal administration of Donald’s 2010 will. Ramona filed a petition for summary confirmation of interest in property pursuant to the MPA’s terms. Ramona contended that Donald did not intend to dispose of property through his 2010 will because the will failed to refer to the power of appointment.
At an evidentiary hearing, the attorney who drafted the testamentary instruments testified that the failure to refer to the power of appointment in the 2010 will was a drafting error and that Donald intended to distribute his property according to the terms of the 2010 will. The circuit court admitted the 2010 will to probate. In a decision authored by Judge Neubauer, the court of appeals affirmed.
Section 702.03(1) of the Wisconsin Statutes provides that “[u]nless the person who executed it had a contrary intention, if a governing instrument, as defined in [Wis. Stat. section] 854.01(2), or an inter vivos governing instrument, as defined in [Wis. Stat. section] 700.27(1)(c), creates a power of appointment that expressly requires that the power be exercised by any type of reference to the power or its source, the donor’s intention in requiring the reference is presumed to be to prevent an inadvertent exercise of the power. Extrinsic evidence, as defined in [Wis. Stat. section] 854.01(1), may be used to construe the intent” (¶ 14) (emphasis added by court). A marital property agreement is a “governing instrument” under Wis. Stat. chapter 854 (see id. n.5).
In this case, the appellate court concluded that “the trial court appropriately considered the 2007 Will, the 2010 Codicil, and [the] drafting attorney’s testimony. The 2007 Will establishes that Donald knew of and intended to exercise the power of appointment.… [T]he attorney who drafted all of the documents in question … testified that the failure of the 2010 Will to reference the power of appointment was due to a drafting error and not a change in Donald’s intent as to the distribution of his estate. Ramona presented no evidence to refute [the attorney’s] testimony. Thus, the undisputed evidence establishes that Donald intended to distribute his property according to the dispositive provisions of his 2010 Will. We conclude that the evidence established Donald’s intent to exercise the power of appointment provided for in the MPA through his 2010 Will” (¶ 19).
The appellate court further held that the circuit court properly admitted the drafting attorney’s testimony as permissible extrinsic evidence of testator intent (see ¶ 1). It rejected Ramona’s arguments that the testimony was inadmissible hearsay and that admission of it violated Wis. Stat. section 885.16, the dead man’s statute (see ¶¶ 20-23).
Umbrella Policy – Pollution – Choice of Law – “Expected-or-Intended” Damages
NCR Corp. v. Transport Ins. Co., 2012 WI App 108 (filed 25 Sept. 2012) (ordered published 31 Oct. 2012)
NCR Corp. faces liability for PCB contamination of the lower Fox River, so it sought a declaration of rights under more than 80 policies issued by 25 insurers between 1953 and 1985. An insurer in this case, Transport, “issued NCR a policy covering February 1, 1983 to January 1, 1984. The policy provided excess liability coverage, with a $5,000,000 limit per occurrence for indemnity loss, above two underlying layers of general liability insurance. [The opinion briefly describes the two underlying policies.] Transport’s third-layer policy was part of a $25,000,000 layer of coverage provided together with several other insurers” (¶ 5). The circuit court ruled on several issues that sparked this appeal by Transport.
The court of appeals, in an opinion written by Judge Hoover, affirmed in part and reversed in part. The main issue concerned the choice of law, specifically, the circuit court’s ruling that Wisconsin law governed interpretation of the insurance policy.
The “proper analysis” first requires an assessment of pertinent state contacts, including the “anticipated principal location of the insured risk,” the place of contracting, the place of negotiating, and so on. “Having considered all of Ohio’s and Wisconsin’s contacts to the case, we conclude that Ohio’s respective contacts are ‘so obviously limited and minimal that application of that state’s law [would] constitute officious intermeddling’” (¶ 22).
In light of this conclusion, the court did not have to undertake the second step, namely, application of the “choice-influencing factors.” Nonetheless, the court of appeals agreed with “the circuit court’s well-reasoned conclusion that this analysis would also lead to applying Wisconsin law” (¶ 23).
The court of appeals then took up several fact-intensive issues that are summarized as follows. First, the circuit court improperly granted summary judgment, in which it held “that NCR intended or expected with substantial certainty that its PCB releases would cause environmental harm.” The vagaries of late 1960s science and NCR’s knowledge were issues of fact for the jury. Second, the trial judge did, however, properly deny Transport’s request to reopen discovery for reasons never quite made clear. Finally, the court of appeals declined to rule on whether Transport must pay part of NCR’s defense costs. Until coverage is established, any such ruling would be “a mere advisory opinion” (¶ 42).
Motor Vehicle Law
OWI – Probable Cause for Preliminary Breath Test – Foundation for PBT Evidence
State v. Felton, 2012 WI App 114 (filed 18 Sept. 2012) (ordered published 31 Oct. 2012)
The defendant appealed his operating while intoxicated (OWI) conviction, contending the arrest was unlawful because the police officer who arrested him did not have probable cause to give him a preliminary breath test (PBT) after he passed all properly administered field-sobriety tests and because there was no evidence that the PBT instrument was approved or certified as accurate. The circuit court denied the defendant’s motion to suppress evidence. In a decision authored by Judge Fine, the court of appeals affirmed.
Section 343.303 of the Wisconsin Statutes authorizes a law enforcement officer who has probable cause to believe a person has violated the OWI law to request the driver to submit to a PBT using a device approved by the Department of Transportation (DOT) for this purpose; the result of the PBT may be used by the officer for the purpose of deciding whether to arrest the driver for violating the OWI statute.
“This section does not require that the officer have probable cause to arrest a driver for drunk driving before giving that driver a preliminary-breath test. Rather, the statute’s phrase ‘probable cause to believe’ refers to a quantum of proof greater than the reasonable suspicion necessary to justify an investigative stop but less than the level of proof required to establish probable cause for arrest. Thus, a preliminary-breath test may be requested when an officer has a basis to justify an investigative stop but has not established probable cause to justify an arrest” (¶ 8) (internal quotations and citations omitted).
In this case, the officer observed the defendant linger unusually long at one stop sign and then proceed past another stop sign without stopping or slowing down. After pulling over the defendant’s vehicle, the officer observed that the defendant’s eyes were glassy and bloodshot and that he smelled of alcohol; the defendant admitted that he had consumed three beers two hours before the stop. Further, the officer knew that the defendant had prior OWI convictions.
Even though the defendant passed all properly administered field-sobriety tests, the court of appeals concluded that the officer nonetheless had the “probable cause” necessary under Wis. Stat. section 343.303 to request the PBT. “Indeed, [the arresting officer] would have been fully justified in asking [the defendant] to take a preliminary-breath test without even asking him to perform any field-sobriety tests because they are not needed to establish probable cause to arrest someone for drunk driving” (¶ 10).
The defendant further argued that it was erroneous for the circuit court to accept the results of the PBT as establishing probable cause for the OWI arrest because the state did not first establish that the measuring device had been subjected to some level of testing and calibration and approved by the DOT.
The court of appeals concluded that, although the statutes contain lengthy criteria for the admission of evidentiary blood alcohol tests, “no statute similarly preconditions the use of the preliminary-breath test when it is used by a law-enforcement officer for the purpose of deciding whether or not the person shall be arrested for a violation of s. 346.63(1)” (¶ 12) (internal quotations omitted).
“Absent a statute that compels such a result in connection with a blood-alcohol testing device, the proponent need not show compliance with administrative rules” (id.). “[I]f the legislature deemed that evidence of approval or certification [of the PBT device] was a necessary prerequisite to use of the preliminary-breath test it would have so provided” (¶ 13).
Lawyer as Witness – Disqualification
State v. Gonzalez-Villarreal, 2012 WI App 110 (filed 18 Sept. 2012) (ordered published 31 Oct. 2012)
The defendant, whose native language is Spanish, was charged with several counts of possessing child pornography. During a recorded “interview” with police officers, the defendant’s lawyer also translated for the defendant. Copies of the recorded interview were prepared for the defense and the prosecution. The state moved to disqualify the defendant’s counsel because he might be called as a potential witness to statements made during the recorded interview. The circuit court granted the motion to disqualify defense counsel.
Granting leave to appeal this nonfinal order, the court of appeals reversed in an opinion authored by Judge Kessler. The court of appeals concluded that there was no “conflict of interest” that justified the disqualification.
“For disqualification under SCR 20:3.7, the State must show that Attorney Knoeller is a necessary witness to the content of the interview. Here, the record supports no such conclusion. First, the State candidly admitted that for tactical reasons (its concern about a future ineffective assistance of counsel claim by Gonzalez-Villarreal), it was unlikely to use what it considered to be the incriminating statement. Further, the entire interview was recorded; the State and Attorney Knoeller both have a CD of the recording. Where an interview has been recorded, and all parties have a copy of the recording, it is unlikely that a party to the interview is a necessary witness to the content of the interview. Finally, the accuracy of the translation on the CD can be shown by means other than Attorney Knoeller’s testimony. Either party can retain a bilingual Spanish-English speaker to translate/interpret and/or to prepare a transcript of what was said by whom on the recording. Should the translations differ, a jury will weigh the testimony of the translators and come to its own conclusions as to whether Gonzalez-Villarreal made incriminating statements” (¶ 12).
Statute of Frauds – Parol Evidence
303 LLC v. Born, 2012 WI App 115 (filed 5 Sept. 2012) (ordered published 31 Oct. 2012)
Walter and Alice Born sold their 50-acre farm to 303 LLC, subject to provisions allowing the Borns to rent back the land for 10 years or “until done farming” and giving 303 LLC a “right of First refusal on remaining Acreage” (¶ 2). The Borns rented back the farm. After Walter’s death, Alice sublet part of the 50-acre farm to the Ditters. In 2005 and 2009, she sold several parcels of other land to the Ditters.
Claiming that it had the right of first refusal on the land purchased by the Ditters and that Alice had breached the lease agreement in subletting to the Ditters, 303 LLC then sued Alice (see ¶ 3). The circuit court granted summary judgment in Alice’s favor on the land-sale claim and, following a bench trial, ruled that Alice had not breached the lease.
The court of appeals affirmed in an opinion written by Judge Reilly. First, the term “remaining acreage” was too indefinite to meet the requirements of the statute of frauds because it did “not provide a key or link to what specific land attached to the right of first refusal, and therefore, any parol or extrinsic evidence would be improper as the evidence would be offered for what the parties intended rather than for what the written conveyance described” (¶ 15).
“Parol evidence in the context of the statute of frauds does not operate to supply the fatal omissions of the writing but rather to render the writing intelligible. A clear distinction must be drawn between the proper admission of extrinsic evidence for the purpose of applying the description to identified property versus the improper supplying of a description or adding to a description that on its face is insufficient” (¶ 16).
Second, the circuit court properly found that Alice had not breached the lease. Quite simply, she was not “done farming” (¶ 20).