Vol. 77, No. 9, September
Court of Appeals Digest
This column summarizes selected published
opinions of the Wisconsin Court of Appeals. Prof. Daniel D. Blinka and
Prof. Thomas J. Hammer invite comments and questions about the digests.
They can be reached at the Marquette University Law School, 1103 W.
Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.
by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer
Attorney Fees - Offer to Settle
Alberte v. Anew Health Care
Servs. Inc., 2004 WI App 146 (filed 29 June 2004) (ordered
published 28 July 2004)
The plaintiff's complaint alleged violations of the Americans with
Disabilities Act (ADA) and various civil liberties claims. She filed an
offer to settle the claims pursuant to Wis. Stat. section (rule) 807.01.
The trial court ruled that the written offer, which included recovery of
the plaintiff's "costs," did not include reasonable attorney fees.
The court of appeals, in an opinion written by Judge Fine, reversed.
The term "costs" in section (rule) 807.01(3) means "taxable costs" as
provided by Wis. Stat. section (rule) 814.04. "Costs recoverable under
Rule 814.04 include 'fees allowed by law'" (¶ 5). The court and the
parties assumed that the plaintiff "prevailed" in her discrimination
claim; therefore, the ADA provided that she was entitled to her
reasonable attorney fees. Case law holds that when a statute defines
costs to include attorney fees, such fees are "costs" under rules
governing an offer of settlement (¶ 6).
Forum Selection Clause - Unconscionability
Pietroske Inc., v. Globalcom
Inc., 2003 WI App 142
(filed 16 June 2004) (ordered published 28 July 2004)
The plaintiff, the owner of a car dealership, negotiated a
telecommunications contract with the defendant company. The contract
provided that all disputes will be decided under Illinois law in the
Cook County courts. The plaintiff sued the defendant for breach of
contract in a Wisconsin court. The circuit court refused to enforce the
forum selection clause based on an "unconscionability" analysis.
The court of appeals, in an opinion written by Judge Anderson,
reversed. "In Wisconsin a forum-selection clause is presumptively valid"
(¶ 1). The court found no "substantive unconscionability" in the
clause, citing such factors as the location of the defendant's
headquarters and the relatively low "personnel and financial impact" on
the plaintiff of traveling to Cook County (¶ 7). Nor was there
procedural unconscionability - all pertinent facts were revealed and the
clause's format was straightforward (for example, short and in "plain
English") (¶ 9). Although the clause was not explained to the
plaintiff (the buyer), this was not fatal in light of his "savvy" and
considerable business experience.
Sanctions - Attorney Fees
McPherson, 2004 WI App 145 (filed 30 June 2004) (ordered
published 28 July 2004)
Earlier litigation in this case concerned the propriety of the
court's decision to disqualify Attorney Forman, who appeared pro hac
vice, from representing a plaintiff in a medical malpractice case. In
this appeal, Forman contended that it was error to grant the defendant's
original motion for mistrial and to impose sanctions of costs and
The court of appeals, in an opinion written by Judge Anderson,
affirmed in part and reversed in part. It upheld the grant of a mistrial
and the award of costs and attorney fees. First, the motions for fees
and costs were timely filed. The court rejected Forman's contention that
the time of filing was controlled by Wis. Stat. section 806.06, which
provides that parties must file their bills of costs within 30 days of
the rendering of a judgment. In this case, the key date in question was
that of an order for consolidation, not the entry of a judgment; thus,
section 806.06 did not apply (¶ 28).
Second, the trial court properly granted the mistrial; the record
reflected that the mistrial was granted "after allowing ample time for
argument and thoughtful consideration of other alternatives" (¶
32). Third, the sanctions of costs and attorney fees were proper. Trial
courts are required to find "bad faith" or "egregious conduct" only
before imposing the sanction of dismissal of claims or defenses; such
was not the case here (¶ 34). Case law and statute allow courts to
impose costs when a mistrial is granted. Attorney fees also may be
granted in appropriate cases, but the court of appeals agreed with
Forman "that the information provided by the defense was not sufficient
to enable the trial court or this court to determine a reasonable figure
for attorneys' fees in this case" (¶ 38). In particular, the court
noted the insufficiency of affidavits and bills of costs referencing,
for example, "trial attendance." The matter was remanded for additional
evidence on the issue of attorney fees.
Reopening Judgments - Change in Case Law
Sukala v. Heritage Mut. Ins.
Co., 2004 WI App 128
(filed 17 June 2004)
(ordered published 28 July 2004)
The Sukalas originally sued their insurer to recover underinsured
motorist (UIM) coverage under their auto policies. An earlier appeal
resolved the issues against them in 2001 (Sukala I), but a 2002
supreme court decision changed the prevailing law and referred to
Sukala I as "incorrect" (see ¶ 5). This appeal
arose when the trial court refused the Sukalas' motion to reopen their
original case. The trial court reasoned that, following Sukala
I, the plaintiffs had released one insurer and stipulated to the
dismissal of another. Moreover, seven months passed between the supreme
court's denial of the petition for review in Sukala I and its
decision to grant a review in the other (2002) case. Finally, the
supreme court had not expressly overruled Sukala I in the later
The court of appeals, in an opinion written by Judge Dykman,
reversed. "We can ascertain no valid justification for protecting a
release from being opened while stipulations are subject to equitable
relief. Both methods are commonly used to terminate litigation.
Therefore, for the purposes of a motion under § 806.07(1), we
consider a release and a stipulation to dismiss a claim one and the
same" (¶ 14). The court also declined to demand "similitude"
between such requests and the facts in Mullen v. Coolong, 153
Wis. 2d 401 (1990). "Like Mullen, the Sukalas were victims of
circumstance.... The crux of our inquiry is whether fairness mandates
opening the judgment, despite compelling justifications for protecting
the finality of a judgment" (¶ 12).
Judge Deininger dissented on the ground that the majority paid only
"lip service to the standard for our review of the trial court's
exercise of discretion" (¶ 15). Posing a hypothetical in which
insurers ask to reopen judgments in light of later case law
developments favorable to their interests, Judge Deininger asked:
"[W]ill this case ever end, regardless of the number of final judgments
that are entered or opportunities for appellate review that are
exhausted, so long as the law regarding UIM clauses continues to
evolve?" (¶ 28).
Warrantless Entry of Attached Garage - Exigent Circumstances
- Threat to Safety - OWI Investigation
Leutenegger, 2004 WI App 127 (filed 24 June 2004) (ordered
published 28 July 2004)
A person telephoned police to report what he believed to be an
intoxicated driver. Using a cellular telephone, the person called from a
tavern parking lot and gave specific information indicating that a man,
later identified as the defendant, was very intoxicated and was driving
a car away from the tavern. Using information supplied by the caller, a
police officer located the defendant sitting in his car in a garage
attached to his home. After viewing the situation for a short time, the
officer approached the open garage door and proceeded into the garage,
making contact with the defendant, who was still in his car. After
entering the garage, the officer made observations supporting the
inference that the defendant was intoxicated. The defendant was arrested
and a breath test showed that his blood alcohol content was .28
The defendant moved to suppress all evidence obtained after the
police officer entered his garage. The circuit court concluded that the
attached garage was part of the curtilage of the defendant's residence
(a finding not contested by the state on appeal - see ¶ 21 n.5)
and, therefore, the officer's warrantless entry into the garage was
presumptively unconstitutional. However, the court also concluded that
the entry was justified by exigent circumstances and thus denied the
suppression motion. The defendant pled no contest to the OWI charge
(fourth offense) and then challenged the circuit court's suppression
ruling on appeal. In a decision authored by Judge Lundsten, the court of
As phrased by the court, the issue before it was whether the
officer's warrantless entry into the defendant's attached garage was
lawful because of a possible need to render assistance or prevent harm.
Applying State v. Richter, 2000 WI 58, 235 Wis. 2d 524, 612
N.W.2d 29, the court concluded that "whether a warrantless home entry is
justified based on the need to render assistance or prevent harm is
judged by an objective test. The test is whether a police officer under
the circumstances known to the officer at the time of entry reasonably
believes that delay in procuring a warrant would gravely endanger life"
(¶ 19) (internal quotes and citations omitted).
In reaching this conclusion, the court declined to apply State v.
Boggess, 115 Wis. 2d 443, 340 N.W.2d 516 (1983), which used a
two-pronged objective/subjective test and held that a warrantless entry
based on a safety concern is illegal unless the entering officer
subjectively believes that entry is necessary to render assistance or
prevent harm. "When our supreme court most recently dealt with a
proffered safety justification for a warrantless entry under
circumstances similar to those before us - that is, in Richter
- it applied a purely objective test" (¶ 7). This does not
mean, though, that the officer's subjective beliefs are irrelevant; a
court may consider them but only insofar as such evidence assists the
court in determining objective reasonableness. See State v.
Kyles, 2004 WI 15, 269 Wis. 2d 1, 675 N.W.2d 449.
Applying these standards to the facts of this case, the court
concluded that the facts would have led a reasonable officer to conclude
that the defendant was in his 70s or 80s and was highly intoxicated. As
the circuit court explained, the defendant's age, combined with his high
degree of intoxication, would lead a reasonable officer to be concerned
about the defendant's health. The officer also observed that the
defendant delayed leaving his car for no apparent reason. The officer
knew that the caller had followed the defendant home and returned a
short distance to a main street where the caller made contact with the
officer. After driving a short distance to the defendant's house, the
officer stood in the street for about a minute. Combining these time
periods, it is apparent that, after driving into his garage, the
defendant sat in his car for at least two to three minutes before the
officer entered the garage.
The circuit court credited the officer's testimony that she was
subjectively motivated, in part, by a concern for the defendant's
safety. "The obvious inference (from her testimony) is that the officer
thought (the defendant) might be experiencing a physical problem related
to his intoxication that was preventing him from taking the normal
action of exiting his car and entering his home.... We agree with the
circuit court that this circumstance, combined with other information,
suggested a current intoxication-related health problem" (¶¶
29-30). Accordingly, exigent circumstances justified a warrantless entry
of the garage.
The state did not argue that entry into the defendant's garage was
justified under the "community caretaker" doctrine, and thus the court
of appeals did not address the application of this doctrine.
Investigative Stops - OWI - Sufficiency of Evidence to
Support Initial Stop
State v. Powers,
2004 WI App 143 (filed 16 June 2004) (ordered published 28 July
A drugstore clerk who provided his name called the police to report
that an intoxicated man had come into the store to purchase beer, a
small outfit, and another item. The clerk indicated that the man's
credit card had been declined and that the man left the store after
stating that he would be coming back with money. The clerk supplied to
the police a description of the man's truck and also provided the
truck's license plate number.
The officer assigned to the call located the truck near the store. He
then saw the defendant walking unsteadily to the truck carrying a case
of beer and a bib or some type of small item. The officer observed the
defendant enter the vehicle, start it, and drive through the parking lot
and onto a public street. Although the defendant did not immediately
respond to the officer's emergency lights, he eventually pulled
The defendant was charged with OWI (fifth offense). He filed a motion
seeking to suppress all of the evidence, claiming that the officer
lacked reasonable suspicion to conduct an investigative traffic stop.
The circuit court held that the tip from the drugstore clerk was
reliable and that the officer properly relied on that tip and on his
personal observations in accumulating reasonable suspicion to conduct an
investigatory stop. The defendant subsequently pled guilty, and he
appealed the denial of his motion to suppress.
In a decision authored by Judge Anderson, the court of appeals
affirmed. The court began its analysis by clarifying when the seizure,
within the meaning of the Fourth Amendment, of the defendant occurred.
The trial court had held that the defendant was seized when the officer
activated his emergency lights. The court of appeals disagreed. In order
to effect a seizure, an officer must make a show of authority and the
citizen must actually yield to that show of authority. In this case, the
seizure did not occur until the officer stopped the defendant.
Turning to the main issue in the case, the court concluded that the
tip from the drugstore clerk was reliable for several reasons. First,
the tip was based on the clerk's firsthand observations. Second, even
though the clerk did not actually see the defendant drive the vehicle,
cases from other jurisdictions have found reliable tips that come from
employees of businesses who have observed individuals they believe to be
drunk, whether or not those individuals were driving. Third, the officer
could rely on the clerk's assessment that the defendant was drunk
because, in Wisconsin, a lay person can give an opinion that he or she
believes another person to be intoxicated. Finally, the officer
independently verified the clerk's tip. "Where a tip has a high degree
of reliability because the informant identified himself or herself and
the police independently verified the information before conducting a
stop, the resulting stop is supported by reasonable suspicion" (¶
Ethics Violation by Prosecutor - Suppression of Evidence Not
State v. Maloney,
2004 WI App 141 (filed 29 June 2004) (ordered published 28 July
The circuit court denied the defendant's motion for postconviction
relief after rejecting allegations that trial counsel provided
ineffective assistance. One of the defendant's arguments was that his
trial counsel should have moved to suppress certain evidence because the
prosecutor committed an ethical violation. The rule in question
prohibits a lawyer who is representing a client from communicating about
the subject of the representation with a party the lawyer knows to be
represented by another lawyer in the matter, unless the lawyer has the
consent of the other lawyer or is authorized by law to do so.
See Supreme Court Rule 20:4.2. The circuit court held that
there had been no violation of this rule and that, even if there had
been, suppression of evidence would not be the remedy.
In a decision authored by Judge Hoover, the court of appeals agreed
"that suppression is not available for an ethics violation" (¶ 11).
The court therefore did not need to decide whether the prosecutor
actually violated the ethical rule cited above. Suppression of evidence
is only required when evidence has been obtained in violation of a
defendant's constitutional rights or if a statute specifically provides
for the suppression remedy.
With regard to the impact of violations of the Rules of Professional
Conduct, the court noted that the preamble to those rules provides in
pertinent part as follows:
"Failure to comply with an obligation or prohibition imposed by a
rule is a basis for invoking the disciplinary process. ...
"Violation of a rule should not give rise to a cause of action nor
should it create any presumption that a legal duty has been breached.
The rules ... are not designed to be a basis for civil liability.
Furthermore, the purpose of the rules can be subverted when they are
invoked by opposing parties as procedural weapons. The fact that a rule
is a just basis ... for sanctioning a lawyer ... does not imply that an
antagonist in a collateral proceeding or transaction has standing to
seek enforcement of the rule. Accordingly, nothing in the rules should
be deemed to augment any substantive legal duty of lawyers or the
disciplinary consequences of violating such duty."
Said the court, "the rule provides neither a constitutional nor a
statutory basis for (the defendant) to seek suppression of (evidence) as
a 'procedural weapon.' Because suppression is not available for an
ethical violation, counsel (was) not ineffective for failing to raise
the argument" (¶ 12).
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Modification of Custody and Physical Placement - Status Quo
Palmersheim, 2004 WI App 126 (filed 3 June 2004) (ordered
published 28 July 2004)
Palmersheim and Abbas are the father and mother of a child born in
1991. A stipulated paternity judgment was entered in 1992, awarding sole
legal custody to the mother and providing that periods of physical
placement with the father were to be "agreed between the parties." At
the time of the 1992 judgment, Wis. Stat. section 767.51(3) provided
that, unless the court orders otherwise, "the mother shall have sole
legal custody of the child."
In 2001 the father filed a motion to modify the original paternity
judgment, seeking joint custody and shared physical placement. The
circuit court denied the motion after finding, among other things, that
the father failed to rebut the status quo presumptions codified in
section 767.325(1)(b)2. These presumptions are that the current
allocation of decision making under the legal custody order and the
continuation of the child's primary physical placement are in the
child's best interest.
Among the issues on appeal was whether the circuit court applied the
correct legal standard in determining whether the proposed changes in
custody and placement were in the child's best interest. The father
argued that the circuit court erred by applying the status quo
presumptions described above rather than the joint legal custody
presumption codified in section 767.24(2)(am). Section 767.24 is the
current statute governing initial determinations of legal custody and
In a decision authored by Judge Higginbotham, the court of appeals
observed that, standing alone, neither section 767.24(2)(am) nor section
767.325(1)(b) is ambiguous. However, these statutes are ambiguous in
their interaction because section 767.325(5m), which deals with
modification of legal custody or physical placement orders, provides
that the court shall make its determination "in a manner consistent with
The court concluded that there is no dispute that the legislature, by
enacting section 767.24(2)(am), intended to create a rebuttable
presumption, applicable in all initial custody proceedings, in favor of
joint legal custody. What is not clear is whether the legislature
intended this presumption to apply in custody modification
determinations. In this case the court held that "the most reasonable
interpretation of sec. 767.24(2)(am) is that the presumption that joint
legal custody is in the child's best interest applies only in initial
legal custody determinations, not in modification determinations"
The court also rejected the father's argument that if the status quo
presumptions of section 767.325(1)(b) cannot be rebutted by the joint
custody presumption of section 767.24(2)(am), then the application of
the status quo presumptions deprives him of his constitutional right to
equal protection under the law.
Judge Lundsten filed a concurring opinion agreeing with much of the
lead opinion but differing in how to reach the same result. Judge
Deininger filed a dissent.
Exclusions - Intentional Conduct
B.N. v. Giese, 2004
WI App 137 (filed 2 June 2004) (ordered published 28 July 2004)
B.N. alleged that she had been sexually abused by a family member
when she was 11 years old. She sued the alleged abuser, his wife, and
their insurer, arguing that the insurer was liable for the wife's
negligent infliction of emotional distress. The trial court granted
summary judgment in the insurer's favor based on a finding that the
wife's conduct was intentional, not negligent.
The court of appeals, in an opinion written by Judge Nettesheim,
affirmed. As a matter of law, the wife's conduct was intentional. The
"mere fact" that B.N. did not allege that the wife intended to harm B.N.
or that the wife's conduct was not substantially certain to produce harm
did "not control the question" (¶ 14). Distinguishing several
cases, the court focused on the wife's "thoughtless and needlessly cruel
conduct in disregard of B.N.'s young age and emotional state" (¶
19). "Under the objective standard, there is no ambiguity as to [the
wife's] intent. That the harm to B.N. may have been different in
character or magnitude from that expected by [the wife] does not bar
application of the intentional acts exclusion" (¶ 20).
Sale of a Business - Transfer of Goodwill - Ownership of the
Koepsell's Olde Popcorn
Wagons Inc. v. Koepsell's Festival Popcorn Wagons Ltd., 2004 WI App 129 (filed 16 June
2004) (ordered published 28 July 2004)
This case arose out of multiple asset purchase agreements between the
parties. Part of their dispute involved whether under Wisconsin law,
when goodwill is transferred, ownership of the trademark also is
transferred. The purchaser argued that the sale of goodwill for a
specific price in the asset purchase agreements also constituted a sale
of the trademark associated with those assets.
In an opinion authored by Judge Anderson, the court of appeals began
its analysis by noting that "trademark law in Wisconsin pertaining to
(the specific issue in this case) appears to be undeveloped" (¶
34). Accordingly, the court looked to federal law for guidance.
Under federal law, it is a well-established rule that sale of a trade
name or mark apart from its goodwill constitutes an invalid "assignment
in gross." See Marshak v. Green, 746 F.2d 927 (2d Cir. 1984).
"However, the federal courts established a different standard for
evaluating sale of goodwill without transfer of trademark. This issue is
addressed at length in Berni v. International Gourmet
Restaurants, 838 F.2d 642 (2nd Cir. 1988). Berni involved
a dispute over ownership and use of an Italian trademark. The
Berni court reaffirmed Marshak, noting that the mark
means nothing without its accompanying goodwill. The Berni
court also noted that although a trademark may not be sold independent
of its goodwill, a mark or name's owner might retain the mark despite
the sale of the business that underlies the mark or name. To retain such
ownership after sale of a business' assets, the mark or name's owner
must (1) demonstrate intent to resume making the substantially same
product, (2) retain some portion of the goodwill, and (3) resume
operations within a reasonable time. Retention of the mark without
evidence of the aforementioned elements will constitute retention of an
invalid 'mark in gross'" (¶ 37) (internal citations omitted).
"Thus, if a business sale contemplates retention of some assets, the
Berni test is applied to determine whether the seller intended
to resume using the mark in a new enterprise. Under this test, the
plaintiff would have to meet the Berni requirements to
demonstrate a protectable interest in the trademark or name" (¶
The appellate court was persuaded that the law of Berni is
applicable in this case. It reversed a grant of summary judgment in the
defendant's favor on the trademark claim and remanded the matter to the
circuit court, because under Berni material facts are in
dispute as to whether the plaintiff had a protectable interest in the
trademark in question.