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    Supreme Court Digest

    Daniel Blinka; Thomas Hammer

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    Wisconsin Lawyer
    Vol. 77, No. 2, February 2004

    Supreme Court Digest


    This column summarizes all decisions of the Wisconsin Supreme Court (except those involving lawyer or judicial discipline, which are digested elsewhere in the magazine). Profs. Daniel D. Blinka and Thomas J. Hammer invite comments and questions about the digests. They can be reached at Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.

    by Prof. Daniel D. Blinka &
    Prof. Thomas J. Hammer

    * *

    Employment Law

    Late Payment of Wages - Civil Penalties

    Hubbard v. Messer, 2003 WI 145 (filed 20 Nov. 2003)

    Wis. Stat. section 109.03(1) provides as follows: "Every employer shall as often as monthly pay to every employee engaged in the employer's business, except those employees engaged in logging operations and farm labor, all wages earned by the employee to a day not more than 31 days prior to the date of payment." In this case the circuit court granted summary judgment to the plaintiff employee, concluding that because certain wages were due and unpaid on the deadline set by the statute quoted above, the employer owed the employee a civil penalty pursuant to section 109.11(2), which governs wage claim actions.

    The court of appeals reversed, concluding that section 109.11(2)(b) imposes civil penalties only if wages are due and unpaid after the employer is delinquent for more than 31 days and remain unpaid at the time a circuit court action commences. In the view of the court of appeals, if an employer belatedly pays wages in full before commencement of a circuit court action, the employee does not have an action for civil penalties.

    In a majority decision authored by Chief Justice Abrahamson, the supreme court affirmed the court of appeals. It held that section 109.11(2)(b) does not impose civil penalties when wages due an employee have been fully paid at the time a circuit court action is commenced. This interpretation of the statute, said the court, "best balances the legislature's goals of encouraging employers to pay wages promptly, facilitating the rapid administrative disposition of disputes, and bringing finality to settlements brokered by the parties on their own or in the administrative process" (¶ 42).

    Justice Roggensack filed a concurring opinion that was joined by Justices Wilcox and Crooks.

    Landlord-Tenant Law

    Evictions - Notice of Appeal - Timeliness

    Highland Manor Assoc. v. Bast, 2003 WI 152 (filed 30 Dec. 2003)

    After the circuit court denied Bast's motion to reconsider an eviction judgment, Bast filed a notice of appeal from that order. The court of appeals dismissed the appeal because the notice was untimely.

    The supreme court, in an opinion authored by Chief Justice Abrahamson, affirmed. The first issue was "whether a tenant defendant in a small claims eviction proceeding may move for reconsideration of a judgment of eviction against the tenant[.]" Examining the interplay between Wis. Stat. sections 799.445 and 805.17(3), the court held "that the considerations favoring motions for reconsideration outweigh any considerations not favoring such motions, and that a tenant's motion for reconsideration of an eviction judgment is compatible with small claims procedure and practice in eviction actions. Thus, a tenant against whom an eviction judgment has been rendered in a small claims eviction action may bring a motion to reconsider the judgment under Wis. Stat. § 805.17(3)" (¶ 19) (note omitted).

    The second issue was "whether a motion for reconsideration extends the tenant's time to appeal from a judgment of eviction prescribed by Wis. Stat. § 799.445." The court held that it did not extend the time for filing. "The conflict between Wis. Stat. §§ 799.445 and 805.17(3) regarding the time of appeal of a judgment of eviction is, we conclude, resolved by § 799.04. As we explained previously, § 799.04 provides that, except as otherwise provided in chapter 799, the general rules of practice and procedure in chapters 750 to 758 and 801 to 847 apply to actions and proceedings under chapter 799. As we have shown, § 799.445 does explicitly provide the allowable time for appeal from a judgment of eviction, and it therefore trumps the time for appeal set forth in § 805.17(3). We need go no further. Under Wis. Stat. § 799.445, a tenant must appeal from a judgment of eviction within 15 days of judgment, and Wis. Stat. § 805.17(3) does not extend the time for initiating an appeal from an eviction judgment" (¶ 25).

    Insurance

    Disability - Bad Faith - Appellate Review

    Brown v. LIRC, 2003 WI 142 (filed 18 Nov. 2003)

    A meat cutter working at a grocery store suffered a compensable back injury in 1993 and reinjured his back in 1995. The insurer paid temporary total disability benefits until early 1996, when it suspended payments based on allegations that the employee was working elsewhere and not reporting the income. Litigation ensued, and the employee won his case for continuation of benefits. The issue in this litigation is whether the employee is entitled to additional penalty payments based on "bad faith." The circuit court affirmed LIRC's conclusion that there was no bad faith, but the court of appeals reversed.

    The supreme court, in an opinion authored by Chief Justice Abrahamson, reversed the court of appeals. The issue before the court was whether "LIRC's conclusion of law - that the employee's claim for benefits was fairly debatable and that the insurer's suspension of benefits did not constitute bad faith under Wis. Stat. § 102.18(1) (bp) and Wis. Admin. Code § DWD 80.70(2) - should be affirmed" (¶3). The appropriate standard of review was "great weight deference," because LIRC "has developed extensive experience interpreting penalty provisions contained in the Worker's Compensation Act" (¶ 18). Accordingly, "a court will refrain from substituting its view of the law for that of an agency charged with administration of the law and will sustain the agency's conclusions of law if they are reasonable" (¶19).

    The court then set forth the standard for defeating a bad faith claim under worker's compensation law: in essence, whether the insurer exercised ordinary care in investigating the facts and law "and reasonably conclude[d] that the claim is fairly debatable" (¶29). Here the record supported - but just barely - LIRC's determination that the insurer's conduct, although by no means exemplary, did not constitute "bad faith." The insurer conducted a "brief, inconclusive investigation" before it suspended the employee's benefits. Although the supreme court upheld the LIRC finding in this case, the court warned that the insurer's actions pushed "very near the limit of what the great weight deference level of review will bear" (¶52).

    Real Property

    Easements of Necessity - Exercise of Judicial Discretion

    McCormick v. Schubring, 2003 WI 149 (filed 26 Nov. 2003)

    This case, which concerns easements of necessity, was before the supreme court on certification from the court of appeals.

    The first certified question was whether an easement of necessity arises by operation of law once the elements required for the easement have been established, or whether its creation is subject to the discretion of the circuit court. In a decision authored by Justice Roggensack, the supreme court concluded that an easement of necessity generally does not arise as a matter of law, but rather, through the exercise of a circuit court's discretion.

    In Wisconsin, an easement of necessity may arise in favor of a property owner who can prove the following elements: 1) common ownership of the proposed servient and dominant estates at the time of the severance that created the landlocked condition, and 2) the landlocked parcel had no access to a public roadway after it was severed and such lack of access continues. Although these elements must be established before an easement of necessity may arise, they may not be sufficient to support an easement of necessity in every case. Judicial creation of an easement is inherently equitable in nature, and equitable decisions are generally discretionary.

    Accordingly, said the court, "our decisions in regard to easements of necessity should not be read to imply that an easement of necessity always arises as a matter of law whenever the two required elements are proved because the equities that drive the creation and the scope of an easement may vary, requiring the circuit court to weigh the burdens and benefits the easement would create" (¶ 15). [The court then proceeded to provide a number of examples that could affect the way in which a circuit court weighs the burdens and benefits.]

    The second certified question before the supreme court was whether an easement of necessity may be afforded to a grantor of real estate who formerly had access to a public way and who retains a landlocked parcel after the severance of a portion of the property. The court concluded that "one who stands in the shoes of a grantor who formerly had access to a public highway but after the severance of a portion of his land retained a landlocked parcel, may obtain an easement of necessity" (¶ 2). The court believed this conclusion to be in accord with legal treatises that have concluded that both grantees and grantors may seek an easement of necessity.

    Applying these principles to the facts of the case before it, the court concluded that the circuit court judge did not erroneously exercise his discretion in granting an easement of necessity.

    Justice Wilcox did not participate in this decision.

    Taxation

    Wis. Stat. Section 70.11(4) Property Tax Exemption - Lessee Identity Condition

    Columbus Park Housing Corp. v. City of Kenosha, 2003 WI 143 (filed 19 Nov. 2003)

    Columbus Park Housing Corp. is a nonstock, nonprofit Wisconsin corporation that acquires and rehabilitates blighted property in Kenosha and leases it to qualified low-income families. It is a benevolent association within the meaning of Wis. Stat. sec. 70.11(4); its mission is to improve the living conditions of the poor and underprivileged in Kenosha by providing safe, affordable housing.

    Columbus Park's rental units are occupied by individuals with annualized incomes below the federal poverty level. Columbus Park uses the rental income from its leased properties, in part, for maintenance and construction debt reduction of its leased properties. Columbus Park participates in the federal rent subsidy program. It charges its tenants 30 percent of their income and receives subsidies from the federal government through the Kenosha Housing Authority, which brings the rents to reasonable market rates.

    This case concerns property taxes that were levied by the city on properties that had been rehabilitated and were rented to low-income individuals or awaiting occupancy. The circuit court found that Columbus Park was exempt from property taxes under section 70.11(4), a decision that was affirmed by the court of appeals. In a majority decision authored by Justice Wilcox, the supreme court reversed the court of appeals.

    Wis. Stat. section 70.11(4) exempts from taxation "property owned and used exclusively by . . . benevolent associations . . . but not exceeding 10 acres of land necessary for location and convenience of buildings while such property is not used for profit." The introductory section of section 70.11 provides as follows: "Leasing a part of the property described in this section does not render it taxable if the lessor uses all of the leasehold income for maintenance of the leased property, construction debt retirement of the leased property or both and if the lessee would be exempt from taxation under this chapter if it owned the property" (emphasis supplied). The emphasized language codifies what is known as the "lessee identity condition."

    The supreme court concluded that Columbus Park is not entitled to a tax exemption under section 70.11(4) because it cannot satisfy the lessee identity requirement. The lessees - the low-income individuals to whom Columbus Park rents - would not qualify under section 70.11 as tax exempt if they owned the property, because section 70.11 only exempts property owned by certain organizations and institutions that meet the statutorily specified criteria.

    The court also addressed and rejected a number of additional arguments raised by Columbus Park. It declined to construe the lessee identity condition of the statute as applying only when a benevolent association leases property to a for-profit business entity. It also rejected an invitation to carve out an exception to the lessee identity condition under which this condition would not apply if the lessees are the objects of the organization's benevolence. The court said that whether an organization should benefit from a tax exemption is a policy decision that is within the province of the legislature.

    Chief Justice Abrahamson filed a dissenting opinion.

    Personal Property Tax - Equipment - Exemptions

    Village of Lannon v. Wood-Land Contractors Inc., 2003 WI 150 (filed 4 Dec. 2003)

    A village brought this action to collect personal property taxes owed by a contractor, which claimed that its equipment was tax-exempt under Wis. Stat. section 70.111(20) (1999-00). The circuit court granted summary judgment in favor of the village. The court of appeals affirmed. The primary issue concerned whether the taxpayer was entitled to claim an exemption for equipment.

    In an opinion authored by Justice Bradley, the supreme court reversed and remanded the action. The supreme court held that the lower courts erred when they applied a test that focused on the "primary purpose" of the business (¶ 40). Rather, the applicable test is one that looks to the "use of the equipment" (¶ 42). Here the contractor was engaged in cutting and clearing trees on customers' property. On remand the circuit court is to consider what equipment is used: "(1) to cut trees for the commercial use of forest products, (2) to transport trees in logging areas for the commercial use of forest products, or (3) to clear land of trees for the commercial use of forest products. [The taxpayer] will bear the burden of proving entitlement to the exemption" (¶ 43).

    Chief Justice Abrahamson concurred but stated that she thought the court of appeals correctly stated the test, that summary judgment was improper, and that the matter should have been remanded for trial.

    Justice Prosser also concurred but wrote separately to address the directive that property tax exemptions are to be "strictly construed."

    Justice Roggensack, joined by Justices Crooks and Wilcox, also concurred and wrote separately because the majority's statutory analysis "departs" from prior precedent.

    Torts

    Furnishing Alcohol - Immunity - Minors

    Anderson v. American Family Mut. Ins. Co., 2003 WI 148 (filed 25 Nov. 2003)

    A mother gave her teenage son a 1.75 liter bottle of vodka. The boy took the vodka to the family's cottage, where he and several friends drank it. One friend, Craig, died of acute alcohol intoxication, and this litigation ensued. The circuit court dismissed the complaint based on statutory immunity. The court of appeals reversed.

    The supreme court, in a decision authored by Justice Sykes, affirmed the court of appeals. The sole issue was "whether an underage drinker who is injured as a result of the consumption of alcohol that was provided to a companion underage drinker is an injured 'third party' under the exception to immunity" (¶2). First, the mother was a "provider" for purposes of the exception to immunity found in Wis. Stat. section 125.035(4) "because she gave her underage son . . . a bottle of vodka while he was unaccompanied by a parent, in violation of Wis. Stat. § 125.07(1)(a)" (¶12). (The court rejected the mother's contention that Craig himself was a "provider" because he had voluntarily consumed the vodka.)

    "By its terms . . . the exception to immunity under Wis. Stat. § 125.035(4)(b) applies when: 1) the injured person is a third party to the provider's act of furnishing alcohol to an underage person when the provider knew or should have known the person was underage; and 2) the alcohol was a substantial factor in causing the third party's injury" (¶18). Nothing in the record suggested that Craig "had any role whatsoever" in the mother's decision to give the alcohol to her son; thus, Craig was a "third party" to that "transaction" (¶19). (Nor was there any dispute that the alcohol was a "substantial factor" in Craig's death.)

    The court also addressed its construction of the exception to immunity in light of prior cases. The statute "does not limit the exception to certain types of injuries. The fact that Craig died as a result of alcohol consumption does not itself take this case outside of the exception"(¶24). Nor is the third-party exception limited by "status of age, condition of sobriety, or separation of circumstances from alcohol consumption" (¶25). (Craig's voluntary consumption will bear, of course, on his contributory negligence.)




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