Vol. 78, No. 6, June 2005

Supreme Court Digest

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

Civil Procedure Criminal Law Criminal Procedure

Employee Benefits Family Law Insurance

Civil Procedure

Claim Preclusion - Special Exception

Kruckenberg v. Harvey, 2005 WI 38 (filed 14 April 2005)

Harvey (the plaintiff) filed a declaratory judgment action against Kruckenberg (the defendant). Part of the goal of the action was to determine the location of the boundary line between the parties' respective properties. The circuit court granted summary judgment in favor of the defendant. The court of appeals affirmed.

The supreme court, in an opinion authored by Chief Justice Abrahamson, reversed and remanded. The issue was "whether the doctrine of claim preclusion bars the plaintiff's action. The prior action brought by the plaintiff's predecessor in title against the defendant was for failing to provide lateral support; the defendant had dug a ditch. The prior action ended in a judgment of dismissal on the merits. The plaintiff's present action against the defendant is for trespass and conversion (the cutting and taking of trees) and for a declaratory judgment regarding the location of the boundary line between the plaintiff's and defendant's land" (¶ 2). The court held that "the case at bar presents a special circumstance to which the doctrine of claim preclusion will not apply, namely, when a prior action between parties or their privies does not explicitly determine the location of a boundary line between their properties, claim preclusion will not bar a later declaratory judgment action to determine the location of the boundary line" (¶ 3).

The opinion discusses the doctrinal underpinning of claim preclusion and its elements, which include: "`(1) identity between the parties or their privies in the prior and present suits; (2) prior litigation [that] resulted in a final judgment on the merits by a court with jurisdiction; and (3) identity of the causes of action in the two suits'" (¶ 21). The first two elements were undisputed (see ¶ 23).

The court addressed the third element, which evinces a "transactional approach" that "is not capable of a `mathematically precise definition' ... Under the transactional approach, the legal theories, remedies sought, and evidence used may be different between the first and second actions. The concept of a transaction connotes a common nucleus of operative facts" (¶ 26). On this record, the earlier litigation and the present lawsuit enjoyed a "measure of identity of claims [such] that a judgment in the second in favor of the plaintiff would appear to impair the rights or interests established in the first judgment" (¶ 33). Although claim preclusion is undoubtedly a "harsh doctrine" (¶ 35), exceptions to it are "rare" (¶ 37). The present case fell within the "special circumstances" exception set forth in section 26(1)(f) of the Restatement (Second) of Judgments, "namely, `the failure of the prior litigation to yield a coherent disposition of the controversy'" (¶¶ 38-39). The court precisely defined the exception's scope: "When an action between parties or their privies does not explicitly determine the location of a boundary line, the doctrine of claim preclusion will not bar a future declaratory judgment action to determine the proper location of the boundary line" (¶ 41).

The supreme court clarified that while "fairness" may play a role in the treatment of "issue preclusion," it does not play a corresponding role in claim preclusion. "[T]he policies of finality and repose play a weaker role in issue preclusion than in claim preclusion. The elements of issue preclusion are therefore often interpreted with flexibility to limit issue preclusion and to exclude issue preclusion when its application would be unfair" (¶ 58). Departing from stare decisis, the supreme court "disavow[ed] any language in the decisions of the court of appeals to the extent that the language requires a court to conduct a `fundamental fairness' analysis in applying the doctrine of claim preclusion or allows litigation of an otherwise barred claim to continue simply because in that particular case, application of the doctrine of claim preclusion might appear unfair" (¶ 62).

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Criminal Law

Obstructing an Officer - "Exculpatory Denial" Exception

State v. Reed, 2005 WI 53 (filed 27 April 2005)

The defendant was charged with operating while intoxicated (OWI) (third offense) and obstructing an officer. The latter charge stemmed from the defendant falsely telling the police officer investigating the OWI incident that another individual was driving the car. The circuit court denied a defense motion to dismiss the complaint and, on appeal from that nonfinal order, the court of appeals affirmed. See State v. Reed, 2004 WI App 98, 273 Wis. 2d 661, 681 N.W.2d 568. The court of appeals concluded that the "exculpatory denial" exception to the obstructing statute set forth in State v. Espinoza, 2002 WI App 51, 250 Wis. 2d 804, 641 N.W.2d 484, which absolves a defendant for falsely denying guilt of a crime when questioned by police, did not extend to the circumstances in this case because the defendant did more than simply provide an exculpatory denial - he gave the officer false information that another named individual was the driver. In a majority decision authored by Justice Butler, the supreme court affirmed the court of appeals.

Wis. Stat. section 946.41 states that "[w]hoever knowingly resists or obstructs an officer while such officer is doing any act in an official capacity and with lawful authority, is guilty of a Class A misdemeanor. ... `Obstructs' includes without limitation knowingly giving false information to the officer . . . with intent to mislead the officer in the performance of his or her duty including the service of any summons or civil process." The court of appeals has recognized that "obstructs" has two meanings: "makes more difficult" and "gives false information with intent to mislead." See State v. Caldwell, 154 Wis. 2d 683, 454 N.W.2d 13 (Ct. App. 1990). The supreme court specifically noted that "this case involves obstructing by giving false information. It does not involve obstructing an officer by making the performance of the officer's duties more difficult. See Wis JI - Criminal 1766. As such, our decision today does not overrule, indeed it does not even implicate, Henes v. Morrissey, 194 Wis. 2d 338, 533 N.W.2d 802 (1995), or State v. Hamilton, 120 Wis. 2d 532, 356 N.W.2d 169 (1984)" (¶ 21 n.3).

Turning to Espinoza and the exculpatory denial exception recognized therein, the supreme court concluded that "there is no exculpatory denial exception in the obstructing statute. The statute criminalizes all false statements knowingly made and with intent to mislead the police. Although the State should have sound reasons for believing that a defendant knowingly made false statements with intent to mislead the police and [that they] were not made out of a good-faith attempt to defend against accusations of a crime, we conclude that the latter can never include the former; knowingly providing false information with intent to mislead the police is the antithesis of a good-faith attempt to defend against accusations of criminal wrongdoing. Accordingly, we overrule Espinoza" (¶ 48).

Chief Justice Abrahamson filed a concurring opinion that was joined by Justice Bradley. Justice Prosser filed a separate concurrence.

Sexual Assault - Therapist

State v. Delain, 2005 WI 52 (filed 26 April 2005)

The supreme court, in an opinion written by Justice Roggensack, affirmed the defendant's conviction for sexual exploitation by a therapist. The issue before the court concerned "whether a finding that there was `an ongoing therapist-patient ... relationship' during a therapy session is precluded if the victim was secretly recording that session in cooperation with police" (¶ 1). The supreme court held that the element of an "ongoing therapist-patient relationship" under Wis. Stat. section 904.022(2) is determined under the "totality of the circumstances" (¶ 24). Among the factors properly considered are the defendant's state of mind as well as a patient's "secret unilateral action" (id.).

"Similarly, the explicit remarks of one party to the other regarding the status of the relationship may be a factor, but not necessarily the dispositive factor, as proposed by the State. Other factors that may appropriately enter into the analysis include, but are not limited to: how much time has gone by since the last therapy session; how close together the therapy sessions had been to each other; the age of the patient; the particular vulnerabilities experienced by the patient as a result of his or her mental health issues; and the ethical obligations of the therapist's profession" (¶ 24). Finally, the court found that sufficient evidence supported the jury's finding of guilt.

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Criminal Procedure

Confrontation - Hearsay - Harmless Error

State v. Stuart, 2005 WI 47 (filed 21 April 2005)

The supreme court, in an opinion written by Justice Bradley, reversed the defendant's conviction for murder on the ground that the prosecution's use of a preliminary hearing transcript violated the defendant's right of confrontation as that right was recently construed in Crawford v. Washington, 541 U.S. 36 (2004). The supreme court had, in earlier appeals, upheld the defendant's conviction, applying the now outmoded pre-Crawford confrontation analysis. Reversible error occurred under Crawford, however, because the defendant did not have the opportunity at the preliminary hearing to cross-examine the witness, his own brother, regarding a potential motive to testify falsely.

Under Crawford, the preliminary hearing transcript clearly constituted "testimonial" hearsay (¶ 28). Crawford mandated that for the state to introduce "testimonial" hearsay against the defendant, the state must demonstrate the declarant's unavailability to testify (a fact that was undisputed in this case) and that the defendant had a "prior opportunity for cross-examination"(¶ 29). For decades, case law has curbed the scope of cross-examination at preliminary examinations. In Stuart, the supreme court underscored that under Crawford, such restrictions may vitiate the admissibility of such preliminary hearing testimony at the defendant's later trial.

"Cross-examination at a preliminary examination is not to be used `for the purpose of exploring the general trustworthiness of the witness.' Indeed, `[t]hat kind of attack is off limits in a preliminary hearing setting.' When this restriction is enforced, as it was in the present case, and the State attempts to use the preliminary hearing testimony at a later trial, a Confrontation Clause problem arises"(¶ 31). Although an array of impeaching information was elicited against the brother at trial (e.g., prior convictions, his commission of another burglary, drug use, and mental confusion), in the end what mattered was that "Stuart did not have the opportunity at the preliminary hearing to question his brother about a potential motive to testify falsely. Thus, he was unable to elicit evidence that [the brother] had been facing criminal charges in 1998 when he gave his statement to police implicating Stuart in the death of Reagles" (¶ 35). The remainder of the majority opinion applies Wisconsin's harmless error standard (see State v. Hale, 2005 WI 7) and is fact intensive.

Chief Justice Abrahamson concurred and wrote separately to refer the reader to her own harmless error analysis in Hale. Justice Prosser concurred yet wrote separately to reference other formulations of the harmless error standard and to address situations wherein a defendant may "forfeit" the confrontation right by wrongdoing or collusion (¶ 60). Justice Butler, also concurring, referenced his opinion in the Hale case as well.

Justices Wilcox and Crooks filed separate dissents in which they each joined. Justice Roggensack also joined Justice Crook's dissent, in which Justice Crooks stated that he would have found the error harmless beyond a reasonable doubt.

Truth-in-Sentencing - Sentence Modification - Penalty Reduction under TIS-II Not "New Factor" for Purpose of Modifying TIS-I Sentence

State v. Trujillo, 2005 WI 45 (filed 21 April 2005)

The defendant was convicted of burglary for a crime that was committed while the first phase of Wisconsin's truth-in-sentencing system (TIS-I) was in effect. Under TIS-I, burglary was a Class C felony punishable by up to 15 years imprisonment, of which up to 10 years could be ordered as initial confinement. The judge sentenced the defendant to eight years of initial confinement followed by five years of extended supervision. When the second phase of truth-in-sentencing legislation (TIS-II) took effect on Feb. 1, 2003, burglary was designated a Class F felony. In the TIS-II felony classification system, a Class F felony carries a maximum sentence of 12.5 years imprisonment, of which up to 7.5 years can be ordered as initial confinement. Thus, the defendant received six months more initial confinement for burglary under TIS-I than would be possible under TIS-II.

The defendant brought a post-conviction motion under Wis. Stat. section 809.30(2)(h) seeking modification of his sentence on the basis of what he claimed was the "new factor" of the penalty reduction for burglary under TIS-II. The circuit court denied the motion. The court of appeals affirmed. In a majority decision authored by Justice Crooks, the supreme court affirmed the court of appeals.

A circuit court has inherent authority to modify a sentence. This power must be exercised within defined parameters, one of which is the showing of a "new factor." "[T]he phrase `new factor' refers to a fact or set of facts highly relevant to the imposition of sentence, but not known to the trial judge at the time of original sentencing, either because it was not then in existence or because, even though it was then in existence, it was unknowingly overlooked by all of the parties" (¶ 13, quoting Rosado v. State, 70 Wis. 2d 280, 288, 234 N.W.2d 69 (1975) (emphasis added)).

In this case the supreme court held that "TIS-II's reduced maximum confinement for the same TIS-I felony does not constitute a new factor when a defendant moves for the modification of a sentence imposed under TIS-I. The legislature has not mandated the retroactive application of the reduced penalties, but has provided an adequate remedy by enacting Wis. Stat. § 973.195" (¶ 2). Accordingly, the court concluded that although the defendant's initial confinement time for burglary under TIS-I exceeded the TIS-II maximum, this change was not highly relevant to the imposition of his TIS-I sentence. (Editors' Note: Section 973.195 is the TIS-II statute authorizing motions for sentence adjustment after a defendant has served a statutorily specified percentage of the initial term of confinement. In State v. Tucker, 2005 WI 46 (digested below), the court held that section 973.195 motions can be made by defendants sentenced under TIS-I.)

In reaching its decision, the court relied on State v. Hegwood, 113 Wis. 2d 544, 335 N.W.2d 399 (1983), and reaffirmed several cases that have developed "new factor" jurisprudence for TIS-I sentences, including State v. Torres, 2003 WI App 199, 267 Wis. 2d 213, 670 N.W.2d 400, and State v. Longmire, 2004 WI App 90, 272 Wis. 2d 759, 681 N.W.2d 534. In Hegwood the court held that the reduction in the maximum penalty is not highly relevant to the imposition of sentence and thus is not a "new factor" supporting sentence modification.

Chief Justice Abrahamson filed a dissenting opinion that was joined by Justice Bradley. Justice Butler filed a separate dissenting opinion.

Truth-in-Sentencing - Wis. Stat. section 973.195 Sentence Adjustment Applicable to TIS-I Sentences

State v. Tucker, 2005 WI 46 (filed 21 April 2005)

The defendant was convicted of possessing five grams or less of cocaine with intent to deliver and felony bail jumping. These crimes were committed while the first phase of Wisconsin's truth-in-sentencing system (TIS-I) was in effect. Under TIS-I the cocaine offense was an unclassified felony punishable by up to 15 years imprisonment, and bail jumping was a Class D felony punishable by up to 10 years imprisonment.

The maximum penalties for the charges of which the defendant was convicted were reduced by the second stage of truth-in-sentencing legislation (TIS-II), most of which applies to crimes committed on and after Feb. 1, 2003. Under the applicable TIS-I statutes, the defendant was sentenced to four years and six months more initial confinement than would be possible for the same offenses under TIS-II.

The defendant brought a post-conviction motion for sentence modification. He argued that the reduction in the maximum penalties under TIS-II constituted new factors for the circuit court to consider during his sentence modification hearing. He did not seek relief under the TIS-II sentencing adjustment statute, Wis. Stat. § 973.195 (which permits motions for sentence adjustment after the defendant has served statutorily prescribed percentages of his initial confinement term), because he believed that the statute did not apply to individuals sentenced under TIS-I. The circuit court denied his motion and the court of appeals affirmed. In a majority opinion authored by Justice Crooks, the supreme court affirmed the court of appeals.

The first question before the supreme court was whether the reduction in the maximum penalties the defendant would have faced had he been convicted under TIS-II constituted a "new factor" that could have formed the basis for a motion to modify his sentences. Relying on State v. Trujillo, 2005 WI 45 (summarized above), the court concluded that "the reduced maximum confinement penalties under TIS-II do not constitute new factors when a defendant such as [the defendant in this case] moves for the modification of sentences imposed under TIS-I. Although [the defendant's] initial confinement time for his TIS-I felonies exceeded the TIS-II maximum for each sentence, the changes are not highly relevant to the imposition of his original TIS-I sentences. The legislature never mandated the retroactive application of the reduced penalties" (¶ 2).

The court also addressed the question of whether a TIS-I offender can petition for a sentence adjustment under section 973.195, the sentence adjustment statute enacted as part of the TIS-II legislation. After determining that the statute is ambiguous on this issue, the court concluded that the legislature intended the sentence adjustment provisions of section 973.195 to apply to TIS-I offenders (see ¶ 22).

Applying this conclusion required the court to deal with the issue posed by language in section 973.195 that establishes the "applicable percentage" of the term of initial confinement that must be served before an adjustment petition can be filed: 85% for Class C, D, and E felonies and 75% for Class F, G, H, and I felonies. The A-I classification system was created by the TIS-II legislation, which does not indicate how to calculate the "applicable percentage" for a TIS-I sentence.

Responding to this problem, the court found that it is remedied "by simply applying the TIS-II felony classification under Wis. Stat. § 939.50 to persons sentenced under TIS-I for the limited purpose of determining the `applicable percentage' of a term of initial confinement in a Wis. Stat. § 973.195 petition for sentence adjustment. For instance, [the defendant] was convicted of felony bail jumping, pursuant to Wis. Stat. § 946.49(1)(b) (1999-2000). At the time he was convicted, his offense was a Class D felony. However, under TIS-II, the crime for which [the defendant] was convicted became a Class H felony. Wis. Stat. § 946.49(1)(b). Thus, while [the defendant] remains convicted of this classified felony, for purposes of determining what `applicable percentage' of his term of initial confinement he must serve in order to be eligible for sentence adjustment, we look to how the crime for which he was convicted is currently classified under TIS-II. That `applicable percentage' is then applied to the sentence originally imposed to determine if he is eligible to file a petition under § 973.195(1g)" (¶ 23).

"While this analytical framework will be effective in most cases where a TIS-I offender seeks sentence adjustment, we are also sensitive to the State's concerns as to how this procedure will affect an individual sentenced for an unclassified felony. However, most of the persons sentenced for TIS-I unclassified felonies will not encounter a problem because, like [the defendant's] conviction for possession with intent to deliver cocaine, almost all of the felonies which were previously unclassified under TIS-I have now been classified under TIS-II. Thus, in the vast majority of cases, a court will simply look to how the previously unclassified crime is classified under TIS-II in order to determine the `applicable percentage.' There is no reason why the analysis we set forth today cannot apply to persons falling into this category" (¶ 24).

Chief Justice Abrahamson filed a dissenting opinion that was joined by Justice Bradley. Justice Butler filed a separate dissent.

Search and Seizure - Search Incident to Arrest - Probable Cause for Arrest

State v. Sykes, 2005 WI 48 (filed 22 April 2005)

Hudson leased an apartment but frequently stayed elsewhere. On one occasion when Hudson returned to her apartment, she found the defendant and his girlfriend inside. Hudson said that the defendant refused to leave, that she never gave him permission to stay in her apartment, and that she did not want him living there. The landlord obtained Hudson's permission to enter the apartment and change the locks. At the landlord's request, a police officer accompanied him when he changed the locks.

When the landlord and the officer arrived at the apartment, they found the defendant and others on the premises. When the defendant was asked for identification, he said it was in his wallet and indicated that the wallet was under a cedar chest located in the same room. The officer retrieved the wallet and found in it a plastic bag of crack cocaine. The defendant was then arrested on drug-related charges. He moved to suppress this evidence on the ground that the officer did not have probable cause before the search took place to arrest him for the drug-related offenses. The circuit court denied the motion. After pleading guilty to amended charges, the defendant appealed to the court of appeals, which affirmed the conviction. The court of appeals held that the search of the wallet was a reasonable search incident to a lawful arrest.

In a majority decision authored by Justice Roggensack, the supreme court affirmed the court of appeals. The question before the supreme court was whether a search incident to arrest is lawful when there is probable cause to arrest for a crime, a search is conducted before that arrest, and the suspect is then immediately arrested and charged only with offenses based on evidence seized during the search.

The court concluded that the search of the defendant's wallet was a valid search incident to arrest. The officer had probable cause to arrest the defendant for criminal trespass before the search was conducted and independent of the fruits of the search. Immediately after the search, the officer made the arrest. "That the arrest led to drug-related charges being filed, not to a charge for criminal trespass, does not negate that probable cause to arrest existed prior to the search" (¶ 22).

The defendant argued that the search at issue here was not lawful, because the crime he was arrested for immediately after the search was different than the crime for which the officer had probable cause to arrest him before the search. However, said the court, "as long as there was probable cause to arrest before the search, no additional protection from government intrusion is afforded by requiring that persons be arrested for and charged with the same crime as that for which probable cause initially existed. To conclude otherwise would put form over substance because [the defendant] could have been arrested for both criminal trespass and the drug-related offenses; the district attorney could have decided to prosecute only the drug-related offense, and [the defendant] would be in the same position as he is in now. The intrusion on his privacy would have been no different. Accordingly, we withdraw any language from [State v. Swanson, 164 Wis. 2d 437, 475 N.W.2d 148 (1991)] that could be interpreted to limit the lawfulness of the search to requiring an arrest for the same crime for which probable cause existed prior to the search" (¶ 27).

The defendant further urged that the officer's subjective motivations be examined. This argument related to the fact that there was no indication that the officer intended to arrest the defendant for trespassing before the search of the wallet occurred. The court responded that "whether law enforcement subjectively intended to arrest [the defendant] for criminal trespass is not the relevant inquiry. Because an analysis of probable cause to arrest turns on the objective facts known to the officer, the relevant inquiry is whether the officer was aware of sufficient objective facts to establish probable cause to arrest before the search was conducted, as well as whether an actual arrest was made contemporaneously with the search" (¶ 31).

Chief Justice Abrahamson, joined by Justices Bradley and Butler, dissented. The Chief Justice believed that the evidence did not support the majority's inference that the wallet was found within an area under the defendant's immediate control, which is a requirement for a valid search incident to arrest under Chimel v. California, 395 U.S. 752 (1969).

Territorial Jurisdiction - Wis. Stat. § 939.03 - Criminal Evidence - "Residual Exception" to Hearsay Rule

State v. Anderson, 2005 WI 54 (filed 4 May 2005)

The defendant is charged with the first-degree intentional homicide of his father. The defendant's father, mother, and brother disappeared on or about July 2, 1998 after last being seen at their Jefferson County home preparing for a trip to their cabin in northern Wisconsin. In December 1999 the father's skeletal remains were found in a remote county in North Carolina. The cause of death was blunt force trauma to the head and face. The defendant was originally charged in North Carolina, but that case was dismissed. He was then charged in Wisconsin and, at the conclusion of the preliminary hearing, the Jefferson County Circuit Court bound him over for trial. He appealed to the court of appeals on the ground that the evidence presented at the preliminary hearing failed to establish probable cause for Wisconsin's territorial jurisdiction over the crime and for venue in Jefferson County. The court of appeals certified the case to the supreme court, which granted certification.

The court of appeals certified the following question on the issue of Wisconsin's territorial jurisdiction over the murder: "Whether the mens rea component of first-degree intentional homicide constitutes a `constituent element' of that crime within the meaning of Wis. Stat. § 939.03(1)(a) (1997-98), such that the state has territorial jurisdiction over a charge of first-degree intentional homicide if an individual commits an act in Wisconsin manifesting an intent to kill" (¶ 2).

The scope of Wisconsin's assertion of territorial jurisdiction over crime is codified in Wis. Stat. section 939.03, which provides in relevant part that a person is subject to prosecution and punishment under Wisconsin law if "the person commits a crime, any of the constituent elements of which takes place in this state." The defendant argued that section 939.03(1)(a) requires the state to prove that an actus reus element of the underlying offense occurred in Wisconsin in order for this state to have jurisdiction over the offense. Specifically, with regard to the charge of first-degree intentional homicide, he contended that the state must demonstrate that the act causing death occurred in Wisconsin, and he argued that the evidence at the preliminary hearing was insufficient to prove this.

In a majority decision authored by Justice Wilcox, the supreme court concluded that "the phrase `constituent elements' in § 939.03(1)(a) refers to the elements of the underlying offense that the State must prove beyond a reasonable doubt in order to secure a conviction. A constituent element of a criminal offense may be either an actus reus element or a mens rea element. Intent to kill is a constituent element of first-degree intentional homicide in Wisconsin. Thus, intent to kill is a constituent element for purposes of § 939.03(1)(a). Further, we conclude that the State offers sufficient proof that a mens rea element of first-degree intentional homicide `takes place' in Wisconsin for purposes of § 939.03(1)(a), if there is proof that the defendant committed an act in this state that manifests an intent to kill" (¶ 51).

Applying this standard to this case (although it was ultimately unnecessary to do so because the supreme court found that the evidence adduced at the preliminary hearing was sufficient to establish that the murder probably was committed in Jefferson County), a majority of the court "believe[d] that the standard we have articulated ... concerning jurisdiction would be met in this case" (¶ 52). The evidence presented at the preliminary hearing established a reasonable inference that the defendant probably formed the intent to kill his father in Wisconsin and made a phone call on July 2, 1998 from the family home in Jefferson County to his father at work for the purpose of luring his father home early in order to murder him. "As such, the phone call constitutes an act committed in Wisconsin manifesting Anderson's intent to kill his father" (¶ 52).

The court also concluded that the evidence adduced at the preliminary hearing, while admittedly entirely circumstantial, was sufficient to establish probable cause to believe that the defendant killed his father in Jefferson County. To reach this conclusion the court analyzed the evidence (detailed at length in the opinion) presented at the preliminary hearing, including certain hearsay that the court held should not have been excluded by the circuit judge. This evidence involved a conversation between the father and a co-worker on April 17, 1998. The co-worker told the defendant's father that one of her sons was at college and was being very moody. In response, the defendant's father asked if the co-worker's son had ever threatened her. The father then told the co-worker that his son (the defendant) had threatened him and had attacked him one night after work by trying to club him with something. The co-worker stated at the preliminary hearing that it was her understanding that the incident had recently occurred, although the defendant's father did not specifically state when it occurred. She further stated that the father was very upset and frightened and visibly shaking when relaying this story.

The circuit court excluded the co-worker's testimony as inadmissible hearsay, but the supreme court disagreed. While the father's statement did not qualify as an excited utterance or a statement of recent perception, the supreme court concluded that it was admissible under the "residual exception" codified in section 908.045(6) "because it contains several guarantees of trustworthiness similar to those found in statements admitted under the excited utterance exception" (¶ 59). "While [the father's] statement does not technically qualify as an excited utterance because of the lack of evidence regarding when the attack occurred, the statement does demonstrate that it was made spontaneously under a great deal of stress caused by a startling event. The fact that the statement was made under circumstances similar to those forming the basis for the excited utterance exception weighs heavily in favor of its admissibility" (¶ 62).

Justice Bradley filed a concurring opinion that was joined by Chief Justice Abrahamson. Justice Butler filed a separate concurrence that was joined in part by Chief Justice Abrahamson.

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Employee Benefits

Pensions - Wisconsin Teachers - "Combined Group" Retirement Plan - "Formula Group" Retirement Plan

Solie v. Employee Trust Funds Bd., 2005 WI 42 (filed 19 April 2005)

The plaintiffs, Solie and Baxter, began their teaching careers in 1957 and 1962 respectively and were members of the State Teacher's Retirement System (STRS) combined group retirement plan, an annuity plan in which the amount of a teacher's retirement benefit depended on the amount of deposits and earnings in the teacher's retirement deposit account. Both the teacher and the state were required to make deposits into the account. After a teacher left the system, the teacher could take a separation benefit. To obtain the separation benefit, the teacher had to sign a "narrow" waiver, which constituted a "full and complete discharge and release of all right, interest or claim ... to state deposit accumulations" (¶ 6). Both of the plaintiffs left teaching and took their separation benefits before the introduction in 1965 of a new retirement annuity plan known as the formula group plan.

Under the formula group plan, a teacher's retirement benefit is calculated by a statutory formula that uses, in addition to other factors, the teacher's creditable service. Creditable service includes all years the teacher worked while he or she was a formula group member as well as certain amounts for years the teacher worked while under the combined group plan or the predecessor separate group plan. A member of either the combined group or the formula group who ceases to be employed as a teacher can withdraw any deposits made into the STRS retirement deposit fund. Unlike a combined group member, however, a formula group member is required to sign a "much broader" waiver, which provides "a full and complete discharge and release of all right, interest or claim on the part of the member to state deposit accumulations and to any benefit arising under any provisions" of the controlling statutes (¶ 9). At the time the formula plan was introduced, STRS members could elect to participate in it, whereas non-STRS members hired after 1965 were required to do so.

The plaintiffs returned to teaching after 1965, and the Department of Employee Trust Funds (the department) automatically enrolled them in the formula group, concluding that this was required because they were no longer STRS members. In 1971, following another withdrawal from teaching, both plaintiffs took separation benefits and signed the broad waiver of all claims to STRS benefits that was required under the formula plan. Both returned to teaching a couple years later (in 1973 and 1974 respectively) and finally retired in 1993 and 1998 respectively. In calculating the plaintiffs' retirement benefits, the department determined that the plaintiffs were entitled only to creditable service dating back to when they returned to teaching in 1973 and 1974, respectively, because they signed the broad formula group waiver when they took their separation benefits in 1971. The department noted that the 1971 formula group waiver signed by the plaintiffs surrendered "all right, interest or claim on the part of the member to state deposit accumulations and to any benefit arising under any provisions of ss. 42.20 to 42.54." According to the department, the waiver meant that the plaintiffs' creditable service before 1971 was extinguished. This resulted in an otherwise reduced retirement benefit.

The case was before the supreme court on certification from the court of appeals. The certified question was whether "[the supreme court's] decision in Schmidt v. Wisconsin Employe Trust Funds Board, 153 Wis. 2d 35, 449 N.W.2d 268 (1990), should be construed to provide continued State Teacher's Retirement System (STRS) combined group membership to teachers who withdrew their deposits in the retirement deposit fund and then returned to teaching after creation of the formula group" (¶ 1).

In a majority opinion authored by Justice Butler, the supreme court responded in the affirmative. "[W]e construe Schmidt to provide continued STRS membership to teachers who were members of the combined group, withdrew their deposits in STRS, and then returned to teaching after creation of the formula group. As STRS members, [the plaintiffs] could have been placed in the formula group only if they had elected to do so. Because they did not, they remained in the combined group and consequently should have signed a combined group waiver only in 1971. Therefore, [the plaintiffs] are entitled to all of their creditable service consistent with this court's decision in Schmidt" (¶ 42).

Justice Wilcox filed a dissenting opinion that was joined by Justice Prosser.

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Family Law

Termination of Parental Rights - Facial Substantive Due Process Challenge to Wis. Stat. section 48.415 (4)

Dane County Dep't of Human Servs. v. Ponn P. (In re Termination of Parental Rights to Diana P.), 2005 WI 32 (filed 23 March 2005)

This case involved a facial substantive due process challenge to Wis. Stat. section 48.415(4). Section 48.415(4) provides that parental rights may be terminated on the basis of continuing denial of periods of physical placement or visitation, which shall be established by proving that "the parent has been denied periods of physical placement by court order in an action affecting the family or has been denied visitation under an order under s. 48.345, 48.363, 48.365, 938.345, 938.363 or 938.365 containing the notice required by s. 48.356(2) or 938.356(2)" and that "at least one year has elapsed since the order denying periods of physical placement or visitation was issued and the court has not subsequently modified its order so as to permit periods of physical placement or visitation."

In a majority decision authored by Justice Roggensack, the supreme court explained that the statute serves the compelling state interest of protecting children from unfit parents. The court then proceeded to determine whether the statute is narrowly tailored to advance this interest. The court used a strict scrutiny standard, because the statute impinges on a person's fundamental liberty interest in parenting his or her children. The court concluded that on its face section 48.415 is narrowly tailored to serve the state's compelling interest of protecting children from unfit parents.

In this case the children's father had argued that "§ 48.415(4) violates substantive due process because `it does not require any evidence of parental unfitness.' It is [the father's] contention that no-contact orders denying physical placement or visitation, such as have been in effect here, are based on the `best interest of the child,' pursuant to Wis. Stat. § 48.355(3), rather than on a finding that the parent is unfit. Therefore, [the father] contends that because these orders are the sole basis for a finding that grounds exist for terminating his parental rights pursuant to §48.415(4), the statute is not narrowly tailored to meet a compelling state interest and violates his substantive due process right" (¶ 24).

To analyze this contention, the court considered the full statutory scheme underlying the ground for termination codified in section 48.415(4). That scheme includes the following steps: "(1) there is an initial decision to hold a child in governmental custody; (2) if the child is held in custody, then there must be a factual determination that the child is in need of protection or services before the next step will be reached; (3) if a child is found in need of protection or services, then the decision about whether to place the child outside the parental home is made; (4) if the child is placed outside the home, only after finding that parent-child visitation or physical placement would be harmful to the child may a parent be denied visitation and physical placement; and (5) if an order denying visitation and physical placement is entered, it must contain conditions that when met will permit the parent to request a revision of the order to afford visitation or periods of physical placement. [The petitioner Dane County Department of Human Services] and the amicus curiae submit that at each of these steps, findings must be made that reflect on the parent's fitness. We agree that the statutory step-by-step process that underlies § 48.415(4) is sufficient to show that subsection (4) is narrowly tailored to advance the State's compelling interest of protecting children against unfit parents ... " (¶ 26).

Justice Prosser and Justice Roggensack filed separate concurring opinions. Chief Justice Abrahamson filed a dissenting opinion that was joined by Justice Butler. Justice Butler filed a dissent that was joined by Chief Justice Abrahamson.

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Insurance

"Occurrence" - "Loss of Use"

Everson v. Lorenz, 2005 WI 51 (filed 22 April 2005)

A property owner, Everson, filed a lawsuit against a real estate developer, Lorenz, which tendered its defense to its commercial general liability (CGL) insurer, Pekin. Pekin moved to intervene and to bifurcate the coverage issues. The circuit court later granted Pekin's motion for summary judgment and found, in effect, that there was no coverage under Pekin's policy for the complaint and causes at issue and that Pekin had no duty to defend.

The court of appeals certified three questions to the supreme court: "(1) Does an alleged strict responsibility misrepresentation and/or negligent misrepresentation in a real estate transaction constitute an `occurrence' for the purpose of a commercial general liability insurance policy such that the insurer's duty to defend the insured is triggered?; (2) What allegations must a complaint contain to plead sufficiently `loss of use' within the meaning of a commercial general liability insurance policy?; and (3) Under what circumstances does a misrepresentation, negligent or strict responsibility, cause the `loss of use' of property such that a `causation nexus' is established?" (¶ 2)

The supreme court, in an opinion written by Justice Crooks, affirmed the circuit court. The supreme court held that "since there is no coverage based on Everson's complaint and the language of the Pekin insurance policy, Pekin has no duty to defend and no duty to indemnify Lorenz against Everson's claims for strict responsibility and/or negligent misrepresentation. The alleged misrepresentation was not an `occurrence' within the meaning of the policy. We hold that Everson must plead more than `damages' in relation to the misrepresentation claims to plead sufficiently a `loss of use' under the policy. We further conclude that since the complaint fails to allege `property damage,' in that there is no allegation of an `occurrence,' and no allegation of `loss of use,' there clearly is not a sufficient allegation of `causation nexus.' The `property damage' was caused by defects in the property, not by any misrepresentations of Lorenz" (¶ 3).

Lorenz contended that any misrepresentation was an "accident" within the meaning of the policy. The supreme court, however, had "never specifically held that strict responsibility and/or negligent misrepresentation are similar to other kinds of negligence so as to categorize them as `accidents'" (¶ 18). In prior cases, negligent injuries were distinguishable from injuries caused by a "`deliberate and contemplated act initiated at least in part by the actor's negligence at some earlier point'"(¶ 19). "Accordingly, in this case, we do not determine that injury or damage prompted from a negligent misrepresentation is ipso facto caused by `accident,' within the meaning of commercial general liability policies. We conclude instead that where there is a volitional act involved in such a misrepresentation, that act removes it from coverage as an `occurrence' under the liability insurance policy" (¶ 20).

The court also rejected Lorenz's contention that it had sufficiently pleaded "loss of use" and "property damage." "Here, Everson's claim does not amount to anything approaching the uselessness of the property, as is required to satisfy Pekin's insurance policy provisions. . .. In this case, Everson testified that his house could have been built where the foundation was already poured, only the landscaping he desired was affected. While Everson's property may now be less useful, aesthetic concerns and landscaping problems do not render the property useless"(¶ 32).

Justice Butler concurred, joining parts of the majority's opinion and part of Justice Bradley's dissent. The dissent, which was joined by Chief Justice Abrahamson, criticized the majority for "skewing the focus" by "ignoring the `negligent' component of the negligent misrepresentation" (¶ 43). Justice Bradley's dissent argued that negligent misrepresentations are "occurrences" within a CGL policy and that the claim's other elements were properly pleaded.

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