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    Vol. 79, No. 12, December 2006

    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

    * *


    Fees - Liens - Separation Agreements

    Markwardt v. Zurich Am. Ins. Co., 2006 WI App 200 (filed 12 Sept. 2006) (ordered published 31 Oct. 2006)

    These consolidated appeals involved a dispute over fees and costs owed by attorney Gende to his former law firm, Cannon & Dunphy. In each instance a circuit court ruled that Cannon & Dunphy had a valid attorney lien and that the fees and costs it requested were reasonable.

    The court of appeals, in an opinion authored by Judge Kessler, affirmed. The law firm's lien was contained in a written contract (the retainer agreements), as required by law. See Wis. Stat. § 757.36. The court of appeals disagreed with Gende on the three grounds on which he attacked the attorney lien. First, the court rejected Gende's contention that the clients retained Gende, not Cannon & Dunphy. It also was undisputed that none of the clients discharged the law firm "for cause" or that the contingent fee was unreasonable. "The Retainer Contract specifically grants Cannon & Dunphy an attorney lien to protect those fees. The Retainer Contract makes additional lien provisions should Cannon & Dunphy withdraw, and contains no language which abrogates the existing law that the lien remains in effect should the client discharge the firm without cause. We conclude, as did the trial courts, that Cannon & Dunphy may properly assert its lien, based on the Retainer Contract, to protect its right to attorney fees" (¶ 16). Second, the court rejected Gende's contention that the costs assessed by the retainer agreements were "unethical" and hence unenforceable. The costs in question were "fixed unit charges for telephone, desktop fax, and photocopying," which both the trial court and the court of appeals found to be reasonable. (¶ 18) Third, the court rejected Gende's contention that his employment and separation agreements with Cannon & Dunphy contravened public policy.

    Finally, the court found that the attorney fees paid by the clients were reasonable. "[W]hen an attorney ends employment with a law firm, the firm and the departing attorney may enter into a separation agreement that allocates between them the fees to be earned on contingent-fee cases which the departing attorney retains after the conclusion of employment. The law firm, and the departing attorney, do not violate public policy by contracting for a method to allocate between them fees on cases that have not been completed.... An agreed percentage allocation between the original and successor counsel, which does not increase the fee due from the client, must still produce a reasonable fee, as applied to the group of cases subject to the agreement. The reasonableness of the fees under this allocation of the fees between original counsel and successor counsel is subject to control by the court. We note that courts have found one-third contingency fees to be reasonable" (¶ 28).

    None of the clients was charged more than the fees and costs set forth in the original retainers. "[T]he undisputed facts demonstrate the differences among the cases in the time between the beginning of the action and settlement of each case. The undisputed facts also demonstrate the differences in the time during which work was done by Cannon & Dunphy and work was done individually by Gende. By entering into the Separation Agreement, Cannon & Dunphy and Gende, as original counsel and successor counsel, respectively, sought to save the time and expense that would be required to litigate the exact division of each fee at the conclusion of each case. This savings was consideration for each party agreeing to a set percentage allocation to be applied to all cases. We find nothing inherently unreasonable in such an agreement" (¶ 31).

    Judge Fine dissented on the ground that the retainer contracts' express terms meant that Cannon & Dunphy's "retention/fee-lien contract" did not survive Gende's departure from the firm and the clients' decision to retain him instead.

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    Civil Procedure

    Settlements - Judicial Estoppel

    Olson v. Darlington Mut. Ins. Co., 2006 WI App 204 (filed 21 Sept. 2006) (ordered published 31 Oct. 2006)

    Olson was injured when her elbow came into contact with a barn fan. She sued the farm's owners, their insurer, and the fan's manufacturer. Olson requested judgment in an amount less than the $75,000 necessary for the defendants to remove the case to federal court. She later settled with the fan manufacturer, and the parties agreed to keep the settlement amount confidential. The remaining defendants moved for an order compelling Olson to disclose the settlement terms. The circuit court granted the order.

    The court of appeals, in an opinion written by Judge Dykman, disagreed and reversed this nonfinal order. The court noted that "[j]udicial estoppel is properly invoked `to prevent a party from adopting inconsistent positions in legal proceedings'" (¶ 4). First, the court held that "on the facts of this case, Olson's limit of her damages to $75,000 in her complaint was not enough to meet the requirement of `convincing the trial court to adopt her position'" (¶ 5). In cases the court of appeals cited in which judicial estoppel was applied, a party had "urged the court to take action," such as granting a jury instruction that the party later attacked as improper. Here "Olson [had] merely asked for a limited amount of damages" (¶ 7).

    The court then turned to "the [judicial estoppel] requirement of two `clearly inconsistent' positions" (¶ 8). "[T]he two positions must be clearly inconsistent and have more than `[t]he mere appearance of inconsistency'" (¶ 9). "Here, Olson has pleaded a limit on her damages and then withheld the amount of a settlement she reached with one joint tort-feasor.... There is no indication from the record that Olson is now asserting that she can recover more than $75,000 in damages by playing `fast and loose' with the courts as a `manipulative perversion' of the judicial process" (¶ 11).

    Judge Deininger concurred and stated that he would have decided two additional issues that inevitably will arise on remand. He said that the settlement amount is not discoverable nor is it admissible at trial (see ¶ 12).

    Permissive Intervention - Wis. Stat. Section 803.09(2)

    Helgeland v. Wisconsin Municipalities, 2006 WI App 216 (filed 28 Sept. 2006) (ordered published 31 Oct. 2006)

    This case involved Wisconsin's permissive intervention statute, Wis. Stat. section 803.09(2), which provides in relevant part as follows: "Upon timely motion anyone may be permitted to intervene in an action when a movant's claim or defense and the main action have a question of law or fact in common.... In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties" (emphasis added).

    The court of appeals' opinion focuses on the meaning of the term "defense" in section 803.09(2). In a majority opinion authored by Judge Higginbotham, the court said that the word "defense" is "a term that has a legal meaning and we may consult Black's Law Dictionary to determine its common legal meaning" (¶ 40). After reviewing the dictionary definition, the court concluded that the term is "commonly understood as a legal term to mean not just anyone's arguments, but the arguments or allegations of a person proceeded against to defeat what the claimant seeks. In the context of Wis. Stat. § 803.09(2), `defense' conveys that the person seeking to intervene, although not named as a defendant, could be a defendant to a claim in the main action or a defendant to a similar or related claim" (id). The court noted that federal cases discussing the identically worded federal rule in all material respects also support this meaning of the word "defense" (see ¶ 42).

    Settlement Offers - Minors - Medical Expenses

    Bockin v. Farmers Ins. Co., 2006 WI App 220 (filed 20 Sept. 2006) (ordered published 31 Oct. 2006)

    A mother and her minor son were injured in a car accident. A guardian ad litem represented the minor in the litigation that followed. Farmers Insurance Co. made several settlement offers to the minor before the trial, and all these offers were rejected. Although the minor failed to recover a more favorable judgment at trial, the trial court rejected Farmers' claim for costs under Wis. Stat. section 807.01(1) and instead awarded costs to the minor.

    The court of appeals, in an opinion written by Judge Snyder, affirmed. The court noted that the offers were defective because they contemplated payment of the minor's medical expenses, but case law firmly establishes "the principle that a claim for medical bills incurred for a minor's injuries belongs to the parent" (¶ 12). "Farmers' offer of judgment created an obligation for [the minor] to pay expenses that were not legally his responsibility. Thus, the normal subrogation relationship, where the subrogee stands in the shoes of the subrogor,... does not exist. By suggesting that the offer of judgment to [the minor] included compensation for his medical expenses, Farmers contradicted the general rule that the parent, not the child, has the right to recover for those expenses" (¶ 14). In short, Farmers should have clarified that its offer of settlement extended only to the minor's pain and suffering, not to his medical bills for which his parents were responsible (see ¶18).

    Verdicts - Changed Answers - Costs - Attorney Lien

    Hamdan v. Dawicki, 2006 WI App 209 (filed 19 Sept. 2006) (ordered published 31 Oct. 2006)

    Dawicki's and Hamdan's cars collided at an intersection. A jury found Hamdan 13 percent negligent and Dawicki 87 percent negligent. Based on the evidence, however, the judge changed the jury's answer to reflect no negligence by Hamdan.

    In an opinion authored by Judge Curley, the court of appeals reversed. "The key to this appeal is the standard of review. As reiterated, we must uphold the jury's finding of negligence if there is `any credible evidence' to support it. As already explained, if any credible evidence exists, it is not up to us to substitute our judgment for that of the jury" (¶ 23). "The record is somewhat one-sided because Dawicki consistently stated that she did not see Hamdan, and could therefore offer no information about the collision until the cars collided, so the only complete version is the one told by Hamdan. Nevertheless, the record does contain a plethora of evidence from which the jury could have reasonably concluded that Hamdan was negligent, for instance, with respect to lookout" (¶ 24). For example, "[t]he jury could have … reasonably deduced that had Hamdan in fact observed Dawicki's car `most of the time,' as she testified she did, Hamdan could have slowed down or swerved in time to avoid the accident or to at least lessen the impact, instead of crashing the front of her minivan directly into Dawicki's car. This conclusion is supported by Dawicki's testimony that the impact took place approximately 4 5 seconds after she started moving from a compete stop at the median, and that she did not see Hamdan. While this is but one way to rationalize the jury's decision to attribute 13 percent of the causal negligence to Hamdan, and while we can only speculate about what the jury's exact thought process might have been, we are satisfied that there was `credible evidence' to support the jury's finding" (¶ 25).

    The court of appeals held that the trial court also erred by denying Dawicki costs pursuant to Wis. Stat. section 807.01, under which Hamdan was liable for costs because she failed to recover more than the $12,000 offered to settle the case. More precisely, Dawicki asked that her costs be offset against the judgment. (The Hamdans had apparently left the United States.) Hamdan contended that Dawicki should collect her costs from the Hamdans directly because "`Mrs. Hamdan's counsel has a lien on the verdict for both attorney fees and costs,' a lien she alleges is primary, and that `[i]f the court reinstates the verdict, the entire judgment would be eaten up by this primary lien'" (¶ 30).

    The court of appeals was "unimpressed" by the Hamdans' argument. "The claim that [the Hamdans'] attorneys have a lien is unsubstantiated by the record; however, even if they do have an attorney lien, it does not influence our decision with respect to Dawicki's statutory entitlement to costs, or convince us that Hamdan's attorneys' recovery of their fees from Hamdan ought to be given priority.... [I]t is curious that Hamdan's attorneys have resorted to a lien to recover their attorney fees from Hamdan for fear of not being paid, yet they assert that Dawicki does not need to offset to recover her costs, indicating that although Hamdan claims a Wisconsin driver's license and the Hamdans' alleged plan to return should be sufficient for Dawicki, they were not enough for Hamdan's attorneys" (¶ 31).

    Frivolous Actions - Safe Harbor - Retroactivity

    Trinity Petroleum Inc. v. Scott Oil Co., 2006 WI App 219 (filed 20 Sept. 2006) (ordered published 31 Oct. 2006)

    The underlying litigation involved a contract dispute that was resolved by summary judgment. The prevailing party, Scott Oil, then moved for sanctions on the ground that Trinity's claims were frivolous, which it had not asserted in prior pleadings, motions, or briefs. Scott Oil's motion for sanctions was filed after July 1, 2005, the effective date for recreated Wis. Stat. section 802.05, which adopted Rule 11 of the Federal Rules of Civil Procedure and the 21-day safe harbor feature of Rule 11. Because Scott Oil had not complied with the safe harbor provision by giving Trinity notice of its intent and 21 days to withdraw the offending claim, the circuit court held that Scott Oil was not entitled to sanctions under section 802.05.

    The court of appeals, in a decision authored by Judge Nettesheim, affirmed the circuit court's application of new section 802.05. "The new Wis. Stat. § 802.05 makes a number of changes to the former frivolous action law. Two of significance are relevant here. The most unique, and arguably the most important, is the `safe harbor' provision. It provides that, before being filed with the court, a specifically stated motion for sanctions first must be served upon the party alleged to have engaged in the challenged conduct to afford an opportunity to withdraw or correct its action. Sec. 802.05(3)(a)1. Only if the other party does not oblige within twenty-one days may the motion then be filed with the court. The second change of note is that sanctions no longer are mandatory, nor are they limited to costs and attorney fees. Wis. Stat. § 802.05(3)(b). Whereas the repealed Wis. Stat. § 814.025(1) provided that upon a finding of frivolousness the court `shall award' costs and reasonable attorney fees, under the new rule the court `may impose an appropriate sanction,' § 802.05(3), which must be `limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated.' Sec. 802.05(3)(b)" (¶¶ 10-11).

    The prime issue was whether the old or new sanctions rule applied to this case. The court of appeals concluded that the new rule applied (see ¶ 25). The court held that section 802.05 is procedural in nature (see ¶ 16), and that although the sanctions rules are vital to the administration of justice, they do not create "substantive rights," as Scott Oil asserted (see ¶ 22). The holding was rooted in the supreme court's reasons for repealing the old law and adopting the new rule. Because the rule is procedural, it can be applied retroactively (see ¶ 25).

    Finally, the court of appeals held that Scott Oil failed to comply with the safe harbor feature. Although Scott Oil argued that its "informal warnings" placed Trinity on notice for purposes of the safe harbor requirement, the court disagreed. "Warnings are not motions.... It would `wrench both the language and the purpose of the [safe-harbor] amendment to the Rule to permit an informal warning to substitute for service of a motion.' Therefore, Scott Oil should have gone a step further and formalized those arguments with a motion for sanctions under the old law before July 1, 2005. Alternatively, on or after July 1, it could have served Trinity with a specifically drawn motion prior to the summary judgment hearing" (¶ 33).

    Judge Anderson dissented. While he agreed that section 802.05 was procedural he dissented from the majority's conclusion that it could be retroactively applied.

    Constitutional Law - Commerce - "Substantially Affected"

    Szukalski v. Crompton Corp., 2006 WI App 195 (filed 26 Sept. 2006) (ordered published 31 Oct. 2006)

    The plaintiffs brought a class action suit against various tire manufacturers and alleged a price-fixing conspiracy. The circuit court dismissed their complaint.

    In a decision authored by Judge Curley, the court of appeals affirmed. "The issue is whether, in light of the supreme court's recent holding in Olstad [v. Microsoft Corp., 2005 WI 121, ¶ 84, 284 Wis. 2d 224, 700 N.W.2d 139], the trial court erred in dismissing the appellants' complaint for failure to state a claim, or whether, in spite of basing its decision on the state of the law pre Olstad, the dismissal of the complaint was nevertheless correct under Olstad" (¶ 11). The plaintiffs did not allege that any "actionable conduct" occurred in Wisconsin, "so the question is only whether the people of Wisconsin were `substantially affected' by the alleged conspiracy" (¶ 16).

    The court held that the complaint was manifestly inadequate, and that the plaintiffs' claims raised the "spectacle of Lilliputian harassment" addressed by Olstad (see ¶ 25). "Beyond their conclusory statement that `[t]he rubber-processing chemical market represents a significant amount of the commerce in the United States as a whole and in Wisconsin specifically,' the appellants fail to allege how the market affects commerce `in Wisconsin specifically.' Indeed, the example that follows is a nationwide statistic which, rather than support the claim that the problem is specific to Wisconsin, supports the conclusion that the issue is a national one. The appellants provide no specific allegations as to the number of tires sold in Wisconsin or how the tire manufacturers' use of the chemicals affected the price of the tires. In fact, there is nothing in the complaint with respect to the dollar value in Wisconsin, or, most significantly, the amount added to the cost of tires by the alleged conspiracy. The appellants' claims are general assertions of what appears to be a nationwide issue, not allegations that show a problem that has a `substantial effect' on Wisconsin" (¶ 24).

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    Criminal Law

    Resisting an Officer - Officer "Acting with Lawful Authority"

    State v. Annina, 2006 WI App 202 (filed 13 Sept. 2006) (ordered published 31 Oct. 2006)

    The defendant was convicted of resisting an officer after she entered an Alford plea (a guilty plea that is entered even though the defendant continues to assert innocence). The resisting-arrest statute provides that "whoever 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." Wis. Stat. § 946.41 (1) (emphasis added). The defendant moved to vacate the judgment, contending that the police officers did not have lawful authority to enter her home at the time she resisted and therefore the required elements of a resisting charge were not present.

    The case arose from the execution of a search warrant at the defendant's home. The warrant was issued in the investigation of alleged underage drinking. When the police officers arrived to execute the warrant, the defendant attempted to shut the door on them. As the officers tried to perform the search, the defendant became "uncontrollable" (¶ 5). "At that point, the officers informed [the defendant] that they were going to take her to the ... police department for processing. [The defendant] went to her knees, screaming, and the officers tried to calm her down. When the officers tried to pick her up she began kicking at them. The officers eventually had to carry [the defendant] from the residence" (¶ 6). The state charged the defendant with disorderly conduct and resisting an officer.

    The circuit court found that the search warrant was invalid but refused to dismiss the disorderly conduct and resisting-arrest charges. In a decision authored by Judge Snyder, the court of appeals affirmed. "We conclude that when the officers were met with disorderly conduct during the execution of the search warrant, they possessed the lawful authority to arrest notwithstanding the invalid warrant.... Disorderly conduct and resisting the officers constituted `new, distinct crime[s],' despite the original illegality. The circuit court correctly determined that the officers were acting in their official capacity and with lawful authority when they arrested [the defendant] for resisting an officer. The court properly denied [the defendant's] motion to withdraw her plea" (¶ 19) (citation omitted).

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    Criminal Procedure

    Return of Seized Property - Firearms - Wis. Stat. Section 968.20(1m)(b)

    State v. Kueny, 2006 WI App 197 (filed 20 Sept. 2006) (ordered published 31 Oct. 2006)

    This case involved a court order entered under Wis. Stat. section 968.20 forfeiting the defendant's collection of firearms and ammunition that had been seized from storage units rented by the defendant at a commercial storage facility. Section 968.20(1m)(b) provides that a seized dangerous weapon "shall not be returned to any person who committed a crime involving the use of the dangerous weapon...."

    In the criminal prosecution underlying this forfeiture, the defendant pleaded guilty to multiple charges arising out of a standoff with authorities at his residence. Pursuant to a plea agreement, a charge of possession of a firearm by a person ordered not to possess a firearm under an injunction was dismissed but was read in for purposes of sentencing. The firearms that were the subject of the challenged forfeiture were connected to the dismissed count.

    The defendant argued that forfeiture was wrongly granted because the stored weapons were not used in committing the crimes of which he was convicted but instead were related to a dismissed and read-in charge. In a decision authored by Judge Nettesheim, the court of appeals disagreed with the defendant's position and affirmed the forfeiture order. Said the court, "Wisconsin Stat. § 968.20(1m)(b) forbids returning weapons to one who `committed' a crime involving their use; it does not require that the defendant be convicted of that crime. Agreeing to a crime being read in at the time of sentencing constitutes an admission of having committed it" (¶ 11). "The read-in charge, possession of dangerous weapons by one ordered not to possess a firearm, intrinsically involved the use of those dangerous weapons. Therefore, the two elements of (1) commission of a crime (2) involving the same dangerous weapons as those sought to be returned were satisfied" (¶ 13).

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    Family Law

    Divorce - Division of Assets When Gifted Property Involved - Order to Pay Maintenance from Proceeds of Covenant Not to Compete

    Grumbeck v. Grumbeck, 2006 WI App 215 (filed 13 Sept. 2006) (ordered published 31 Oct. 2006)

    Jeffrey Grumbeck (the husband) appealed the property division in his divorce from Barbara Grumbeck (the wife). The circuit court found that the husband's shares of two family businesses were gifts and were therefore nondivisible. It awarded the shares to the husband but then divided the remaining estate unequally, giving the wife extra assets amounting to exactly half the value of the husband's business shares. The end result was that the husband and the wife each received the same total award as they would have if the shares had been divisible. The husband argued that the circuit court's maneuver was contrary to Wisconsin's statutory scheme, which allows the division of gifted assets only when not allowing division would cause hardship to the nonowning spouse. The husband further contended that the circuit court erred when it ordered him to pay maintenance to the wife from the proceeds of his noncompetition covenant with his former employer. The covenant was part of the same agreement in which the husband sold his shares in the businesses to his co-owners.

    In a decision authored by Judge Brown, the court of appeals affirmed in part and reversed in part. Turning first to the matter of the property division, the court observed that Wis. Stat. section 767.255(2)(a)1 (2003-04) provides that any property given to one party by gift remains that party's property and cannot be divided by the court. The exception to this rule is found in section 767.255(2)(b) (2003-04), which provides that the court may divide the property if failure to do so would result in hardship to the other party. Section 767.255(3) (2003-04) establishes a presumption that all other property be divided equally but allows a court to depart from equal division after considering all of a list of several factors, one of which is whether one of the parties has substantial nondivisible assets. (Editors' Note: 2005 Wis. Act 443 renumbered section 767.255 (2003-04) as section 767.61.)

    The court of appeals said that in this case there could be no finding of hardship, because the divisible estate alone is worth more than $4 million. The circuit court was therefore correct to conclude that the gifted assets belong to the husband. The question was whether it was within the circuit court's discretion to make a division of the parties' other property so as to essentially nullify this conclusion. The appellate court concluded that "[t]hough a circuit court may consider substantial gifted assets when dividing the marital estate, it may not divide the marital estate to work a de facto splitting of those assets where there is no hardship" (¶ 1).

    With respect to the maintenance ordered to be paid out of the proceeds of the husband's covenant not to compete, the appellate court concluded that "the payments are income to [the husband]" (id.), in that he is being paid to refrain from doing business. "The circuit court was free to award a portion of the payments as maintenance to [the wife] under Wis. Stat. § 767.26 [2003-04]" (¶ 15). (Editors' Note: 2005 Wis. Act 443 renumbered section 767.26 (2003-04) as section 767.56.)

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    Umbrella - UIM

    Stone v. Acuity, 2006 WI App 205 (filed 15 Aug. 2006) (ordered published 31 Oct. 2006)

    While riding a bicycle, Stone was struck by a car and injured. The Stones settled with the tortfeasor but then sought more money under their own insurance policy's underinsured motorist (UIM) coverage. In this action the Stones claimed that their umbrella policy also contained UIM coverage. The circuit court agreed based on its determination that the umbrella policy was ambiguous on the UIM issue and should be construed in the Stones' favor.

    In an opinion authored by Judge Fine, the court of appeals affirmed, although on different grounds. Rather than "venture into the `ambiguity' thicket," the court held that Acuity's failure to comply with Wis. Stat. section 632.32(4m) created coverage. The statute, in effect, requires that insurers notify their customers of the availability of UIM coverage. In Rebernick v. Wausau General Insurance Co., 2006 WI 27, ¶¶ 2, 25_30, the supreme court held that the statute's notice requirements apply to umbrella policies as well as liability policies. Here Acuity did not even argue that it had complied with the statute (see ¶ 5).

    Rebernick had left open the issue of what remedy was appropriate. The court agreed with the Stones' contention that "Acuity's failure to comply with Wis. Stat. § 632.32(4m) requires that their umbrella policy with Acuity be reformed to provide underinsured-motorists coverage" (¶ 7). Specifically, the court "agree[d] with Justice Louis B. Butler's concurrence/dissent in Rebernick that whether an insurance company's violation of § 632.32(4m) requires the company to provide retroactive underinsured-motorists coverage depends on whether the insureds would have purchased it if they had known about its availability.... Here, however, Acuity does not contend that the Stones would not have purchased umbrella underinsured-motorists coverage had they known that it was available; indeed, as we have seen, they purchased $300,000 of underinsured-motorists coverage of underlying insurance. Thus, although there might be cases where there is a genuine issue of fact as to whether an insured would have used the notice mandated by § 632.32(4m) to actually buy the underinsured-motorists coverage, this is not one of them. Accordingly, the Stones are entitled to have their umbrella endorsement reformed to provide, upon their payment of an appropriate premium, umbrella underinsured-motorists coverage retroactive to 1999, when Acuity first offered that coverage and should have sent to the Stones the requisite § 632.32(4m) notice" (¶ 8).

    Bifurcation - Coverage - "Volunteers"

    Heikkinen v. United Servs. Auto. Ass'n, 2006 WI App 207 (filed 6 Sept. 2006) (ordered published 31 Oct. 2006)

    Morse drove through a red light and her car then struck and injured Heikkinen. Although she was driving her own car, Morse was delivering a religious statue as a volunteer for a "volunteer service organization," the Legion of Mary, that served the needs of her church (Christ King). The main issue at trial was whether Morse was covered by the liability insurance certificate issued by Catholic Mutual to the Milwaukee Archdiocese, within which Christ King was a parish. The trial court found that coverage applied.

    The court of appeals, in an opinion written by Judge Curley, affirmed in an opinion that addressed four issues. First, the trial court properly exercised its discretion by denying bifurcation of damages and coverage issues. The plaintiff, age 84, was badly injured, and the trial judge was understandably concerned about further delays.

    Second, the trial judge properly worded the special verdict question relating to coverage, which simply asked if Morse was acting "on behalf of" her parish and/or the Archdiocese. The certificate "provides coverage to volunteers of Christ King and the Archdiocese `while acting within the scope of their duties or in their official capacity,' but specifically excludes bodily injury or property damage incurred in connection with automobiles. It is undisputed that the automobile exclusion does not apply to religious volunteers `while using their own automobiles on behalf of the Certificate Holder or other Protected Person(s)….'" (¶ 31)

    "[T]he issue was for whom was Morse acting as volunteer: only the Legion of Mary or also Christ King and/or the Archdiocese? In light of the numerous potential misinterpretations outlined above, it is understandable that the court preferred a simpler phrasing. Considering that what was really disputed was for whom Morse was delivering the statue, a simpler way to ask the same question was to ask whether Morse was acting `on behalf of' Christ King and/or the Archdiocese. Under the unusual facts of this case, where neither Morse's status as a volunteer, nor the fact that the delivery of the statue was within her duties was disputed, we are satisfied that the `on behalf of' language does indeed carry the same meaning as a `volunteer of a protected person' while acting in `the scope of their duties or in their official capacity' that was used by the parties in the certificate" (¶ 38). (The court of appeals also found sufficient evidence to support this finding).

    Third, Morse's conduct fell within the aegis of the policy's excess liability coverage. Although the defendants arguably had waived this claim by failing to raise it with the trial court, the court of appeals nonetheless found that the excess coverage "has no independent requirements other than satisfying the terms and conditions of the underlying coverage" (¶ 58).

    Lastly, the court concluded that the damages were not excessive.

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    Juvenile Law

    Delinquency - Restitution - Ability to Pay

    State v. Anthony D., 2006 WI App 218 (filed 27 Sept. 2006) (ordered published 31 Oct. 2006)

    Anthony D. was found delinquent for the negligent handling of burning materials after he damaged a bathroom in his high school. At the restitution hearing, the court found that the damages to the bathroom were $8,727. The court also found that Anthony was capable of working and could reasonably pay $100 per month in restitution during the nine months in which he would be under supervision before reaching his 18th birthday. The court set restitution at $8,727, ordered Anthony to pay $100 per month during the nine-month supervision, and stated that the remaining balance was to be converted to a civil judgment. (Wis. Stat. section 895.035(2m)(a) provides that if a juvenile fails to pay the full amount of restitution during the supervision period, the victim may petition the court to convert the unpaid balance to a civil judgment against the juvenile.)

    After Anthony's supervision expired, the court granted the school district's motion for a civil judgment against Anthony and his parents for unpaid restitution under Wis. Stat. section 895.035(2m)(a). The balance remaining at that time was $8,197.79. Anthony moved the court to modify the restitution order and to stay the civil judgment pending appeal. The court refused to modify the restitution order, but it stayed the civil judgment. Anthony appealed the restitution order and the denial of his modification motion. In a decision authored by Judge Brown, the court of appeals reversed.

    The appellate court agreed with Anthony that the restitution statute at issue (Wis. Stat. § 938.34(5)(a)) prohibits a court from ordering restitution in an amount higher than what the juvenile alone can pay. Said the court, "assessing the damages to the victim is the first step in the court's determination of restitution and determining the amount the juvenile is capable of paying is the second. Whichever amount is lower is the maximum amount that the court may order as restitution" (¶ 10).

    In this case, given the circuit court's holding that Anthony could pay only $900, it could not set a higher amount of restitution. Nor could it later use some other figure to arrive at a civil judgment. Accordingly, the appellate court reversed and remanded the matter so that the circuit court can amend the restitution order to allow only the unpaid portion of the $900 to become a civil judgment. The civil judgment must also be amended to reflect the lower total. "We wish to stress that nothing in our decision precludes the school district from filing a separate civil suit seeking compensation for the damage to its property. We only hold that the school could not make use of the conversion statute `shortcut' to obtain compensation greater than what the court found Anthony could pay"(¶ 12).

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    Abandoned Roads - Test for Abandonment - Wis. Stat. Section 82.19

    Town of Schoepke v. Rustick, 2006 WI App 222 (filed 6 Sept. 2006) (ordered published 31 Oct. 2006)

    The defendants own land in Oneida County adjacent to Highway 26, which is a 1.75-mile dirt road connecting State Highway 45 with another road. Highway 26 reverted to two towns whe n the state abandoned it as a state highway. The towns did not maintain the highway for at least five years and the defendants blocked its use. The towns sued the defendants to have Highway 26 declared a town road; the defendants counterclaimed and argued that the road was abandoned under Wis. Stat. section 82.19. The towns prevailed at trial. In a decision authored by Chief Judge Cane, the court of appeals affirmed.

    Section 82.18 provides that a road will be considered abandoned if: 1) no money was spent on the maintenance of the road in the last five years, and 2) the road is entirely abandoned (see ¶ 7). In this case it was undisputed that the municipalities spent no money in the five years preceding this action on the maintenance of the road in question. Rather, the dispute was whether Highway 26 was entirely abandoned.

    Synthesizing the holdings of several earlier decisions, the court of appeals concluded that "a road is not abandoned when it is used by those who have occasion to use the roadway, and it is irrelevant the roadway may be used by a small or changing portion of the public" (¶ 9). Said the court, "[w]e are satisfied the trial court applied the correct law of abandonment, and the evidence supports its conclusion that the road had not been entirely abandoned.... The evidence shows that Highway 26 has been used by at least five people on a consistent basis" (¶ 10). The court further concluded that abandonment under section 82.19 must be proven by clear and convincing evidence (and not by a mere preponderance of the evidence) (see ¶¶ 11-14).

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