Vol. 80, No. 9, September 2007
Wisconsin's Antitrust Act - Application to Interstate Commerce
Meyers v. Bayer AG, 2007 WI 99 (filed 13 July 2007)
The plaintiffs, representing a putative class of Wisconsin residents who purchased the antibiotic ciprofloxacin hydrochloride (under the brand name Cipro) from defendant Bayer AG, brought suit under Wisconsin's Antitrust Act (Wis. Stat. chapter 133) claiming that Wisconsin consumers paid inflated prices for Cipro as a result of an unlawful agreement between Bayer and three manufacturers of generic drugs, which precluded the latter from selling or marketing generic ciprofloxacin hydrochloride to compete with Cipro. The circuit court dismissed the claims against Bayer, concluding that the Antitrust Act applies only to intrastate commerce. In a published decision, the court of appeals reversed the circuit court. See 2006 WI App 102. In a majority decision authored by Justice Butler, the supreme court affirmed.
The ultimate issue before the court was whether the Antitrust Act applies to interstate commerce. The court reaffirmed the following standard, set forth in Olstad v. Microsoft Corp., 2005 WI 121, 284 Wis. 2d 224, 700 N.W.2d 139, for determining when chapter 133 reaches interstate commerce: "A plaintiff filing an action under Wisconsin's Antitrust Act must allege price fixing as a result of the formation of a combination or conspiracy that `substantially affects the people of Wisconsin and has impacts in this state' when the challenged conduct occurs predominately or exclusively outside this state" (¶ 58) (citations omitted). The court noted that the "substantially affects" standard derives from the following language in the [State v. Allied Chemical & Dye Corp., 9 Wis. 2d 290, 101 N.W.2d 133 (1960)] decision: "The public interest and welfare of the people of Wisconsin are substantially affected if prices of a product are fixed or supplies thereof are restricted as the result of an illegal combination or conspiracy" (¶ 31).
The court declined to follow defendant Bayer's suggestion that the "effects of the challenged conduct on Wisconsin must be distinguishable from or disproportionate to its effects on other states. Under Olstad, the complaint must simply allege that the challenged conduct substantially affects the people of Wisconsin and has impacts in this state, not that these impacts be disproportionately felt in Wisconsin" (¶ 44) (internal quotes omitted). "An allegation that a group of pharmaceutical companies conspired to maintain monopoly prices on a best-selling prescription drug purchased by thousands of Wisconsin residents over several years meets the `substantially affects' test set forth in Olstad..." (¶ 57).
Turning to the complaint in this case, the majority observed that the plaintiffs' complaint alleged a broad price-fixing scheme affecting thousands of people in Wisconsin who purchased the best-selling antibiotic Cipro. "We conclude that [the plaintiffs'] complaint alleges illegal conduct that, if true, substantially affected the people of Wisconsin and had impacts in this state" (¶ 59).
Justice Prosser filed a dissenting opinion. Justice Roggensack filed a dissenting opinion that was joined by Justices Wilcox and Prosser.
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Clerk of Courts - Funds Paid into Clerk's Office and Held by Clerk for Repayment
HSBC Realty Credit Corp. v. City of Glendale, 2007 WI 94 (filed 11 July 2007)
The Community Development Authority of the City of Glendale (CDA) condemned a parcel of real estate containing several businesses as part of a redevelopment project of a local shopping mall. The CDA deposited a $14.5 million condemnation award with the Milwaukee County Clerk of Court for the benefit of the parties. The clerk thereafter exercised his authority under Wis. Stat. section 59.40(3)(b) to invest the funds. (Section 59.40(3)(b) grants a clerk of court authority to invest "any funds" that are paid into the clerk's office and are being held for repayment, but it requires that the interest earned on these funds be paid into the county general fund (see ¶ 2).) In this case the clerk invested the award in Milwaukee County's general fund with the interest to go to the fund.
One of the parties filed a motion in the circuit court seeking an order to place the award into an interest-bearing account for the benefit of the ultimate recipients of the award. The motion named a preferred depository. The circuit court granted the motion and ordered the clerk to transfer the award from the county general fund into a separate money market account at the suggested private bank, with interest accruing for the benefit of the ultimate recipients of the award. The court also provided that neither the award nor the interest be released or disbursed without court order and that the transfer of the award not be subject to the transfer fee codified in section 814.61(12)(a)1. (see ¶ 9). The court reasoned that it had the discretion to make this order under section 59.40(3)(c). (This statute allows a circuit court judge to direct that section 59.40(3)(b), which is summarized above, not apply to "certain funds paid into the [clerk's] office.") In a published decision, the court of appeals reversed the circuit court. See 2006 WI App 160.
In a majority decision authored by Justice Prosser, the supreme court reversed the court of appeals. The supreme court concluded that "Wis. Stat. § 59.40(3)(c) empowers a circuit judge not only to veto the clerk's authority to invest 'certain funds' and pay all interest on those funds into the county general fund, but also to direct the clerk to transfer 'certain funds' from the clerk's control into a secure private account for the benefit of persons ultimately entitled to the funds. The judge's power under § 59.40(3)(c) is especially clear with respect to condemnation awards, when § 59.40(3)(c) is read in conjunction with Wis. Stat. § 32.05(7)(d)" (¶ 4). "
[W]e think Wis. Stat. § 59.40(3)(c) empowers a circuit judge not only to veto the clerk's authority to invest and control the interest on condemnation awards but also veto the clerk's authority over 'certain' other funds deposited with the clerk, so long as the funds relate to a case before the judge's court. When the judge exercises his authority under Wis. Stat. § 59.40(3)(c), the judge may cooperate with the clerk to invest the funds and redirect the interest to the persons ultimately entitled to the funds, or [the court] may transfer the funds from the clerk's control into a secure private account where it can earn interest for interested persons" (¶ 46).
The supreme court recognized that its interpretation of the statute entails responsibilities "not sought by circuit courts" (¶ 47). "When a court is asked to invoke its power under Wis. Stat.
§ 59.40(3)(c), it need not automatically grant the request. A court should have a good reason to transfer funds from the clerk's control. In every instance, a court should exercise its power with sound discretion, with the consent, if possible, of all interested parties, and with a prudence that assures that any funds transferred from the clerk's control be placed in `suitably protected accounts.' Wisconsin Stat. § 54.12(1)(a) authorizes a circuit court to order a register in probate to deposit the property of a minor or an individual found incompetent `in an interest-bearing account in a bank or other financial institution insured by an agency of the federal government or invest the property in interest-bearing obligations of the United States.' Wis. Stat. § 54.12(1)(a). We think this statute describes for a court what is meant by investments in `suitably protected accounts.' A court is not an investment advisor" (id.).
Lastly, the court concluded that the transfer of the award in this case was not subject to the disbursement fee codified in Wis. Stat. section 814.61(12)(a)1. (see ¶¶ 48-50).
Chief Justice Abrahamson filed a concurring opinion. Justice Butler also filed a concurring opinion, which was joined by the Chief Justice.
Sanctions - Retroactivity
Trinity Petroleum Inc. v. Scott Oil Co., 2007 WI 88 (filed 6 July 2007)
Trinity Petroleum sued Scott Oil for breach of contract. The circuit court granted summary judgment in favor of Scott Oil on July 5, 2005, just five days after the effective date of the new sanctions statute, Wis. Stat. section 802.05, which is modeled on Fed. R. Civ. P. 11. Scott Oil moved for sanctions, alleging that Trinity's claim was frivolous. The circuit court ruled that new section 802.05 is procedural and therefore can be applied retroactively "without exception" but did not impose sanctions because of the impossibility of invoking the rule's 21-day "safe harbor" provision. The court of appeals affirmed.
The supreme court, in an opinion written by Chief Justice Abrahamson, reversed and remanded. In summary, the court held "that new Wis. Stat. § (Rule) 802.05 (2005-06) is a procedural rule and that procedural rules generally have retroactive application. [Yet it also concluded] that new rule Wis. Stat. § (Rule) 802.05 (2005-06) is not to be applied retroactively when the new rule diminishes a contract, disturbs vested rights, or imposes an unreasonable burden on the party charged with complying with the new rule's requirements" (¶ 7). The central issue concerned the retroactive application of section 802.05, which was adopted by the supreme court in its rule-making capacity. The text and history of the new rule were silent on this issue, so the court turned to case law on the retroactivity of statutes (see ¶ 39). The court said that the rule is clearly procedural, not substantive, because it was "designed to deter frivolous filings because they disrupt and delay the legitimate court cases, thereby bogging down the court system" (¶ 43). Its pedigree and placement among the civil procedure rules further evidence the rule's procedural character.
Although procedural rules are "ordinarily" (presumptively) applied retroactively (¶ 52), this is not an "absolute rule" (¶ 53). The exceptions, set forth in Mosing v. Hagen, 33 Wis. 2d 636, 148 N.W.2d 93 (1967), occur when retroactive application affects "a vested or contractual right or impose[s] an unreasonable burden upon the party attempting to comply with the procedural requirements" (¶ 54). The court explicitly held that Mosing remains "good law" (¶ 67) and conforms to the federal formulation that inquires whether retroactive application is "just and practicable" (¶ 74). In this case, the only arguable exception involved imposition of an unreasonable burden. The supreme court also held that Wisconsin continues its adherence to the "Chevron/Kurtz factors" even though the federal system long-ago abandoned Chevron in criminal and civil cases (see ¶ 76). Nonetheless, Chevron is limited to issues of retroactivity of judicial holdings, not of statutes or rules such as section 802.05 (see ¶ 78). The case was remanded for a determination of whether a retroactive application presented an unreasonable burden and, if not, whether any sanctions were appropriate under the new rule.
Justice Roggensack, joined by Justices Wilcox and Prosser, filed an opinion that concurred and dissented. They concurred with the decision to remand but disagreed with the majority's analysis of the retroactivity issue, particularly whether the plaintiff asserted a "substantive claim" under repealed section 814.025 (the old frivolous action statute) and the majority's determination that the Chevron/Kurtz test was not applicable (see ¶ 104).
Jury Trial - Regulatory Actions
State v. Schweda, 2007 WI 100 (filed 13 July 2007)
The state brought this regulatory action against the owners of ECI, a "centralized waste treater." The claims sought various forfeitures and other penalties for permit violations and for breach of administrative regulations. ECI demanded a jury trial but the circuit court ruled that ECI had no constitutional right to a jury. The case was tried to the court, which found violations of some, but not all, of the alleged infractions. ECI appealed and the court of appeals certified the case on the question of a right to trial by jury under article I, section 5 of the Wisconsin Constitution.
The supreme court, in a majority opinion authored by Justice Bradley, affirmed in part and reversed in part. Applying the test set forth in Village Food & Liquor Mart v. H&S Petroleum, 2002 WI 92, 254 Wis. 2d 478, 647 N.W.2d 177, the court held that "the claims asserted in the State's complaint do not give rise to a constitutional right to a jury trial. Common law nuisance causes of action are not sufficiently analogous to be considered `essential counterparts' to the modern day regulatory claims asserted here. Therefore, ECI fails the first prong of the Village Food test because the claims asserted did not exist, were not known, and were not recognized at common law at the time the state's constitution was adopted. Our determination, however, does not preclude the constitutional right to a jury trial in all environmental regulatory cases. Such a right exists if the asserted claim has an essential counterpart that existed at common law in 1848 and was recognized as an action at law in 1848" (¶¶ 3-4).
Despite disagreements in the case law over the test's application, "the court has been [unequivocal] in rejecting the temptation to carve out a constitutional right to a jury trial based on broad analogies between modern causes of action and causes of action at statehood" (¶ 21). Nuisance poses a special problem because of its breadth and, unlike many regulatory offenses, demands proof of harm (see ¶ 39). "Thus, where such a vital aspect of a common law nuisance cause of action, i.e., harm, is not part of a contemporary cause of action, it is our determination that the two are not sufficiently analogous to pass the first prong of the Village Food test. Rather, the causes of action here are part of a `detailed scheme [of] regulation' of the sort the Village Food concurrence/dissent discerned in the Unfair Sales Act…. Because the causes of action fail the first prong of the Village Food test, they fail the second prong of the test as well. If they did not exist in 1848, they could not have been regarded as actions at law in 1848" (¶ 42).
Concurring, Chief Justice Abrahamson joined Justice Bradley's opinion but wrote separately to express that she would not have remanded to the court of appeals the questions of the sufficiency of evidence or the circuit court's exercise of discretion in assessing forfeitures.
Justice Prosser, joined by Justices Wilcox and Roggensack, filed a lengthy opinion that concurred in part and dissented in part. They concluded that ECI was entitled to a jury trial on five claims alleging harm that was both "direct and immediate, not speculative or remote. Environmental claims that require a civil jury trial are thus distinguishable from claims that require testing, record-keeping, labeling, or reporting - violations that do not directly cause environmental damage" (¶ 57). In sum, the dissenting justices accused the majority justices of "sever[ing] the historic connection between public nuisance at common law and modern environmental regulation. Ostensibly, the majority does not preclude the right to a civil jury trial in all environmental regulatory cases, but it provides no guidance to circuit judges on when that might be appropriate. This is a sad day for Wisconsin" (¶ 150).
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Civil Procedure/Appellate Procedure
Reopening Case and Amending Pleading Following Dismissal of Action on Merits and Affirmance of Dismissal on Appeal
Tietsworth v. Harley-Davidson Inc., 2007 WI 97 (filed 12 July 2007)
Tietsworth filed a complaint on behalf of himself and a class of certain Harley-Davidson motorcycle owners (collectively the plaintiffs) alleging that Harley-Davidson designed, manufactured, marketed, and sold motorcycles with a particular engine defect. Four tort-based causes of action were alleged: 1) negligence, 2) strict products liability, 3) fraudulent concealment, and 4) fraudulent misrepresentation and deceptive trade practices in violation of Wis. Stat. section 100.18(1) and (11)(b). The circuit court dismissed the entire complaint for failure to state a claim. It dismissed the negligence and strict products liability claims because the plaintiffs failed to allege any actual damages and because the economic loss doctrine barred the claims. It dismissed the two fraud claims because the plaintiffs did not allege any actual damages.
The plaintiffs appealed the dismissal of the common law fraud and statutory fraudulent misrepresentation/deceptive trade practices claims. In a published decision the court of appeals reversed the circuit court and reinstated the fraud claims. See 2003 WI App 75. The supreme court reversed the court of appeals. With regard to the fraudulent misrepresentation/deceptive trade practices claim, the supreme court held that the plaintiffs did not allege facts to meet the elements of the statutory claim and, with respect to the common law fraud claim, the court held that the plaintiffs were barred by the economic loss doctrine. The supreme court's opinion concluded with the following mandate: "The decision of the Court of Appeals is reversed." See 2004 WI 32.
Thereafter the plaintiffs moved the circuit court for leave to reopen the original case to amend the complaint to assert three new claims: 1) breach of warranty, 2) fraudulent inducement to contract, and 3) unjust enrichment. The circuit court ruled that the plaintiffs could not amend the original complaint to introduce the contract and warranty claims because the earlier supreme court decision in this case was final and that a circuit court may not allow amendments of pleadings when the supreme court affirmed the judgment of dismissal. The court of appeals reversed this decision. See 2006 WI App 5. In a majority decision authored by Justice Prosser, the supreme court reversed the court of appeals.
The precise issue before the court in this appeal was whether plaintiffs may reopen a case and amend a complaint after the circuit court has dismissed the complaint in its entirety on the merits and the dismissal has been affirmed on appeal. The majority concluded that "[i]n the absence of a remand order in the mandate line or some other clear directive from the appellate court ultimately deciding the appeal, a trial court whose judgment or final order has been affirmed by the appellate court on the merits has no authority to reopen the case for an amended complaint. This general rule is designed to assure compliance with the appellate court's decision. It conforms to the long-established principle that `a judgment of a trial court when affirmed by this court becomes in legal effect the judgment of this court and the trial court has no power to vacate or set it aside'" (¶ 50) (citation omitted). "[The] mandate [in 2004 WI 32 quoted above] is clear: the decision of the court of appeals is reversed, thus affirming the circuit court's dismissal of the entire action. The mandate does not order or direct or instruct the trial court to take further action or proceedings. There is no reference to a remand. If we had wanted to allow the trial court to take further action, we would have specified as much in the mandate or by clear directive in the text of the opinion" (¶¶ 43-44).
This holding "is not at odds with the sensible principle stated in Fullerton [Lumber Co. v. Torbord, 274 Wis. 478, 80 N.W.2d 461 (1957)] that a trial court may determine any matters left open by the higher court as long as the determination is not inconsistent with the higher court's mandate" (¶ 53). However, the supreme court refused to characterize the plaintiffs' new contract-based claims as being left open by its earlier decision in this litigation. "These [contract-based] claims do not remain unresolved because [the plaintiffs] chose not to allege them in [their] original pleadings or to amend the pleadings while the case was still in the trial court. Therefore, these claims were not part of this action" (¶ 56).
Chief Justice Abrahamson filed a dissenting opinion that was joined by Justices Bradley and Crooks.
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Commitments - Tuberculosis - Jail
City of Milwaukee v. Washington, 2007 WI 104 (filed 17 July 2007)
A judge ordered Washington, who was diagnosed with tuberculosis, confined in the county jail after she failed to comply with prior court orders concerning treatment. The court of appeals affirmed.
The supreme court, in an opinion written by Justice Butler, affirmed the court of appeals. In summary it held "that Wis. Stat. § 252.07(9)(a) authorizes confinement to a jail for a person with noninfectious tuberculosis who is at a high risk of developing infectious tuberculosis and fails to comply with a prescribed treatment regimen, provided the jail is a place where proper care and treatment will be provided and the spread of disease will be prevented, and that no less restrictive alternative exists to jail confinement. We further conclude that a circuit court may take into account the cost of placement options when determining the place of confinement under § 252.07(9), but only after determining that two or more placement options fulfill the statutory requirements of proper medical treatment and disease prevention, and that none of these options is significantly less restrictive than the other(s)" (¶ 3).
The case compelled the court to examine the long-term confinement provisions of the tuberculosis control statute, Wis. Stat. section 252.07(9). Washington challenged the judge's authority to confine her to the "criminal justice facility" (that is, the jail). The court "conclude[d] that, together, the commonly accepted meanings of `facility' and `confined' indicate that the legislature intended jail to be a permissible placement option under Wis. Stat. § 252.07(9)(a) for persons with noninfectious tuberculosis who are noncompliant with a prescribed treatment regimen, provided that `no less restrictive alternative exists' to such placement and that the particular jail to which a person is to be confined is a place where proper care and treatment will be provided and spread of the disease will be prevented" (¶ 37) (citations omitted). It also followed that "a circuit court may take into account cost when determining place of confinement under Wis. Stat. § 252.07(9)" (¶ 53).
The record revealed that the circuit court properly exercised its discretion in this case. "In future cases, courts should follow the guidelines set forth in this opinion when determining place of confinement under Wis. Stat. § 252.07(9). A court proceeding under § 252.07(9) must ascertain whether a proposed place of confinement is a facility where proper care and treatment will be provided, spread of the disease will be prevented and that no less restrictive alternative placement exists. After applying these criteria to potential placement options, if two or more placement options meet the statutory requirements for treatment and disease prevention, and none of these placement options is significantly less restrictive than the others, the court may take into account the relative costs of the different placements. However, a determination based on cost must be supported by more than mere assumptions about the cost of particular placements" (¶ 61). (The supreme court "disavow[ed]" the court of appeals' discussion of whether the confinement was also lawful under contempt procedures (¶ 68).)
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Defective Autos - Costs and Expenses
Kolupar v. Wilde Pontiac Cadillac, 2007 WI 98 (filed 12 July 2007)
This is the second time this case reached the supreme court. It involves the plaintiff's purchase of a "deficient" used car. In Kolupar I the court upheld an award of $15,000 in attorney fees and remanded the matter for a determination of costs. On remand, Kolupar submitted two lists of costs, one for $8,700 and the other for $9,900. The circuit court awarded $3,500 in "taxable costs" as provided by Wis. Stat. section 814.04. The court of appeals rejected Kolupar's argument that she was entitled to "actual, reasonable costs" under Wis. Stat. section 218.0163(2).
In a majority decision authored by Justice Butler, the supreme court reversed the court of appeals. "The narrow issue before us is whether a retail buyer's recovery of costs under Wis. Stat. § 218.0163(2) is limited to costs enumerated in Wis. Stat. § 814.04 or also includes all other reasonable costs not enumerated in § 814.04. We conclude that Wis. Stat. § 218.0163(2) provides for the award of reasonable costs. Because the court of appeals misconstrued § 218.0163(2) in affirming the circuit court's award of costs, we reverse its decision. Because the circuit court failed to apply the correct legal standard to its cost determination, we conclude it erroneously exercised its discretion in determining the amount of the award of costs" (¶ 3). "The applicable statute in this case, Wis. Stat. § 218.0116, is remedial in nature, offering retail buyers protection against certain unfair practices of auto dealers, salespersons and finance companies. Specifically, the statute prohibits a number of unsavory practices, including fraudulent misrepresentation and use of deceptive sales practices, in the retail sale or lease of a motor vehicle" (¶ 35). "[A] construction of `costs' to mean only Wis. Stat. § 814.04 enumerated costs would put language providing for `reasonable attorney fees' in § 218.0163(2) in direct conflict with the attorney fee provisions of § 814.04. A construction of `costs' to mean `reasonable costs' is therefore necessary to harmonize § 218.0163(2) and § 814.04(1)(a)"(¶ 42). Although the plaintiff presented plainly inconsistent statements of costs, this did not establish that the circuit court had properly exercised its discretion in awarding just $3,500. Finally, the supreme court agreed that Kolupar's lawyers were entitled to reasonable attorney fees and costs for bringing this appeal (see ¶ 56).
Justice Wilcox, joined by Justice Prosser, dissented on the ground that the majority turned the statute's plain language "on its head" (¶ 77). "Tammy Kolupar received more costs than she was permitted under Wis. Stat. § 218.0163(2). Rather than anxiously awaiting the deadline for appeal in hopes that Wilde Pontiac would decide an appeal over $430 was not worth it, she filed an appeal herself. With today's decision, Kolupar's litigation gamble pays off. She now heads back to the circuit court with a chance to recover even more costs. Kolupar's attorneys are not doing too badly either. On top of the $15,000 in reasonable attorney fees initially awarded, the majority is awarding attorney fees for this appeal" (¶¶ 60-63).
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Confessions - Corroboration
State v. Bannister, 2007 WI 86 (filed 3 July 2007)
A jury convicted the defendant of delivering a controlled substance, morphine, to a person who then died of a morphine overdose. The state's case was largely predicated on the defendant's confession. The court of appeals reversed because it found insufficient corroboration of the confession.
The supreme court, in an opinion written by Justice Wilcox, reversed the court of appeals, finding that the state had satisfied the corroboration rule. "The corroboration rule ensures that a conviction does not stand when there is an absence of any evidence independent of the defendant's confession that the crime in fact occurred" (¶ 23). The rule requires "that the State corroborate `any significant fact'" (¶ 26). It is a rule of evidentiary sufficiency, not a rule of admissibility (see ¶ 33). "A significant fact is one that gives confidence that the crime the defendant confessed to actually occured. A significant fact need not either independently establish the specific elements of the crime or independently link the defendant to the crime. Rather, the State must present at least one significant fact that gives confidence that the crime the defendant has been convicted of actually did occur" (¶ 31).
The supreme court rejected arguments that Wisconsin's version of the rule should be reformulated to require corroboration of a "particularized fact" in the confession (¶ 36). "In this case, the evidence of morphine being present in Michael Wolk's body at the time of his death constitutes a significant fact. The presence of morphine is evidence of the fact that Michael used morphine. That fact corroborates Bannister's confession that he delivered morphine between December 2002 and mid-January 2003 to the Wolks because it gives confidence that he in fact gave the Wolks morphine" (¶ 34). The court also rejected the defendant's contention that he should be granted a new trial in the interest of justice.
Justice Butler dissented, joined by Chief Justice Abrahamson. "Because the evidence of Michael Wolk's death was highly prejudicial in nature, and the means by which the prosecutor secured admission of this evidence were questionable at best, I conclude that Bannister should be granted a new trial in the interest of justice" (¶ 53).
Sentence Credit - Time Spent in Custody in Connection with "Course of Conduct" for which Sentence is Imposed - Credit for Time Spent in Juvenile Commitment
State v. Johnson, 2007 WI 107 (filed 18 July 2007)
Johnson was adjudicated delinquent on one count each of theft and disorderly conduct and two counts of battery. He was committed to a secure juvenile institution. While confined under this commitment at an institution, Johnson committed a battery against another resident. He was arrested and charged as an adult on a felony battery charge. On the adult charge the court ordered a signature bond so that Johnson could be returned to custody in the juvenile institution. He was later convicted on the adult charge. Before sentence was imposed on the adult charge, the juvenile court extended Johnson's juvenile supervision. At the time of sentencing on the adult charge, Johnson requested credit against his adult sentence for the time between his arrest on the adult charge and the sentencing in that case. He relied on Wis. Stat. section 973.155(1)(a), which provides that "[a] convicted offender shall be given credit toward the service of his or her sentence for all days spent in custody in connection with the course of conduct for which sentence was imposed."
The circuit court denied Johnson's request for sentence credit, concluding that the days spent in custody before sentencing on the adult battery charge were not connected with the battery charge for the purposes of Wis. Stat. section 973.155. The court reasoned that "irrespective of the presence of a signature bond, Johnson's custody was not in connection with the battery because it was `virtually certain' that he would have been in custody under juvenile commitment regardless of the battery. In support of its order, the court cited Johnson's negative pattern of behavior over the period of his juvenile commitment, emphasizing that Johnson had accumulated a total of 233 charges and 497 days in security while confined under his juvenile commitment" (¶ 4). Johnson appealed and the court of appeals certified the case to the supreme court, which granted certification.
In a unanimous decision authored by Justice Prosser, the supreme court affirmed. Applying sentence credit principles from State v. Beets, 124 Wis. 2d 372, 369 N.W.2d 382 (1985), the court held that "Johnson is not entitled to sentence credit on the adult battery charge because the time he spent in custody between his arrest and his sentence was not custody `in connection with' the adult battery. First, Johnson is not entitled to credit for time in custody from his arrest [on the adult battery] to the May 6, 2003, extension hearing in the juvenile court because, during that period, Johnson was subject to a juvenile commitment order based entirely on conduct preceding and unrelated to the adult battery. Therefore, under Beets, Johnson's 2002 extension of his juvenile commitment precluded any connection to the later adult battery. Second, Johnson is not entitled to credit for time in custody from the May 6, 2003, extension of his juvenile commitment up to the time of sentencing [on the adult battery] because, even though the adult battery was a factor in the juvenile court's decision to extend Johnson's juvenile supervision for another year, the circuit court ... determined that the juvenile court ... would have extended Johnson's supervision even if that battery had never occurred. Therefore, Johnson's time in custody from the extension hearing to the time of sentencing was not in connection with the adult battery" (¶ 9).
Guilty Pleas - Motion to Withdraw Plea Before Sentencing
State v. Jenkins, 2007 WI 96 (filed 12 July 2007)
The defendant entered a guilty plea to a charge of delivering heroin. Before sentencing he filed a motion to withdraw the plea, claiming that he misunderstood the consequences of his plea because he thought that he would be guaranteed the opportunity to work with law enforcement to potentially affect his sentence. The circuit court denied the motion but the court of appeals reversed. See 2006 WI App 28. In a majority decision authored by Justice Prosser, the supreme court reversed the court of appeals.
Said the supreme court, "[this] case presents the recurrent question of how to review a circuit court's denial of a defendant's motion to withdraw his plea before sentencing, given the longstanding legal principle that a circuit court should `freely allow a defendant to withdraw his plea prior to sentencing for any fair and just reason, unless the prosecution [would] be substantially prejudiced.' State v. Bollig, 2000 WI 6, ¶ 28, 232 Wis. 2d 561, 578, 605 N.W.2d 199" (¶ 2). In this case, the state did not argue that it would be substantially prejudiced by Jenkins' plea withdrawal. Therefore, the issues were whether Jenkins had a fair and just reason to withdraw his plea and how an appellate court should review the circuit court's denial of Jenkins' motion.
A circuit court's decision to grant or deny a motion for plea withdrawal is a matter within the court's discretion (see ¶ 6). "Upon a motion to withdraw a plea before sentencing, the defendant faces three obstacles. First, the defendant must proffer a fair and just reason for withdrawing his plea. Not every reason will qualify as a fair and just reason. Second, the defendant must proffer a fair and just reason that the circuit court finds credible. In other words, the circuit court must believe that the defendant's proffered reason actually exists. Third, the defendant must rebut evidence of substantial prejudice to the State"(¶ 43) (citations omitted).
"If the defendant does not overcome these obstacles in the view of the circuit court, and is therefore not permitted to withdraw his plea, the defendant's burden to reverse the circuit court on appeal becomes relatively high. This is so because, on appeal, the defendant has two additional and substantial obstacles. The first obstacle is the applicable standard of review, which requires the reviewing court to affirm the circuit court's decision unless it is clearly erroneous. The second obstacle is the extensive plea colloquy required of circuit courts. The plea colloquy is designed to secure a knowing, intelligent, and voluntary plea from the defendant and a developed record from which reviewing courts may evaluate the circuit court's decision" (¶ 44). With regard to the plea colloquy, the court noted that a corresponding impact of the more elaborate and comprehensive colloquy required under contemporary law is to make it more difficult for defendants to withdraw their pleas (see ¶ 60). Any notion that guilty pleas are merely tentative until sentencing has been undercut by the requirement of a developed guilty plea record demonstrating the defendant's personal understanding of his or her plea. "As long as circuit courts follow the court mandated and statutory requirements during plea colloquies, defendants will ordinarily have difficulty showing a fair and just reason for plea withdrawal if the reason is based on grounds that were adequately addressed in the plea colloquy" (id.).
"A fair and just reason for plea withdrawal before sentence will always be subject to case-by-case analysis. As a general rule, a fair and just reason for plea withdrawal before sentence will likely exist if the defendant shows that the circuit court failed to conform to its statutory or other mandatory duties in the plea colloquy, and the defendant asserts misunderstanding because of it. In such a circumstance, the State may show that it has been prejudiced, in which case the court will have to decide whether the deficiency in the plea colloquy compromised the knowing, intelligent, and voluntary nature of the defendant's plea. A defendant may proffer a fair and just reason, including misunderstanding and changed circumstances, based on matters outside the plea colloquy record. When the plea colloquy is sufficient, however, the defendant's fair and just reason should rely on matters outside the plea colloquy record or be able to show why it is fair and just to disregard the solemn answers the defendant gave in the colloquy" (¶ 62) (citations omitted).
Applying these standards to this case, the supreme court concluded that the circuit court did not erroneously exercise its discretion when it denied Jenkins' motion to withdraw his plea. "From the beginning of the case, Jenkins was represented by counsel. He had several months to consider the plea agreement offered by the State. The plea agreement did not include a promise that Jenkins would be guaranteed the opportunity to work with the police. Jenkins participated in a thorough plea colloquy with the court. The record supports the circuit court's determination that Jenkins understood the consequences of his plea. We conclude that the circuit court did not err in denying Jenkins' motion to withdraw his plea" (¶ 92).
(As part of its discussion the court addressed the question of whether an assertion of innocence is necessary under the "fair and just reason" standard. It concluded that "an assertion of innocence is a factor `that bear[s] on whether the defendant's proffered reason of misunderstanding, confusion or coercion [is] credible.' In other words, an assertion of innocence is not necessary, but it helps the circuit court evaluate the defendant's `fair and just reason'" (¶ 89) (citations omitted).
Chief Justice Abrahamson filed a concurring opinion that was joined by Justice Butler. Justice Butler filed a concurring opinion that was joined by Chief Justice Abrahamson and Justice Bradley.
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Power of Attorney - Joint Checking Account - Self-dealing
Russ v. Russ, 2007 WI 83 (filed 3 July 2007)
This case concerns a son, Elliott, who owned a joint checking account with his elderly mother, Johnnie, who later gave Elliott a durable power of attorney (POA) that did not authorize self-dealing. After executing the POA, Elliott paid himself from the account with his mother's funds. Johnnie's guardian ad litem (GAL) brought an action to recover those funds based on Elliott's alleged breach of fiduciary duties. The circuit court reformed the POA because of a "mutual mistake" and ruled that Johnnie's claim was barred by equitable estoppel.
On certification, the supreme court, in an opinion written by Justice Crooks, affirmed the circuit court but on different grounds. The court held "that a joint checking account established under Wis. Stat. § 705.03 prior to the execution of a POA creates a presumption of donative intent, and that the transfer of funds from such joint account by an agent acting under a POA, but for the agent's own use, creates a presumption of fraud, unless the POA explicitly authorizes self-dealing. We further hold that when, as in the present case, these two conflicting and inconsistent presumptions coincide, the circuit court is free to make a determination based on the facts and the credibility of the witnesses, as the circuit court did here" (¶ 3). More precisely, "when a POA agent and a principal share a preexisting joint checking account, the execution of a POA document, in and of itself, is not `clear and convincing evidence of a different intent' under Wis. Stat. § 705.03. We are satisfied that § 705.03, under which Elliott owed no duty to Johnnie as a joint account holder, appears to conflict with Elliott's fiduciary duty as a POA agent pursuant to Wis. Stat. § 243.10. This case involves conflicting and inconsistent presumptions. When funds are deposited into a joint bank account, donative intent is presumed. The length of time that funds remain in a joint account, along with other evidence, is `part of the inquiry into whether the presumption of donative intent is rebutted by other evidence'" (¶ 31) (citations and internal quotes omitted). "On the other hand, a fiduciary, such as a POA agent, has an obligation not to engage in self-dealing…. When a POA agent, for the agent's own use, transfers funds deposited by the principal, without written authority in the POA document to do so, a presumption of fraud is created, regardless of whether the funds were deposited before or after the execution of the POA" (¶ 32).
Since there were no Wisconsin cases on point, the court adopted Illinois precedent. "We hold that a joint checking account established under Wis. Stat. § 705.03 prior to the execution of a POA creates a presumption of donative intent. We further hold that when an agent acting under a POA transfers funds deposited by the principal from such joint account, but for the agent's own use, a presumption of fraud is created. When these two conflicting and inconsistent presumptions coexist, the circuit court is then free to make a determination based upon the facts and the credibility of the witnesses. Under such circumstances, as well as in cases where a power of attorney agent actively uses his or her authority to create a joint account with the principal, thereby triggering a presumption of fraud, extrinsic evidence may be admissible to determine the intent of the parties. The prohibition against the admissibility of extrinsic evidence of the parties' intent to allow the making of gifts … would not apply in such cases" (¶ 36). Finally, the supreme court reiterated that lower courts are to use the "conflicting and inconsistent presumptions approach" when grappling with these issues, not the doctrines of reformation and equitable estoppel (see ¶ 39).
Concurring, Chief Justice Abrahamson, joined by Justice Bradley, wrote separately to argue that such cases are likely to recur with frequency as the population ages. "There are significant issues bubbling and brewing just below the surface of today's decision that need to be addressed. Courts have not had the opportunity to define the role of an agent under a durable power of attorney sufficiently because litigation is too infrequent and too fact-specific. Legislative study of the use and abuse of durable powers of attorney may be called for. See Wis. Stat. § 13.83(1) (Law Revision Committee). The legislature should consider formulating guideposts to govern the fiduciary responsibilities of an agent so that agents can operate efficiently on behalf of the principal under a durable power, while the principal is protected from abuse of the power and unnecessary court interventions and government intrusions are prevented. Any reform of the durable power of attorney must preserve and foster the instrument's usefulness" (¶ 64).
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Disability - WFEA
Stoughton Trailers Inc. v. LIRC, 2007 WI 105 (filed 17 July 2007)
Stoughton Trailers (Stoughton) terminated Geen because of his excessive absences. Geen contended that because he was disabled by migraine headaches, his termination violated the Wisconsin Fair Employment Act (WFEA). The Labor and Industry Review Commission (LIRC) concluded that Geen was disabled and that Stoughton failed to reasonably accommodate him. The court of appeals affirmed LIRC's determination.
The supreme court, in a majority decision authored by Justice Butler, affirmed the court of appeals. The court expressly declined to decide "whether a termination for exceeding the maximum number of absences permitted under a no-fault attendance policy is because of disability under the WFEA when some of the absences were caused by disability and others were not" (¶ 5). Nonetheless, the court held that LIRC's determination was reasonable because "Stoughton's termination of Geen violated its own no-fault attendance policy because Geen was not provided 15 days to submit documentation to avoid being assessed an `occurrence' under the policy. As a result, Geen had not accrued the requisite number of `occurrences' necessary for termination. Accordingly, we conclude that Stoughton is not entitled to whatever protection its no-fault policy may provide. We conclude that the circumstances surrounding Geen's termination demonstrate that LIRC's conclusion that [Geen] was terminated because of his disability was reasonable" (¶ 49).
Stoughton also failed to reasonably accommodate Geen. "LIRC reasonably concluded that an employer should exercise `clemency and forbearance' by not immediately terminating an employee where, as here, the employer knows a medical intervention is already underway that has not had the chance to take effect to potentially resolve the problem of the employee's absences" (¶ 65). Finally, LIRC properly ordered reinstatement and back pay as the remedy under the WFEA and case law (see ¶ 71).
In dissent, Justice Prosser, joined by Justice Wilcox, contended that the majority should have addressed the central issue: "whether an employer may apply a facially neutral no-fault attendance policy to terminate an employee, without risk of employment discrimination liability, when some of the employee's absences are caused by disability but most are not" (¶ 75). The dissent faulted the majority for not resolving this important policy question while nonetheless "pick[ing] a winner" (¶ 76).
WFEA - Discrimination - Truck Driver
Szleszinski v. LIRC, 2007 WI 106 (filed 18 July 2007)
A commercial truck driver was prohibited from driving trucks after a doctor diagnosed him as suffering from Wilson's disease and recommended his disqualification. The driver complained that he had been discriminated against under the Wisconsin Fair Employment Act (WFEA). A hearing examiner found in the driver's favor but the Labor and Industry Review Commission (LIRC) reversed, primarily on the ground that the driver had failed to challenge the medical evaluation under the DOT's dispute resolution procedures. The circuit court affirmed LIRC, but the court of appeals reversed.
In a majority decision authored by Justice Butler, the supreme court affirmed the court of appeals but on different grounds. "We therefore conclude that if, in the context of a WFEA proceeding, a determination regarding a driver's medical qualifications is necessary to resolve a dispute concerning such qualifications that cannot be resolved by facial application of the DOT regulations, the determination should be made by the DOT under its dispute resolution procedure. However, the fact that DOT regulators should resolve such disputes when they arise in the context of a WFEA claim does not mean that a determination of medical qualification must be made before a WFEA claim is filed, or that it is the driver's responsibility to seek such a determination" (¶ 34). The court also concluded "that when a dispute exists between the physician for the driver and the physician for the carrier regarding the driver's physical and medical qualifications, it is the carrier, not the driver, who bears the burden of seeking a determination under the DOT dispute resolution procedure if the carrier intends to offer a qualification-based defense against the driver's claim of disability discrimination under the WFEA. A requirement that the driver seek a DOT determination before filing a state discrimination claim would be contrary to the burden-shifting scheme of the WFEA. Moreover, such a requirement would prevent some drivers from filing legitimate WFEA claims before the statute of limitations has run" (¶ 37).
The majority expressly addressed the issue of public safety. "Our decision ensures that whenever a legitimate dispute regarding the medical qualifications of a driver arises in the context of a WFEA claim, it will be resolved in the same manner as would any such dispute - by resort to the proper federal authorities, with the driver being disqualified until a determination is made" (¶ 43).
Justice Prosser dissented, joined by Justices Wilcox and Roggensack. "Most employment discrimination disputes do not involve the safety of the public. This one does. The effect of this case is to punish a trucking company that discontinued the services of an over-the-road commercial truck driver whom it believed posed an unreasonable risk on the highway. Although the court appears to decide the case on narrow procedural grounds, it fails to confront important issues that transcend this dispute and adversely affect the motor carrier industry and the public at large. Because these issues require discussion, I respectfully dissent" (¶ 50).
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Failure to Comply with Family Court Orders - Remedial Contempt - Illegality of Stipulations Capping Child Support
Frisch v. Henrichs, 2007 WI 102 (filed 17 July 2007)
Heidi Frisch and Ronald Henrichs divorced in 1993. Ronald was ordered to pay $600 per month in child support. A provision of the divorce judgment referenced Wis. Stat. section 767.263 (1993-94), which required child support obligors to report all substantial changes in income within 10 days to the clerk of court. The marital settlement agreement also provided that as long as Ronald had an obligation to pay support, he was to provide Heidi with a copy of his Form 1040 tax return, together with all schedules.
The circuit court found Ronald in contempt for failing to provide tax information on an annual basis to Heidi and for failing to timely report substantial changes in his income, as required under statute, their divorce judgment, a November 1995 court order, and a stipulation entered into between Ronald and Heidi. It ordered Ronald to pay $100,000 as compensation for his contemptuous conduct.
The court of appeals reversed, holding that the circuit court improperly employed remedial contempt because Ronald's contempt was no longer continuing at the time of the contempt hearing. The court of appeals noted that Ronald had provided Heidi with all of the tax information before the contempt hearing; therefore, the contempt was no longer continuing and the circuit court was not authorized under Wis. Stat. chapter 785 to employ remedial contempt. See 2006 WI App 64. ("Wisconsin Stat. § 785.01(3) allows a court to impose a remedial sanction for the purpose of terminating a continuing contempt of court"(¶ 37).)
In a majority decision authored by Justice Prosser, the supreme court reversed the court of appeals. Said the court, "[t]his case presents the issue of whether the circuit court had authority under Wis. Stat. ch. 785 to order payment for loss suffered as a result of contemptuous conduct - specifically the untimely production of financial information and the failure to report substantial changes in income - as a purge condition for contempt of court. In a broader sense, this issue requires the [supreme] court to determine whether the circuit court had authority under Wis. Stat. ch. 785 to employ remedial contempt under these circumstances" (¶ 29).
The supreme court held that "the circuit court properly employed remedial contempt in this case. Ronald's contempt was continuing at the time of the contempt hearing because, although he had provided Heidi with complete tax and income information at the time of the hearing, his failure to produce the information in a timely manner, as required, permitted him to evade exposure to the possibility of a modification of his child support obligation and thereby deprived Heidi and their children of their traditional remedies under statutory law. The timely provision of information was an essential element of the court's order. Because Ronald could not and did not turn back time when he produced the required information too late to be acted on, his contempt was and is continuing within the legislative directive of Wis. Stat. § 767.27(2m). This continuing contempt in relation to Wis. Stat. § 767.27(2m) gave the circuit court authority to fashion an alternative purge condition of $100,000 to allow Ronald to purge himself of his continuing contempt" (¶ 4).
The court also concluded that a stipulation between the parties that capped child support for a period of four years was unenforceable because it was not in the best interests of the children and therefore was contrary to public policy (see ¶ 81).
Justice Butler filed a concurring opinion that was joined by Justice Bradley. Chief Justice Abrahamson filed a dissenting opinion.
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Reducing Clauses - UIM
Marotz v. Hallman, 2007 WI 89 (filed 10 July 2007)
Marotz, a passenger, was injured in a car accident because of the negligence of the two drivers involved. The driver of Marotz's car carried a liability policy with limits of just $25,000 while the other driver had limits of $250,000. Marotz's family's policy provided underinsured motorist (UIM) coverage of $100,000 per person. Marotz received the $25,000 limit from the one insurer and settled with the other for $90,000. At issue was the UIM coverage, which was subject to a reducing clause. The circuit court rejected Marotz's contention that the reducing clause reached only the $25,000 from the "UIM tortfeasor," not the $90,000 from the "non-UIM tortfeasor." The court of appeals affirmed the circuit court.
The supreme court, in a majority decision authored by Justice Wilcox, affirmed the court of appeals. The first issue was whether "Wis. Stat. § 632.32(5)(i)1. permit[s] an insurer to reduce the UIM limit by the amount paid by a non-UIM tortfeasor" (¶ 14). The court initially took up the issue of statutory ambiguity. "In this case, the question is whether § 632.32(5)(i)1. becomes ambiguous in the context of an accident involving an underinsured motorist (i.e., Hallman), an insured motorist (i.e., Hilgemann), and an injured party with UIM coverage (i.e., Marotz)" (¶ 21). The majority agreed with the UIM insurer that the context did not render the statute ambiguous (see ¶ 22).
"Our examination of the language of the statute, and the context in which it appears, leads us to conclude that § 632.32(5)(i)1. does not prohibit an insurer from reducing the limit of UIM liability by an amount paid to an insured by a non-UIM tortfeasor, as long as the payment otherwise falls within the scope of the subsection" (¶ 25). Prior case law had not resolved this issue. "By taking our previous discussions out of context and failing to appreciate we were quoting a treatise, one may conclude that this court has already decided that the limit of UIM liability may be reduced only by payments from an UIM tortfeasor. That would be a mistake. This is the first case we have addressed whether § 632.32(5)(i)1. allows an insurer to reduce the limit of UIM liability by payments made to the insured by a non-UIM tortfeasor" (¶ 31).
Second, the court held that "[t]he reducing clause unambiguously complies with § 632.32(5)(i). Based on the common, ordinary language, a reasonable person in the insured's position would understand the clause to have the effect of reducing the UIM liability limit by payments made by or on behalf of those legally responsible for the accident at issue, regardless of their UIM status" (¶ 37).
Finally, the reducing clause was held to pass scrutiny under the Folkman [v. Quamme, 2003 WI 116] analysis, which assesses the clause in the context of the entire policy. "Considering context, Rural's policy `clearly sets forth that the insured is purchasing a fixed level of UIM recovery that will be arrived at by combining payments made from all sources.' … In this case, the combination of the notification in the declarations and the reducing clause that complies with § 632.32(5)(i)1. create the requisite clarity for the reducing clause to be deemed enforceable. Accordingly, we hold that the reducing clause in the policy issued by Rural unambiguously complies with § 632.32(5)(i)1." (¶ 45).
Justice Bradley, joined by Chief Justice Abrahamson and Justice Butler, dissented. The majority opinion, they contended, "renders statutory language superfluous" and "conflicts with this court's prior interpretation of the statute" (¶ 47).
Reducing Clauses - UIM
State Farm v. Bailey, 2007 WI 90 (filed 10 July 2007)
Bailey was injured in a car accident. The driver of the car in which he was riding carried liability insurance of $25,000 while the other driver's liability limits were $250,000 per person. Bailey had underinsured motorist (UIM) coverage of $50,000. The (same) insurer paid the full $25,000 on the one policy (covering the UIM vehicle) and $37,500 on the other.
In a majority opinion authored by Justice Wilcox, the supreme court reversed in part and affirmed in part the court of appeals. The issues presented and the respective holding are the same as in Marotz v. Hallman, 2007 WI 89 (digested immediately above). Thus, the reducing clause was held not to contravene Wis. Stat. section 632.32(5). Nor was the reducing clause fatally ambiguous. "The reducing clause unambiguously complies with § 632.32(5)(i)1. Based on the common, ordinary language, a reasonable person in the insured's position would understand the clause to have the effect of reducing the UIM liability limit by payments made to an insured by or on behalf of those legally responsible for the accident at issue, regardless of their UIM status" (¶ 26).
Nor was the clause ambiguous in context. "Read in isolation, one may conclude that the language stating the payments that State Farm would make indicates that the UIM coverage relates to payments made from a UIM tortfeasor. However, the point of contextual ambiguity is not to read provisions in isolation…. On the declarations page itself, the policy indicates that there are `EXCEPTIONS AND ENDORSEMENTS' to the various types of coverage provided. In the list of those exceptions and endorsements appears the endorsement related to UIM coverage. At the top of the endorsement, it states, `This endorsement is a part of your policy. Except for the changes it makes, all other terms of the policy remain the same and apply to this endorsement.' A reasonable person in the position of the insured would understand that the reducing clause, amended by the endorsement, would affect the benefits he or she may receive from the UIM coverage" (¶ 31).
Justice Bradley dissented, joined by Chief Justice Abrahamson and Justice Butler, for the reasons set forth in their Marotz dissent (see above).
Hit-and-Run - UM Coverage
DeHart v. Wisconsin Mutual Ins. Co., 2007 WI 91 (filed 10 July 2007)
Wendy was following her two friends in a three-car caravan. Wendy's car was in third (last) position. An unidentified driver coming from the opposite direction swerved into the lane occupied by Wendy's and her two friends' cars. The unidentified vehicle may have struck the first car, shearing off the driver's side mirror, although the facts are disputed. It was not disputed that the second car was forced to pull over and stop. Wendy, however, lost control of her car and crashed as the unidentified vehicle approached her. There is no evidence that the vehicle struck ("hit") Wendy's car. Wendy filed this action seeking uninsured motorist (UM) coverage under her own policy. The circuit court granted summary judgment in favor of the insurer, but the court of appeals reversed, relying on the hit-and-run statute.
The supreme court, in a majority opinion authored by Justice Roggensack, reversed the court of appeals. The opinion features an extensive discussion of the statute's history and pertinent case law construing the "physical contact" element of the statute. "Based on our review of Wisconsin case law, we conclude that for an accident to meet the physical contact element of a `hit-and-run' under Wis. Stat. § 632.32(4)(a)2.b., there must be both (1) a `hit' by the unidentified vehicle, or part thereof, and (2) a `hit' to the insured by another vehicle or part thereof, but not necessarily by the unidentified vehicle. There is no precedent for coverage under § 632.32(4)(a)2.b. without both a `hit' by an unidentified vehicle, or part thereof, and a `hit' to the insured vehicle" (¶ 31). "Wendy's vehicle was not involved in a hit-and-run accident, but rather a type of miss-and-run accident, which we have established does not mandate coverage under Wis. Stat. § 632.32(4)(a)2.b. … We recognize that in this case we are assuming that the unidentified vehicle made physical contact with another vehicle, and therefore, the unidentified vehicle did not `miss' hitting another vehicle altogether. However, like the insureds' vehicles in the miss-and-run cases, Wendy's vehicle was forced off the road by the unidentified vehicle, but was not `hit' by the unidentified vehicle, any part thereof, or another vehicle. Therefore, like [two cited cases], the physical contact element of a `hit-and-run accident' under § 632.32(4)(a)2.b. is not met and UM coverage is not mandated" (¶ 35). Public policy, especially concerns about fraudulent claims in other contexts, supported this construction.
Chief Justice Abrahamson, joined by Justices Bradley and Butler, dissented. The majority's opinion, they contended, rested on faulty statutory construction and misconceived public policy.
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Fire and Police Commission - First-class Cities - Commission Authority to Promulgate Rules for Administration of Disciplinary Proceedings
State ex rel. Castaneda v. Welch, 2007 WI 103 (filed 17 July 2007)
This case concerns Wis. Stat. section 62.50(19), which authorizes an aggrieved person to file a complaint against a member of the police or fire department of a first-class city (that is, a city with a population of 150,000 or more) alleging conduct sufficient to warrant removal of a member of the police or fire department. To administer the complaint process under this statute the Milwaukee Fire and Police Commission Board (FPC) has promulgated a series of procedures in what is known as Rule XVII.
An overarching issue on appeal was whether the FPC has authority to promulgate a rule concerning the administration of citizen complaints against police officers and firefighters. In a unanimous decision authored by Justice Prosser, the supreme court concluded that "the plain language of Wis. Stat. § 62.50(3)(a) gives the Board express authority to promulgate rules concerning the administration of citizen complaints under Wis. Stat. § 62.50(19) insofar as those complaints affect member discipline. The language of the enabling statute - `[t]he board may prescribe rules for the government of the members of each department' - is plain and unambiguous" (¶ 34). The court also concluded that "even without this express authority, the Board would have implied authority to promulgate rules concerning citizen complaints in Wis. Stat. § 62.50(19). As we stated in Kasik [v. Janssen, 158 Wis. 606, 149 N.W. 398 (1914)], a public officer `has by implication such additional powers as are necessary for the due and efficient exercise of powers expressly granted or such as may be fairly implied from the statute granting express powers.' Kasik, 158 Wis. at 610. Likewise, the [FPC] has implied authority to promulgate rules to carry out its express powers under Wis. Stat. § 62.50(19)" (¶ 38).
However, even though the FPC has authority to promulgate a rule for the administration of the section 62.50(19) grievance process, the court concluded that the FPC exceeded its authority in adopting Rule XVII because at least four provisions thereof contravene the language of the statute or the legislative intent underlying it (see ¶ 5). Among other things these provisions deal with 1) the requirement that citizen complainants cite a specific department rule or standard operating procedure that the officer or firefighter allegedly violated, 2) unduly restrictive limitations with regard to which persons may file complaints, 3) the requirement that the complainant state the name, badge number, or other identification of the accused officer, and 4) the FPC's asserted authority to dismiss a complaint without a finding of legal insufficiency (as required by statute) and to refer such complaint to the police or fire chief for investigation and disposition.
Because of these legal frailties, the court declared Rule XVII invalid "in its entirety" (¶ 82). (In its opinion the court also commented on various other provisions of Rule XVII that, it believes, "frustrate the purpose of the statute" (¶ 48), for example, a provision authorizing the FPC to compel a complainant to participate in a conciliation procedure (see ¶ 75).
Justice Roggensack did not participate in this decision.
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Eminent Domain - "Comparable Replacement Property"
City of Janesville v. CC Midwest Inc., 2007 WI 93 (filed 11 July 2007)
The circuit court granted the city of Janesville a writ of assistance to remove defendant CC Midwest Inc. from property that the city had previously acquired by exercising its power of eminent domain. The circuit court concluded that there were no issues of material fact and that the city had met its statutory obligation to make available to CC Midwest, which operates a "less than truck-load business" where customers sent and received freight in quantities less than a full semi-trailer load, a comparable replacement property/business as required by Wis. Stat. sections 32.05(8)(b)-(c) and 32.19(2)(c). The circuit court also concluded that granting the city a writ of assistance did not deprive CC Midwest of any constitutional rights. In a published decision, the court of appeals reversed. See 2006 WI App 21. In a decision that split the supreme court and generated five separate opinions, the supreme court reversed the court of appeals. Justice Roggensack authored the opinion that garnered majority support in part but only a plurality (as explained below) as to the remainder.
Section 32.05(8)(b)-(c) addresses writs of assistance sought subsequent to eminent domain proceedings. There are three conditions precedent to the issuance of a writ of assistance: 1) compliance with all jurisdictional requirements, 2) payment or tender of the relocation assistance award, and 3) making available comparable replacement property to the occupants (see ¶ 23). With regard to the last of these conditions, which was at the heart of this appeal, a majority of the court concluded that "in satisfying its statutory obligation to make available a comparable replacement property pursuant to Wis. Stat. § 32.05(8)(b)-(c), prior to being entitled to a writ of assistance, the City must proceed to identify one or more properties that meet the parameters of Wis. Stat. § 32.19(2)(c) to serve as a comparable replacement business" (¶ 49).
Section 32.19(2)(c) provides that a "comparable replacement business" means "a replacement business which, when compared with the business premises being acquired by the condemnor, is adequate for the needs of the business, is reasonably similar in all major characteristics, is functionally equivalent with respect to condition, state of repair, land area, building square footage required, access to transportation, utilities and public service, is available on the market, meets all applicable federal, state or local codes required of the particular business being conducted, is within reasonable proximity of the business acquired and is suited for the same type of business conducted by the acquired business at the time of acquisition."
The majority concluded that this language shows that "relocation assistance provided under Wis. Stat. § 32.19(2)(c) does not require identification of a property that is identical to the property condemned or that, at the moment of identification, the property, without modification, can be used by the business that was relocated. Rather, it requires identification of a property that with modification can be used for the occupier's business. For example, the land area of a property identified may be sufficient, but the building may have been used for another purpose and may need remodeling in order for the business to carry on its activities as it has in the past" (¶ 40) (citation omitted). The majority further concluded that the city had identified a property meeting the standard of section 32.19(2)(c) even though it will require some modification.
A plurality of the court (Justices Roggensack, Wilcox, and Crooks) also reached the constitutional question of whether the statutory benefits involving relocation assistance are required in order to satisfy the federal and state constitutional mandates for just compensation to those whose property has been taken for a public use. The plurality concluded that "the relocation assistance benefits provided by Wis. Stat. § 32.19(3) and (4m) do not have a direct relationship to the fair market value of a tenant's interest, and therefore, are incidental or consequential damages that are not considered in the constitutional requirement for just compensation" (¶ 21).
Justice Wilcox filed a concurring opinion as did Justice Bradley, who was joined by the Chief Justice. Justices Prosser and Butler filed separate dissenting opinions.
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Statutes of Limitation
Clergy Sexual Abuse of Minors - Negligent Supervision - Fraud
John Doe 1 v. Archdiocese of Milwaukee, 2007 WI 95 (filed 11 July 2007)
The plaintiffs claimed that, when they were minors, they were sexually abused by Catholic priests. The incidents allegedly occurred in 1982 or earlier. The complaints asserted claims that 1) the Archdiocese negligently supervised the priests because it knew or reasonably should have known of their dangerous propensities for child sexual exploitation and failed to provide reasonable supervision of them, and 2) the Archdiocese committed fraud because it knew of the priests' history of molesting children and knew they were a danger to the children but, notwithstanding that knowledge, a) affirmatively represented that it did not know of their history and danger and b) failed to disclose its knowledge of their history. The plaintiffs contended that they did not discover until recently, nor in the exercise of reasonable diligence should they have discovered, that the Archdiocese negligently supervised the priests and committed the fraud as described above.
The Archdiocese moved to dismiss the complaints asserting, among other things, that the claims were barred by the applicable statute of limitation. The circuit court agreed and dismissed the complaints. In an unpublished decision the court of appeals affirmed. In a majority decision authored by Justice Roggensack, the supreme court affirmed in part and reversed in part.
With respect to the claims of negligent supervision, "unless the claims ... accrued within three years of when the complaints were filed in 2005, they are barred" (¶ 18). The court concluded that "according to controlling precedent such claims are derivative and accrued as a matter of law by the time of the last incident of sexual assault" (¶ 64). ("A derivative claim is one `that derives from, grows out of, or results from an earlier or fundamental state or condition.' .... Accordingly, a claim against an employer for negligent supervision of an employee is derivative of an employee's wrongful act that causes injury to another, which wrongful act is alleged to have been caused by the employer's negligence" (¶ 24 n.11) (citations omitted).) "As all claims for negligent supervision accrued at least 23 years before the complaints were filed, the tolling periods due to the plaintiffs' minorities are of insufficient length to save them. Furthermore, even though the plaintiffs contend that their injuries and the cause thereof were not discovered until recently due to psychological coping mechanisms, the statute of limitations is not tolled based on claims of repressed memories" (¶ 36).
With regard to the claims of fraud, the applicable statute of limitation is six years (see ¶ 37). Thus, unless the claims for fraud accrued within six years of when the complaints were filed in 2005, the claims are barred (id.). The court concluded that "the claims of fraud for intentional misrepresentation are independent claims based on the Archdiocese's alleged knowledge of the priests' prior sexual molestation of children and the Archdiocese's intent to deceive children and their families. We further conclude that the date of the accrual of the fraud claims is `when the plaintiffs discovered or, in the exercise of reasonable diligence, should have discovered' that the Archdiocese's alleged fraud was a cause of their injuries. This determination cannot be resolved by a motion to dismiss the complaints. Therefore, we ... reverse the dismissal of the fraud claims; and we remand for further proceedings" (¶ 64) (citations omitted). (The court also noted that "[b]ecause we have concluded that the plaintiffs' allegations of affirmative fraudulent misrepresentations are sufficient, we do not address the sufficiency of the plaintiffs' fraudulent misrepresentation claims based on failures to disclose [the priests'] histories of sexually molesting children that were known to the Archdiocese prior to the sexual abuse of the plaintiffs" (¶ 49).)
Chief Justice Abrahamson, joined by Justice Bradley, concurred in part and dissented in part. Said the Chief Justice, "I concur in the parts of the majority opinion that reverse the decision regarding the plaintiffs' causes of action grounded in fraud and I dissent from the parts of the majority opinion that affirm the decision dismissing the negligent supervision claims. I would remand the cause to the circuit court for further proceedings on all of the plaintiffs' claims"(¶ 118).
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Property Tax - Exemption for Property Owned by County - Exemption for Educational Associations
Milwaukee Regional Medical Ctr. Inc. v. City of Wauwatosa, 2007 WI 101 (filed 17 July 2007)
The Milwaukee Regional Medical Center Inc. (MRMC) is a voluntary consortium of governmental and private nonprofit institutions, including two hospitals, a medical college, and a blood center. It is organized under Wis. Stat. chapter 181 as a nonprofit, nonstock Wisconsin corporation. MRMC leased land from Milwaukee County for the specific purpose of building a day care facility for the children of employees and students of MRMC's members and affiliates as well as the general public. The facility, which is on property located in the city of Wauwatosa, offers a program with educational components to children of varying ages. This case deals with the question of whether the leased land and day care facility are exempt from property taxes. MRMC paid property taxes and then filed a claim against the city to recover the taxes paid.
MRMC contended that the property is tax-exempt under Wis. Stat. section 70.11(2) or (4). Section 70.11(2) exempts from property tax property owned by municipalities. Section 70.11(4) exempts property that is used by an educational association for educational purposes. The circuit court concluded that the property is tax-exempt under section 70.11(2) because it is owned by the county. The court also made a nondispositive determination that the property is not tax-exempt under section 70.11(4). In a published decision the court of appeals reversed. See 2006 WI App 139. In a majority decision authored by Justice Prosser, the supreme court affirmed the court of appeals.
The supreme court concluded that "MRMC, not the County, is the beneficial owner of the property at the present time so that the property is not tax-exempt under Wis. Stat. § 70.11(2)..." (¶ 5). Though Milwaukee County retains legal title to the property, "retaining legal title to the land does not guarantee that the County or an equivalent municipality will remain the `owner' of property for tax exemption purposes, because `taxation or exemption depends not upon the legal title but on the status of the owner of the beneficial interest in the property.' Thus, the word `owned' in Wis. Stat. § 70.11(2) means `beneficial ownership, not mere technical title'" (¶ 33) (citations omitted).
To determine whether MRMC or Milwaukee County is the beneficial owner, the court examined the totality of the facts and circumstances surrounding the case. It analyzed each party's rights and benefits that are usually associated with ownership and weighed the county's indicia of ownership against MRMC's (see ¶ 35). After identifying 14 indicia of county ownership and 15 indicia of MRMC ownership (see ¶¶ 55-56), the court concluded that MRMC - not Milwaukee County - is the beneficial owner of the property at the present time and that it is accordingly not exempt from taxation under section 70.11(2).
In reaching this conclusion the court emphasized that 1) MRMC's lease of the property is for 50 years, 2) MRMC is entitled to exercise exclusive occupancy of the property for a half century, 3) legal title to the day care facility is presently vested in MRMC, 4) MRMC receives the primary financial benefit from the property at the present time (paying token rent in the amount of $1.00 per year to Milwaukee County for the first 30 years of the lease), and 5) Milwaukee County is not involved in the daily operation of the facility (see ¶¶ 57-62). (The court noted that, after the first 30 years of the lease, MRMC will have to pay fair market value rent to the county and this "may" alter the property tax status of the property (see ¶ 66).)
With regard to a property tax exemption under section 70.11(4) for educational associations, MRMC must among other things be a nonprofit organization substantially and primarily devoted to educational purposes (see ¶ 70). Because MRMC is the taxable entity, the court looked at the entirety of MRMC's activities - not just its activities at the day care facility - to determine whether it qualifies for a tax exemption. It found that the education of young children is incidental to MRMC's primary goal, which, as stated in its bylaws, is "aid[ing] and support[ing] the development and provision of health services in the Milwaukee region" and "facilitate[ing] the efficient development and functioning of the Medical Center campus" (¶ 75). Accordingly, the court concluded that "MRMC is not primarily devoted to educational purposes. Therefore, MRMC is not an educational association under Wis. Stat. § 70.11(4), and the property is not exempt from property tax"(¶ 77).
Justice Butler filed an opinion concurring in part and dissenting in part that was joined by Chief Justice Abrahamson.
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Wrongful Death - Medical Negligence - Eligible Claimants
Lornson v. Siddiqui, 2007 WI 92 (filed 10 July 2007)
Joseph Sanders filed a wrongful death claim against the defendants for medical negligence in the death of his wife, Janice. He died before his case could go to trial. His adult daughters, plaintiffs Lornson and Hoertsch, were appointed personal representatives for their father's estate, and, in that capacity, they pursued his wrongful death claim. At the same time, in the alternative, they made their own individual claims for the wrongful death of their mother, citing Wis. Stat. section 895.04(2). As administrators of their mother's estate, the plaintiffs also sought compensatory damages on behalf of the estate.
The defendants joined in a motion to dismiss the wrongful death claim asserted on behalf of Joseph Sanders' estate, and in the alternative, on behalf of plaintiffs Lornson and Hoertsch individually. The defendants asserted Lornson and Hoertsch lacked standing to bring a wrongful death claim in their capacities as personal representatives of their father's estate or as individuals. The defendants argued that the wrongful death claim did not survive the death of Joseph Sanders and that Lornson and Hoertsch, in their individual capacities, were not eligible to make a medical malpractice wrongful death claim under Wis. Stat. section 655.007. The defendants conceded that the survival claim by the special administrators on behalf of Janice Sanders' estate was unaffected by Joseph Sanders' death. The circuit court granted the defense motions to dismiss and the court of appeals certified the plaintiffs' appeal to the supreme court, which granted certification. In a majority decision authored by Justice Prosser, the supreme court affirmed.
The supreme court held that "in wrongful death actions, an eligible claimant's cause of action does not survive the death of the claimant. Thus, Joseph Sanders' wrongful death claim does not survive. In a non-medical malpractice wrongful death case, under Wis. Stat. § 895.04(2) [the general wrongful death statute], a new cause of action is available to the next claimant in the statutory hierarchy. In a medical malpractice wrongful death case, eligible claimants under Wis. Stat. § 655.007 [part of the chapter establishing exclusive procedures for malpractice claims against health care providers] are not subject to a statutory hierarchy like claimants under Wis. Stat. § 895.04(2). However, in a medical malpractice wrongful death case, adult children of the deceased (like [plaintiffs] Lornson and Hoertsch) are not listed as eligible claimants and are therefore not eligible because of the exclusivity of Wis. Stat. § 655.007.... We therefore affirm the decision of the circuit court that Lornson's claim in her capacity as personal representative of Joseph Sanders' estate should be dismissed with prejudice, and that Lornson's alternative claim in her capacity as adult child of Janice Sanders should also be dismissed with prejudice" (¶ 75).
The court also held that "our interpretation of Wis. Stat. § 655.007 in conjunction with Wis. Stat. §§ 895.01(1)(o) and 895.04(2) does not deprive Joseph Sanders or his estate of a vested property right without due process or violate equal protection of the law" (¶ 5).
Justice Crooks filed a concurrence/dissent that was joined by Chief Justice Abrahamson and Justice Bradley.
Damages - Collateral Source Rule
Leitinger v. DBart Inc., 2007 WI 84 (filed 3 July 2007)
The plaintiff was seriously injured and incurred more than $150,000 in medical bills. The insurer and the health care providers negotiated a payment of $110,000. Thus, the difference between the amount paid and the amount billed was roughly $40,000. At trial the judge permitted the defendant tortfeasor to offer evidence of the difference on the theory that it was relevant to the actual, reasonable medical expenses incurred by the plaintiff. (The judge's ruling sparked a stipulation for trial purposes that still preserved the issue for appeal.) The court of appeals reversed based on the collateral source rule.
In a majority opinion authored by Chief Justice Abrahamson, the supreme court affirmed the court of appeals. "We hold, as did the court of appeals, that the collateral source rule prohibits parties in a personal injury action from introducing evidence of the amount actually paid by the injured person's health insurance company, a collateral source, for medical treatment rendered to prove the reasonable value of the medical treatment" (¶ 7). "The proper measure of damages for medical treatment rendered in a personal injury action is the reasonable value of the medical treatment reasonably required by the injury. The court has explained that `while the actual amount paid for medical services may reflect the reasonable value of the treatment rendered, the focus is on the reasonable value, not the actual charge'" (¶ 23).
"The collateral source rule is a well-established rule of law in Wisconsin … [which] states that benefits an injured person receives from sources that have nothing to do with the tortfeasor may not be used to reduce the tortfeasor's liability to the injured person. In other words, the tortfeasor is not given credit for payments or benefits conferred upon the injured person by any person other than the tortfeasor or someone identified with the tortfeasor (such as the tortfeasor's insurance company). Thus under the collateral source rule, as the phrase implies, a payment by one who is not a tortfeasor (that is, a payment collateral to the tortfeasor) is treated differently from a payment by the tortfeasor" (¶ 26). Although an injured person may receive a "double recovery," the rule's purpose is not to foster such "windfalls" but rather to "prevent the tortfeasor for excepting liability because a collateral source has compensated the injured person" (¶ 34).
The court also explicated two of its recent decisions on the collateral source rule, which "leave no doubt that the tortfeasor is not to benefit from the fact that the medical services provider was paid less by a collateral source than the amount billed. If evidence of the collateral source payments were admissible, even for consideration of the reasonable value of the medical treatment rendered, a plaintiff's recovery of medical expenses would be affected by the amount actually paid by a collateral source for medical services. Such a `limitation' on the plaintiff's damages contravenes the view of the collateral source rule stated in Ellsworth [v. Schelbrock], 2000 WI 63, 235 Wis. 2d 678, 611 N.W.2d 764, and Koffman [v. Leichtfuss], 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 201" (¶ 48). The court closely scrutinized several passages from those cases in light of the insurer's contentions (see ¶¶ 57-62).
Justice Roggensack, joined by Justice Prosser, dissented on the ground that the majority unduly extended the collateral source rule's reach. The dissent's contentions, particularly those concerning the relevancy of such evidence, are trenchantly summarized at paragraph 102.
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