Wisconsin Lawyer
Vol. 81, No. 10, October 2008

Court of Appeals Digest

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

• Administrative Law
• Civil Procedure
• Corporations
• Criminal Law
• Criminal Procedure
• Employment Law
• Insurance
• Real Property

Administrative Law

Cholvin v. Wisconsin Dep't of Health & Family Servs., 2008 WI App 127 (filed 24 July 2008) (ordered published 27 Aug. 2008)

Cholvin, who suffers from multiple sclerosis and other disorders, was ruled ineligible for various home and community-based long-term-care services. Specifically, "COP-W/CIP-II is a Medicaid waiver program under which individuals with disabilities and the elderly, who would otherwise qualify for Medicaid institutional care, are instead permitted to receive services in a home or community setting" (¶ 3). "The services available under COP-W/CIP-II are comprehensive, largely nonmedical support services that are designed to make it possible for disabled or elderly people to continue to live in their home communities despite suffering from disability or long term illness" (¶ 4). Cholvin had been eligible under earlier iterations of the program, but a 2005 "instruction" on program eligibility resulted in a finding that she was no longer eligible. The circuit court upheld the Department of Health and Family Services' (DHFS's) determination that Cholvin was ineligible.

The court of appeals reversed in a decision written by Judge Bridge. In essence, the court held, the instruction was a rule that had not been properly promulgated under Wis. Stat. section 227.10. The case was remanded for a determination of Cholvin's eligibility irrespective of the challenged instruction. The instruction attempted to deal with persons whose care needs changed daily. Under the older procedure, program screeners assessed the level of care based on an applicant's "bad" day. The new instruction in effect required at least 10 "bad" days per month (see ¶ 19). Since the instruction announced a "general policy" and did not address a specific case or applicant, it amounted to a rule. "As Cholvin points out, before a screener can determine whether the instruction does or does not affect an individual, the screener must first apply the instruction to each individual applicant. In other words, § 1.12D applies to all applicants even though it may affect only some of them. We therefore conclude that § 1.12D is a policy of general application" (¶ 25). Despite DHFS's characterizations, nothing suggested that the instruction was "simply advisory" (see ¶ 29). Nor did the instruction fall within an exception for explanatory or informational material (see ¶ 33).

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Civil Procedure

Lister v. Sure-Dry Basement Sys. Inc., 2008 WI App 124 (filed 10 June 2008) (ordered published 27 Aug. 2008)

Lister sued a home-repair contractor for allegedly breaching its warranty and for damages. He failed to appear on an agreed-upon date for a deposition despite counsel's reasonable efforts to notify him. Before the date of Lister's second scheduled deposition, his counsel learned that Lister had been seeking cancer treatment in Mexico. Lister failed to appear at the second deposition. The defendant filed motions to dismiss Lister's complaint but the circuit court gave Lister two weeks to provide medical documentation of his illness. When Lister failed to provide the required reports in a timely manner, the circuit court dismissed the complaint.

The court of appeals affirmed in an opinion authored by Judge Kessler. Dismissal is an appropriate sanction for a party's egregious behavior. The circuit court did not abuse its discretion in dismissing the complaint, particularly because Lister was aware that his failure to provide the medical reports would trigger dismissal in light of his two failures to appear for a deposition.

Hartford Citizens for Responsible Gov't v. City of Hartford Bd. of Zoning Appeals, 2008 WI App 107 (filed 25 June 2008) (ordered published 30 July 2008)

The appellant sought certiorari review in the circuit court of a decision of the local board of zoning appeals. There is a 30-day statutory time limit following the filing of a zoning decision within which to commence a certiorari action in circuit court. See Wis. Stat. § 62.23(7)(e)10. On the 30th day following the filing of the zoning decision at issue, a representative of the appellant arrived at the Washington County clerk of courts office just after the 4:30 p.m. closing time, intent on filing the papers necessary to initiate certiorari review. The clerk accepted the papers but did not file them until the following day, because the clerk's office has a policy of filing papers on the day they are received only if receipt occurs during regular business hours. As a result, in the present case the papers seeking certiorari review were not filed by the clerk until the 31st day after the zoning decision was filed. The circuit court subsequently dismissed the action as untimely filed.

In a decision authored by Judge Neubauer, the court of appeals affirmed. It concluded that the clerk of courts properly exercised her discretion in enforcing the filing policy described above (see ¶ 2). Said the court, "In his or her discretion, the clerk may adopt a policy that is flexible or one that restricts filings to regular business hours. The reasonableness of the Washington County Clerk of Circuit Court's policy of confining filings to regular business hours is supported by the similar policy of our supreme court and the rationale behind that policy. See St. John's [Home v. Continental Casualty Co.], 150 Wis. 2d at 44 (concluding that a bright-line rule requiring filing during usual business hours would alleviate unpredictability and potential for abuse)" (¶ 22).

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Corporations

Ehlinger v. Hauser, 2008 WI App 123 (filed 24 July 2008) (ordered published 27 Aug. 2008)

Hauser and Ehlinger were equal shareholders in Evald Moulding Co. (Evald). Ehlinger later contracted Parkinson's disease, and a dispute over the disability buyout provisions of the parties' buy-sell agreement ensued. The circuit court ruled that the shareholders were deadlocked and ordered Evald's dissolution under Wis. Stat. section 180.1430. Nonetheless, the court held the dissolution in abeyance and later determined that the disability buyout provisions were unenforceable. The court also ruled that Hauser could use corporate assets to pay the costs of litigating this matter. Hauser and Evald appealed only the circuit court's ruling that the disability buyout provision was unenforceable.

The court of appeals, in an opinion written by Judge Bridge, affirmed. First, the circuit court properly found that Ehlinger was totally disabled by his illness (see ¶ 25). Second, the agreement was unenforceable because the corporation's "book value" could not be reliably determined. Specifically, "missing documentation" made it impossible to calculate this value. In summary, the court of appeals held "that the term `book value' as used in the Agreement is not indefinite but is ambiguous, and that the most reasonable construction of that term is that it refers to a computation using generally accepted accounting principles. We conclude further that the absence of information necessary to complete the GAAP analysis rendered the disability buyout provisions unenforceable because Evald's book value as of March 31, 2001, could not be determined" (¶ 43). In attempting to arrive at such a calculation, the circuit court properly appointed a certified public accountant to serve as a special magistrate. Although the circuit court permitted limited questioning of the special magistrate, this did not render him an "expert witness" who was subject to more far-reaching questioning (see ¶ 42).

Finally, Evald properly used corporate assets to defend against Ehlinger's claims. This was more than a dispute between shareholders, especially the attacks against Hauser's preparation of the "corporate books and financial statements" (¶ 47), and Evald was more than a "nominal party"; thus, corporate assets were properly spent on attorney fees and costs pursuant to section 180.0851.

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Criminal Law

State v. Dewitt, 2008 WI App 134 (filed 29 July 2008) (ordered published 27 Aug. 2008)

The defendant was charged in three distinct cases. The court imposed a $500 signature bond in the misdemeanor case and $500 cash bonds in each of the two felony cases. In the misdemeanor case and in one of the felony cases, the court included as a condition of release that the defendant have no contact with a named victim. The defendant signed the signature bond but was held in custody on the cash bonds. While still in custody he allegedly called the victim nine times. As a result, he was charged with nine counts of bail jumping for violating the no-contact provision of the signature bond in the misdemeanor case.

The defendant ultimately pleaded guilty to three of the bail-jumping counts. He thereafter sought to withdraw these pleas, contending that the bail-jumping convictions were invalid because he was still a prisoner in jail when he violated the no-contact order. His claim was anchored in the language of the bail-jumping statute, which provides that it is a bail jump to intentionally fail to comply with the terms of one's bond after the defendant "[has] been released from custody under ch. 969." See Wis. Stat. § 946.49(1) (emphasis added). The state responded that the defendant had technically been released on the signature bond at the time the calls to the victim were made. The circuit court denied the postconviction motion.

In a decision authored by Judge Hoover, the court of appeals affirmed the circuit court. It concluded that the term "released" in the statute quoted above "refers to the defendant posting the bond, be it signature or cash, and need not be accompanied by the defendant's physical departure from the jailhouse" (¶ 14). In this case the defendant had three bonds. "He was able to make bond on the misdemeanor simply by signing it, and he therefore committed himself to its conditions. [The defendant] was not obligated to sign the bond, especially if he knew he would not be posting cash bond. Thus, while not physically released, [the defendant] was released as contemplated by Wis. Stat. § 969.02 when he fulfilled the signature bond" (¶ 17). He was accordingly liable for bail jumping when he violated the no-contact provision of his signature bond even though he was still in physical custody at the time (because he was unable to post the cash bonds in his other cases).

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Criminal Procedure

State v. King, 2008 WI App 129 (filed 22 July 2008) (ordered published 27 Aug. 2008)

The defendant, King, was convicted by a jury of multiple drug offenses. On appeal he argued that the trial court erred in denying his motion to suppress physical evidence seized during the execution of what he contends was an invalid anticipatory search warrant. In a majority decision authored by Judge Curley, the court of appeals agreed with the defendant and reversed the conviction.

A Milwaukee Police Department detective applied for a warrant related to "certain premises located at 8811, 8813, 8815 West Mitchell, West Allis, Wisconsin, more particularly described as a three-unit townhouse." The warrant stated: "This authorization is contingent upon law enforcement officers identifying the precise unit, 8811, 8813 or 8815, in which Michael King resides. No search of any unit is authorized absent such a verification, and the authorization extends only to that unit in which Michael King resides" (¶ 2). The search warrant was executed at the unit with the 8813 address, and evidence recovered there formed the basis for the defendant's prosecution.

In State v. Meyer, 216 Wis. 2d 729, 576 N.W.2d 260 (1998), the Wisconsin Supreme Court described anticipatory search warrants as being "peculiar to property in transit." Said the court in that case, "[Such warrants] are based upon an affidavit showing probable cause that at some future time (but not presently) certain evidence of crime will be located at a specified place" (¶ 17) (citations omitted). Meyer and the few other published decisions of Wisconsin's appellate courts dealing with anticipatory search warrants each involved property in transit to a known residence or person (or a somewhat analogous situation). Here, the court of appeals "refrain[ed] from extending the use of anticipatory search warrants to encompass situations such as this, where execution is conditioned on verification of an individual's address" (¶ 24).

The court said that even were it willing to conclude that an anticipatory search warrant could be used as it was in this case, the court would nonetheless "find the warrant invalid for its lack of particularity" (¶ 25). The particularity requirement of the Fourth Amendment, which insists that warrants "particularly" describe the place to be searched and the persons or things to be seized, is necessary "to direct the officer to the exact place to be searched and to guard against abuses that prevailed under the old writs of assistance which left the place to be searched to the discretion of the searching officer" (id.) (citations omitted). The appellate court "agree[d] with [defendant] King that the search warrant afforded law enforcement the sole discretion to search any one of the three addresses specified in violation of the particularity requirement. There were no safeguards in the warrant as to how the police were going to determine the address" (¶ 27). "Were we to conclude that this language was sufficiently particular, we would encourage a crop of search warrants containing alternate addresses, leaving law enforcement free to pick the residence they want to search. On the basis of this record, it would appear sheer luck allowed law enforcement to choose to search 8813 West Mitchell Street. Wisconsin's constitution and the federal constitution require more than luck. We cannot conclude that the language in the search warrant referencing three separate residences complied with [the] Fourth Amendment and article I, section 11 of Wisconsin's constitution" (¶ 31).

In a footnote the court observed that "[t]he State does not argue that the good faith exception to the rule excluding evidence obtained in violation of article I, section 11 of Wisconsin's constitution and the Fourth Amendment is applicable here" (¶ 32 n.8). Accordingly the court did not address the good faith exception.

Judge Fine filed a dissenting opinion in which he contended that the majority failed to accord proper deference to the decision of the warrant-issuing magistrate and ignored "the common-sense standard we must apply in assessing on appeal a warrant's validity" (¶ 33).

State v. Jackson, 2008 WI App 109 (filed 10 June 2008) (ordered published 30 July 2008)

The defendant, Jackson, appealed from a judgment of conviction and sentence that followed his guilty plea after the circuit court denied his motion to suppress certain evidence obtained pursuant to a search warrant. Jackson asserted that the warrant was invalid. In a majority decision authored by Judge Kessler, the court of appeals reversed the circuit court, concluding that "the warrant failed to establish the particularity required for the search of one unit in a multifamily residence, and failed to establish probable cause for the search of the building as a whole or either unit therein" (¶ 1).

A judicial court commissioner issued a search warrant for "certain premises occupied by Adrian Jermaine Jackson," described as: "Address of 4124 N. 21st Street is a two-story duplex residence." The physical description of the exterior of the building was repeated verbatim from the affidavit presented in support of the warrant. There was no description of any portion of the interior of the residence. The warrant identified the crime for which evidence was sought as possession of a firearm by convicted felon in violation of Wis. Stat. section 941.29. The affidavit in support of the warrant included a representation that a "reliable confidential informant ... within the past eight days, went to 4124 N. 21st Street and observed Adrian Jackson in possession of two-semi [sic] automatic pistols at the residence of 4124 N. 21st Street in the City and County of Milwaukee" (¶ 3). The affiant further represented that county jail booking records from eight months earlier listed the same address for Adrian J. Jackson (see id.). However, the affidavit "provides the issuing magistrate with no factual information (e.g. utility billing, property tax records, driver's license, vehicle registration at the address, or reports from neighbors or police surveillance) which tends to indicate what, if any, portion of the duplex Jackson lives in or controls" (¶ 4).

The particularity requirements of the federal and state constitutions mean that a search warrant must sufficiently describe the place to be searched so that the officer can with reasonable effort ascertain and identify the place intended (see ¶ 8). "If the location to be searched is not described with sufficient particularity to inform officers which unit in a multi-unit building they are to search, the particularity required by the Fourth Amendment has not been satisfied" (¶ 9) (citation omitted). The search warrant in this case refers to the target premises as a "two-story duplex residence." A duplex is defined in a recognized dictionary as being, among other things, "a two-family house" (see ¶ 13) (citation omitted).

In this case the affidavit in support of the warrant reported that an informant observed the defendant in possession of the pistols "at" the residence. "The Affidavit does not report that anyone - informant, officer, or neighbor - has ever seen guns in any particular part of the building. The Affidavit does not report anyone saying they have seen Jackson (with or without guns) in any particular unit of the building. Neither the Affidavit nor the warrant identify which portion of the two-family residence is to be searched. The unit of the duplex `occupied by Adrian Jermaine Jackson' is not, in any way, otherwise identified ... The Affidavit reports no investigation by law enforcement beyond looking at a booking record for Jackson from eight months earlier that identifies as his residence the address common to the whole duplex. Not a shred of evidence presented to the magistrate hints at which unit Jackson occupied" (¶¶ 14-15). On these facts the appellate court concluded that the search warrant did not describe with particularity the unit in the duplex to be searched (see ¶ 28).

The court also rejected the state's argument that the affidavit in support of the warrant established probable cause to search the entire building. "To prevail on the State's `whole building' theory of the search warrant, there must be probable cause in the Affidavit to search each unit in the building, or there must be probable cause to search the entire building" (¶ 18). The appellate court concluded that "[f]rom the meager information in the Affidavit here, a magistrate could not reasonably infer that there is probable cause to believe Jackson had control of and/or unrestricted access to both of the two living units in the building searched or that evidence of Jackson's possession of guns was probably going to be found in the upper unit, in the lower unit, in the basement, in the garage, or in the trash can" (¶ 23). In sum the court held that the issuing magistrate was not provided with probable cause to issue a warrant to search either the entire building or a specific unit thereof (see ¶ 28).

Judge Fine filed a dissenting opinion.

State v. Lippold, 2008 WI App 130 (filed 22 July 2008) (ordered published 27 Aug. 2008)

The defendant was charged in Milwaukee County with the crime of receiving stolen property. See Wis. Stat. § 943.34. The case involved numerous respirators that had been stolen from a hospital in Milwaukee County. The investigation led to an Illinois company that claimed to have purchased the missing respirators from the defendant, a vendor of medical devices and equipment. When questioned by police, the defendant claimed that he purchased the respirators from a man named "Steve" at a restaurant in Kenosha County. A jury in Milwaukee County convicted the defendant of seven counts of receiving stolen property.

On appeal the defendant contended that the trial court erred in failing to dismiss the charges against him because the state never established proper venue in Milwaukee County. He argued that no direct evidence was presented during the trial that he received the equipment in Milwaukee County or transported it through the county. He further argued that "when a person is charged with the crime of receiving stolen property, the county where the property was stolen is insufficient to establish venue" (¶ 8).

In a decision authored by Judge Curley the court of appeals affirmed the convictions. The term venue refers to the locality of the prosecution; it sets the particular judicial district in which a criminal charge is to be filed and in which it will be tried (see ¶ 9). "Although venue in Wisconsin must be proven beyond a reasonable doubt, it is not an element of the crime, but rather a matter of procedure, which refers to the place of trial" (¶ 10). Proper venue can be proved either by direct or by circumstantial evidence.

In this case the court concluded that "because the crime of receiving stolen property requires more than two acts, and one of the acts is that the property must be stolen and that act occurred in Milwaukee County, venue was properly established" in Milwaukee County (¶ 16). Moreover, the court held that there was ample circumstantial evidence adduced at trial that the defendant actually possessed the stolen property in Milwaukee County (see ¶ 1). Said the court, "The facts here point to [the defendant] being the thief, as well as the receiver of stolen property" (¶ 28).

State v. Greene, 2008 WI App 100 (filed 12 June 2008) (ordered published 30 July 2008)

The defendant is a prisoner in the custody of the Department of Corrections (DOC). He appealed an order of restitution in which the circuit court directed the DOC to distribute 10 percent of his prison "wages, earnings and accounts" to pay restitution. The defendant argued that the circuit court lacked the authority to direct DOC to access his prison accounts (which apparently included gifted funds from friends and family) to pay restitution. In a decision authored by Judge Higginbotham, the court of appeals affirmed the restitution order.

Section 973.20 of the Wisconsin Statutes governs restitution in criminal cases. Circuit courts are required under section 973.20(13)(a) to consider several factors in determining whether to order restitution and the amount thereof, including a defendant's ability to pay and financial resources (see ¶ 11). The court of appeals concluded that "`financial resources' refers to all financial resources available to the defendant at the time of the restitution order, including gifted funds, except where otherwise provided by law. Because a circuit court may consider all sources of funds held by a defendant in determining the amount of restitution, it follows that a court may also order a defendant to pay restitution out of all funds held or available to a defendant, including gifted funds. We therefore conclude that, under § 973.20, a circuit court has the authority to order a defendant to pay restitution from all of his or her `financial resources,' including gifted funds, available at the time of the restitution order and as funds become available to the defendant at a later time" (¶ 12).

Accordingly, the appellate court held that the circuit court in this case properly ordered the defendant to use money from his prison accounts, which presumably includes gifted funds, to satisfy his restitution obligation (see¶ 21).

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Employment Law

Milwaukee Bd. of Sch. Directors v. Wisconsin Employment Relations Comm'n, 2008 WI App 125 (filed 1 July 2008) (ordered published 27 Aug. 2008)

A teachers' union (MTEA) and the Milwaukee school board were unable to reach a collective bargaining agreement. Teachers wore buttons and posted placards in their classrooms that stated "Attract and Retain." School administrators ordered removal of the signs (not the buttons) on the ground that their posting violated a policy prohibiting political advocacy. The MTEA filed a complaint with WERC, which concluded that the board had not shown sufficient cause to exclude the signs. The circuit court affirmed WERC's ruling.

The court of appeals affirmed in an opinion written by Judge Wedemeyer. "The issue in this case is whether WERC erred in ruling that the Board violated MERA by prohibiting teachers from displaying the union support signs in their classrooms. The trial court affirmed WERC's determination" (¶ 7). The court applied the due weight standard of review, because "WERC has some expertise in deciding these issues, but does not satisfy all the requirements for great weight deference. Likewise, de novo review is not appropriate as the issue is not one of first impression for WERC" (¶ 11). The court of appeals held that WERC's decision was a "thoughtful and well-reasoned analysis" of the issues (¶ 13). The signs were unlikely to "provoke any more questioning or distraction than the teacher's other personal postings, which are specifically permitted by the Board" (¶ 18). Nor would WERC's decision "open the door to more questionable union activities within the classroom" (¶ 19).

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Insurance

Meriter Health Servs. Inc. v. Travelers Cas. & Sur. Co., 2008 WI App 132 (filed 17 July 2008) (ordered published 27 Aug. 2008)

Meriter Health Services (Meriter) sued its insurer, Travelers, after Travelers denied coverage under a "commercial Crime" insurance policy. The claim involved a theft by an employee of nearly $500,000. The embezzled funds were stolen from an account funded by staff physicians for various activities. The circuit court granted summary judgment in favor of Travelers.

The court of appeals affirmed in an opinion written by Judge Bridge. The first issue was whether Meriter "owned" the account. The court held that Meriter did not own the account in the sense of possessing or controlling it. For example, Meriter had no "signatory authority or the ability to withdraw from the account" (¶ 18). For similar reasons, Meriter did not "hold" the account within the meaning of the insurance policy. The court also observed that Meriter had omitted from its application this account as among the property it held for purposes of the policy (see ¶ 22). Finally, Meriter was not "legally liable" for this account within the meaning of the policy. "We begin by observing that the Travelers policy covers Meriter's direct loss of property rather than damages incurred by Meriter to a third party. This is because the policy is an employee dishonesty policy, otherwise referred to as a fidelity policy, rather than a liability policy. The two types of policies insure against different risks. Whereas a liability policy covers the liability of the insured to a third party, a fidelity policy serves to indemnify the insured for the loss of property the insured sustains due to employee dishonesty. Thus, the Travelers policy does not cover Meriter's vicarious liability for damages to a third party" (¶ 26).

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Real Property

Anchor Point Condominium Owner's Ass'n v. Fish Tale Props. LLC, 2008 WI App 133 (filed 3 July 2008) (ordered published 27 Aug. 2008)

Anchor Point (APCA) filed a declaratory judgment action and sought an injunction against Fish Tale Properties to prevent the latter from using APCA's piers and boat slips. APCA and Fish Tale were located on two adjacent lots. APCA's property abutted a lake. Documents conveyed to Fish Tale the right to use APCA's piers, docks, and boat slips. The circuit court granted summary judgment to Fish Tale.

The court of appeals reversed in a decision authored by Judge Dykman. The central issue concerned whether the "use of pier and boat slip space is a riparian right." The court held it was (see ¶ 9). The court rejected multiple arguments by Fish Tale to the effect that "pier use" is not a riparian right. Its status as a riparian right was critical because Wis. Stat. section 30.133(1) bars the transfer of riparian rights. "Fish Tale argues that our interpretation of Wis. Stat. § 30.133(1) means the non-riparian owner with an easement to the water may only cross the land and walk only to the water's edge, but must stop short of placing his or her toes in the water. We disagree. The right to access the water exists over land. Where land reaches navigable water, the land ends at the ordinary high water mark. Once beyond the ordinary high water mark in navigable water, the public can enjoy Wisconsin's waters. See Wis. Const. art. IX, § 1. But this does not include the use of a riparian owner's piers or boat slips. Placing piers and boat slips is a right granted only to riparian owners. See Wis. Stat. ch. 30. The right of riparian owners to install piers necessarily prevents the public's right to use every square inch of Wisconsin's waters; it is often impossible to fish, swim, or sail under a pier or boat slip. Fish Tale's valid easement over APCA's land to access the water allows it to cross the ordinary high water mark to enjoy the publicly owned water, a right distinct from using APCA's piers and boat slips" (¶ 17). Finally, APCA was not barred by equitable estoppel from attacking Fish Tale's riparian rights.

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