Wisconsin Lawyer
Vol. 81, No. 8, August 2008

Court of Appeals Digest

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

Appellate Procedure

Kiser v. Jungbacker, 2008 WI App 88 (filed 7 May 2008) (ordered published 25 June 2008)

A class action lawsuit resulted in a settlement liquidating a commercial real estate investment limited partnership. The general partner (Century Capital) appealed an order that awarded attorney fees of $500,000 and costs of $50,000 from the $3 million settlement fund.

The court of appeals, in an opinion authored by Judge Neubauer, held that the appellants lacked standing because they are not "aggrieved." "The issue presented is whether Century Capital has standing to appeal the award to class counsel of attorney fees and costs from an established settlement fund. The rule is that a person may not appeal from a judgment or order unless aggrieved by it. A person is aggrieved if the judgment or order bears `directly and injuriously' upon his or her interests and affects the person `in some appreciable manner'" (¶ 11).

"Century Capital concedes that it has no financial stake in the amount of fees awarded to class counsel out of the settlement fund. Its liability is limited to the approximately $3 million settlement paid to the class, as the attorney fees are to be taken from the settlement payments. Thus, Century Capital's only alleged basis for standing is its claimed fiduciary obligation to the class to ensure that the most money possible could end up in the limited partners' pockets. This does not support standing to appeal under Wisconsin law" (¶ 12). "Century Capital and class counsel worked together to prepare the class notice for distribution to class members. When the parties submitted the class notice to the court, Century Capital expressly stated that it was `agreeable to' and had `no objection to the notice that was submitted for the Court's review.' The notice plainly explained the settlement terms, class counsels' fees and how class members could object and get more information. Not one class member objected to the settlement or to class counsel's proposed fees or expenses" (¶ 16).

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Criminal Law

State v. Baron, 2008 WI App 90 (filed 29 May 2008) (ordered published 25 June 2008)

This case involves the application of Wisconsin's identity theft statute to a person who misappropriated the identity of a public official. The criminal complaint charged that the defendant, an emergency medical technician, hacked into the work computer of his supervisor, F, and forwarded emails found therein to various city and county workers and to F's wife. These emails suggested that F was having an extramarital affair. The emails were forwarded so as to appear to have come from F, not the defendant. The day after the defendant circulated the emails, F committed suicide.

The circuit court ruled that the identity theft statute (Wis. Stat. § 943.201(2)(c)), which in part prohibits the unauthorized use of a person's identity for the purpose of harming an individual's reputation, is unconstitutional as applied in the present case. It reasoned that because the person whose identity the defendant misappropriated was a public official, application of the identity theft statute violated his First Amendment right to defame a public official with true information (see ¶ 1). In a decision authored by Judge Bridge, the court of appeals reversed the circuit court.

To convict the defendant of identity theft, the state had to prove that the defendant 1) intentionally used F's personal identifying information 2) for the purpose of harming F's reputation 3) by intentionally representing that he was F 4) without F's consent. It was undisputed that the defendant's purpose in misappropriating F's identity was to harm F's reputation. The defendant argued that, because the "purpose" element of harming an individual's reputation is an element of identity theft that the state must prove, the statute directly punished him for his intent to defame and indirectly punished him for his disclosure of defamatory information, in violation of his First Amendment rights (see ¶ 9).

The court of appeals disagreed with the defendant. Said the court, "The flaw in the defendant's logic is that it focuses on the `purpose' element viewed in isolation. Instead, what is criminalized by the identity theft statute is the whole act of using someone's identity without their permission plus using the identity for one of the enumerated purposes, including harming another's reputation. The statute does not criminalize each of its component parts standing alone"

(¶ 10). "In sum, the identity theft statute neither prohibited [the defendant] from disseminating information about [F] nor prevented the public from receiving that information. Instead, the statute prohibited [the defendant] from purporting to be [F] when he sent the emails. We conclude that the identity theft statute as applied to [the defendant] does not criminalize his constitutionally protected right to defame a public official. Accordingly, we conclude that the State has met its burden of proving beyond a reasonable doubt that the statute is constitutional" (¶¶ 14-15).

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Criminal Procedure

State v. Hoppe, 2008 WI App 89 (filed 28 May 2008) (ordered published 25 June 2008)

The defendant, Hoppe, sought to withdraw his guilty pleas to multiple counts of possession of child pornography. He claimed that the guilty plea procedure as conducted by the circuit court was defective. He contended that the court did not comply with Wis. Stat. section 971.08 (the guilty plea statute) and other court-mandated procedures because it accepted his guilty plea without determining whether any promises had been made to him, informing him of the maximum penalty he faced, or ascertaining that he understood the information in the plea questionnaire and the rights he was waiving. The circuit court denied the motion after a hearing. In a decision authored by Judge Neubauer, the court of appeals affirmed.

At the guilty plea hearing, the defendant was represented by counsel. Before the hearing, the defendant signed a guilty plea questionnaire. The plea questionnaire and waiver-of-rights form recited each constitutional right subject to being waived and required that the box next to each item be checked to signify an understanding that a plea would result in that right being relinquished. When filled out, the form stated that Hoppe understood that by entering a guilty plea, he gave up, of his own free will, his constitutional rights to a trial, to remain silent, to testify and present evidence, to subpoena witnesses on his behalf, to a unanimous verdict of 12 jurors, to confront his accusers, and to be proved guilty beyond a reasonable doubt. By signing the plea questionnaire, Hoppe indicated that he "reviewed and underst[oo]d the entire document and any attachments[,] reviewed it with [his] attorney[s] [and] answered all questions truthfully" (¶ 16).

At the plea hearing the judge introduced the plea questionnaire (see ¶ 4). "[The judge] addressed Hoppe personally, as Wis. Stat. § 971.08 directs, and specifically invoked the plea questionnaire Hoppe had completed. The court ascertained that Hoppe had gone over the questionnaire with both attorneys; that he understood `everything in the questionnaire and waiver of rights and the elements of the charges you're going to be pleading to,' and that a copy of the elements was attached; that Hoppe was satisfied he made a free, voluntary and intelligent plea with all of his rights in mind; that both attorneys were satisfied that Hoppe's plea was free, knowing and voluntary; and that there was a factual basis for the plea. This colloquy, which establishes that Hoppe voluntarily and knowingly waived his constitutional rights, exceeds that in [State v. Hansen, 168 Wis. 2d 749, 485 N.W.2d 74 (Ct. App. 1992)], where we deemed inadequate a plea colloquy limited to little more than asking the defendant if he had `gone over' the plea questionnaire with his attorney" (¶ 17).

The court noted that "[a] plea questionnaire's proper use can lessen the extent and degree of the colloquy otherwise required ... We do not interpret [precedent as requiring] that, plea questionnaire in hand, the court must revisit the particulars of each item with a defendant, such as Hoppe, who has expressed his full understanding and gives the court no reason to believe that such is not the case. We thus say here what [State v. Moederndorfer, 141 Wis. 2d 823, 416 N.W.2d 627 (Ct. App. 1987)] only implies: a plea questionnaire is not outside the plea hearing; it is part and parcel of it" (¶ 18).

Accordingly, the court of appeals concluded that, "although the plea colloquy was brief, since Hoppe assured the trial court that he had discussed the plea and its consequences with both of his attorneys and that he `fully' understood the elements of the charges and everything in the plea questionnaire with all of his rights in mind, Hoppe did not make a prima facie showing that the plea colloquy was defective. Even assuming for argument's sake that it was flawed, Hoppe had an evidentiary hearing. The total record establishes that the State proved by clear and convincing evidence that his plea was knowingly and voluntarily made" (¶ 2).

State v. White, 2008 WI App 96 (filed 29 May 2008) (ordered published 25 June 2008)

The state charged the defendant with delivery of a controlled substance (a felony). At the preliminary hearing defense counsel asked the police officer whether he knew the identity of the owner of the residence where the delivery occurred and whether the defendant was a tenant there. The prosecutor objected on relevancy grounds, and the presiding court commissioner sustained the objections. At the end of the hearing, the commissioner found probable cause to believe that the defendant had committed a felony and bound her over for trial.

The prosecutor then filed an information that charged the delivery count and added a count of maintaining a drug house. The defendant moved to dismiss the drug-house charge on the ground that the evidence presented at the preliminary hearing did not support probable cause for this charge because it requires proof of dominion and control over the house. The circuit court granted the motion, concluding that it was unfair to allow the addition of the drug-house charge after the defendant's attorney had been prevented from cross-examining the officer at the preliminary hearing on topics that were relevant to the drug-house charge.

In a decision authored by Judge Vergeront, the court of appeals reversed the circuit court. It concluded that the delivery and drug-house charges are transactionally related and that, under existing precedent, the prosecutor could add the drug-house charge in the information after the defendant was bound over on the delivery charge (see ¶ 12). "The prosecutor's successful objections at the preliminary hearing do not provide a basis for a different result, and the doctrine of judicial estoppel does not apply" (¶ 2).

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Insurance

Nault v. West Bend Mut. Ins. Co., 2008 WI App 91 (filed 20 May 2008) (ordered published 25 June 2008)

The Naults' son, Jason, was killed in a motorcycle/car collision. The other driver, who was at fault, carried a small liability policy. Jason's motorcycle had underinsured motorist (UIM) coverage of $100,000. The Naults also had an umbrella policy with a limit of $1 million issued by West Bend Mutual. The Naults claimed the umbrella policy covered the $250,000 in uncompensated damages. The circuit court ruled that the West Bend umbrella policy provided no UIM coverage.

The court of appeals, in an opinion written by Judge Hoover, affirmed in part and reversed in part. It affirmed the finding that the policy was not contextually ambiguous. There was nothing ambiguous in the policy's organization, labeling, or index. Nor were certain terms fatally ambiguous (see ¶¶ 12-13). "The Naults also argue the phrase `unless this coverage form is endorsed to provide such coverage' is ambiguous because no such endorsement was available, at least to them. However, the unavailability of an endorsement would not lead a reasonable insured to believe there was coverage. The exclusion unambiguously states there is no UIM coverage absent an endorsement. A reasonable insured would conclude that if no endorsement was available there was no coverage, not the opposite. In addition, contextual ambiguity exists when a particular policy provision is ambiguous in the context of other parts of the policy, not in the context of facts that may or may not have been known to an insured" (¶ 14).

West Bend failed, however, to provide the statutorily mandated notice that its umbrella policies that are excess over auto liability policies could include UIM coverage as well. See Wis. Stat. § 632.32(4m). West Bend contended that it was excused from providing such notice because it did not offer excess UIM coverage under umbrella policies it issued after January 2004. "West Bend does not attempt to reconcile its position with this statutory language; instead, it simply asserts that `it makes no sense to even discuss giving notice of availability of something that did not exist.' However, we see no way to read the statute except as requiring West Bend to offer excess UIM coverage and to provide notice that the coverage is available. West Bend's decision to not offer excess UIM coverage was contrary to the statute, and cannot excuse its failure to give the required notice" (¶ 23).

Moreover, Stone v. Acuity, 2008 WI 30, "holds that if an insurer issues a qualifying umbrella policy but does not give the notice required under Wis. Stat. § 632.32(4m), the remedy is to read in the minimum amount of coverage specified in § 632.32(4m)(d). Stone, [2008 WI 30], ¶ 61. On remand, the court shall enter judgment holding West Bend's umbrella policy includes excess UIM coverage with limits of $50,000 per person and $100,000 per accident. See Wis. Stat. § 632.32(4m)(d)" (¶ 28). The court of appeals, plainly troubled by the application of those rules to these facts, closed by "suggesting" that various "anomalies" (for example, the clear disjunct between the minimum UIM coverage and corresponding umbrella policies) be "revisited" (¶ 34).

Ellifson v. West Bend Mut. Ins. Co., 2008 WI App 86 (filed 14 May 2008) (ordered published 25 June 2008)

A sheriff's deputy, Ellifson, was injured in a car accident while working in his capacity as a deputy. He settled with the other drivers and then sued his own underinsured motorist (UIM) carrier, West Bend Mutual, which in turn brought a third-party action against the county's insurer, Wisconsin Municipal, seeking a declaration that the latter was Ellifson's primary UIM insurer. The circuit court granted summary judgment in favor of Wisconsin Municipal.

The court of appeals affirmed in a decision written by Judge Anderson. First, it held that Wisconsin Municipal was not bound by a circuit court ruling in a parallel, but otherwise unrelated, case that also involved Ellifson and Wisconsin Municipal. There was no final judgment on the merits but instead only a nonfinal order that denied summary judgment and found insurance coverage. "Moving to the merits" of this case, the court held that "Wisconsin Municipal's UIM coverage is not illusory and … is not contextually ambiguous.... UIM coverage is illusory only if there are no circumstances under which benefits will ever be paid under the policy" (¶ 18). West Bend argued that the policy's exclusion of "employees" and "volunteers" from the ranks of the "insured" rendered the policy illusory. Rejecting this contention, the court of appeals listed a number of scenarios in which the UIM coverage applied (for example, situations involving adult prisoners, arrestees, or juvenile detainees).

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Marital Property

Joyce v. Joyce, 2008 WI App 92 (filed 21 May 2008) (ordered published 25 June 2008)

As succinctly framed by Chief Judge Brown, "[t]his case is about whether a widow, who was left out of an [individual retirement account] IRA and missed the one-year deadline to make a claim alleging an improper gift under the Marital Property Act, can nevertheless breathe life into her claim by asserting it as part of the probate of her late husband's will. She raises numerous arguments that she can do it this way, but we shoot them all down for the simple reason that she is comparing the proverbial apples and oranges. A claim of a marital property interest in an asset subject to nonprobate transfer is a completely different species from a challenge to a will's validity. We affirm the trial court's dismissal of her claim" (¶ 1).

Wis. Stat. section 766.70(6) "allows a person to bring an action to recover improper gifts of marital property made by his or her spouse. Where, as here, an improper gift of marital property during marriage becomes effective upon the death of the spouse, the action is against the gift's recipient and must be commenced within one year of the spouse's death"(¶ 6).

The widow offered several arguments. "First, Mary Jo claims that her original intervention in the probate matter in March of 2006 also served as the commencement of an action to enforce her marital property right to the IRA under Wis. Stat. § 766.70(6)(b)1. She notes that, in addition to objecting to informal probate, she filed a demand for formal proceedings" (¶ 8). This argument foundered because the IRA provided for a nonprobate transfer to the beneficiary and was thus a nontestamentary asset. Put differently, this alleged "`action' had nothing to do with [Mary Jo] asserting her marital property interest" (¶ 9).

For the same reason the court rejected Mary Jo's second argument, that the pendency of the probate matter tolled the time limit on the marital property claim (see ¶ 11).

Finally, the court rejected Mary Jo's contention that "her `Petition to Determine Interest in Certain Property,' though filed more than a year after Michael's death, is nevertheless timely because it relates back to her initial intervention in the probate matter, her demand for formal administration" (¶ 12). "[T]he fact remains that the execution of the form and the execution of the new will were separate acts related to separate assets with separate legal consequences. Further, the circumstances of the execution of the IRA form are not the source of her marital property claim: unlike any right she may have in the probate estate, the marital property claim does not depend on whether the children exercised undue influence or committed fraud, or whether Michael had the requisite testamentary capacity. The only questions are whether Michael made a gift greater than $1000 without Mary Jo's participation, and whether the former spouses' economic position rendered this gift reasonable.... Michael's testamentary capacity and the children's actions form the factual basis of the probate dispute, but they have nothing to do with Mary Jo's marital property interest in the IRA. As such, Mary Jo's marital property claim does not arise out of the same `transaction, occurrence, or event' as the probate matter, and cannot relate back to its commencement" (¶ 14).

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Mental Commitments

State v. Luttrell, 2008 WI App 93 (filed 20 May 2008) (ordered published 25 June 2008)

This case involves an appeal from a nonfinal order in a chapter 980 action to commit Luttrell as a sexually violent person. The issue was whether "a person against whom a Wis. Stat. ch. 980 petition has been filed is entitled to a competency evaluation under Wis. Stat. § 971.14" (¶ 5). The circuit court said no.

The court of appeals, in an opinion written by Judge Fine, affirmed. Earlier statutes had applied section 971.14 to chapter 980 commitments, but these statutes had been repealed (see ¶ 8). In sum, neither present statutes nor constitutional due process protections compel a competency determination in such actions. The court explained why later statutory changes responded to "cracks" in the civil commitment laws (see ¶ 11).

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Municipal Law

Town of Merrimac v. Village of Merrimac, 2008 WI App 98 (filed 22 May 2008) (ordered published 25 June 2008)

Property owners in the town of Merrimac petitioned the village of Merrimac for a direct annexation by unanimous approval pursuant to Wis. Stat. section 66.0217(2). The village, in turn, passed an ordinance annexing the property. The town filed suit, alleging that the annexation was void because the annexed property was not contiguous to the village and because the village failed to comply with a requirement in section 66.0217(14)(a) that the village pay the town a property tax set-off. The village moved to dismiss, and the circuit court granted the motion. In a decision authored by Judge Lundsten, the court of appeals affirmed the circuit court.

The issue before the appellate court was whether section 66.0217(11)(c) bars a town from contesting in court a particular type of annexation, namely, a "direct annexation by unanimous approval" under section 66.0217(2). Section 66.0217(11)(c) provides that "[n]o action on any grounds, whether procedural or jurisdictional, to contest the validity of an annexation under sub. (2) [a direct annexation by unanimous approval], may be brought by any town.

The court of appeals concluded that "§ 66.0217(11)(c) bars a town from contesting in court a particular type of annexation, namely, a `direct annexation by unanimous approval' under § 66.0217(2). Consequently, we need not address the merits of the Town's attack on the validity of the annexation, specifically, whether the annexation is void because the annexed property is not contiguous with Village property and because the Town failed to comply with the property tax set-off requirement" (¶ 19). The appellate court also held that the town may not obtain review of the annexation by the common law writ of certiorari (see ¶ 17).

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Real Property

Devine v. Notter, 2008 WI App 87 (filed 7 May 2008) (ordered published 25 June 2008)

The buyer made an offer to purchase residential property that was accepted by the sellers. Among the documents executed by the parties was one titled "Buyers and Sellers Attorney's Approval." This document gave both parties the opportunity to obtain legal assistance and seek modification of the deal, but only within five days of the signing of the offer. Ten days before closing (and one month after the offer to purchase was accepted), the sellers notified the buyer that they would not complete the sale. In subsequent litigation the circuit court granted judgment of specific performance in favor of the plaintiff buyer. In a decision authored by Chief Judge Brown, the court of appeals affirmed.

The defendant sellers argued that the attorney-approval document signed by the parties rendered the entire contract between them illusory and unenforceable. The court of appeals disagreed. It held that the contract at issue was not illusory. Said the court, "The attorney review period was strictly limited in time and, since the time elapsed without objection, we see no reason both parties should not be bound to the contract" (¶ 1).

Attorney-approval clauses, which are widely used in other jurisdictions (see ¶ 6), "serve generally to allow the parties to a real-estate contract to get a deal signed in a timely fashion, while reserving the right to consult with an attorney about what is, for many people, the most important transaction (and legal commitment) that they will ever make.... And we are convinced that, at least where the review period is strictly limited, such clauses do not render a real-estate deal illusory" (¶¶ 7-8). Because in this case no objection was made within the five-day window, the contract remains in force and the buyer is entitled to specific performance (see ¶ 10).

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Torts

Wilson v. Tuxen, 2008 WI App 94 (filed 20 May 2008) (ordered published 25 June 2008)

The Wilsons purchased a herd of dairy cattle from Tuxen. The cattle turned out to be diseased, and the Wilsons sued Tuxen on the ground that the cattle had ruined their farm business. The circuit court granted summary judgment to Tuxen and dismissed the Wilsons' claims.

The court of appeals, in an opinion written by Judge Peterson, affirmed in part and reversed in part. The court first addressed the impact of the economic loss doctrine on the Wilsons' tort claims. "The cows purchased from Tuxen are the defective product in this case. They are not `property other than the product itself.'" Their loss in value because of the disease was a "disappointed performance expectation" (¶ 15). Tuxen conceded, though, that a single "diseased calf" was "other property." Since there was enough evidence to create a factual dispute over whether Tuxen's diseased cows infected the calf, summary judgment was inappropriate on these claims (see ¶ 23).

The court next addressed a series of issues pertaining to claims under Wis. Stat. section 95.19, which relates to diseased livestock. First, section 95.19 claims are not subject to the economic loss doctrine. Second, three of the claims could be based on Johne's disease, which had infected Tuxen's cows. (Johne's disease is one of 19 statutorily enumerated diseases to which section 95.19 applies.) Third, the Wilsons should have been permitted to amend their complaint to reflect these three claims (see ¶24).

Finally, with respect to the breach of contract claim, the Wilsons' failure to notify Tuxen of the problem for nearly a year meant that they had failed to give "timely notice" of the breach as required by the Uniform Commercial Code (Wis. Stat. § 402.607(3)(a)).

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