Wisconsin Lawyer
Vol. 82, No. 9, September 2009

• Attorneys
• Civil Procedure
• Consumer Law
• Evidence
• Open Records Law
• Real Property
• Torts

Attorneys

Tensfeldt v. Haberman, 2009 WI 77 (filed 14 July 2009)

A 1974 divorce decree compelled Robert Tensfeldt, pursuant to a stipulation, to execute a will leaving not less than two-thirds of his net estate to his three adult children (the Tensfeldt children). Robert remarried in 1975 and executed a will that complied with the judgment. In 1980 Robert retained Attorney LaBudde, who assisted Robert in executing an estate plan that did not comply with the stipulation and judgment. After Robert moved to Florida and LaBudde “scaled back his practice,” Robert met with Attorney Haberman, who worked in LaBudde’s firm. No changes were made to the noncompliant estate plan. Moreover, in 1999 Haberman failed to advise Robert of a Florida case that permitted a surviving spouse to “elect against the will” by “taking 30 percent of the estate off the top” while continuing to receive income from a revocable trust for the rest of the spouse’s life (¶ 15).

After Robert died in 2000, extensive probate litigation occurred in Florida. Following settlement of those claims, the Tensfeldt children sued LaBudde and Haberman. The circuit court ruled as a matter of law that LaBudde aided and abetted Robert’s violation of the divorce judgment. Other issues were left for a jury. The court also dismissed the claims against Haberman, “concluding that he was negligent as a matter of law but that the evidence that his negligence had actually caused harm to the children was speculative” (¶ 22). This appeal and cross-appeal followed. The supreme court accepted jurisdiction of the entire case pursuant to Wis. Stat. section 809.61.

The supreme court reversed in part and affirmed in part in a majority opinion authored by Justice Bradley. The majority first addressed a series of issues involving the intentional tort claims against LaBudde. First, the court rejected LaBudde’s contention that the 1974 divorce judgment was unenforceable because it required Robert to create a will naming his adult children (see ¶ 28). “A court order or judgment must be complied with even if the party – or his attorney – disagrees with the order” (¶ 40). “Even if LaBudde believed that the judgment exceeded the divorce court’s authority under the 1974 statutes, the only lawful courses of action were to follow the judgment, to ask the court to modify it, or to appeal the judgment” (¶ 42). (The majority rebuffed the position advanced in the concurrence/dissent that the 1974 court lacked jurisdiction (see ¶ 43).) Of special importance was the fact that the judgment had incorporated the parties’ stipulation (see ¶ 45). In sum, the judgment requiring Robert to maintain a will giving two-thirds of his net estate outright to his adult children was enforceable (see ¶ 54).

Second, neither a statute of limitation nor a statute of repose barred the claim. The discovery rule applies to this action. It sufficed that “it was unlawful for Robert to violate the court order between 1980 and 1992” (¶ 57). Third, LaBudde was not shielded by immunity or privilege from this third-party claim. “Unlike in Yorgan v. Durkin, [2006 WI 60, 290 Wis. 2d 671, 715 N.W.2d 160,] the theory of liability advanced by the Tensfeldt children is not vicarious. It is not based on LaBudde’s failure to fulfill a professional obligation to Robert to the detriment of the Tensfeldt children. Indeed, the parties agree that Robert asked LaBudde to draft the will in violation of the court judgment, and LaBudde was not negligent in performing this service. In contrast to Yorgan v. Durkin, the basis for liability here is that LaBudde knowingly assisted the commission of the unlawful act” (¶ 62). Nor was LaBudde entitled to a “good faith advice privilege” (¶ 66). “The action here is not for breach of contract. Rather, it is an action in tort for assisting a client to unlawfully violate a court judgment. Further, LaBudde did not merely give advice. He drafted an estate plan that violated the judgment. We conclude that, under these facts, LaBudde is not entitled to this privilege” (¶67).

The court next took up the third-party negligence claim against LaBudde. “It is undisputed that LaBudde carried out Robert’s explicit instructions when he crafted an estate plan that did not leave two-thirds of Robert’s net estate outright to his children. To this end, we determine that the children’s third party negligence claim cannot be maintained because they cannot establish that LaBudde’s negligence thwarted Robert’s clear intent. We conclude that the circuit court erred in denying LaBudde’s motion for summary judgment on the negligence claim” (¶74).

Turning to the third-party claims against Haberman for his negligent advice to Robert, the supreme court affirmed the circuit court in dismissing them. Under the so-called Auric exception, Wisconsin law clearly permits third-party beneficiaries to sue a lawyer whose negligence frustrates the deceased’s testamentary intent. See Auric v. Continental Cas. Co., 111 Wis. 2d 507, 331 N.W.2d 325 (1983). But here “Attorney Haberman neither drafted nor supervised the execution of Robert’s estate plan. His only role was giving Robert admittedly negligent advice. Extending the Auric exception to attorneys who give negligent advice stretches the exception too far” (¶ 77). There was no evidence that Robert would have changed the estate plan had he been properly advised.

Justice Roggensack, joined by Justice Ziegler, concurred in part and dissented in part. They concurred in the dismissal of the third-party negligence claims against LaBudde and Haberman. They dissented on the grounds that 1) the aiding and abetting claim failed to state a claim on which relief could be granted because the 1974 court lacked jurisdiction; 2) LaBudde acted in good faith when advising that the 1974 judgment was void; and 3) the 20-year statute of repose nonetheless precluded actions on the divorce judgment after 1994 (see ¶ 85).

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Civil Procedure

Harvot v. Solo Cup Co., 2009 WI 85 (filed 17 July 2009)

Harvot sued her employer claiming that it had violated her rights under the Wisconsin Family and Medical Leave Act (WFMLA). See Wis. Stat. § 103.10. She also demanded a jury trial, which the circuit court denied on the ground that neither the statute nor the state constitution confers such a right. The court of appeals certified this case to the supreme court.

In a majority decision authored by Justice Prosser, the supreme court affirmed. “The issues presented examine whether there is a right to jury trial in a civil action to recover damages under” the WFMLA (¶ 1). The court held that the WFMLA conferred no express or implied statutory right to a jury trial. “Asking this court to discover an implied statutory right to trial by jury in situations where the legislature has not prescribed such a right and where the constitution does not afford such a right would open a can of worms. Statutes vary widely. Ad hoc judicial discovery of implied statutory rights to trial by jury would not yield a meaningful legal test that could carry over from case to case. It would instead invite ad hoc argument whenever the statutes are silent. This would not be desirable. If the legislature wants to provide a right to trial by jury in new causes of action, it has broad power to do so” (¶ 50).

Nor does the state constitution extend such a right. “A party has a constitutional right, under Article I, Section 5, to have a statutory claim tried to a jury ‘when: (1) the cause of action created by the statute existed, was known, or was recognized at common law at the time of the adoption of the Wisconsin Constitution in 1848 and (2) the action was regarded at law in 1848’” (¶ 64). “[I]t would be hard to imagine that Harvot’s civil action for damages under the WFMLA ‘existed, was known, or was recognized at common law … in 1848’ when we consider that the creation of the WFMLA was a response to the change in composition of the modern-day work force” (¶ 87).

Justice Bradley, joined by Chief Justice Abrahamson, dissented. They particularly criticized the majority’s “sweeping determination” that “‘when a statute is silent with regard to the right to a jury trial, no jury trial is required unless the right is preserved by Article I, Section 5 of the Wisconsin Constitution’” (¶ 89). “Its sweeping proclamation calls into question the status of a host of jury trials in this state and misapprehends the law. Because I determine that there exists an implied statutory right to jury trial for WFMLA actions, I respectfully dissent” (¶ 90).

Christensen v. Sullivan, 2009 WI 87 (filed 21 July 2009)

The litigation arises out of a consent decree imposed on Milwaukee County for flagrant abuses involving persons held at the county jail. The circuit court found that the county was in contempt but refused to impose monetary damages as a remedial sanction. In a published decision, the court of appeals reversed. See 2008 WI App 18, 307 Wis. 2d 754, 746 N.W.2d 553.

The supreme court reversed the court of appeals in a majority opinion authored by Justice Prosser. First, the circuit court lacked discretion to impose remedial sanctions after the county’s contempt had ceased. The supreme court construed the contempt provisions in Wis. Stat. chapter 785. “A continuing contempt is required for the imposition of a remedial sanction because remedial sanctions are not designed to punish the contemnor, vindicate the court’s authority, or benefit the public” (¶ 55). A continuing contempt is conduct that “persists” (¶ 60). “Because the County’s violation of the Consent Decree had indisputably terminated before the contempt proceedings began, there is no way we can justify the plaintiff class’s request for monetary damages on grounds of ‘a continuing [or persistent or uninterrupted] contempt of court.’ … As the County’s contempt was not continuing, the court could not impose a remedial sanction against the County ‘for the purpose of terminating a continuing contempt of court.’ Wis. Stat. § 785.01(3). … In fact, the principal objective that would be served by the imposition of a contempt sanction in this case now would be the punishment of the County and the vindication of the circuit court’s authority – both of which are punitive sanction objectives” (¶ 75). 

Second, the court also held that the class was not entitled to monetary damages for alleged “emotional distress” brought on by the county’s breach. “Although we acknowledge that some members of the plaintiff class may have suffered bodily injury, isolated incidents of bodily injury, even if proven, are nearly inevitable in a jail population of approximately 150,000 people over the period of three years (March 2001 to April 2004). Generalized claims of such injuries do not support an award of contract damages for widespread emotional disturbance among the 16,000 members of the class” (¶ 88).

Chief Justice Abrahamson dissented, joined by Justices Bradley and Crooks. “[I]n the present case, according to the majority opinion, the County can violate the circuit court order without penalty for two and one half years and may even be free to do so again so long as the County again stops the violations before a motion for contempt is filed” (¶ 97). The dissent concluded that the majority’s construction of the phrase remedial sanction erroneously construed chapter 785, contravened recent case law, and created a “void in a court’s power to enforce an order through contempt” (¶¶ 99-101).

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Consumer Law

Tammi v. Porsche Cars N. Am. Inc., 2009 WI 83 (filed 17 July 2009)

This case was before the Wisconsin Supreme Court on certification from the U.S. Court of Appeals for the Seventh Circuit. It involves a suit under Wisconsin’s lemon law (Wis. Stat. § 218.0171) that was originally filed in state court but subsequently removed to federal court. The plaintiff prevailed before a jury in federal court, and the defendant appealed to the Seventh Circuit. Among the issues on appeal is whether the federal district court correctly measured the plaintiff’s damages.

Before deciding this appeal the Seventh Circuit certified the following four questions to the Wisconsin Supreme Court:

1. When a consumer defined in Wisconsin Statute Section 218.0171(1)(b)4[.] brings an action pursuant to subsection (7), if that consumer, after making his Lemon Law demand, then exercises an option to purchase and buys the vehicle as provided in the lease, is the consumer then entitled to recover the amount of the purchase price?
2. If the consumer defined in Wisconsin Statute Section 218.0171(1)(b)4[.] is entitled to recover the vehicle purchase price when he exercises the purchase option provided in the lease, does the purchase amount qualify as pecuniary loss subject to the doubling provision in subsection (7)?
3. If the answers to questions 1 and 2 are in the affirmative, is the consumer permitted to keep the purchased vehicle in addition to the receipt of the damage award or must the vehicle be returned to the manufacturer?
4. Is a damage award under subsection (7) subject to a reduction for reasonable use of the vehicle?

In a unanimous decision authored by Justice Prosser, the supreme court answered the first certified question in the negative. “When a consumer who is leasing a motor vehicle brings an action against the manufacturer of the vehicle pursuant to subsection (7) of Wis. Stat. § 218.0171, and then exercises his option to purchase the vehicle under the terms of the lease, the consumer is not entitled to damages for the price of his voluntary purchase because his purchase was not ‘caused’ by any violation of the statute by the manufacturer. See Wis. Stat. § 218.0171(7)” (¶ 2).

Because the supreme court answered the first certified question in the negative, it was unnecessary for it to reach the second and third certified questions, because they depend on a “yes” answer to the first question. “A discussion of certified questions two and three would devolve into an impermissible discussion of a hypothetical situation, because this case does not implicate a consumer who is entitled to recover his vehicle purchase price. As the resolution of those issues depends on hypothetical or future facts, they are not ripe for adjudication and will not be addressed by this court” (¶ 3) (internal quotes omitted).

The court answered the fourth certified question as follows: “The plain language of the statute makes clear that a consumer’s refund under Wis. Stat. § 218.0171(2)(b)2.b. or 3.a. is subject to a reasonable allowance for use. Because we read subsection (7) in conjunction with the rest of the statute, we conclude that the amount of ‘pecuniary loss’ under Wis. Stat. § 218.0171(7) must incorporate a reasonable allowance for use before the pecuniary loss is doubled” (¶ 61).

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Evidence

State v. Payano, 2009 WI 86 (filed 21 July 2009)

Payano shot a police officer who was executing a no-knock warrant at his apartment. Payano claimed that he acted in self-defense and in defense of his family. According to Payano, he did not know that the men breaking into his apartment were police officers until after he fired the gun. The defense introduced a recorded 911 call made by the defendant to substantiate its version. The state presented testimony that the officers had properly identified themselves in English and Spanish, and it contended that the defendant fought off police to give family members an opportunity to flush drugs down the toilet. The police did not find drugs, but the gun was found in the toilet’s tank. The first trial ended in a hung jury. At the second trial, the state offered other-acts evidence from an informant, who described visiting Payano’s apartment the day before the shooting and seeing Payano in possession of a large quantity of cocaine and the same handgun used to shoot the officer. The trial court admitted the other-acts evidence to provide context for the search warrant, which was based on the informant’s information, and to impeach Payano’s self-defense claim. A jury convicted Payano of reckless injury and related offenses. In a published decision the court of appeals reversed on the ground that the other-acts evidence was inadmissible. See 2008 WI App 74, 312 Wis. 2d 224, 752 N.W.2d 378.

In a majority opinion authored by Justice Prosser, the supreme court reversed the court of appeals. The majority carefully explained the doctrine and procedures governing the use of other-acts evidence. It focused on the three-step test first set forth in State v. Sullivan, 216 Wis. 2d 768, 576 N.W.2d 30 (1998). The standard of review, namely, whether the trial judge abused her discretion, was crucial (see ¶ 51). First, the evidence was introduced for a proper purpose. “The question that inevitably occurs to an outsider looking at this shooting is why Payano shot at the door. This implicates Payano’s claim of self-defense. It also implicates his motive and knowledge. Motive and knowledge are both enumerated purposes for the admission of other acts evidence under Wis. Stat. § 904.04(2)” (¶ 65).

Second, the evidence was relevant to these purposes apart from its tendency to portray Payano in a bad light (see ¶ 67). Relevance embraces two considerations: 1) whether the proffered purpose is “consequential” to the action; and 2) whether the evidence makes that purpose more or less likely. “As the circuit court’s ruling makes clear, the central dispute at trial was whether Payano acted reasonably in self-defense and defense of others when he shot Officer Lutz –whether he knew or should have known it was the police at the apartment door when he shot the gun. In other words, as the State argued, ‘the jury needed to decide between two competing motives for the shooting: to protect his family, as Payano argued; or to buy time to hide drug evidence, as the State argued.’ Payano’s entire defense theory was premised on the fact that he acted reasonably to protect himself and his family when he shot Officer Lutz. Hence, what Payano knew or reasonably believed at the time of the shooting was paramount to the ‘determination of the action’” (¶ 72). The evidence also satisfied the second relevancy prong because it made the state’s theory – Payano shot to buy time to flush the drugs – more probable and made the defense’s theory – he feared unknown intruders – less probable.

Third, the trial judge properly applied the balancing test found in section 904.03. The record showed she was “fully engaged” in the analysis, especially as she had presided over the first trial (see ¶ 92). Conceding the damning effect of the other-acts evidence (the defendant possessed the gun and a large quantity of drugs on the day preceding the incident), the supreme court found no abuse of discretion because of its “high degree of probative value” (¶ 97).

The court also addressed various tools that help ensure the proper use of such evidence, including restrictions on arguments and limiting instructions (see ¶ 99). Here a limiting instruction was neither requested nor given. The trial judge did, however, “firmly admonish the attorneys to limit their arguments regarding the other acts evidence to the purposes delineated by the prosecution” (¶ 102). In sum, “[t]he court limited the use of the evidence to ‘a very narrow point’ – namely, as proof that Payano shot the gun, knowing that the police were at the door, so that he could get rid of drugs – and there is no suggestion that the evidence was used for any reason beyond that ‘very narrow point’” (¶ 103).

In dissent, Justice Bradley, joined by Chief Justice Abrahamson, pointed to the inexplicable absence from the record of the crucial 911 telephone call. Absent that tape, the dissent contended, the court of appeals correctly found an abuse of discretion in admitting the other-acts evidence. “The problem with the context argument is that it is used to admit evidence that is not relevant to the elements of the charged offense. The circuit court accepted the context argument to admit evidence to defend the actions of the police officers rather than evidence relevant to Payano’s actions” (¶ 124). “The other acts evidence here is probative of little if anything other than Payano’s character as a drug dealing criminal and the inference that he will behave accordingly” (¶ 127).  

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Open Records Law

Zellner v. Herrick, 2009 WI 80 (filed 15 July 2009)

This appeal arose from a request made by an individual under the Wisconsin Open Records Law (Wis. Stat. § 19.35) for the public release of a transcript of a closed arbitration hearing. The plaintiff, Robert Zellner, is a former school teacher whose firing was at issue in the arbitration hearing. He sued the Cedarburg School Board to prevent the release of the transcript.

On Oct. 1, 2007, the circuit court entered an order enjoining the Cedarburg School District from releasing the transcript. On Nov. 9, 2007, the individual filed a notice of intervention pursuant to Wis. Stat. section 19.356(4) and on the same day filed a notice of appeal. The court of appeals concluded that the appeal was timely filed. In a majority decision authored by Justice Crooks, the supreme court concluded that it was not.

Wis. Stat. section 19.356(8) requires that an appeal of a decision relating to an open records request be filed in “the time period specified in s. 808.04(1m).” The time period specified in that statute is 20 days (see ¶ 27). Because the appeal in this case was filed outside the 20-day period, the court of appeals did not have jurisdiction. The supreme court accordingly ordered the appeal dismissed.

Justice Roggensack filed a dissenting opinion in which she argued that the 45-day time period for taking an appeal (as provided for in Wis. Stat. section 808.04(1)) should be applied in this case (see ¶ 28).

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Real Property

Osborn v. Dennison, 2009 WI 72 (filed 9 July 2009)

This case involves interpretation of the now-mandatory WB-11 Residential Offer to Purchase form approved for residential real estate transactions by the Wisconsin Department of Regulation and Licensing. The question before the supreme court was whether the seller in a failed real estate transaction loses the right to sue the defaulting buyer for actual damages if the seller fails to direct the seller’s broker to return the defaulting buyer’s earnest money before the date the seller sues the defaulting buyer for actual damages (see ¶ 2). In a unanimous decision authored by Justice Prosser, the supreme court answered this question in the affirmative.

The WB-11 provides as follows with respect to defaults by the buyer: “If Buyer defaults, Seller may: (1) sue for specific performance and request the earnest money as partial payment of the purchase price; or (2) terminate the Offer and have the option to: (a) request the earnest money as liquidated damages; or (b) direct Broker to return the earnest money and have the option to sue for actual damages” (¶ 34). This case did not involve a suit for specific performance. Nor were the sellers requesting the earnest money as liquidated damages. Rather, the sellers sued for actual damages. The problem was that the sellers directed their broker to hold the earnest money. “In effect, they directed their broker not to return the money to the buyer” (¶ 37). Two months after filing suit, the sellers directed their broker to return the earnest money to the buyers.

The supreme court concluded that when a seller seeks actual damages, the seller “may not tie up the buyer’s earnest money while the seller is seeking actual damages. Rather, the seller must direct the broker holding the earnest money to return it to the buyer. The seller must direct the release of the money before or at the same time as filing suit for actual damages. In filing suit for actual damages, the seller must be able to plead that the seller has directed the return of the earnest money to the buyer. If the seller is unable to plead this condition precedent, the seller has limited himself to seeking the earnest money as liquidated damages. By his own action, the seller has foreclosed the other remedy” (¶ 49) (citations omitted).

Accordingly, because the sellers’ suit for actual damages was filed almost two months before the time the sellers directed their broker to return the earnest money, their suit for actual damages is not allowed. Supplementing the complaint to allege that sellers later authorized the release of the earnest money did not cure the defect (see ¶ 52).

City of Milwaukee Post No. 2874 Veterans of Foreign Wars v. Redevelopment Auth., 2009 WI 84 (filed 17 July 2009)

In this condemnation proceeding the circuit court ruled that the city of Milwaukee Redevelopment Authority is not obligated under article I, section 13 of the Wisconsin Constitution to pay any sum to the Veterans of Foreign Wars Post No. 2874 (VFW) as just compensation for the taking of a parcel of real property in which the VFW held a leasehold interest. The VFW had originally owned the parcel of property. In 1961 it conveyed the real estate to Towne Metropolitan Inc., which built a hotel on the property. In exchange for conveying the property, the VFW obtained a 99-year lease to use 5,200 square feet on the hotel’s ground floor for an annual rent of $ 1. The VFW’s leasehold amounted to about 4.6 percent of the building. Ownership of the property changed hands over time and, although the portion rented by the VFW remained in habitable condition, the hotel as a whole deteriorated. A jury determined that the fair market value of the entire property was $ 0. It did so after being instructed by the circuit judge to value the property as a whole unit and single entity.

In a published decision the court of appeals reversed the judgment of the circuit court and remanded the case to the circuit court, instructing that “the VFW must be afforded an opportunity to prove the value of its separate leasehold interest” in the condemned property and to receive compensation for it. See 2008 WI App 24, 307 Wis. 2d 518, 746 N.W.2d 536.

In a majority decision authored by Chief Justice Abrahamson, the supreme court reversed the court of appeals. It concluded that the unit rule applied by the circuit court in the present case did not contravene the VFW’s state constitutional right to just compensation (see ¶ 3). Under the unit rule, when property that is held in partial estates by multiple owners is condemned, the condemnor pays the fair market value of an undivided interest in the property rather than the fair market value of each owner’s partial interest. Apportionment of the total sum awarded is then made among the owners (see ¶ 4). The majority held that “using the unit rule in the present case to value the whole property to determine the amount of compensation due to the VFW does not violate the just compensation clause. We conclude that the VFW receives just compensation when it receives no compensation for its leasehold interest in a property that has no value” (¶ 8).

The court explained that the rationale for applying the unit rule is that the condemnor, representing the public, should not have to pay a total sum to all the owners that exceeds the total fair market value of the property were the property held by one person (see ¶ 46). Departure from the unit rule may be made in rare and exceptional circumstances (see ¶ 49). In this case the VFW argued for an exception because “under the unit rule the VFW will not be compensated for the loss of its valuable leasehold interest because the value of its leasehold interest exceeds the zero value of an undivided interest in the condemned property. According to the VFW, the unit rule should not be applied when payment equaling the value of an undivided interest in condemned property is insufficient to fully compensate owners holding partial interests in the property” (¶ 43). For numerous reasons articulated by the majority, the court did not believe that the present case presented the kind of rare and exceptional situation that would justify departure from the unit rule (see ¶¶ 49-81).

Justice Ziegler, joined by Justice Gableman, filed a concurring opinion in which she joined the majority but wrote separately “to emphasize that while we sympathize with the VFW, our sympathy cannot dictate the result” (¶ 83).

Justice Prosser, joined by Justice Crooks and Justice Roggensack, filed a lengthy dissent. “To sum up: (1) the VFW had a prepaid, long-term lease of real value; (2) the lease was a recognized property interest, the taking of which requires just compensation; (3) there was no ‘condemnation clause’ in the lease that forfeited the VFW’s right to receive just compensation; (4) the City and the Redevelopment Authority together contributed to the decline of the underlying real property by their actions and inactions and by the lengthy delay between the condemning authority’s announced intention to take the property and the filing of the condemnation petition; (5) the VFW was given no opportunity before the jury to prove the separate value of its leasehold interest, i.e., no opportunity to show what it lost; and (6) the VFW is being awarded no compensation whatever for the taking of its property” (¶ 135).

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Torts

Horst v. Deere & Co., 2009 WI 75 (filed 14 July 2009)

A man who was mowing grass using a riding mower severed his two-year-old son’s feet when he inadvertently backed up while the mower blade was engaged. The plaintiffs brought a strict product liability claim against the manufacturer, John Deere. They claimed that the mower was defectively designed despite a sophisticated override system, which the driver had to engage to mow in reverse. Essentially, they argued that mowing in reverse was inherently dangerous and the machine should have no such capability. A jury found the boy’s parents negligent but also found that the mower was not unreasonably dangerous. The jury instructions explained that “a bystander personal injury claim in strict products liability is only available if the product is unreasonably dangerous based on the expectations of an ordinary user or consumer (the ‘consumer contemplation test’)” (¶ 2). The court of appeals affirmed. See 2008 WI App 65, 312 Wis. 2d 421, 752 N.W.2d 406. 

The supreme court affirmed in an opinion authored by Justice Gableman. “No one in the case at bar disputes that bystanders may recover if a product is unreasonably dangerous. The issue in this case is the proper legal standard for determining whether a product is unreasonably dangerous when a bystander is injured” (¶ 31). Thus, the primary issue concerned the adequacy of the jury instructions and whether state law recognizes some variant of a “bystander contemplation test.” The majority closely canvassed prior case law, which contained “suggestive” language but did not “directly answer[]” the precise question, and concluded that the holding “impinges on no precedent and does not require us to overturn or modify the holding of any prior cases” ¶ 67).

The court rejected “the proposed bystander contemplation test and reiterate[d] that the consumer contemplation test is the proper standard for all strict products liability cases” (¶ 68). The majority discussed the uncertainties manifested by a bystander contemplation test, contending that it “comes dangerously close to absolute liability by adopting an amorphous, ambiguous, and standard-less test that effectively gives a jury the power to find a manufacturer liable under almost any conceivable fact situation” (¶ 73).

This did not strip bystanders of all recourse. “It is true that under our holding today, where a product is not unreasonably dangerous based on the expectations of the ordinary user or consumer, the bystander does not receive additional protections. But if a product is unreasonably dangerous in light of the expectations of the ordinary user or consumer and a bystander is injured, a strict products liability claim remains available. In addition, the Horsts ignore the availability of recovery under negligence. They are understandably dissatisfied with that avenue of recovery because the jury considered it in this case, and found that Jonathan’s parents, and not John Deere, were negligent in the tragic injury to Jonathan. Additionally, a user or consumer’s expectations regarding a product will often include safety expectations relating to bystanders. That is, users and consumers do not just have expectations regarding their own safety; they expect that a product will be reasonably safe for bystanders as well. Juries can certainly take this into account in their deliberations and evaluation of whether a product is unreasonably dangerous” (¶¶ 77-78).

Justice Gableman, joined by Justices Prosser and Roggensack, filed a concurring opinion that urged the court to consider adopting the risk-utility test set forth in the Restatement (Third) of Torts, § 2(b).

Justice Crooks, also concurring, wrote separately in response to Justice Gableman’s concurrence. This record, he concluded, offered an “exceedingly flimsy basis” on which to discuss the adoption of § 2(b) of the Restatement (Third) (¶ 85).

Justice Bradley, joined by Chief Justice Abrahamson, dissented. The dissent agreed “with the majority that bystanders can recover in strict liability for a product that is unreasonably dangerous to bystanders, and that the test for products liability in Wisconsin measures the expectations of the ordinary consumer” (¶ 107) but found, however, that the instructions misstated the law and that the special verdict, as worded, “asked the wrong question.” Finally, the dissent pointedly rejected the call to consider § 2(b), a changes that “toss[es] stare decisis to the wind” and would unsettle “scores of cases” (¶ 133).

Justice Ziegler did not participate in this case.

Godoy v. E.I. du Pont de Nemours, 2009 WI 78 (filed 14 July 2009)

Godoy, a minor, allegedly sustained lead poisoning from the paint used in his Milwaukee home. He sued various paint manufacturers because he was unable to identify which manufacturer made the white-lead-carbonate pigment he ingested. The circuit court dismissed the design defect claims on the ground that “lead is an inherent characteristic of white lead carbonate.” The court of appeals affirmed. See 2007 WI App 239, 306 Wis. 2d 226, 743 N.W.2d 159.

The supreme court affirmed in an opinion authored by Justice Bradley. “The issue presented here is whether the circuit court correctly concluded that Godoy’s complaint failed to state a claim of defective design where (1) the product is white lead carbonate pigment; (2) the alleged design defect is the presence of lead; and (3) the defendant manufacturers were manufacturers of white lead carbonate pigment” (¶ 1). The court held that a “claim for defective design cannot be maintained here where the presence of lead is the alleged defect in design, and its very presence is a characteristic of the product itself. Without lead, there can be no white lead carbonate pigment. We therefore conclude that the complaint fails to allege a design feature that makes the design of white lead carbonate pigment defective” (¶ 2). The majority carefully surveyed Wisconsin case law on product liability. Although case law adopted Section 402A of the Restatement (Second) of Torts, it has “neither adopted nor rejected in its entirety” the conceptually different approach set forth in § 2 of the Restatement (Third) of Torts: Products Liability. In sum, Section 402A remains “the touchstone” for strict products liability (¶ 18).

The product at issue in this case was white-lead-carbonate pigment in the paint (see ¶ 25). “[A] determination that a product is defective is not identical to a determination that the product was defectively designed. Put another way, the fact that a defect exists does not compel the conclusion that the source of the defect is the product’s design” (¶ 28). “Lead is a characteristic ingredient of white lead carbonate pigment. By definition, white lead carbonate pigment contains lead. Removing lead from white lead carbonate pigment would transform it into a different product. Under these circumstances, we conclude that the design of white lead carbonate pigment is not defective” (¶ 31).

The majority also seized the occasion to clarify two aspects of product liability law. First, “[h]olding that the presence of an ingredient which is ‘characteristic of the product itself’ is an improper basis for a defective design claim is not equivalent to imposing a reasonable alternative design requirement. We do not require that a plaintiff affirmatively prove, through expert testimony, that an alternative design is commercially viable. We do not impose an expensive burden and require a battle of the experts over competing product designs. We simply acknowledge that some ingredients cannot be eliminated from a design without eliminating the product itself. When the ingredient cannot be designed out of the product, the Restatement (Second) instructs that although other claims may be asserted, the proper claim is not design defect”(¶ 45). Second, “the substantial change defense” was not a basis for the decisions by either the supreme court or the court of appeals (see ¶ 38). Moreover, “[i]ntegration into another product does not shift responsibility from the manufacturer of a defective component to another party ‘who [is] in no position to detect the hidden defect’” (¶ 53).

Justice Bradley, joined by Chief Justice Abrahamson, concurred. They addressed the public policy ramifications of Justice Prosser’s concurrence, which calls for a reconsideration of Wisconsin’s consumer contemplation test in light of the dramatically different test in the Restatement (Third). Such a course “would overrule or modify scores of cases,” all without “the benefit of briefing or argument by the parties” (¶ 66).

Justice Crooks, joined by Chief Justice Abrahamson and Justice Bradley, also concurred, to better “emphasize that the parties in this case did not invite the court to adopt § 2(b) of the Restatement (Third). The briefing and arguments to the court of appeals and this court in this case did not address the implications of adopting that approach. … Before this court, the parties vigorously disputed whether the court of appeals, in referring to § 2(b) in its ruling, had ‘essentially adopted’ the provision and based its ruling on it, but no party advocated for its adoption” (¶ 72).

Finally, Justice Prosser, joined by Justice Ziegler and Justice Gableman, concurred. Justice Prosser observed that while the majority ostensibly buried the Restatement (Third), its own analysis was similar (see ¶ 80). “The distinction between the analysis the lead opinion disparages and the analysis the lead opinion employs is too metaphysical to justify continuing disavowal of Restatement (Third) of Torts: Products Liability § 2(b). Instead of denigrating Restatement (Third), I would adopt § 2(b) of Restatement (Third) for analyzing defective design claims and put Wisconsin back in step with the evolution of products liability law^” (¶ 81).

Justice Roggensack did not participate in this decision.

Phelps v. Physicians Ins. Co., 2009 WI 74 (filed 10 July 2009)

Medical negligence resulted in the death of an infant during delivery. His twin brother survived. Plaintiffs, including his parents, sued various health-care providers on a variety of claims. Several appeals resulted. This remaining piece of litigation concerned the emotional distress claim of Gregory, the boys’ father, against Lindemann, then an unlicensed first-year resident who attended the boys’ mother. The circuit court ruled that Lindemann was a borrowed employee of the hospital, St. Joseph’s, and therefore that this claim fell under Wis. Stat. chapter 655. The court of appeals reversed. See 2008 WI App 6, 307 Wis. 2d 184, 744 N.W.2d 880.

The supreme court reversed the court of appeals in a majority opinion authored by Justice Roggensack. The court held first that Lindemann was a borrowed employee of St. Joseph’s. This discussion inextricably intertwines considerations of the proper standard of review with the test for borrowed employees. The majority faulted the court of appeals for improperly reversing the circuit court’s factual determinations regarding the elements of that test. “The circuit court’s finding makes clear that, under the first factor, Lindemann consented to work for St. Joseph’s. Under the second factor, the circuit court’s finding demonstrates that Lindemann was performing the work of St. Joseph’s at the time of the injury. Under the third factor, St. Joseph’s had the right to control the details of the work Lindemann performed. Finally, Lindemann’s work was performed primarily for the benefit of St. Joseph’s” (¶ 57).  

Since Lindemann was the hospital’s borrowed employee, it followed that he was “an employee of a health care provider within the meaning of Wis. Stat. ch. 655 and Wis. Stat. § 893.55(4)” (¶ 60). The majority “expressly adopt[ed]” Justice Sykes’ lead opinion in Finnegan v. Patients Compensation Fund, 2003 WI 98, 263 Wis. 2d 574, 666 N.W.2d 797, holding “that Wis. Stat. ch. 655 does not permit bystander claims for negligent infliction of emotional distress arising from medical malpractice of health care providers and their employees” (¶ 62). Such claims are direct, not derivative, claims (see ¶ 63).

Justice Bradley, joined by Chief Justice Abrahamson, dissented “because (1) the majority fails to apply the correct appellate standard for review of a paper record; (2) it erroneously concludes that Dr. Lindemann was a borrowed employee; [and] (3) unlike the majority, I conclude that Wis. Stat. ch. 655 does not bar Gregory Phelps’ bystander claim for negligent infliction of emotional distress” (¶ 69).

Behrendt v. Gulf Underwriters, 2009 WI 71 (filed 9 July 2009)

The plaintiff was injured when a tank exploded while he was using it for his job in an oil-change business. The tank had first been fabricated as a side job by an employee of Silvan, a pressurized tank fabricator that permitted its employees to perform such side jobs, although they were forbidden from making pressurized tanks for safety reasons. The plaintiff’s employer later modified the tank to permit pressurization for drainage purposes. The tank exploded while the plaintiff was pressurizing it for drainage. The plaintiff sued Silvan, alleging it was negligent for permitting the tank to be made as a side job and vicariously liable for its employee’s conduct in making the tank. The circuit court granted summary judgment to Silvan. The court of appeals affirmed in an unpublished opinion.

The supreme court affirmed the grant of summary judgment on both claims in a lead opinion written by Justice Crooks. First addressing the negligence claim, the court explicitly reaffirmed, yet again, Wisconsin’s fealty to the Palsgraf minority approach, under which “Silvan had a duty to exercise ordinary care under the circumstances so that its policy permitting side jobs did not create ‘an unreasonable risk of injury’ to Behrendt” (¶ 21). Although the foreseeability of any injury was a central issue, it related not to Silvan’s duty but to whether Silvan breached its duty of care. The distinction was supported by case law as well as the Restatement (Third) of Torts (see ¶ 26). Silvan was entitled to summary judgment on the breach issue because uncontested evidence showed that its policy allowing side jobs nonetheless strictly prohibited the manufacture of “pressure vessels” (see ¶ 24). Moreover, the tank had later been modified by others (see ¶ 25). The court acknowledged that “other paths,” particularly public policy grounds, might lead to the same outcome but reiterated that this case rested on a finding of no breach because the damages were unforeseeable (see ¶ 28).

Summary judgment was also appropriate on the vicarious liability claim. “The evidence in the record indicates that the tank, like the other side jobs, was built as a personal benefit to the employee. Fisher enlisted a coworker to help fabricate the tank. Silvan was never paid for the tank or the materials or the labor. There is nothing in the record that shows any purpose to benefit the employer or any resulting benefit to the employer, either” (¶ 39).

Chief Justice Abrahamson concurred, writing separately to criticize Justice Roggensack’s concurrence, which stressed a distinction between affirmative acts and omissions relative to a defendant’s duty. The Chief Justice identified “three essential problems” with such an approach (¶ 50). First, such a distinction is “tenuous and misleading” (¶ 51). Second, it runs against the current of Wisconsin case law (see ¶ 52). Third, it also conflicts with the approach in the Restatement (Third) of Torts (see ¶ 53).

Justice Roggensack concurred, joined by Justice Ziegler and Justice Gableman. In their opinion, they clarified Wisconsin law by distinguishing omissions from affirmative acts in assessing a defendant’s duty. The Chief Justice’s approach, they contended, would “eliminate the element of duty from common law negligence claims in Wisconsin” (¶ 109).

Umansky v. ABC Ins. Co., 2009 WI 82 (filed 17 July 2009)

Umansky, a television cameraman, died after he fell from a camera platform at Camp Randall Stadium. The platform had no railings. The plaintiffs sued Fox, the stadium’s facilities director, on the ground that he failed to enforce a specific safety regulation in not installing rails on the platform. The circuit court granted summary judgment in Fox’s favor. In a published decision, the court of appeals reversed. See 2008 WI App 101, 313 Wis. 2d 445, 756 N.W.2d 601.

The supreme court affirmed the court of appeals in an opinion authored by Justice Crooks. “The general rule is that state officers and employees are immune from personal liability for injuries resulting from acts performed within the scope of their official duties” (¶ 10). The issue was whether Fox was within the ministerial duty exception. The court held that “because 29 C.F.R. § 1910.23(c)(1) ‘imposes, prescribes and defines the time, mode and occasion … with such certainty that nothing remains for judgment or discretion’ and because Wis. Admin. Code § Comm 32.50(2) makes it applicable to public buildings of a public employer, Fox was under a ministerial duty to act to ensure a railing was on the platform” (¶ 18). The court also pointedly rejected Fox’s contention that any such duty ran only to public employees (Fox was privately employed by a TV network) or pertained only to platforms where public employees worked. The argument was unsupported by either the administrative regulations or the state statute (see ¶ 20).

Finally, the court rebuffed Fox’s argument that the safe place statute (Wis. Stat. § 101.11) applied here. “The complaint of the Umanskys makes it clear that the claim underlying the questions we address here as to immunity is one of common law negligence. We agree with the court of appeals that there is ‘no logical connection between an employer’s inability to shift its liability for a safe place violation to a third party and its ability to delegate to an employee the duty to comply with applicable safety regulations.’ This is not a safe-place statute case, and the rules concerning such claims do not govern here” (¶ 27).

Justice Crooks wrote a concurrence, joined by Justice Prosser, in which he emphasized “that courts in other jurisdictions have taken positions similar to the reasoning of the majority in this case” (¶ 29).

Justice Prosser, joined by Justice Crooks, concurred, applauding the majority for taking “a small but very welcome correction in the course this court has followed for many years” (¶ 38). He said that “more change is necessary” (¶ 39). Justice Prosser surveyed case law development on governmental and public employee immunity with an eye toward underscoring the “current problem,” namely, “Wisconsin courts have taken the principle of ‘ministerial duty’ from a context in which it was valuable and necessary and employed it in a context in which it is unfair and absurd” (¶ 64).

Justice Ziegler, joined by Justice Roggensack and Justice Gableman, dissented. “As a result of the majority decision, a windfall recovery is potentially created for any non-state employee who can obtain both worker’s compensation and a recovery against the state employee, while an injured state employee under the same circumstances would be limited to a worker’s compensation recovery. The majority opinion also opens the door to allow any injured frequenter recovery against the state or a state employee. Until today, the state was treated by the legislature differently than a private employer in order to protect the public fisc” (¶ 83).

Bubb v. Brusky, 2009 WI 91 (filed 24 July 2009)

On Oct. 24 Bubb was admitted to an emergency room and diagnosed as having suffered a transient ischemic attack (TIA). The emergency room physician, Brusky, consulted with a neurologist. Bubb was discharged with after-care instructions, which included seeing the neurologist. The following day, his wife scheduled an appointment for 11 days later, but on Oct. 26, she found her husband unconscious. He had suffered a stroke caused by a 90-percent blockage in his carotid artery. The Bubbs sued Brusky for negligent treatment and for failing to obtain informed consent. At the close of evidence, the trial judge refused to instruct the jury on informed consent because, he held, the issue lacked sufficient grounding in the evidence. A jury returned a verdict for Brusky on the negligent treatment claim. In a published decision, the court of appeals affirmed. See 2008 WI App 104, 313 Wis. 2d 187, 756 N.W.2d 584.

The supreme court reversed the court of appeals in an opinion written by Justice Prosser. The opinion closely surveys the case law on informed consent as well as its statutory basis in Wis. Stat. section 448.30. Credible evidence supported the informed consent claim; accordingly, the trial judge erred by not instructing the jury on that claim. “First, there is credible evidence in the record from which a reasonable jury could conclude that there were reasonable alternatives available for treating Richard’s TIA. Most pertinently, Dr. Brusky’s own testimony establishes that admitting Richard to the hospital and ordering a carotid Doppler ultrasound was ‘one of the reasonable ways of’ treating a TIA. Second, expert testimony elicited during the trial demonstrates that there is considerable debate in the medical community over whether to admit patients immediately after a TIA episode or to discharge them with instructions and a referral to a neurologist. The fact this debate exists presents credible evidence for the jury to believe that there were reasonable alternative treatments available for Richard. Third, the circuit court’s decision to include the alternative paragraph to the standard medical negligence jury instruction, which is to be used ‘only if there is evidence of two or more alternative methods of treatment or diagnosis recognized as reasonable,’ demonstrates that credible evidence was presented to show that a reasonable alternative mode of treatment existed. See Wis JI – Civil 1023” (¶ 70).  

Credible evidence also showed that this treatment was viable, “including statistics related to the increased risk of stroke following a TIA, the severe consequences that can result from a stroke, and the fact that a stenosed carotid artery is a possible cause of a TIA” (¶ 72). In sum, “a reasonable person in Richard’s condition would have wanted to know about the alternative of admission with further diagnostic testing” (id.). The “same evidence” provided a sufficient basis for the causal link between Bubb’s stroke-related injuries and the informed consent violation (that is, whether a reasonable person would have refused the recommended treatment if advised of the alternatives) (see ¶ 73).

The court also held that the limitations in Wis. Stat. section 448.30 made it unlikely that “undue hardship” would be imposed on emergency room physicians. Brusky was not compelled to provide information “outside his field of knowledge” (¶ 76). “Another way the statute limits Dr. Brusky’s duty in this case is that he does not necessarily have a duty to inform Richard of which particular diagnostic tests should be employed or the details of those tests” (¶ 77).

Justice Ziegler did not participate in this decision.

Hocking v. City of Dodgeville, 2009 WI 70 (filed 9 July 2009)

The Hockings purchased their home in the city of Dodgeville in 1978; at that time there were no neighbors nearby. In 1991 the land surrounding their home, including land uphill from them, was developed. As a result, the Hockings’ property is now at the bottom of a bowl and they have experienced significant water problems. Before the surrounding land was developed, the Hockings never had water leakage in their basement. The Hockings’ consulting engineer concluded that increased storm water runoff flowing over their property resulted from the way in which the surrounding land was developed.

The Hockings sued the city of Dodgeville and several individuals for negligence, unlawful taking, and creating and maintaining a nuisance. This appeal relates exclusively to the allegation of negligent maintenance of a nuisance against defendants who are the present or former owners of a home adjacent to and directly uphill from the plaintiffs’ property. The defendants did not modify the property in any way that could affect water drainage onto the plaintiffs’ land.

The circuit court granted summary judgment to the defendants. It concluded that, as a matter of law, the defendants could not be liable to the Hockings. It reasoned that the defendants had no duty to abate this nuisance because they were merely “possessors and titleholders in portions of upgrade property from the Hockings.” Therefore, no duty to abate this nuisance arose. In addition, the circuit court concluded that, even if a duty were owed and the defendants were negligent, liability should be precluded by the application of public policy factors (see ¶ 6). The plaintiffs appealed, and the court of appeals certified the appeal to the supreme court, which accepted the case for review.

In a majority opinion authored by Justice Ziegler, the supreme court affirmed the decision of the circuit court. It concluded that the defendants are not liable to the Hockings for damages allegedly caused by surface water (that is, storm water) running from the defendants’ property to the plaintiffs’ property because, under the circumstances, the defendants have no duty to abate the alleged nuisance (see ¶ 2).

The court relied on common law doctrines governing surface water to ascertain the defendants’ duty of ordinary care under the circumstances. Although different doctrines have developed over the years for analyzing surface water problems, Wisconsin currently applies the reasonable use rule (see ¶ 14). “Under this rule, a landowner must use his land reasonably, and a duty to act will arise if the landowner’s use of his land that resulted in altering the flow of surface waters is unreasonable. As a result, when the defendant’s conduct is unreasonable, that defendant has a positive duty to act to abate the nuisance. A positive duty to act must exist before liability will arise in a failure to abate claim such as the one presented here. Consequently, the defendants here have a positive duty to abate this nuisance only if the use of their property had altered the flow of surface water and was an unreasonable use of their property” (¶ 21) (citations omitted).

In the case at hand the defendants’ conduct did not involve a use of their property that altered the flow of surface water. Therefore, their use was not unreasonable, and they had no duty to abate in the first instance. The defendants merely purchased a home, lived in that home, paid property taxes, and established a tie to the community in which they live. They did not create the flow of rainwater or alter the property so as to create this problem on the Hockings’ property. The development by Rogers (the original developer of the property surrounding the plaintiffs’ land) allegedly caused these problems. The defendants did not create a trench that increased the flow of water to the Hockings’ property, point oversized downspouts at the Hockings’ property, or landscape in such a way as to unreasonably increase water flow to the Hockings’ property (see ¶ 22). “Instead, the defendants purchased a home in a development and lived there” (id.). Said the court, “The defendants could not reasonably be required to take positive action that would affect rainwater runoff onto the Hockings’ property” (id.). “The defendants’ conduct in this case is reasonable under the circumstances, and as a result, no positive duty to abate this nuisance arises and the Hockings’ claims for maintaining a nuisance cannot survive” (¶ 24). The defendants reasonably used their property and, as a result, they satisfied their duty of ordinary care under the circumstances (see ¶ 28).

Chief Justice Abrahamson filed a concurring opinion that was joined in by Justice Bradley.

[Editors’ Note: Another appeal arising out of this same fact situation was recently decided by the court of appeals and is summarized in this month’s Court of Appeals Digest. See Hocking v. City of Dodgeville, 2009 WI App 108 (filed 4 June 2009) (ordered published 29 July 2009).]

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