Wisconsin Lawyer
Vol. 84, No. 6, June 2011
Appellate Procedure
Nonfinal Orders – Final Judgments
Dixon v. Hnilicka Co., 2011 WI App 46 (filed 1 March 2011) (ordered published 20 April 2011)
The plaintiffs (the owners of condominium units and the condominium association) sued several defendants for flawed construction of the units and related claims. Various parties sought to amend their pleadings to include cross-claims for negligence, contribution, indemnification, and so on, but the circuit court denied leave to amend. No final orders were entered and no appeal was taken. Later, the circuit court granted summary judgment to various defendants, and the plaintiffs appealed. “The main issue on this appeal is whether we may review non-final orders or rulings in conjunction with an appeal of a final judgment or order even though: (1) the time to seek leave to take an interlocutory appeal from those non-final orders or rulings has expired, and (2) the non-final orders or rulings were not favorable to the parties in whose favor the appealed final judgment or order was entered” (¶ 3).
The court of appeals affirmed the circuit court in an opinion authored by Judge Fine. The first part of the opinion addresses why the court lacked jurisdiction over the nonfinal orders and rulings. “Dixon and Cornerstone did not seek leave to appeal the non-final orders that they want us to review on this appeal. Further, they may not appeal those orders as of right because those orders are not final as required by Wis. Stat. § 808.03(1). Rather, they seek to circumvent the final-order rule by piggybacking the non-final orders on an appeal of orders and rulings that are final but do not involve the Commerce Bluff plaintiffs. They may not” (¶ 7).
The court rejected a series of arguments to the effect that the plaintiffs waived “the right to complain that [the court] does not have jurisdiction” (¶ 13). The plaintiffs neither waived nor forfeited their right to object. Moreover, the court has an independent duty to police its own jurisdiction (see ¶ 15). Nor did a Pierringer release somehow confer jurisdiction (see ¶ 17). Finally, the circuit court properly exercised its discretion in denying the parties’ motion to amend their pleadings to assert cross-claims.
Criminal Procedure
Equitable Estoppel – Defense Not Available in Criminal Cases
State v. Drown, 2011 WI App 53 (filed 29 March 2011) (ordered published 20 April 2011)
According to the criminal complaint, Drown abducted his ex-girlfriend from her home in Shawano County, drove to Oconto County, and then sexually assaulted her after stopping the vehicle in Oconto County. After a second-degree sexual assault charge was filed in Oconto County, the defendant moved to dismiss. He asserted that he had already been convicted in Shawano County, pursuant to a plea bargain, to charges of false imprisonment and disorderly conduct and that those charges were based on the same incident as that charged in Oconto County. The defense argued that the state was equitably estopped from prosecuting the defendant for sexual assault, asserting that the defense strategy in the Shawano County case “‘was devised and executed in reliance on ... Drown’s then-current situation, in which no sexual assault was charged,’ and that ‘[n]o competent counsel would have allowed ... Drown to plead guilty to false imprisonment in the Shawano case knowing the charge in this case was to follow as a separate prosecution’” (¶ 15 n.4). The circuit court granted the motion. In a decision authored by Judge Hoover, the court of appeals reversed.
There are four elements to equitable estoppel: 1) action or nonaction, 2) on the part of one against whom estoppel is asserted, 3) which induces reasonable reliance thereon by the other, 4) which is to the relying party’s detriment. Beyond this four-part test, when raising an estoppel defense against the government, the court must balance the injustice that might be caused if the estoppel doctrine is not applied against the public interests at stake if the doctrine is applied (see ¶ 7). “However, we will ‘not allow[] estoppel to be invoked against the government when the application of the doctrine interferes with the police power for the protection of the public health, safety or general welfare’” (¶ 8) (citation omitted).
The court of appeals agreed with the state that “the public interest would be unduly harmed if the State were equitably estopped from prosecuting criminal charges. There is a compelling societal interest in convicting and punishing criminal offenders. On balance, the public interests at stake will always outweigh any potential injustice to a criminal defendant where he or she seeks to evade prosecution via equitable estoppel. This is especially true because defendants already benefit from various due process protections in the event of either inaction or action by the State that is allegedly unjust. Thus, extension of the equitable estoppel doctrine is unnecessary” (¶ 10) (citations omitted). (The court then went on to analyze some of the due process protections to which it was referring in the previous passage.)
Harmless Error – Marital Privilege
State v. Eison, 2011 WI App 52 (filed 1 March 2011) (ordered published 20 April 2011)
Eison was convicted of robbery and false imprisonment. On appeal he claimed that various evidence was improperly admitted at trial, and he also alleged mistaken identification by the victim.
The court of appeals affirmed in an opinion written by Judge Kess-ler. It found that other-act evidence, specifically, the defendant’s flight from Milwaukee police, was improperly admitted but the error was harmless. The analysis is necessarily fact intensive and will not be summarized further (see ¶ 22).
Eison also asserted that his former wife improperly testified about matters that fell within the marital privilege. See Wis. Stat. § 905.05. The testimony is detailed in the opinion to demonstrate that much of it concerned information not within the privilege because it involved no “communication” between Eison and his then wife. Put differently, much of the testimony involved no “private communications” and in the few instances in which it did, any error was harmless beyond a reasonable doubt. The court declined to adopt the state’s position that a “deceptive” communication should lose its privileged character, a consideration better left to the legislature (see ¶ 31). In other conversations Eison had called his former wife from jail, which meant that they lacked confidentiality because all such talks are monitored by jail officials.
Insurance
UM – Umbrella – Ambiguity
Wadzinski v. Auto-Owners Ins. Co., 2011 WI App 47 (filed 1 March 2011) (ordered published 20 April 2011)
The plaintiff’s husband was killed in a car accident. The issue in this case concerned an executive umbrella policy, which did not specifically exclude uninsured motorist (UM) coverage. The circuit court ruled that UM coverage was not available under the executive umbrella policy.
The court of appeals reversed in an opinion written by Judge Brunner. The executive umbrella policy was “contextually ambiguous. The policy endorsement purporting to exclude coverage for personal injury to an insured can be reasonably read as providing UM coverage. The endorsement’s heading adds to that ambiguity by using the phrase ‘following form.’ And finally, the executive umbrella policy lacks the type of unambiguous exclusion found in the commercial umbrella policy” (¶ 12). The policy’s endorsement lent itself to several reasonable interpretations, one of which favored the insured and thus supported coverage (see ¶ 15).
The court also looked at another policy, a commercial umbrella policy, which was issued at the same time and under the same policy number as the executive umbrella, but which clearly excluded UM coverage. “A reasonable insured could view the presence of the exclusion in the commercial umbrella, and its corresponding absence in the executive umbrella, as confirming what the language of the endorsement suggests: that UM coverage is available under the executive umbrella as long as it is available in an underlying policy” (¶ 28).
Natural Resources
Managed Forest Land Program – Tax on Withdrawal from Program – Remitting Tax to Municipality Where Property Is Located
Town of Somerset v. Department of Natural Resources, 2011 WI App 55 (filed 29 March 2011) (ordered published 20 April 2011)
The managed forest land (MFL) program was established in 1985 to encourage the management of private forest lands for the production of future crops for commercial use through sound forestry practices. See Wis. Stat. § 77.80. A landowner who enrolls his or her land in the program pays reduced property taxes as an incentive to manage the land in a sustainable fashion. The landowner must commit to keeping the property in the MFL program for either 25 or 50 years. If the landowner withdraws property from the program early, the landowner must pay the Department of Natural Resources (DNR) a withdrawal tax. Wisconsin Statutes section 77.89(1) requires the DNR to remit “100 percent of each withdrawal tax payment to the treasurer of each municipality in which is located the land to which the payment applies.”
The property in this case was enrolled in the MFL program in 1987. At that time, the property was located in the town of Somerset. However, in November 2007, the property was annexed and purchased by the village of Somerset. In August 2008, the village withdrew the property from the MFL program and paid the DNR a withdrawal tax of $43,597.28. The DNR then determined that, pursuant to section 77.89(1), it was required to pay the withdrawal tax amount back to the village because the property was located in the village at the time of the withdrawal. Accordingly, the DNR paid the village $43,597.28 in August 2009.
The town filed a petition for judicial review of the DNR’s decision. The petition alleged that the DNR incorrectly interpreted section 77.89(1) or, alternatively, that the statute is unconstitutional on its face because it deprives the town of a protected property interest, contrary to the Wisconsin Constitution. The town contended that the DNR should have prorated the withdrawal tax payment between “the municipalities where the land was situated during the years that the tax burden was lessened as a result of the property being placed in [the] MFL program” (¶ 5). This would have resulted in the town receiving 91 percent of the payment and the village receiving 9 percent. The DNR moved to dismiss, and the circuit court granted the motion. In a decision authored by Judge Peterson, the court of appeals affirmed.
The appellate court concluded that “the circuit court properly dismissed the Town’s petition on the merits because the Department correctly interpreted Wis. Stat. § 77.89(1) to require payment of the withdrawal tax to the Village” (¶ 7). Said the court, “[Section] 77.89(1) requires the Department to pay ‘100 percent of each withdrawal tax payment received under s. 77.88(7) to the treasurer of each municipality in which is located the land to which the payment applies.’ (Emphasis added.) By using a present tense verb form, the statute clearly specifies that the Department is to remit the payment to the municipality where the property is located at the present time. The statute does not require the Department to pay the withdrawal tax to each municipality where the land was located during its enrollment in the MFL program. Instead, based on the plain language of the statute, it is the present location of the property that matters for purposes of making the withdrawal tax payment” (¶ 9).
The appellate court also concluded that the town lacked standing to challenge the constitutionality of section 77.89(1). “Municipalities generally do not have standing to challenge the constitutionality of statutes. There is an exception to this rule if the issue is one of great public concern. However, the great public concern exception only applies ‘to cases where a private litigant and a creature of the state are involved, and not to suits limited to creatures of the state.’ This case involves a state agency and two municipalities, but no private litigants. Consequently, the great public concern exception is inapplicable” (¶ 13) (citations omitted).
Real Property
Mortgage – Foreclosure
Wachovia Mortgage FSB v. Dallas, 2011 WI App 54 (filed 15 March 2011) (ordered published 20 April 2011)
Dallas appealed a foreclosure judgment entered against her, which involved a mortgage on property she owned with her brother, Rogers. Their mother had quit claimed the property to Dallas and Rogers. In 2003, they obtained a mortgage loan from Fair Finance Corp. so that Rogers could buy a different house. Dallas signed the mortgage and the note. In 2004, Wachovia Mortgage loaned Rogers money, secured by a mortgage on the house he jointly owned with Dallas. The proceeds from this loan were used to pay off the Fair Finance loan and thus satisfied that mortgage. Dallas signed none of these papers. Rogers defaulted on the Wachovia loan. The circuit court granted summary judgment and awarded a foreclosure judgment in favor of Wachovia.
The court of appeals affirmed in an opinion authored by Judge Fine. The appeal involved an issue of law: “whether Wachovia is entitled to foreclose on Dallas’s interest in the house because the encumbrance on that interest was discharged by the [Wachovia] loan” (¶ 5). The court relied on the doctrine of equitable subrogation. It was immaterial that Dallas signed none of the Wachovia loan documents because that loan’s proceeds paid off the Fair Finance loan on which she was liable. Nor was Wachovia seeking any deficiency judgment against Dallas (see ¶ 6).
“Had World Savings Bank not satisfied the Fair Finance mortgage, and had Rogers and Dallas defaulted on the Fair Finance debt, Fair Finance would have been able to foreclose on Dallas’s interest in the property. Wachovia steps into Fair Finance’s shoes, and there is nothing unfair about this result.… Indeed, if Dallas were able to retain her interest in the property she and Rogers mortgaged as security for the Fair Finance loan despite the fact that the Fair Finance mortgage was satisfied by the World Savings Bank loan, she would be unjustly enriched at Wachovia’s expense. Significantly, this is not a situation where a financial institution seeks to extract from a person who cosigned only the original debt documents an obligation that is more onerous than that to which the cosigner agreed” (¶ 7).
Taxation
Tax on Personal Property – Property Kept for Personal Use
Faydash v. City of Sheboygan, 2011 WI App 57 (filed 2 March 2011) (ordered published 20 April 2011)
Faydash purchased a single-family home in the city of Sheboygan in 2006. She furnished the home with her personal property, and it was used only by Faydash and her family that year. In 2007 and 2008, Faydash rented the home on some limited dates. The premises were advertised year round as available for rent. The home was rented out in 2008 for 16 overnights. The home was available for Faydash and her family to use on the dates on which it was not rented. For the years 2006, 2007, and 2008, Faydash or her family used the home and the personal property in the home for their personal use at least three months during each year. The same personal property was kept in the home for the entire year.
The city assessed the personal property located within the home for tax year 2008 and levied a tax of $625 on that personal property. Faydash paid the personal property tax under protest and served the city with a claim to recover unlawful tax on personal property pursuant to Wis. Stat. section 74.35. The city took no action on Faydash’s claim. Faydash then filed a complaint in circuit court claiming that the personal property was kept for personal use, the personal property was exempt by law from taxation, and the levy of the personal property tax was an unlawful tax. The circuit court granted summary judgment to the city, and Faydash appealed. In a decision authored by Judge Anderson, the court of appeals affirmed.
Under Wis. Stat. section 70.111(1), a variety of personal property (household furniture, equipment and furnishings, apparel, personal ornaments and jewelry, private libraries, and so on) is exempt from general property taxes “if such items are kept for personal use by the owner.” Appellate case law in this state has developed an exception to exclusivity-type standards in tax exemption statutes. “That exception is the ‘de minimus’ or inconsequential use of otherwise tax-exempt property for ‘gain.’ Because the supreme court has mandated that ‘de minimus’ use is permissible, we apply that policy choice to the statute at bar. Accordingly, the answer to the question – whether the statute’s language ‘kept for personal use’ explicitly limits the use of personal property solely to personal use – is no” (¶ 21).
Given that “kept for personal use” does not explicitly limit the use of personal property solely to personal use, the decisive question before the court of appeals was whether Faydash’s rental property – available for rent year-round, yet rented in fact for 16 days – was de minimus or inconsequential. The circuit court found that Faydash did not meet her burden of proof; she failed to establish that holding out her property for a commercial purpose was inconsequential. Under the specific facts of this case, the court of appeals agreed (see ¶ 21).
Said the court, “Faydash did not establish a pattern of de minimus commercial use. The record does not reveal that Faydash chose to limit rental to sixteen days, it simply shows that she was able to find renters for sixteen days. The year-round advertising of her home for rent translates into a year-round availability of her home for commercial use” (¶ 23). Had Faydash’s advertisement for rent explicity limited available rental dates to a de minimus number of dates, the property might, depending on all the facts, be exempt under the statute (see id.)
Torts
Recreational Immunity – “Occupancy”
Milton v. Washburn County, 2011 WI App 48 (filed 1 March 2011) (ordered published 20 April 2011)
The plaintiffs were injured while riding their snowmobiles on a county access trail when they crashed into a closed gate. They sued both a snowmobile club and the county. The circuit court granted summary judgment in favor of the club and the county and dismissed the claims pursuant to the recreational-use immunity statute. See Wis. Stat. § 895.52.
The court of appeals affirmed in an opinion written by Judge Peterson. As to the club, a key issue was its role with respect to the access trail. “It is undisputed that the Club does not own or lease the access trail, and that its recreational agreement with the County does not include the access trail. The operative question is therefore whether the Club ‘occupies’ the access trail” (¶ 8).
The club qualified as an occupant because it had “actual use of the access trail. The County gave the Club permission to use the access trail to reach Trail Eight, one of the trails the Club is contractually obligated to maintain. The County gave the Club a key to the gate, to allow the Club to transport its grooming equipment over the access trail. The Club actually uses the access trail to get to Trail Eight. This actual use, combined with the County’s permission, is sufficient to make the Club an occupant of the access trail for recreational immunity purposes. The Club is therefore entitled to recreational immunity, unless one of the statutory exceptions applies” (¶ 10).
The court of appeals next rejected the plaintiffs’ contention that one such exception applied, namely, the club caused their injuries by a “malicious” act or a “malicious” failure to warn of an unsafe condition. Although the club might have been negligent or even reckless, its actions were not malicious when analyzed in light of case law.
The plaintiffs also argued that the county, as owner of the land, had acted maliciously by closing the gate. Two factors undercut this contention. “First, the County’s road access plan and a local ordinance require that the gate be closed at all times. We do not see … how the County can be deemed malicious for performing an act required by law. Second, as with the Club, we do not agree that the County’s conduct was so certain to cause an accident that a reasonable jury could infer the County was aware an injury was substantially certain to result. Again, the closed gate was not ‘certain to cause an accident’ in the same way that firing a bullet into a dense crowd is certain to cause injury. The gate was in place for about six years and was supposed to be closed at all times. … [T]here is no evidence that the gate ever caused an accident other than the one at issue in this case” (¶¶ 17-18).
“Sleeping Dogs” – Statutory Owner – Public Policy
Erdmann v. Progressive N. Ins. Co., 2011 WI App 33 (filed 8 Feb. 2011)
Jorgensen, the insured home-
owner, was babysitting her grandchildren and one of their friends (the plaintiff). A dog owned by Jorgenson’s daughter bit the plaintiff when she allegedly slid into it while the dog lay on the floor. The plaintiff sued Jorgensen and her insurer. The circuit court granted summary judgment against the plaintiff, dismissing the claims as barred by public policy.
The court of appeals reversed in an opinion written by Judge Brunner. A key issue was whether Jorgensen was a statutory owner and thus subject to strict liability under the dog-bite statute. Wis. Stat. § 174.001(5). Because Jorgensen gave the dog water throughout the day, let him outside, and occasionally checked on him, she “both kept and harbored” the dog and was therefore a statutory owner as construed in the case law (see ¶ 23). The court also reviewed the “sleeping dog” doctrine (see ¶ 10), concluding that here the injuries were not caused “by a dormant dog” or inflicted on an “uninvited guest” (¶ 12). Finally, public policy grounds did not preclude liability.
Worker’s Compensation
Compensable Injuries – “Well-Being Activity Exclusion”
City of Kenosha v. LIRC, 2011 WI App 51 (filed 16 March 2011) (ordered published 20 April 2011)
Leipzig, a firefighter, was injured while playing a basketball game in a park near his fire station. He was receiving compensation to “stand ready” at the fire station when the injury occurred. Leipzig sought a 10 percent permanent-partial-disability benefit. The city contended that his injury did not arise out of his employment. An administrative law judge and the Labor and Industry Review Commission (LIRC) ruled in Leipzig’s favor.
The court of appeals affirmed LIRC’s ruling in an opinion authored by Judge Anderson. Essentially the city contended that Leipzig’s injury fell within the “well-being activity exclusion” set forth in Wis. Stat. section 102.03(1)(c)3., which has three elements: “(1) the employee is engaged in an activity designed to improve his physical well-being, (2) his participation is voluntary, and (3) he receives no compensation for participation” (¶ 10). The court held that the city failed to establish the third element, namely, “the well-being activity exclusion is not applicable because Leipzig was being compensated by the City to stand ready at the fire station at the time of his injury” (¶ 11).
“Here, Leipzig was employed by the City as a firefighter and was on-duty at Fire Station Number 5 when he suffered his injury. It could not be any clearer that he was engaged in the City’s business – providing fire fighting capabilities – at the time of the injury. It is conceded by the City that Leipzig was being compensated as a firefighter at the time of his injury, which is all that is needed to come under the worker’s compensation law. We reject the City’s position that to get out from under the well-being activity exclusion of Wis. Stat. § 102.03(1)(c)3., Leipzig would have to be receiving additional compensation for playing basketball” (¶ 12).
The court disagreed with the city’s arguments that 2005 amendments supported the city’s position. It also relied on the circuit court’s common-sense (and amusing) reasoning that the city’s position was “unnatural” and would give rise to “bizarre” outcomes. (“He would be covered for choking on a Doritos chip while watching ‘Desperate Housewives’ on the firehouse television, but not for a sprained ankle sustained while jogging outside the station house in order to maintain his endurance” (¶ 17)). It closed with the following terse observation: “We fail to understand how the City can expect to pay a firefighter who is injured fighting a fire, but not pay for the firefighter who, while standing ready, works to stay in shape so as to hopefully avoid being injured while fighting a fire. It makes no sense” (¶ 18).
Defamation – Postemployment Defamatory Statements
Anderson v. Hebert, 2011 WI App 56 (filed 15 March 2011) (ordered published 20 April 2011)
Anderson is a former employee of Barron County. He claimed that after he left his employment, Duane Hebert, the county administrator, defamed him. The circuit court concluded that Anderson’s exclusive remedy was under the Worker’s Compensation Act. It therefore granted summary judgment dismissing Anderson’s defamation claim. In a decision authored by Judge Peterson, the court of appeals reversed.
As relevant to this case, an injury is covered by the Act only if “at the time of the injury: (1) both the employer and employee are subject to the provisions of the Act; and (2) the employee is performing service growing out of and incidental to his or her employment. It is undisputed that the injury to Anderson – the alleged defamation – did not occur until after Anderson resigned. Thus, at the time of the injury, Anderson was not the County’s employee and was not subject to the provisions of the Act. Furthermore, because he had already resigned, Anderson was not ‘performing service growing out of and incidental to his employment’ at the time of the injury. See Wis. Stat. § 102.03(1)(c)1. Anderson’s injury therefore is not covered by the Act. Consequently, the Act’s exclusive remedy provision does not bar his defamation claim” (¶ 10) (citations omitted).
The court of appeals also concluded that genuine issues exist in this case regarding whether the allegedly defamatory statements were substantially true and whether they were made with actual malice (see ¶ 1). Accordingly, the grant of summary judgment was inappropriate.
Vocational Rehabilitation –
Work Restrictions – Termination
Oshkosh Corp. v. LIRC, 2011 WI App 42 (filed 23 Feb. 2011)
Nuetzel injured both knees while at work. After separate surgeries he continued to work for his employer, Oshkosh, with permanent work restrictions until he was fired for sleeping on the job. Nuetzel applied for vocational rehabilitation benefits but Oshkosh denied liability for such benefits. An administrative law judge rejected Oshkosh’s positions and found Nuetzel was entitled to the benefits, a finding affirmed by the Labor and Industry Review Commission and later upheld by the circuit court.
The court of appeals affirmed in an opinion written by Judge Reilly. “[N]othing in Wis. Stat. § 102.61(1g) or the Worker’s Compensation Act provides that an injured employee can be denied vocational rehabilitation benefits when he is offered suitable employment after his injury and is subsequently fired for just cause” (¶ 4). Credible evidence supported the finding that Nuetzel had permanent work restrictions. “It is the injury sustained by the employee and not the employee’s acts that underlie the principles in § 102.61(1g)” (¶ 17). Finally, Nuetzel’s Department of Vocational Rehabilitation counselor did not abuse her discretion when she recommended he take training classes before conducting a job search.
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