Jury Trials – Pretrial Waiver – Contracts
Parsons v. Associated Banc-Corp., 2017 WI 37 (filed 13 April 2017)
HOLDING: A pre-litigation contractual waiver of the right to a jury trial in a civil action was binding.
SUMMARY: The plaintiffs sued a bank, alleging corrupt practices. The bank moved to strike their demand for a trial by jury, contending that they had waived the right through contract provisions signed before the dispute arose. The circuit court granted the bank’s motion. In a published decision, the court of appeals reversed the circuit court. See 2016 WI App 44.
The supreme court reversed the court of appeals in a majority opinion authored by Justice Ziegler. Parties may waive their right to jury trial. “The central question in this case, therefore, is not whether a civil jury trial may be waived, but instead whether a pre-litigation jury waiver provision in a contract constitutes waiver ‘in the manner prescribed by law[,]’” as provided by the Wisconsin Constitution (¶ 23).
The court held that such pretrial contractual waivers are valid (see ¶ 34). Nor need it be shown that the waiver was “knowingly or voluntarily” agreed upon (¶ 37). The court also rejected arguments that the waiver was procured by fraud or was unconscionable on its terms. Finally, the trial judge did not abuse his discretion in finding that the bank’s assertion of the jury waiver was timely (see ¶ 42).
A dissent was filed by Justice Ann Walsh Bradley, joined by Justice Abraham-son. The majority, they contended, ignored controlling case law and the factual record. The plaintiffs did not knowingly or voluntarily waive their rights and the bank’s motion to strike was untimely, coming years after the plaintiffs’ jury demand.
Justice Kelly did not participate in this case.
Right to Counsel – Forfeiture of Counsel
State v. Suriano, 2017 WI 42 (filed 27 April 2017)
HOLDING: The defendant forfeited his constitutional right to counsel by engaging in voluntary and deliberate conduct that frustrated the progression of his case and interfered with the proper administration of justice.
SUMMARY: In State v. Cummings, 199 Wis. 2d 721, 546 N.W.2d 406 (1996), the Wisconsin Supreme Court acknowledged two situations in which a defendant loses the right to counsel: 1) a defendant may knowingly, intelligently, and voluntarily waive his or her right to counsel; and 2) a defendant may forfeit his or her right to counsel. [Editors’ Note:Some jurisdictions – but not Wisconsin – also recognize a third situation in which a defendant loses the right to counsel: it is called “waiver by conduct” (¶¶ 26-29).]
edu daniel.blinka marquette Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.
edu thomas.hammer marquette Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.
“In a waiver situation, the circuit court must hold a hearing and engage in a colloquy with the defendant to ensure the defendant: (1) made a deliberate choice to proceed without counsel, (2) was aware of the difficulties and disadvantages of self-representation, (3) was aware of the seriousness of the charge or charges against him, and (4) was aware of the general range of penalties that could have been imposed on him. The circuit court must also determine whether a defendant is competent to represent himself” (¶ 23) (internal quotations and citations omitted).
“Forfeiture” requires very different procedures covering a variety of scenarios in which a defendant’s conduct results in the involuntary loss of counsel by operation of law. “[T]he triggering event for forfeiture is when the court becomes convinced that the orderly and efficient progression of the case [is] being frustrated. Scenarios triggering forfeiture include: (1) a defendant’s manipulative and disruptive behavior; (2) withdrawal of multiple attorneys based on a defendant’s consistent refusal to cooperate with any of them and constant complaints about the attorneys’ performance; (3) a defendant whose attitude is defiant and whose choices repeatedly result in delay, interfering with the process of justice, and (4) physical or verbal abuse directed at counsel or the court” (¶ 24) (internal quotations and citations omitted).
This case involved forfeiture of counsel. In a majority opinion authored by Justice Rebecca G. Bradley, the court concluded that defendant Suriano forfeited his right to counsel.
“The record supports the circuit court’s finding that Suriano made it clear he would not cooperate with any attorney. His actions caused three … lawyers [appointed by the State Public Defender] to withdraw in rapid succession. One of those lawyers specifically testified that Suriano was trying to frustrate the progress of the case and cause delay because Suriano believed the case should be dismissed. Another one of his lawyers felt so threatened by Suriano that he would not meet with him unless he could be sure Suriano did not have a weapon. Suriano verbally abused at least one of his lawyers, admitted in open court that he did so, and declared he would do it again because the disparaging verbal assaults were all ‘true’” (¶ 31).
“The circuit court found Suriano was playing games and manipulating the case to delay the trial. Suriano did not say he wanted to represent himself, but his repeated dilatory tactics and abusive behavior expressed loudly and clearly that he would make it impossible for any attorney to represent him. This is sufficient to satisfy the forfeiture standard and supports the circuit court’s finding of forfeiture in this case. Suriano’s voluntary and deliberate choices frustrated the orderly and efficient progression of this case” (id.).
The court rejected Suriano’s contention that a defendant cannot forfeit the right to counsel unless his or her actions were done with an intent or purpose to delay (see ¶ 32).
Lastly, the court considered the procedures circuit courts should follow in handling forfeiture-of-counsel situations. In the Cummings case cited above, a dissenting justice advocated for the following warnings and procedures in forfeiture of counsel cases: “(1) Explicit warnings that, if the defendant persists in ‘X’ [specific conduct], the court will find that the right to counsel has been forfeited and will require the defendant to proceed to trial pro se; (2) a colloquy indicating that the defendant has been made aware of the difficulties and dangers inherent in self-representation; (3) a clear ruling when the court deems the right to counsel to have been forfeited; (4) factual findings to support the court’s ruling; and (5) appointment of standby counsel” (¶ 33 n.9).
The Cummings majority recommended these procedures but did not mandate them. In the present case, the court reaffirmed the approach of the Cummings majority (see ¶ 33).
Justice Abrahamson filed a dissenting opinion that was joined in by Justice Ann Walsh Bradley.
Miranda – Functional Equivalent of Interrogation
State v. Harris, 2017 WI 31 (filed 7 April 2017)
HOLDING: The defendant was not subjected to either express questioning or its functional equivalent, and therefore a statement he made was not obtained in violation of Miranda.
SUMMARY: Police officers arrested defendant Harris after they found him in the basement of a vacant residence. Strewn about him were copper piping, a flashlight, and a duffle bag containing a saw, saw blades, a bolt-cutter, and crowbars.
While seated in a squad car after his arrest, Harris commenced an unprompted narrative of his criminal activities. He told a police officer that he had been homeless for approximately seven years, he frequently went into vacant homes to sleep, and he often committed misdemeanor crimes to obtain items to sell. He said this was his plan for the copper piping. This impromptu statement was not made in response to any police questioning, and no Miranda warning was given before the statement was uttered.
The next morning a detective (Buchanan) went to the county jail and met with the defendant. The detective asked Harris a question to the effect of “Would you like to give me a statement?” Instead of responding with “yes” or “no,” the defendant replied by saying, “They caught me man, I got nothing else to say.” No Miranda warning was provided before this statement was uttered.
The defendant moved to suppress his “they caught me” statement on grounds that it was obtained in violation of Miranda v. Arizona, 384 U.S. 436 (1966), which requires the administration of warnings before any custodial interrogation. The circuit court denied the motion, and the statement was admitted at the defendant’s trial. He was convicted by a jury. In a published decision the court of appeals affirmed, concluding that the statement was not obtained in violation of Miranda.See 2016 WI App 2. In a majority decision authored by Justice Kelly, the supreme court affirmed the court of appeals.
The term “interrogation” under Miranda refers not only to express questioning but also to any words or actions on the part of police officers (other than those normally attendant to arrest and custody) that the officers should know are reasonably likely to elicit an incriminating response from the suspect. See Rhode Island v. Innis, 446 U.S. 291 (1980). The latter is often referred to as the functional equivalent of express questioning.
Wisconsin implements the “functional equivalency” standard by positing a reasonable third-person observer and inquiring into how such a person would expect the suspect to react to the officer’s words and actions:
“[I]f an objective observer (with the same knowledge of the suspect as the police officer) could, on the sole basis of hearing the officer’s remarks or observing the officer’s conduct, conclude that the officer’s conduct or words would be likely to elicit an incriminating response, that is, could reasonably have had the force of a question on the suspect, then the conduct or words would constitute interrogation.” State v. Cunningham, 144 Wis. 2d 272, 278-79, 423 N.W.2d 862 (1988).
In this case the court concluded that Detective Buchanan’s question “did not constitute express questioning because it sought nothing that could be potentially incriminating. Although his question was certainly designed to obtain a response, the only information it sought was whether Mr. Harris would like to make a statement; it did not seek the statement itself” (¶ 18). Further, the court “[had] no difficulty finding that Detective Buchanan’s question was not the functional equivalent of an interrogation under the Cunningham formulation. There is no indication Detective Buchanan intended his question to elicit an incriminating statement, nor is there anything to suggest that asking a suspect whether he would like to make a statement is a police practice designed to surreptitiously cause the suspect to divulge incriminating evidence” (¶ 33).
Justice Ziegler joined the majority opinion “so long as it is read to answer only the issue presented and does not alter, change, or affect existing case law concerning Miranda, 384 U.S. 436 (1966), or an issue not present here, Goodchild (voluntariness). See State ex rel. Goodchild v. Burke, 27 Wis. 2d 244, 262, 133 N.W.2d 753 (1965)” (¶ 49). Justice Gableman joined this concurrence.
Justice Abrahamson filed a dissenting opinion concluding that “in this close case … the Detective’s words constituted interrogation that should have been (but was not) preceded by Miranda warnings and should have been suppressed” (¶ 84).
Unemployment Compensation – Discharge – “Substantial Fault”
Operton v. LIRC, 2017 WI 46 (filed 4 May 2017)
HOLDING: A drug-store clerk fired for making multiple mistakes was nonetheless entitled to unemployment compensation because her errors were inadvertent and she was not at “substantial fault.”
SUMMARY: Walgreens fired Operton because of several money-handling mistakes she made while employed. According to Walgreens, despite being warned, she continued to make errors. She filed for unemployment benefits, which Walgreens contested. The Labor and Industry Review Commission (LIRC) ultimately found that Operton was terminated for “substantial fault” and thus not entitled to benefits, a finding affirmed by the circuit court. In a published decision, the court of appeals set aside LIRC’s determination; it concluded that Operton’s mistakes, while many, were inadvertent and unintentional and did not constitute substantial fault. See 2016 WI App 37.
The supreme court affirmed the court of appeals in an opinion authored by Chief Justice Roggensack. Because LIRC had not explained its interpretation of the statute, the standard of review was of “no consequence,” and the court applied its established principles of statutory construction (¶ 26).
Wisconsin Statutes section 108.04(5g) broadly defines substantial fault. “It includes ‘acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee’s employer.’ However, the legislature did not disqualify every employee who commits such errors from receiving unemployment benefits” (¶ 36). Three types of conduct fall outside the range of substantial fault, including “inadvertent errors” (¶ 37).
“Under the facts of this case, it suffices to interpret the statute to mean that multiple inadvertent errors, even if the employee has been warned about the errors, does not necessarily constitute substantial fault” (¶ 46). “[T]he length of Operton’s employment, the number of transactions Operton handled throughout her employment, and the variety of the errors she committed compels the conclusion that she was not terminated from Walgreens for substantial fault. While all of the errors fell within the same general cash-handling duties of her employment, the errors were, nevertheless, inadvertent” (¶ 53).
Justice Abrahamson, joined by Justice Ann Walsh Bradley, concurred in the mandate but departed from the majority on grounds that 1) this was a “no deference” case, and 2) the majority injects “extra-statutory considerations” into its analysis (¶ 59).
Justice Ziegler wrote a brief concurrence regarding the importance of agency deference and the court’s need for careful briefing and argument before changing its approach.
Justice Rebecca G. Bradley, joined by Justice Gableman and Justice Kelly, joined the majority but concurred separately to “question” the practice of agency deference. The concurrence underscored that this was not a case in which the judiciary “abdicated” its role to an executive agency (¶ 80).
Health Care Records
Certification Charges and Retrieval Fees – Exemption for Lawyers Authorized by Clients in Writing to Obtain Health Care Records
Moya v. Aurora Healthcare Inc., 2017 WI 45 (filed 4 May 2017)
HOLDING: A lawyer authorized in writing by his or her client to obtain the client’s health care records is exempt from paying the certification charge and retrieval fee for those records.
SUMMARY: This is a class action filed by the plaintiff on behalf of herself and all other similarly situated persons who have been billed the certification charge and retrieval fee by the defendants for obtaining their own health care records. The charge and fee are authorized by the statute governing patient health care records. See Wis. Stat. § 146.83.
The circuit court denied the defendants’ motion for summary judgment and, in an interlocutory appeal, the court of appeals in a published decision reversed the circuit court. See 2016 WI App 5. In a majority decision authored by Justice Gableman, the supreme court reversed the court of appeals.
The health care records statutes exempt the patient or a “person authorized by the patient” from having to pay the certification charge and retrieval fee for the patient’s health care records. The term person authorized by the patient is defined to include “any person authorized in writing by the patient.” Wis. Stat. § 146.81(5).
In this case the supreme court was asked to determine whether a lawyer whose client authorized him via a HIPAA release form to obtain her health care records may benefit from this fee exemption. “Because the phrase ‘person authorized by the patient’ is defined in Wis. Stat. § 146.81(5) to include ‘any person authorized in writing by the patient,’ we hold that an attorney authorized by his or her client in writing via a HIPAA release form to obtain the client’s health care records is a ‘person authorized by the patient’ under Wis. Stat. § 146.83(3f)(b)4.-5. and is therefore exempt from certification charges and retrieval fees under these subdivisions” (¶ 2).
In reaching this conclusion the court rejected the defendants’ argument that “any person authorized in writing by the patient” must have the ability to make health care decisions on the patient’s behalf (see ¶¶ 23-31). The supreme court also declined to apply the doctrines of voluntary payment and waiver to bar the plaintiff’s class action.
Justice Ziegler filed a dissenting opinion.
Motor Vehicle Law
Hit and Run Resulting in Deaths of Multiple Victims – Multiplicity
State v. Pal, 2017 WI 44 (filed 28 April 2017)
HOLDINGS: 1) Multiple charges of hit and run resulting in death stemming from a single collision were not multiplicitous. 2) The sentences imposed by the circuit court were not unduly harsh.
SUMMARY: On April 20, 2014, defendant Pal was involved in a traffic accident when his sport utility vehicle collided with a group of motorcyclists on a highway; two motorcyclists died from the injuries they sustained in the crash. Pal fled the accident scene but was apprehended by the police a few days later. He eventually pleaded guilty to two counts of hit and run resulting in death, in violation of Wis. Stat. section 346.67(1) (2013-14). The circuit court sentenced Pal to 10 years’ initial confinement and 10 years’ extended supervision for each count, with the term of imprisonment for the first count to be served consecutive to the term of imprisonment for the second count.
Before the supreme court Pal raised a multiplicity challenge arguing that he was punished twice for hit and run resulting in death even though he only committed a single offense of fleeing the scene of an accident. He also contended that the circuit court imposed an unduly harsh sentence. In a majority opinion authored by Justice Ziegler, the supreme court affirmed the court of appeals, which had affirmed the circuit court’s judgment of conviction and order denying the defendant postconviction relief.
Multiplicity claims are reviewed according to a well-established two-pronged methodology. The court first examines whether the charged offenses are identical in law and fact. If it concludes that the offenses are not identical in law and fact, the court presumes that the legislature authorized multiple punishments. This presumption, however, may be rebutted by clear evidence of contrary legislative intent.
Legislative intent in multiplicity cases is discerned through study of 1) all applicable statutory language; 2) the legislative history and context of the statutes; 3) the nature of the proscribed conduct; and 4) the appropriateness of multiple punishments for the conduct. If the presumption is rebutted and the court concludes that the legislature did not authorize multiple punishments, then the defendant has a legitimate due process claim (see ¶ 15).
In this case the multiple counts against the defendant were identical in law; both involved violations of the same statute. However, the court concluded that the two offenses for which Pal was sentenced are not identical in fact (see ¶ 17).
“The State did not simply charge Pal for his failure to stop his vehicle at the scene of the accident; it charged Pal for his failure to stop his vehicle at the scene of the accident until he had fulfilled his statutory obligations of providing information and assistance to each of the two victims he had hit with his vehicle. Because Pal did not perform his statutorily-imposed duties with regard to each of two victims, the State charged Pal with two violations of the statute” (¶ 20).
Because the two counts of hit and run resulting in death are not identical in fact, the court presumed that the legislature authorized punishment for each offense (see ¶ 23). It then proceeded to conclude that Pal’s attempts to rebut that presumption failed. “Under Wis. Stat. § 346.67(1), Pal owed a distinct set of duties to each of the two victims at the accident scene he fled” (¶ 24).
Moreover, as a general rule, where the crime is against persons rather than property, there are as many offenses as individuals affected. “Given this rule, and the statute’s clear imposition of duties with regard to each of the victims at the accident scene in this case, it is reasonable to presume, as we do, that the legislature authorized multiple punishments under
§ 346.67(1)” (id.).
The supreme court also concluded that the circuit court imposed a sentence within the statutory maximum after it had properly considered the relevant factors and had provided Pal with a thorough explanation of the reasons supporting its decision. The circuit court’s actions were not unduly harsh and unconscionable (see ¶ 36).
Chief Justice Roggensack, joined by Justice Rebecca G. Bradley, concurred. They joined the majority opinion in full but wrote separately to urge that, in cases involving multiple violations of the same statute, courts should analyze multiplicity challenges as “unit of prosecution” claims in which they interpret the statute at issue to determine if the legislature authorized multiple convictions (¶ 49).
Justice Kelly, joined by Justice Abrahamson and Justice Ann Walsh Bradley, filed a separate concurrence.
Implied Consent – No Constitutional or Statutory Right to Refuse Breath Test
State v. Lemberger, 2017 WI 39 (filed 20 April 2017)
HOLDINGS: 1) The defendant had no constitutional or statutory right to refuse to take the breathalyzer test following his arrest for drunk driving, and the state could comment at trial on his improper refusal to take the test. 2) The defendant’s trial counsel was not ineffective for failing to object to the prosecutor’s comments to the jury about the defendant’s refusal.
SUMMARY: In 2014, defendant Lemberger was convicted of operating a motor vehicle while intoxicated (fourth offense) after a jury trial, during which the prosecutor repeatedly informed the jury that the defendant had refused to take a breath test following his arrest for drunken driving, arguing that the refusal stemmed from “a guilty conscience” and constituted “proof positive that [Lemberger] knew he had been drinking” (¶ 8). Before trial the circuit court had determined in a refusal hearing that the defendant’s refusal to submit to a breath test was unlawful.
In a postconviction motion Lemberger requested a new trial, arguing that his constitutional right to the effective assistance of counsel had been violated. Lemberger claimed his trial lawyer should have objected to the prosecutor’s comments because Lemberger possessed a constitutional right to refuse to take a warrantless breathalyzer test such that the prosecutor was not permitted to seek an inference of guilt from the refusal. The circuit court denied the motion. In an unpublished decision, the court of appeals affirmed.
In a majority decision authored by Justice Ziegler, the supreme court affirmed the court of appeals. It concluded that “Lemberger did not receive ineffective assistance of counsel. The law was settled at the time of Lemberger’s trial that, upon his lawful arrest for drunk driving, Lemberger had no constitutional or statutory right to refuse to take the breathalyzer test and that the State could comment at trial on Lemberger’s improper refusal to take the test. Lemberger’s attorney did not render ineffective assistance of counsel in failing to argue contrary to controlling precedent” (¶ 36).
The court added that, since Lemberger’s trial, the U.S. Supreme Court clarified in Birchfield v. North Dakota, 136 S. Ct. 2160 (2016), that the Fourth Amendment permits warrantless breath tests incident to arrests for drunk driving. “Thus Birchfield provides an additional reason why defendants lawfully arrested for drunk driving have `no right to refuse’ a breath test” (¶ 34).
Justice Abrahamson filed a concurring opinion that was joined in by Justice Ann Walsh Bradley and Justice Kelly. Justice Kelly filed a separate concurrence.
Easements – Interpretation – Language of Description
Garza v. American Transmission Co., 2017 WI 35 (filed 13 April 2017)
HOLDING: American Transmission Co. (ATC) has the right to enter the plaintiffs’ property to trim and remove the trees that threaten or endanger the operation of an electric transmission line it operates there pursuant to a 1969 easement.
SUMMARY: In 1969, the Wisconsin Public Service Corp. (WPSC) was granted an easement by the Hertigs to erect an electric transmission line “comprising wood pole structures” over their property and to enter the property from time to time to maintain the line and clear brush and trees adjacent to the line. The Hertigs subdivided their property in 1977 to create Woodland Park Estates. In 1995, WPSC upgraded the line and replaced the wood poles supporting it with steel poles. In 2001, WPSC assigned the easement to ATC.
Three years later, the plaintiffs purchased a parcel of property in Woodland Park Estates; the transmission line did not cross their parcel but their property was within the area in which ATC had the right pursuant to the easement to clear trees and brush to protect the line. In 2011, ATC notified the plaintiffs that it needed to enter their property to clear some trees and, although it was able to perform some of the necessary work, the plaintiffs prevented ATC from completing the project. This litigation followed, with the plaintiffs filing an inverse-condemnation action and ATC filing a declaratory-judgment action.
The circuit court granted summary judgment to ATC. In an unpublished decision, the court of appeals reversed. It concluded that the 1969 easement limited the transmission line to being constructed on a wood pole structure, that the transmission line upon which the 1969 easement was founded no longer exists, and that ATC thus has no rights to enter the Garzas’ property (see ¶ 17).
In a unanimous decision authored by Justice Gableman, the supreme court reversed the court of appeals. It held that “under the 1969 deed of easement, ATC has the right to enter the [plaintiffs’] property to both trim and remove the trees that threaten or endanger the operation of the relevant transmission line. This is so because … the 1969 easement is still in effect, thereby allowing ATC to enter their property. The 1969 easement’s language ‘comprising wood pole structures’ is language of description, not circumscription, and as such, it does not limit the transmission line to being constructed on wood poles, thereby terminating the 1969 easement. Rather, the 1969 easement grants to the dominant estate holder (here ATC) the right to make the change from wood poles to steel poles” (¶ 2).
“A dominant estate has the right to do what is reasonably necessary to enjoy the right to use granted in a deed of easement, provided no undue burden is placed on the servient estate” (¶ 43).
Zoning – Vested Rights
McKee Family I LLC v. City of Fitchburg, 2017 WI 34 (filed 12 April 2017)
HOLDING: A developer had no vested right under a planned-development-district zoning classification.
SUMMARY: A developer, McKee Family I, objected to the city of Fitchburg’s rezoning of its property from a planned-development-district (PDD) to a residential-medium zoning classification. McKee had never applied for a building permit for its property. The circuit court granted summary judgment in favor of Fitchburg and, in an unpublished decision, the court of appeals affirmed.
The supreme court affirmed in an opinion authored by Justice Ann Walsh Bradley. The opinion traces the various zoning classifications in some detail. “At issue is whether McKee has a vested right in the zoning classification and whether the classification creates contractual expectations upon which McKee may rely” (¶ 28).
First, the court rejected McKee’s contention that it had a “vested right” in the PDD zoning classification, for which it was ineligible and for which it had never applied for a permit. It also rejected McKee’s request that the court “depart from Wisconsin’s bright-line building permit rule and evaluate whether a developer has vested rights on a case-by-case basis” (¶ 34). Zoning creates no vested rights except when a property owner applies for a building permit that conforms to the original zoning classification (see ¶ 37). This approach creates predictability for all interested parties (see ¶ 43). A case-by-case approach invites too much uncertainty “at the various stages of the development process” (¶ 44).
Nor does a zoning classification itself create expectations on which developers may rely. A city’s needs change over the years, as amply demonstrated by residents’ complaints about development in this case. “McKee’s argument here contravenes the strong presumption that legislative enactments do not create contractual rights.… Treating legislative acts as contracts would ‘enormously curtail the operation of democratic government’” (¶ 51).
Because McKee had no vested right, the court did not consider its “takings” claim (see ¶ 61).
Justice Abrahamson and Justice Rebecca G. Bradley did not participate in this case.
Commercial Property – Vendor-vendee Liability – Caveat Emptor
Brenner v. Amerisure Mut. Ins. Co., 2017 WI 38 (filed 18 April 2017)
HOLDING: A former commercial tenant was not liable for injuries to a worker incurred while he renovated the property for a later purchaser.
SUMMARY: A commercial tenant, Charter, vacated a commercial property and its owner, Garland Brothers, sold it to an entity, Milwaukee World Festival Inc. (MFW), which bought it “as is.” MFW hired a contractor to do demolition and renovation work, during which a worker, Brenner, was seriously injured when he fell through a hole in the floor. The hole had been created by the removal of a heat treatment furnace by Charter; the hole had been covered by a wooden box.
Brenner later settled with Garland Bros. and Charter; the settlement included a Pierringer release. This litigation involves the extent of Charter’s liability, which is now attributable to the injured Brenner. The circuit court ruled that Charter was not liable for the property’s condition after it vacated its lease. In a published decision, the court of appeals affirmed. See 2015 WI App 85.
The supreme court affirmed in an opinion authored by Justice Kelly. MFW urged the court to abandon caveat emptor doctrine and adopt its construction of the Restatement (Third) of Torts section 51. The court declined to do so.
MWF asked for “no small change” in the law. The transaction in this case was “entirely unremarkable” and any change would affect “an untold (and certainly large) number of vendors who once owned Wisconsin real estate” (¶ 34).
“We decline MWF’s invitation to adopt comment t [to section 51] because it would introduce dramatic changes to the duty a former land possessor owes under Wisconsin law, and would negatively impact settled expectations, and settled rights, between real estate vendors and vendees. Further, MWF has identified no compelling reason to abandon the current state of our law, and certainly nothing important enough to justify the market dislocations comment t would likely cause” (¶ 40).
The court then held that caveat emptor governed the transaction. “These principles instruct that caveat emptor should apply in the commercial tenancy context just as it does in the vendor-vendee relationship described in [Restatement section] 352. The one difference is that a tenant will, when commencing the tenancy, occupy the position of a vendee with respect to the landlord, while at the end of the tenancy he will occupy the position of the vendor” (¶ 47).
When the lessor enters the lease, it is in the role of a vendee who must ensure that the property is suitable for its use (see ¶ 48). When the tenancy ends, the lessee plays the role of vendor in transferring the property back to the landlord (see ¶ 50).
“The similarities between the commercial tenancy and vendor-vendee relationships extend to the intolerable consequences of not applying caveat emptor. The former tenant, like the vendor, would suffer continuing exposure to liability even after he can no longer reduce, eliminate, or manage around the dangerous condition.… He would also, like the vendor, stand as liability insurer to all subsequent possessors, and would similarly have no access to the insurance market (at least until the industry adapted)” (¶ 51).
Finally, examining the facts, the court held that Charter did not fall within the exceptions to Restatement section 353 regarding concealment of a dangerous condition. Garland Bros. had “reason to know” of the holes in the floor (¶ 65).
Justice Rebecca G. Bradley did not participate in this decision.