Wisconsin
Lawyer
Vol. 81, No. 5, May
2008
Supreme Court Digest
This column summarizes selected
published opinions of the Wisconsin Supreme Court (except those
involving lawyer or judicial discipline, which are digested elsewhere in
the magazine). Prof. Daniel D. Blinka
and Prof. Thomas J. Hammer invite comments and questions about the
digests.
They can be reached at the Marquette University Law School, 1103 W.
Wisconsin
Ave., Milwaukee, WI 53233, (414) 288-7090.
by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer
Administrative Law
Ambiguity - Agency Interpretation
State v.
Harenda Enters., 2008 WI 16 (filed 13 March 2008)
The Department of Natural Resources (DNR) cited a contractor,
Harenda, for
violating administrative rules governing asbestos abatement while
renovating an old building.
The circuit court found that tests of materials from the job site
revealed the presence
of improperly handled asbestos. The court of appeals reversed on the
ground that the DNR
had relied on an Environmental Protection Agency (EPA) interpretation of
a rule that
was inconsistent with the rule's plain language.
The supreme court reversed the court of appeals in a decision
authored by
Justice Bradley. "The central issue in this case concerns the
interpretation of the method
used to test for asbestos-containing material (ACM) pursuant to chapter
NR 447 of the
Wisconsin Administrative Code" (¶ 24). First, the court held
that the rule itself was ambiguous
because it was
poorly written, consisting of two clauses that, simply put, did not
relate to one another
(see ¶ 36). Second, despite the court's finding that the
rule was ambiguous, the court held
that the DNR's interpretation of the rule was not inconsistent with the
regulation or
clearly erroneous (see ¶ 48). In particular, the DNR relied
on EPA interpretations of the
rule. "The EPA's interpretation fulfills the purpose of the
asbestos regulations, whereas
the alternative interpretation Harenda proposes defeats that purpose.
Moreover, the
EPA's view is supported by basic principles of statutory construction.
Giving deference to
an agency's interpretation of its own rule, we conclude that the
interpretation of
§ 1.7.2.1 explained in the EPA's January 1994 and December
1995 clarifications is controlling" (¶ 57).
Third, the EPA's interpretations did not constitute
"legislative rules" that
were improperly promulgated (see ¶ 65). Finally, the circuit
court properly granted summary judgment against the
contractor. The contractor argued that its own predemolition sampling
and testing failed
to reveal ACM, and thus an issue of fact was created for trial. The
supreme court
held, however, that "liability does not depend on whether an owner
or operator conducts
pre-demolition sampling testing in accord with the regulations"
(¶¶ 71-72).
Justice Ziegler, joined by Justices Prosser and Roggensack,
dissented. They
concluded, in essence, that the EPA's clarifications did not
"clarify" the ambiguity, were
contrary to the promulgated rules, and were themselves rules that were
not properly adopted.
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Consumer Law
Home Improvements - Negligence - Damages - Statute of Limitation
Stuart v.
Weisflog's Showroom Gallery
Inc., 2008
WI 22 (filed 28 March 2008)
This appeal raised issues under the Home Improvement Practices
Act (HIPA), as
set forth in Wisconsin Administrative Code chapter ATCP 110 (Oct. 2004)
and Wis. Stat.
section 100.20(5). The Stuarts hired a contractor, Weisflog's Showroom
Gallery (WSGI),
to remodel and put an addition on their home. In 1996 they entered into
a remodeling
contract with WSGI, and they first became aware of substandard
construction (for
example, rotted flooring) in 2001. They filed suit in 2003, about two
years after becoming
aware of the problems and seven years after construction began. The
supreme court, in an
opinion written by Justice Crooks, affirmed a decision by the court of
appeals, which
affirmed in part and reversed in part rulings by the circuit court.
The decision addressed six major issues, which are succinctly
described in the
court's summary. "First, we hold that the Stuarts' HIPA claims and
their negligence claims
are not barred by the statute of limitations because their claims are
governed by the
discovery rule and the six-year statute of limitations set forth in Wis.
Stat. §
893.93(1)(b). Second, we are satisfied that Wis. Stat. § 100.20(5)
authorizes the doubling of an
entire damage award, even if a HIPA violation is combined with
additional wrongdoing that
contributes to the loss in question. Third, based on the evidence in the
record and on
the facts of the present case, we hold that the circuit court erred by
asking the jury
to apportion damages between the Stuarts' HIPA claims and their
negligence claims"
(¶ 4). "To obtain apportionment in lawsuits that contain
HIPA claims, we hold that,
before a party may request apportionment, it must meet the burden of
showing that the
damages can be separated. The petitioners failed to do so in the present
case. In cases
such as the present one, where there is no clear way to apportion the
Stuarts' pecuniary
loss between negligence damages and HIPA damages, doubling the entire
pecuniary loss
serves public policy concerns by encouraging victims to become `private
attorney generals'
and by providing larger disincentives to unscrupulous contractors"
(¶ 30). "Fourth, we are satisfied that the ELD [economic loss
doctrine] is inapplicable to
the Stuarts' claims, and, therefore, does not bar their claims"
(¶ 4). "If we were to apply the ELD to bar the HIPA claims,
we would be ignoring
the public policies that are the basis for the HIPA. We are satisfied
that the ELD
cannot apply to statutory claims, including those under HIPA, because of
such public
policies. Whether or not the ELD applies to the Stuarts'
non-HIPA negligence claims would be
analyzed and determined using the predominant purpose test. In analyzing
those claims
in light of the predominant purpose test, we hold that the architectural
contract, which
was one for services, was the core transaction from which the
contract for the remodeling
and for the addition flowed. That second contract also involved
services, as well as
some products. Given that the core contract was one for services, and
given that both
contracts involved services, we are satisfied that the transactions were
primarily for
services and that the ELD does not apply in the present case. The
appropriate application
of the predominant purpose test leads us to that result" (¶
33).
"Fifth, we hold that a corporate employee may be held
personally liable for acts,
he or she takes on behalf of the corporate entity that employs him or
her, that violate
the HIPA" (¶ 4). "However, we note that merely being an
officer, agent, employee,
representative, shareholder, or director will not be enough to impose
individual liability on
a person in such a class in the absence of proof that he or she was
personally
responsible for prohibited, unfair dealings or practices" (¶
42). "Lastly, we hold that the
circuit court erred in its determination of an appropriate attorney fee
award" (¶ 4). The
trial judge awarded about $16,000 in fees based on a percentage of the
damages. The
Stuarts sought about $200,000 in fees. The supreme court ordered that on
remand, the trial
court was to use the "lodestar methodology" as described in
other cases.
Chief Justice Abrahamson concurred in the majority opinion
except for part VI
relating to the ELD. Justice Roggensack, joined by Justices Prosser and
Ziegler, concurred in
part and dissented in part.
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Criminal Procedure
Preliminary Hearings - No Defense Right to Subpoena Police
Reports Before
Preliminary Hearing
State v.
Schaefer, 2008 WI 25 (filed 2 April 2008)
The district attorney charged the defendant with two counts of
second-degree
sexual assault of a child. Before the preliminary hearing, defense
counsel served a
subpoena duces tecum on the police chief of the investigating police
department commanding
that the following materials be produced at what the subpoena described
as a "return
of records" proceeding: "a complete copy of all reports,
memorandums, witness interviews
and any records related to the investigation and arrest of [the
defendant] on suspected
criminal offenses relating to the alleged sexual assault of [the
victim]" (¶ 11). The
state moved to quash the subpoena. A court commissioner and a circuit
court judge both
granted the motion to quash. The defendant was granted leave to appeal,
the court of
appeals certified the case to the supreme court, and the supreme court
accepted certification.
In a majority opinion authored by Justice Prosser, the supreme court
affirmed.
The supreme court characterized this as a "discovery"
case because, the court
said, the defendant "is using the subpoena duces tecum as a
discovery tool" (¶ 31), and
it described the defendant's appeal as one asking the court to approve
use of the
subpoena power to effect discovery in a criminal case before the
preliminary hearing
(see ¶ 18). It concluded that "a criminal defendant
does not have a statutory or constitutional
right to compel the production of police investigation reports and
nonprivileged materials
by subpoena duces tecum prior to the preliminary examination. A criminal
defendant who
employs the subpoena power in this manner is attempting to engage in
discovery
without authority in either civil or criminal procedure statutes and in
conflict with
criminal discovery statutes. Although a reasonable argument can be made
for prosecutors to
open their files to defendants at an early point in criminal
prosecutions, this argument
does not translate into an enforceable right to subpoena police
investigation reports
and nonprivileged materials before a preliminary examination"
(¶ 95).
The court concluded that no subpoena statute authorizes the
defendant's action
(see ¶ 45). It further noted that the criminal discovery
statute (Wis. Stat. § 971.23(1))
requires a district attorney to disclose discovery material "within
a reasonable time
before trial." "Requiring the state
to disclose discovery material before the
preliminary examination - before the court has even authorized a
trial - is plainly at odds with
the statutory scheme. This conclusion about timing is reinforced by the
language in
Wis. Stat. § 971.31(5)(b) that discovery motions `shall not be
made at a preliminary
examination and not until an information has been filed'" (¶
57).
Responding to the defendant's constitutional arguments, the
court concluded
that "[t]here is no compulsory process right to subpoena police
investigation reports
and nonprivileged materials before the preliminary examination"
(¶ 70), and it declined
to expand a defendant's compulsory process rights to encompass a right
to subpoena
these kinds of materials for examination and copying in anticipation of
a preliminary
hearing (see ¶ 75). It further held that the defendant
"has no Sixth Amendment right, based
on effective assistance of counsel, to subpoena police reports and other
non-privileged materials prior to his preliminary examination"
(¶ 94).
Chief Justice Abrahamson filed a concurring opinion that was
joined by Justices
Bradley and Butler.
Discovery - State's Failure to Disclose Discoverable Materials -
Remedy
State v.
Harris, 2008 WI 15 (filed 6 March 2008)
The defendant was convicted of possessing more than 40 grams of
cocaine or
cocaine base. He sought postconviction relief in the circuit court and
alleged numerous
violations of the discovery statutes by the state. The circuit court
denied the motion for
a new trial, and the court of appeals affirmed in an unpublished
opinion. In a
unanimous decision authored by Chief Justice Abrahamson, the supreme
court affirmed the court
of appeals.
One of the defendant's complaints involved the failure of the
prosecutor to turn
over certain reports of police witnesses until the day of trial despite
the fact that
the defendant had previously filed a discovery demand. The court agreed
that the
prosecutor had a duty to turn over these reports because they contained
written statements of
a witness whom the district attorney intended to call at trial and
further because
they contained exculpatory evidence. See Wis. Stat. §
971.23(1)(e), (h).
The court rejected the state's argument that disclosure was
timely because the
reports were turned over as soon as the prosecutor found them. Said the
court, "It is of no
moment under the criminal discovery statute that the State was unaware
until the day
before the trial or during the trial that it possessed the reports in
question when the
information was in the district attorney's files and could have been
located before trial
had the files been examined with reasonable diligence. The prosecutor's
belated discovery
of the evidence in his possession did not absolve the prosecutor of his
duty under
Wis. Stat. § 971.23(1) to reveal the evidence within a
reasonable time before trial. The
prosecutor's duty is to seek to know of the existence of reports that
should be
disclosed. The test of whether evidence `should be disclosed
is not whether in fact the
prosecutor knows of its existence but, rather, whether by the exercise
of due diligence the
prosecutor should have discovered it.' ... The court of appeals was
correct in concluding,
and we emphasize, that `the report should have been maintained [in the
district
attorney's office] in such a fashion as to be included in the State's
response to [the
defendant's] pretrial discovery requests'" (¶¶ 39-40)
(citations omitted). Nonetheless, the
court concluded that in the overall context of this case, the failure to
disclose these
reports was harmless error. It further rejected the defendant's claim
that he is entitled to
a new trial because the nondisclosure violated his right to due process.
See Brady v. Maryland, 373 U.S. 83 (1963).
The discovery statutes grant the circuit court discretion to
advise the jury about
the state's misconduct as a sanction for violating those statutes.
See Wis. Stat. § 971.23(7m)(b). In this case the supreme
court concluded that, although the circuit
court apologized to the jury for the delay (which was occasioned by the
discovery
violation) and explained defense counsel's obligation to make
objections, it "erroneously
exercised its discretion in failing to advise the jury that the State
had failed to make
timely disclosure of the reports to the defendant under the criminal
discovery statute" (¶
106). Said the court, "Although the effect of the State's failure
to adhere to the
criminal discovery statute on the defendant's trial strategy was not
great and the admission
of the evidence was not prejudicial, defense counsel was caught by
surprise. A
defendant should not be surprised by two unproduced reports that were
requested, were subject
to discovery, and were in the prosecutor's possession. Under the
circumstances of
the present case, we agree with the defendant that the circuit court
should have
exercised its discretion to mitigate the effect, if any, of the State's
failure to fulfill
its statutory discovery obligations by advising the jury pursuant to
§ 971.23(7m)(b)" (¶ 105). Nonetheless, the supreme
court concluded that the trial
judge's failure to
so advise the jury was harmless error.
The court further found that the state violated the discovery
statute by failing
to disclose a certain statement made by the defendant. It also found
that the circuit
court erred in failing to strike a certain reference to the defendant's
criminal history
that was contained in paperwork found during the execution of a search
warrant and was used
to link the defendant to the cocaine found on the premises that were
searched.
However, neither of these errors was found to be prejudicial. The court
also concluded that
the various errors described above, when viewed cumulatively, were not
prejudicial
errors requiring a new trial (see ¶ 114).
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Motor Vehicle Law
OWI - Implied Consent - Elements of a Refusal Hearing - Probable
Cause for
Arrest - Informing the Accused - Oversupply of Information Before
Refusal
Washburn
County v. Smith, 2008 WI 23 (filed 28 March 2008)
After being arrested for operating a motor vehicle while under
the influence of
an intoxicant (OWI), the defendant refused to submit to chemical
testing. In an
implied consent refusal hearing the circuit court concluded that the
defendant unlawfully
refused to submit to a chemical test, and it revoked his operating
privilege. In an
unpublished opinion, the court of appeals affirmed. In a unanimous
decision authored by Chief
Justice Abrahamson, the supreme court affirmed the court of appeals.
The first question considered by the supreme court was whether
the circuit court
erred in determining at the refusal hearing that the law enforcement
officer had probable
cause to arrest the defendant for OWI. The supreme court held that the
circuit court did
not err because, under the circumstances in this case, the arresting
officer's knowledge
at the time of the arrest would lead a reasonable law enforcement
officer to believe
that the defendant was operating a motor vehicle while under the
influence of an intoxicant.
"At the time of the arrest, the Deputy knew that the
defendant had been driving
well in excess of the speed limit (21 m.p.h. over the limit) late at
night on a two-lane
highway; that the defendant delayed [for .3 miles] pulling over after
the Deputy
activated his emergency lights; that the defendant had twice driven
across the centerline
before pulling over; that the defendant had an odor of alcohol on his
breath; that the
defendant had admitted to consuming alcohol over a period of more than
ten hours ending just
prior to his encounter with the Deputy; and that the defendant had
supplied inconsistent
and equivocal information regarding the amount of alcohol that he had
consumed during
that period of time. The state has met its burden of presenting evidence
sufficient to
establish that the Deputy had probable cause to believe that the
defendant was operating
a motor vehicle while under the influence of an intoxicant and had
probable cause to
arrest him for this offense" (¶ 36).
No evidence of a field sobriety test was admitted at the refusal
hearing because
the officer failed to comply with a subpoena duces tecum directing him
to bring his
training manuals to the hearing. The defendant argued that
State v. Swanson, 164 Wis. 2d 437, 475 N.W.2d 148 (1991),
requires that a field sobriety test be performed in order for
the state to establish probable cause for an OWI arrest. The court said,
"Swanson did not announce a general rule requiring field
sobriety tests in all cases as a prerequisite
for establishing probable cause to arrest a driver for operating a motor
vehicle while
under the influence of an intoxicant" (¶ 33).
The second issue before the court was whether the circuit court
erred in
determining at the refusal hearing that the defendant
unlawfully refused to submit to chemical
testing. At the heart of this issue was the defendant's contention that
his refusal was
not improper for two reasons. First, the deputy failed to explain to the
defendant that
the penalties for a refusal under Wisconsin law might be different from
the penalties for
a refusal under Louisiana law (the defendant has a Louisiana driver's
license). Second,
the deputy mistakenly told the defendant that he would have a hearing on
a refusal to
submit to a breath test within 10 days (when in fact the 10-day period
referenced in the
implied consent law relates to the time within which a request for a
hearing must be made).
Before tackling the defendant's complaints, the court helpfully
clarified the
application of several prior appellate decisions that deal with 1) an
officer's failure to inform the arrestee of statutorily mandated
information about the implied consent law
(the "Informing the Accused" protocol) and 2) an officer's
erroneous oversupply of
information about the implied consent law. The supreme court held that
if an officer has failed
to provide statutorily mandated information, the circuit court should
order that no
action be taken against the operating privilege for the implied consent
refusal.
See State v. Wilke, 152 Wis. 2d 243, 448 N.W.2d 13 (Ct. App.
1989). However, in situations in
which the officer has imparted information beyond what is required by
the implied consent
law, the circuit court must determine whether that information was
erroneous and, if
so, whether the erroneous additional information in fact caused the
defendant to refuse
to submit to chemical testing. See State v. Ludwigson,
212 Wis. 2d 871, 569 N.W.2d 762 (Ct. App. 1997);
County of Ozaukee v. Quelle, 198 Wis. 2d 269, 542 N.W.2d 196 (Ct.
App. 1995).
This case involved an oversupply of information after the deputy
correctly advised
the defendant of statutorily mandated information about the implied
consent law. Thus
the court resolved the defendant's complaints by applying the
Quelle and Ludwigson cases. It rejected the argument that
the officer stated incorrect penalties for an implied
consent violation because he did not differentiate between Wisconsin and
Louisiana
sanctions. "The Deputy accurately stated the Wisconsin law.
Regardless of whether the Deputy
accurately stated the law of Louisiana, neither the deputy nor the
defendant believed
that the Deputy was stating the law of Louisiana" (¶ 81). With
respect to the erroneous
information about the 10-day period as described above, the court
concluded that the
defendant failed to make a prima facie showing that the error
contributed to his refusal to
submit to chemical testing (see ¶ 86). Accordingly, the
court held that the defendant's
refusal to submit to a breath test was unlawful.
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Torts
Underage Drinking - Social Hosts
Nichols v.
Progressive N. Ins. Co., 2008 WI 20 (filed 25 March 2008)
The Nichols' vehicle was struck by a vehicle driven by a minor,
Carr, who had
consumed alcohol at an underage drinking party held on the Niesens'
property. The Nicholses
sued the Niesens for their alleged negligence in failing to supervise
and monitor the
party. The circuit court dismissed the complaint for failure to state a
claim. The court
of appeals reversed on the ground that the complaint stated a claim for
common-law
negligence.
In an opinion authored by Justice Crooks, the supreme court
reversed the court
of appeals. The court held that public policy factors precluded a claim
for common-law
negligence. It specifically observed that the "Nichols do not
allege that the Niesens
provided alcohol to Carr, that the Niesens were aware that Carr
(specifically) was
consuming alcoholic beverages, that the Niesens knew or should have
known that Carr was
intoxicated, or that the Niesens knew or should have known that Carr was
not able to drive
her motor vehicle safely at the time of the accident. We note that there
also is no
allegation by the Nichols that the Niesens aided, agreed to assist, or
attempted to aid Carr
or any other person in the procurement or consumption of alcohol on
premises under
their control. There also are no allegations that the Niesens knew in
advance that any
underage individuals would be drinking" (¶ 20).
The court found "most significant" the following
public policy factor:
Recovery against a negligent tortfeasor may be denied when
"allowing recovery would have no
sensible or just stopping point" (¶ 27).
"Liability for injuries that are caused by an
underage, intoxicated individual has always been premised upon the
affirmative acts of a
defendant, such as procuring, furnishing, or dispensing alcohol for that
underage
individual. Liability has never been premised on the conduct that the
Nichols alleged" (¶
30). "If the Nichols' claim were allowed to proceed, the expansion
of liability might
also include liability for parents who allegedly should have known that
drinking would
occur on their property while they were absent, based on the
proclivities of teenagers in
a given area to consume alcohol. Imposing such liability would be only a
short step
away from imposing strict liability upon property owners for any
underage drinking that
occurs on property under their control" (¶ 31). No prior
Wisconsin case "has held a social
host liable for the results of a guest's intoxication when that social
host did not
provide alcohol
. We conclude that a claim for common-law
negligence cannot be maintained
against social hosts who allegedly were aware that minors on their
property were consuming
alcohol, but who did not provide the alcohol, when an underage guest
later was involved in
an alcohol-related car accident" (id.).
The court also addressed concerns that the court, in
Hoida Inc. v. M&I Midstate Bank, 2006 WI 69, had somehow
"overruled" several decisions that are discussed in some
detail in the opinion. The court said that
Hoida did not change Wisconsin negligence law;
public policy factors continue to determine when liability is limited
(see ¶ 47). To hold otherwise would be a "significant
extension" of liability, said the court, and the court
reserved this task to the legislature (see ¶ 49).
Chief Justice Abrahamson concurred in the mandate. She
criticized the majority
opinion for relying on "legislative policy" and not
"judicial public policy grounds." The
Chief Justice agreed with the reasoning of the circuit court, which
found that liability
was foreclosed by Wis. Stat. section 125.07
(see ¶ 50).
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