This case presented important issues related to the authority of circuit courts to order educational services for students who are subject to delinquency petitions and also have been expelled from school. A 15-year-old student was expelled from Madison East High School for bringing nine bags of marijuana to school; the expulsion order denied him any educational services from the school district for at least one semester. The student was also the subject of a delinquency petition as a result of his conduct. In the delinquency proceeding, the circuit court ordered the school district to provide the juvenile with educational services. In an unpublished opinion, the court of appeals granted a writ of prohibition and vacated the circuit court’s order requiring the school district to develop and implement an educational plan for this juvenile.
The crucial issue before the supreme court was whether a circuit court has authority to order a school district to provide alternative educational services to a juvenile who has been expelled from school by a lawful and unchallenged expulsion order. In a majority decision authored by Justice Prosser, the supreme court affirmed the decision of the court of appeals. Addressing the various statutes that are relevant to the central issue on appeal, the court concluded as follows:
“(1) Wisconsin Stat. § 120.13(1)(c)1. gives a school district express authority to expel a student from school. (2) A circuit court does not have statutory authority to order a school district to provide alternative educational services to a juvenile who has been expelled from school by a lawful and unchallenged expulsion order but is still residing in the community. (a) Wisconsin Stat. § 120.12(18) requires a school board to cooperate with the juvenile court and the agency designated by the court to prepare an educational plan under Wis. Stat. § 938.33(1)(e) for a pupil or former pupil who is subject to a dispositional order under Wis. Stat. § 938.34 or Wis. Stat. § 938.355. (b) Wisconsin Stat. § 120.12(18) requires a school district to ‘[c]oordinate and provide for continuity of educational programming’ for pupils receiving educational services as the result of a court order under Wis. Stat. § 938.34(7d). (c) Wisconsin Stat. § 120.12(18) does not require a school board or a school district to provide alternative educational resources to a juvenile who has been expelled from school under Wis. Stat. § 120.13(1)(c)1. (d) Wisconsin Stat. § 938.34(7d) authorizes a circuit court to order a juvenile to attend a variety of educational programs, but it does not authorize a circuit court to order a school district to create an educational program or contract for an educational program” (¶ 5).
The supreme court also disagreed with the circuit court’s view that it could obtain authority over the school district under section 938.45 to order the district to provide educational services for the juvenile. In support of its order, the circuit court stated that the district’s refusal to attempt or consider a reasonable educational challenge and opportunity for the juvenile contributes to the delinquency of the juvenile under Wis. Stat. section 938.45 (see ¶ 22). However, this statute refers to orders that a circuit court may make with respect to “person[s].” Said the supreme court, “[w]e conclude that a plain reading of the statutory language in Wis. Stat. § 938.45, coupled with our obligation to construe statutes in a manner that avoids unreasonable results, clearly indicates that the term ‘person’ encompasses natural persons, not entities such as the District. If the District cannot be considered a ‘person,’ it cannot have contributed to [the juvenile’s] delinquency; consequently, the circuit court could not obtain authority over the District under Wis. Stat. § 938.45” (¶ 72).
Lastly, the supreme court concluded that because the circuit court exceeded its authority by ordering the school district to provide educational services to the juvenile, the writ of prohibition issued by the court of appeals was proper (see ¶ 91).
In dissent, Justice Crooks wrote that he “would hold that a circuit court has authority, when exercising its juvenile court jurisdiction in a delinquency proceeding, to order a school district to submit a plan to provide educational services to a student expelled by the district” (¶ 127). Chief Justice Abrahamson and Justice Bradley joined this dissent.
Experts – Hearsay
State v. Kandutsch, 2011 WI 78 (filed 19 July 2011)
The defendant was convicted of operating a motor vehicle while intoxicated. Police officers found him highly intoxicated in the home of his estranged wife, his car parked nearby. He claimed that he had been sober when he drove to the home but became intoxicated at a nearby bar after he parked his car. To prove he had driven while intoxicated, the state relied on circumstantial evidence: the defendant was wearing an electronic monitoring device (EMD) that established that he had left his home only 20 minutes before his arrest, not more than an hour earlier as he claimed. In an unpublished decision, the court of appeals affirmed, finding sufficient evidence of the EMD’s reliability.
The supreme court affirmed in a majority opinion written by Justice Prosser that addressed two evidentiary issues. First, did the EMD evidence require expert testimony? The court held it did not because “the technology underlying the EMD and the daily summary report [which recorded the subject’s comings and goings] is well within the comprehension of the average juror” (¶ 37). It agreed with the court of appeals that the technology was essentially that of the “cordless telephone.” Several Department of Corrections’ (DOC) agents testified concerning their experience working with EMDs generally and the EMD unit in this case, reporting that they had not seen any problems (see ¶ 39). The court found this sufficient.
“The intersection of radio signals and telephone connections does not convert the EMD into an issue so ‘unusually complex or esoteric’ that the jury required the aid of expert testimony to interpret the information. Accordingly, we decline to take the extraordinary step of requiring expert testimony to introduce evidence of the EMD at issue here” (¶ 41). EMD technology has been used in Wisconsin for several decades (see ¶ 49).
“We conclude that the EMD report does not present an issue that is particularly complex or unusually esoteric, and additionally, that the EMD involves scientific principles that are indisputable and fully within the lay comprehension of the average juror. Expert testimony was not required to properly establish a foundation for the report’s admissibility. Furthermore, the testimony provided by Agents Klarkowski and Williams fully satisfied the requirements of Wis. Stat. § 909.01” (¶ 50).
The second issue was whether the electronic monitoring report generated by the EMD system was hearsay under Wis. Stat. section 908.01. This report provided the critical time frame for the defendant’s having left his house to drive to his ex-wife’s home, from which the jury inferred he had to have been drunk while driving. Hearsay statements are made by declarants, a term defined as including only human beings. Because this report was generated by a machine program, not a human, it was not hearsay; thus, it did not have to be introduced under some exception to the hearsay rule but had only to be properly authenticated, as in this case. The court carefully distinguished “computer-generated records,” like the EMD report, from “computer-stored records,” which may constitute hearsay “because they merely store or maintain the statements and assertions of a human being” (¶ 57).
Chief Justice Abrahamson, joined by Justice Bradley, dissented. The state, they contended, failed to make an adequate record showing that the EMD system was sufficiently reliable (see ¶ 92). No statute or case established its reliability. And the record did not support judicial notice (see ¶ 86). Thus, the state was obligated to provide expert testimony establishing the system’s reliability:
“Neither the circuit court nor the jury was presented with testimony regarding the scientific principles underlying how the technology worked. No testimony was presented that described the computer processes involved in storing the data and producing the report. No testimony was presented regarding the reliability of the software that created the report (except for the anecdotal evidence of the DOC agents), the processes involved in creating the report, or the verification methodology for the output of the system” (¶ 82). Finally, the state also failed to provide sufficient evidence that the defendant’s EMD unit was reliably working that evening (see ¶ 93).
Cross-Examination – Confrontation
State v. Rhodes, 2011 WI 73 (filed 14 July 2011)
A jury convicted the defendant of the execution-style killing of his sister’s ex-boyfriend. The motive for the killing, according to the state, was that the victim had instigated a beating of the defendant’s sister, Nari, the day before. The defendant denied any involvement in the murder and disclaimed any motive to retaliate. To that end, he sought to show a past pattern of domestic abuse of Nari by the victim, for which there had been no retaliation. At trial, Nari testified concerning the beating the day before the murder, minimized the defendant’s involvement, and alluded to prior domestic violence at the victim’s hand. On cross-examination by the defense, Nari talked about earlier abuse at the victim’s hands, including a broken orbital bone, but the circuit court sustained the state’s objection to any further testimony about prior acts of violence. In an unpublished decision, the court of appeals reversed the defendant’s convictions on the ground that the circuit court had unfairly limited his right of cross-examination.
The supreme court reversed the court of appeals in a majority opinion authored by Justice Prosser. The supreme court held that the circuit court did not abuse its discretion by restricting any further cross-examination about the history of domestic violence between Nari and the victim. It had appropriately balanced the risk of confusion against the defendant’s right to challenge the state’s evidence. A defendant has the right to expose a witness’s motivation (bias) in testifying. “Here, however, Rhodes is attempting to use a State witness [Nari] to rebut the State’s theory of the defendant’s motivation, even though Nari had provided little support for the State’s theory in her testimony. If Rhodes had attempted to challenge the motivation or credibility of Nari through cross-examination, we have a different case” (¶ 51). The circuit court “permissively exercised its discretion in curtailing a full inquiry into prior incidents between [the victim] and Nari” (¶ 59). Indeed, “Nari’s testimony seemed to refute the State’s theory of motive” because it portrayed the victim as somewhat protective of, and friendly toward, Nari (¶ 64). “[F]aced with a difficult dilemma,” the trial judge appropriately balanced the defendant’s constitutional rights with the dangers of confusing the issues and misleading the jury (see ¶ 67).
Chief Justice Abrahamson, joined by Justice Bradley, dissented. “A defendant’s fundamental constitutional right of confrontation surely affords the defendant more protection and leeway in cross-examining a witness than the standard analysis used in discretionary evidentiary decisions when a fundamental constitutional right is implicated” (¶ 80).
Family Law
Divorce – Division of Property – Professional Goodwill – Maintenance – Double-Counting Rule
McReath v. McReath, 2011 WI 66 (filed 12 July 2011)
Tim and Tracy McReath divorced following a 20-year marriage. Tim is a dentist with an orthodontic practice (Orthodontic Specialists S.C.) that he purchased from Grady early on in the marriage. Most of Tim’s dental education was pursued during the marriage, and his student loans were repaid with marital funds. Tracy does not have a professional degree and throughout much of the marriage worked as a homemaker and primary caregiver of the couple’s three children. The divorce court ordered Tim to pay Tracy $796,720 to equalize the property division upon the couple’s divorce, as well as maintenance of $16,000 per month for 20 years. In a published decision, the court of appeals affirmed. See 2010 WI App 101. In a unanimous decision authored by Justice Roggensack, the supreme court affirmed the court of appeals.
The first question before the court was whether the entire value of the salable professional goodwill of Tim’s interest in Orthodontic Specialists can be counted as divisible property in the marital estate. Professional goodwill “is the goodwill that is attendant to a professional business” (¶ 1 n.3). The court concluded that “when valuing a business interest that is part of the marital estate for purposes of divorce, a circuit court shall include the value of the salable professional goodwill attendant to the business interest”
(¶ 35).
“[W]hile Wis. Stat. § 767.61(2) excludes specific property from the marital estate, professional goodwill is not listed therein. Moreover, under § 767.61(3), we presume that the marital estate should be divided equally. As aforementioned, the presumption of equal division recognizes the contributions of each spouse to the marriage, including a homemaker spouse’s lost earning capacity from being out of the job market. Where the salable professional goodwill is developed during the marriage, it defies the presumption of equality to exclude it from the divisible marital estate” (¶ 36).
Tim urged the supreme court to divide professional goodwill into subcategories of enterprise goodwill (goodwill in a professional practice attributable to the business enterprise itself by virtue of its existing arrangements with suppliers, customers, or others, and its anticipated future customer base resulting from factors attributable to the business) and personal goodwill (goodwill that is attributable to the individual owner’s personal skill, training, or reputation, that is, the goodwill that depends on the continued presence of a particular individual) (see ¶ 39). Tim further argued that “personal goodwill” should be excluded from the marital estate.
After reviewing cases from other jurisdictions that distinguish between personal and enterprise goodwill, the court “[chose] not to require circuit courts to draw a distinction between personal and enterprise goodwill when dividing a marital estate that includes professional goodwill. This is so because the premise on which the distinction is grounded – that enterprise goodwill is salable and personal goodwill is not – is mistaken. As evidenced by the facts of the case at hand, Tim testified that when he bought Orthodontic Specialists for $930,000, nearly 90 percent of the sale price was for the professional goodwill. Tim described this goodwill as including elements of ‘personal’ goodwill: ‘Dr. Grady’s name, the noncompete clause, and the employment agreement that Dr. Grady would stay on to introduce me to his existing patients.’ Therefore, as this case demonstrates, in some situations, personal goodwill is salable” (¶ 41).
The court went on to conclude that, given the presumption of an equal division of the marital estate and the contributions of both parties to the creation of that estate (including Tracy’s contributions to the development and success of the dental practice), the circuit court did not erroneously exercise its discretion when it included the goodwill associated with Orthodontic Specialists in the marital estate and divided it on a 50/50 basis (see ¶ 58).
The second major issue before the supreme court was whether the circuit court double counted the value of Tim’s professional goodwill by basing Tracy’s maintenance award on Tim’s expected future earnings from Orthodontic Specialists. Under Tim’s line of reasoning, the circuit court counted the goodwill once when it treated the goodwill as a divisible marital asset. Tim contended that the court then counted professional goodwill a second time when it awarded maintenance based on his past earnings from Orthodontic Specialists, given that professional goodwill increased those past earnings. The supreme court disagreed.
“[T]he double counting rule does not prohibit the inclusion of investment income from assets awarded to a spouse as part of property division when calculating maintenance. This is so because the value of the investment asset is separate from the income it produces…. Applying these principles to the case at hand, we conclude that the salable professional goodwill in Orthodontic Specialists is similar to an asset that produces income” (¶ 60) (citations omitted). Tim’s future earnings (calculated at $465,000 annually) constitute income that is “separate from the value of the dental practice as it existed at the time of the property division. Consequently, the circuit court did not double count Orthodontic Specialists’ professional goodwill and, therefore, did not erroneously exercise its discretion when it awarded Tracy $16,000 per month, for 20 years, in maintenance” (¶ 61).
Judges
Disqualification – Power of Supreme Court to Disqualify a Justice on a Case-by-Case Basis
State v. Henley, 2011 WI 67 (filed 12 July 2011)
At the center of this appeal was the issue of whether four justices of the supreme court have the power, on a case-by-case basis, to prevent a judicial peer from participating in a pending matter (see ¶ 6). “The question decided herein is an institutional question, i.e., whether recusal may be forced upon a fellow justice on a case-by-case basis by his or her judicial peers. This question implicates constitutional functions: that of the court as an institution and those of individual justices as constitutional officers” (¶ 8).
In a per curiam opinion joined by four justices (including the justice whose disqualification was sought), the court concluded that determining whether to recuse is the sole responsibility of the individual justice for whom disqualification from participation is sought; a majority of the supreme court does not have the power to disqualify a judicial peer from performing the constitutional functions of a Wisconsin Supreme Court justice on a case-by-case basis; and the party who moved for recusal of a justice in this case has received due process
(see ¶ 39).
Said the majority, “[i]n regard to limiting an individual Wisconsin Supreme Court justice’s constitutional authority to act, Article VII of the Wisconsin Constitution … establishes the circumstances under which a justice can be prevented from exercising his or her judicial functions. It provides that a justice may be removed from office only through impeachment (Wis. Const. art. VII, § 1); pursuant to a disciplinary proceeding brought before the supreme court for cause or disability (Wis. Const. art. VII, § 11); and by address of both houses of the legislature (Wis. Const. art. VII, § 13). The voters may also recall a justice (Wis. Const. art. XIII, § 12)” (¶ 24).
The majority also noted that it is through the Code of Judicial Conduct that the supreme court may exercise its power over an individual supreme court justice (see ¶ 21); however, “[t]he Judicial Code provides no authority to the supreme court to disqualify a justice from participating in a particular case when that justice has considered and decided a motion to disqualify him or her” (¶ 23). The supreme court’s internal operating procedures specify that “[t]he decision of a justice to recuse or disqualify himself or herself is that of the justice alone” (¶ 26).
The majority observed that “four justices forcing a fellow justice off a pending case will not increase the public’s perception that the court is an impartial decision maker. Rather, the specter of four justices preventing another justice from participating will just as likely be seen by the public as a biased act of four justices who view a pending issue differently from the justice whom they disqualified” (¶ 36). It concluded its analysis by indicating that “removal of a justice from participating in an individual case negatively impacts judicial independence. This is so because motions for disqualification are not made in regard to a justice that the movant believes will decide the pending case in the movant’s favor. Rather, they are made to exert pressure on a justice the movant believes will not decide the case as the movant wants it to be decided, or in motions after decision in order to cancel a justice’s participation from a decision under which the movant did not prevail” (¶ 37).
Chief Justice Abrahamson filed a dissenting opinion that was joined by Justice Bradley and Justice Crooks. Among other things, the dissenters were critical of the fact that the justice whose disqualification was sought participated in this decision and was a member of the majority that issued the per curiam opinion (see ¶¶ 42-56).
[Editors’ Note: In a per curiam opinion issued on the same date as the Henley decision, the supreme court denied a motion to disqualify one of its justices in another case by applying the holding in Henley. See Polsky v. Virnich, 2011 WI 69 (filed 12 July 2011). Chief Justice Abrahamson dissented in Polsky and was joined by Justice Bradley and Justice Crooks. Justice Ziegler did not participate in Polsky.]
Lemon Law
Damages – Prevailing Party – Remedies
Kilian v. Mercedes-Benz USA, 2011 WI 65 (filed 12 June 2011)
Kilian leased an automobile manufactured by Mercedes-Benz USA and financed by Mercedes-Benz Financial. Mechanical problems with the car led Kilian to return it to Mercedes-Benz USA, which accepted the vehicle and gave him more than $20,000 under the Lemon Law. Mercedes-Benz Financial, however, began collection actions against Kilian, who had stopped making payments after he returned the car. The collection actions continued even after Kilian’s lawyer advised Mercedes-Benz Financial that the car had been returned, and even after it had promised to stop collection efforts – which finally ceased only when this action was filed. Because Kilian had suffered no pecuniary loss, the circuit court granted summary judgment in favor of Mercedes-Benz Financial because no further Lemon Law violation had occurred. In an unpublished opinion, the court of appeals affirmed.
The supreme court reversed in a majority opinion written by Justice Gableman. First, Kilian had been “damaged” under the Lemon Law regardless of any pecuniary loss. Thus, Kilian’s claim for equitable relief was proper under the Lemon Law (see ¶ 31). Second, Mercedes-Benz Financial had violated the Lemon Law. “We agree with Kilian that a lender who continues to enforce a lease after the consumer returns the vehicle and receives a refund from the manufacturer may be held to violate the plain language of the statute prohibiting ‘[any] person’ from doing so” (¶ 34). Assertions of an “innocent mistake” were inadequate (¶ 37). “[I]n light of (1) Mercedes-Benz Financial’s repeated efforts to enforce the lease for two months after Kilian received his refund, (2) the notice of the refund that Mercedes-Benz Financial received from both Kilian and his attorney, and (3) Bieler’s assurances that Mercedes-Benz Financial’s collection efforts would cease, we hold that Mercedes-Benz Financial violated Lemon Law § 218.0171(2)(cm)3.” (¶ 38). Third, Kilian’s pursuit of equitable relief (rescission) did not limit his remedies under the Lemon Law. Moreover, under the law governing consumer protection actions, Kilian “prevailed” in his lawsuit for purposes of the Lemon Law (see ¶ 46).
The court next addressed Kilian’s remedies under the Lemon Law. Because Kilian had received the refund to which he was entitled, he was not entitled to an amount equal to twice any pecuniary loss. Such a “windfall” was not contemplated by the Lemon Law. “The legislature did not intend that consumers who have already received a proper refund should also recover twice the amount they paid under the lease as pecuniary loss” (¶ 51). Kilian was entitled to his costs and disbursement, which were to be calculated on remand. And because the Lemon Law is a fee-shifting statute, Kilian was also owed his reasonable attorney fees, which were to be determined upon remand (see ¶ 57).
Concurring, Justice Roggensack urged the legislature to require manufacturers to notify a financing institute when a car has been returned under the Lemon Law.
Taxation
Property Taxes – Hospital Exemption – Doctor’s Offices
Covenant Health Care Sys. Inc. v. City of Wauwatosa, 2011 WI 80 (filed 19 July 2011)
St. Joseph Regional Medical Center Inc. (St. Joseph) operates a large full-service hospital on Chambers Street in the city of Milwaukee. It also operates the St. Joseph Outpatient Clinic five miles away in the city of Wauwatosa. The outpatient clinic provides a broad range of outpatient medical services, including 24-hour urgent care and 24-hour laboratory services; its most frequently provided services include cardiopulmonary, continence and pelvic floor, laboratory, pain management, sleep disorder, women’s health, and wound care services and outpatient surgery, pediatric rehabilitation, physical therapy, and radiology. The clinic provides all levels of emergency room care, although patients with more serious conditions are stabilized and transferred to a different medical facility; the clinic does not provide inpatient care. The St. Joseph hospital and the St. Joseph clinic share an online registration system, and all hospital and patient records are accessible at both locations.
Following a lengthy trial, the circuit court found that St. Joseph embarked on the outpatient clinic project to address a variety of limitations confronting the main hospital, including the need to divert less serious emergencies from the hospital to the clinic. “The circuit court found that the Outpatient Clinic fulfilled the primary purpose of the St. Joseph Chambers Street Hospital in a variety of other ways: freeing up space for outpatient services, delivering services more conveniently and efficiently, creating a single unit to address the special health needs of women throughout their lives, and providing the most modern facilities and equipment for patients, visitors, and staff” (¶ 27).
The issue at the heart of this litigation was whether the outpatient clinic is exempt from paying property taxes to the city of Wauwatosa because the clinic property is used exclusively for the purpose of a hospital. See Wis. Stat. § 70.11(4m)(a). The city denied the exemption, arguing that the clinic is a doctor’s office, not a hospital. The circuit court concluded that the clinic is exempt from taxation because the property is used exclusively for the purposes of a hospital. In a published decision, the court of appeals reversed. See 2010 WI App 125. In a majority decision authored by Justice Gableman, the supreme court reversed the court of appeals.
The majority held that the outpatient clinic is used for the primary purposes of a hospital and therefore is entitled to the property tax exemption. Said the supreme court, “[t]he circuit court concluded that the Outpatient Clinic, as designed, constructed, and operated, addressed limitations and goals that could not be addressed or satisfied within the physical confines of the St. Joseph Chambers Street Hospital. We agree with the circuit court that the Outpatient Clinic effectively serves as a department of the larger St. Joseph Chambers Street Hospital. In light of this, we conclude that the Outpatient Clinic is used exclusively for the purposes of a hospital – the St. Joseph Chambers Street Hospital – and therefore qualifies for the property tax exemption under Wis. Stat. § 70.11(4m)(a)”
(¶ 29).
The supreme court further held that the plaintiff met its burden of demonstrating that the outpatient clinic is not a doctor’s office. If it were, the facility would not qualify for the tax exemption. “[W]e conclude that [the plaintiff] has met its burden of demonstrating that the Outpatient Clinic is not a doctor’s office. First, physicians practicing at the Outpatient Clinic do not receive variable compensation related to the extent of their services. Second, the Outpatient Clinic physicians do not receive extra compensation for overseeing non-physician staff. Third, the Outpatient Clinic’s bills are generated on the same software system as the bills generated by St. Joseph. Fourth, physicians at the Outpatient Clinic do not have their own offices. Instead, Outpatient Clinic Physicians have shared access to unassigned cubicles. Fifth, the physicians practicing at the Outpatient Clinic do not own or lease the building or equipment – all equipment is the exclusive property of St. Joseph” (¶ 37).
The court also noted that the clinic accepts emergency ambulances and has the capacity to provide all levels of emergency care; typical doctors’ offices have no such advanced emergency care operations (see ¶ 40). Lastly, the court concluded that proximity to the main hospital is irrelevant when considering whether the clinic qualifies as a doctor’s office (see ¶ 43).
Finally, the court concluded that the clinic was not used for a commercial purpose (its primary aim did not involve making a profit but instead was focused on such purposes as diagnosing and treating illnesses, promoting a greater faith-based health care presence, and so on) and that no part of its net earnings inured to the benefit of any shareholder, member, director, or officer within the meaning of section 70.11(4m)(a) (the court held that the term member does not include nonprofit entities like the plaintiff). Findings contrary to those described in this paragraph would have defeated the clinic’s tax exemption.
Chief Justice Abrahamson filed a dissenting opinion in which she agreed with the court of appeals that the plaintiff has not met its burden to prove that the clinic is not “used as a doctor’s office” (¶ 61).
Property Taxes – Assessments
Stupar River LLC v. Town of Linwood, 2011 WI 82 (filed 22 July 2011)
A country club, Stupar River, appealed its 2005 property tax assessment. It purchased the property for about $830,000 in 2001, but the property was assessed at $1.8 million in 2002, which triggered unrelated litigation. In 2005, the property was again valued at $1.8 million. Stupar River objected, and so the town of Linwood Board of Review (the board) conducted an evidentiary hearing and ultimately upheld the 2005 value. Later assessments in 2006 and 2007, however, “adjusted” the value to about $1.4 million. Stupar River claimed the 2006 and 2007 assessments proved that the property was overassessed in 2005. Nonetheless, the circuit court and the court of appeals upheld the board.
The supreme court affirmed the court of appeals in an opinion written by Justice Gableman. The court’s review was limited to whether the board acted according to law when it upheld the 2005 assessment (see ¶ 19). Stupar River pointed to the undulating annual assessments and the language of Wis. Stat. section 70.32(1), which it interpreted as commanding that assessed values must equal a property’s fair market value (see ¶ 20). The board responded that the later downward adjustments were necessitated by “an overall class adjustment” to all commercial properties (see ¶ 21).
“Without question, assessors must base assessments of real property on the property’s fair market value. See Wis. Stat. § 70.32(1). However, as the plain language of the Property Assessment Manual (Manual) makes clear, a property’s fair market value is not synonymous with its assessed value” (¶ 23). Relying on Department of Revenue protocols, the court explained that “a property’s assessed value is based on fair market value but a property’s assessed value is not necessarily equal to its fair market value. It is axiomatic that assessors may assign to taxable property an assessed value of less than 100 percent of the property’s fair market value when applied uniformly. We therefore reject Stupar River’s argument that the 2005 assessment was an overassessment in violation of the plain language of Wis. Stat. § 70.32(1), and conclude that the 2005 assessment was made according to law” (¶ 24). Moreover, the evidence provided reasonable support for the board’s determination.
Torts
Excusable Neglect – Direct Action – Corporate Officer – Personal Liability
Casper v. American Int’l S. Ins., 2011 WI 81 (filed 19 July 2011)
In 2003, a commercial truck plowed into the back of a stopped minivan, seriously injuring the minivan’s occupants. The plaintiffs sued the trucking company and others. The circuit court extended the time for one insurer to file its answer, finding “excusable neglect” in the insurer’s claim that the complaint had been “lost in the mail.” It also ruled that the plaintiffs could not bring a direct action against the same insurer because the policy in question had not been delivered or issued for delivery in Wisconsin. Finally, the judge also ruled that a corporate officer for the trucking company could be held personally liable for his negligence related to the accident. In a published decision, the court of appeals affirmed. See 2010 WI App 2. Both sides petitioned the supreme court for review.
The supreme court affirmed in part and reversed in part in a majority opinion authored by Justice Prosser. First, the circuit court did not abuse its discretion in enlarging the time for the dilatory insurer to file its answer. Although cautioning that “courts should be skeptical of glib claims that attribute fault to the United States Postal Service,” the record showed that the insurer’s agents “acted in normal fashion and that their established routine worked previously to provide timely answers to the plaintiffs in this case” (¶ 47). Case law sets “an extremely high bar to reverse excusable neglect determinations,” a threshold that was not met in this case (¶ 48).
Second, the supreme court reversed the court of appeals on the direct-action issue, a decision that compelled it to overrule Kenison v. Wellington Insurance Co., 218 Wis. 2d 700, 582 N.W.2d 69 (Ct. App. 1998). The opinion comprehensively surveys the history of the direct-action statutes from their inception to the present. In overruling Kenison, the court held “only that Wis. Stat. § 632.24 applies to any policy of insurance covering liability, irrespective of whether that policy was delivered or issued for delivery in Wisconsin, so long as the accident or injury occurs in this state” (¶ 80). The court expressly recognized the potential effects on other statutory provisions posed by the parties’ arguments, but it was “not prepared to evaluate all the ramifications of such a determination” (¶ 79).
Third, the supreme court addressed whether a corporate officer could be personally liable for his or her negligent acts. The defendant argued that personal liability was limited to a corporate officer’s intentional conduct. The corporate officer, Wenham, allegedly played a role in approving the arduous, arguably unlawful route driven by the drugged truck driver who injured the plaintiffs. The supreme court held that “while a corporate officer may be liable in some situations for non-intentional torts committed in the scope of his employment, in this instance Wenham’s actions are too remote to provide a basis for personal liability” (¶ 105). The court also clarified that “the business judgment rule does not necessarily immunize a corporate executive from liability for negligence. Nonetheless, the very existence of a business judgment rule reflects public policy that corporate officers are allowed some latitude to make wrong decisions without subjecting themselves to personal liability” (¶ 102).
Justice Bradley, joined by Chief Justice Abrahamson, concurred in the majority’s decision on the first two issues but parted ways on the third. In her view, the policy-based “remoteness” analysis was premature because “the facts are not sufficiently developed at this stage” of the proceedings (¶ 107). “The majority foregoes factual development and short-circuits a jury determination” (¶ 116) regarding the role played by Wenham’s alleged negligence in the accident (see ¶ 123).
Towns
Laying Out, Altering, or Discontinuing Public Highways Crossing Municipal Lines – Decisions Made by Town Boards “Acting Together” Pursuant to Wis. Stat. Section 82.21(2)
Dawson v. Town of Jackson, 2011 WI 77 (filed 19 July 2011)
The Dawsons applied to the town boards of Cedarburg and Jackson to vacate part of a jointly owned public highway, Wausaukee Road, which is surrounded by land the Dawsons own. The two town boards held a joint meeting to consider the Dawsons’ application. The meeting was attended by three of five Cedarburg board members and all five Jackson board members. At the meeting, the five Jackson board members voted in favor of the application to discontinue the road, but the three Cedarburg members in attendance voted against it. Following the meeting, Jackson recorded a highway order to vacate the road but Cedarburg declined to issue a similar order. The Dawsons sought a declaratory judgment under Wis. Stat. section 806.04 that the joint action of the town boards resulted in discontinuance of the road. The circuit court granted summary judgment to the Dawsons. In a published decision, the court of appeals affirmed. See 2010 WI App 24. In a majority decision authored by Justice Prosser, the supreme court reversed.
Section 82.21 of the Wisconsin Statutes establishes procedures for laying out, altering, or discontinuing a highway located along the boundary line between a town and another municipality or a highway that traverses such boundaries. On proper application, the governing bodies of the municipalities, “acting together,” shall proceed to determine the matter. At the heart of this appeal was the meaning of acting together. The circuit court and the court of appeals concluded that under section 82.21(2), acting together required that all votes at the joint meeting be counted in the aggregate, resulting in discontinuance of the highway because five of the eight participants in the joint meeting voted in favor of the discontinuance.
The supreme court disagreed and concluded as follows: “The phrase ‘acting together’ does not require that the separate votes taken by two governing bodies in deciding an application to lay out, alter, or discontinue a public highway on or across municipal lines be counted in the aggregate as if the two bodies voted as one.… § 82.21(2) expects governing bodies such as town boards to come together and cooperate to resolve a joint application, but it does not mandate the creation of a combined board. The approval of both governing bodies is necessary to approve a joint application like the one from the Dawsons” (¶ 5) (emphasis added).
The majority further held that “§ 82.15 contemplates certiorari review under Wis. Stat. § 68.13 as the prescribed method for review of ‘a highway order, or a refusal to issue such an order.’ Section 68.13 establishes both the procedure and a time limit for seeking review of a highway order under most circumstances. Inasmuch as the Dawsons were seeking a determination that Cedarburg’s refusal to issue a highway order was not in accordance with law, they should have proceeded under Wis. Stat. § 68.13” (¶ 77) – not under section 806.04 (declaratory judgment).
Justice Roggensack filed a concurring opinion. Chief Justice Abrahamson filed a dissent in which she concluded, among other things, that the votes of the town boards at the joint meeting should have been aggregated (see ¶ 81).
Sexually Violent Persons
Release – Burden of Proof
State v. West, 2011 WI 83 (filed 26 July 2011); State v. Nordberg, 2011 WI 84 (filed 26 July 2011)
Both West and Nordberg were committed as sexually violent persons pursuant to Wis. Stat. chapter 980. Both petitioned unsuccessfully for supervised release. On appeal, both men unsuccessfully contended that chapter 980 and the Wisconsin and U.S. Constitutions place the burden of proof on the state to show that they are not entitled to supervised release. The supreme court affirmed in a majority opinion written by Justice Prosser. [Editors’ Note: Because the opinion in West also disposed of Nordberg’s appeal, only the West case will be summarized here.]
In 2005, the legislature amended chapter 980’s procedures for supervised release. Under the prior statute, the state bore the burden of proving that supervised release was inappropriate. “The issue presented is whether the amendment to Wis. Stat. § 980.08(4) has changed the burden of proof in a supervised release petition, and if so, to whom has it been shifted and how?” (¶ 51). “Prior § 980.08(4)(b) made it clear that it was the State that had to overcome the presumption that a petition would be granted. By contrast, amended § 980.08(4)(cg) sets forth a presumption that supervised release may not be authorized unless, considering all the evidence, ‘the court finds that all of the following criteria are met.’ (Emphasis added.) While this statement does not explicitly address who must meet these criteria, or produce evidence for the court, the list of criteria required for a grant of supervised release makes the assignment of the burden of proof’ unmistakable” (¶¶ 57-58).
The court held that the burden now falls on the person seeking supervised release. “All five criteria are stated in the affirmative. All five criteria are statutory prerequisites to supervised release, and must be supported by evidence before the court. Most important, all five criteria weigh in favor of release, and are therefore in the committed petitioner’s best interests to prove. A plain reading of the statute’s presumption, coupled with these five criteria, unambiguously assigns the burden of proof (that is, the burden of producing the requisite evidence) to the committed individual seeking supervised release” (¶ 59). The opinion discusses each of the five factors.
The court then took up West’s constitutional challenges. It held that by placing the burden on the person seeking supervised release, the statute did not violate either the due process or the equal protection clause of the U.S. or Wisconsin Constitution.
Justice Bradley, joined by Chief Justice Abrahamson, dissented on the ground that the majority’s opinion unnecessarily “pushes chapter 980 one step closer to a punitive scheme” that prior case law had rejected (¶ 104). “Rather than adhering to the statutory text, the majority interprets legislative silence as unambiguous intent to place the burden of persuasion on the committed person. It then exacerbates any constitutional infirmities such an interpretation may create by contending that, based on public policy, the burden on the committed person is clear and convincing evidence” (¶ 103).
Trials
Juror Bias – Appellate Review
State v. Funk, 2011 WI 62 (filed 8 July 2011)
A jury convicted Funk of sexually assaulting a child. During postverdict proceedings, the trial judge learned that one juror, Tanya G., had herself been a sexual assault victim on two different occasions. The trial judge vacated the verdict, ruling that the juror was biased, subjectively and objectively (see ¶ 21). The court of appeals affirmed in an unpublished decision.
The supreme court reversed the court of appeals in a majority opinion authored by Justice Roggensack. Although the main issue was the juror’s bias, the court confronted three “sub-issues”: “(1) whether Tanya G. failed to respond to a material question during voir dire, (2) whether the circuit court’s finding that Tanya G. was subjectively biased against Funk was clearly erroneous, and (3) whether, as a matter of law, a reasonable judge could have concluded that a reasonable person in Tanya G.’s position could not be impartial, and therefore, Tanya G. was objectively biased against Funk” (¶ 1).
First, Tanya G. had not responded to a material question during voir dire when asked if anyone on the jury panel had ever testified in a criminal case (see ¶ 42). The opinion delineates what constitutes a “material” voir dire question, a category that includes “follow-up questions that would likely have been asked had the juror answered the asked question correctly” (¶ 35). The analysis resurrects an approach used in State v. Wyss, 124 Wis. 2d 681, 370 N.W.2d 745 (1985), which predated the court’s more recent assessment of juror bias in light of the inadequacies of earlier case law. (The majority and the dissent sparred over whether Wyss was overruled by the later cases. See ¶ 39 n.18.)
Despite Tanya G.’s failure to respond to a material question, the record did not support a finding that she was subjectively or objectively biased. The trial judge’s determination that she was subjectively biased turned on a question she was never asked, namely, whether anyone on the jury panel had been sexually assaulted (see ¶ 48). For similar reasons, Tanya G. could not be found to be objectively biased. “In sum, jurors are presumed impartial, and Funk had the burden of rebutting this presumption and proving Tanya G.’s bias in this case.… [T]he questions asked of Tanya G. were ‘so inartfully posed that Tanya G.’s non-answers cannot reasonably be used to support a finding of objective bias.’ … As such, Funk has not met his burden because there is no proof that a reasonable juror in Tanya G.’s position could not be impartial. Without such proof, the only basis on which we could conclude that she was objectively biased is to conclude she was per se biased against Funk. Delgado [State v. Delgado, 223 Wis. 2d 270, 558 N.W.2d 1 (1999)] forbids such a per se bias rule based solely on having been the victim of sexual assault…. Consequently, we hold that Funk has not met his burden to prove that Tanya G. was objectively biased.… Therefore, the circuit court erred as a matter of law in concluding that a reasonable person in Tanya G.’s position could not be impartial” (¶ 63).
Dissenting, Chief Justice Abrahamson, who also joined Justice Bradley’s dissent, wrote separately to emphasize that a trial judge’s finding of subjective juror bias is entitled to greater deference on appeal than a finding of objective bias.
Justice Bradley’s dissent emphasized that the approach to juror bias represented by Wyss had been discarded by later case law because of its inadequacies (see ¶ 86). The majority’s approach “resurrects old standards” (¶ 97), blurs the distinction between subjective and objective bias (see ¶ 100), and gives inadequate deference to the circuit court (see ¶ 119).
Worker's Compensation
Injured Employees – Rehiring
deBoer Transp. Inc. v. Swenson, 2011 WI 64 (filed 12 July 2011)
A truck driver, Swenson, suffered a work-related injury for which he was compensated. When he was cleared to return to work, Swenson satisfied all the trucking company’s conditions except for a “check-ride,” a safety measure that required he ride with another driver-trainer for an extended period. Swenson claimed he could not meet this condition because he cared for his elderly father and hiring a nurse in his absence would be too costly. The company would not pay for the nurse or give way on the check-ride requirement, and it then fired Swenson. The Labor and Industry Review Commission (LIRC) ruled in Swenson’s favor, finding that the company unreasonably refused to rehire him and that the check-ride condition was a pretext. The circuit court affirmed LIRC, but the court of appeals reversed on the ground that LIRC had incorrectly interpreted the statute governing reasonable cause. See 2010 WI App 54.
The supreme court affirmed the court of appeals in a majority opinion written by Justice Roggensack. LIRC’s decision, said the court, did not “withstand any level of deference” because it misconstrued the law (¶ 36). The pertinent statute, Wis. Stat. section 102.35(3), requires employers to rehire injured employees absent “reasonable cause.” Case law sets forth the relative burdens between employee and employer, although the supreme court noted a “potential inconsistency in the case law with regard to the third element of the prima facie case” (¶ 40), specifically whether it must be shown that the injury was the reason for the denial of rehiring (see ¶ 41). The court, however, left this issue “for another day” (¶ 42) because Swenson’s employer had reasonable cause. Section 102.35(3) “does not contain a requirement that employers change their legitimate and universally applied business policies to meet the personal obligations of their employees” (¶ 45). Put differently, the employer was not obligated to “accommodate” Swenson in the way that it must accommodate a disabled employee (see ¶ 52).
The court also found unsupported by the evidence LIRC’s finding that the check-ride requirement was only a pretext. “[A] primary reason LIRC found pretext was that deBoer failed to present evidence that it would have been an unreasonable burden to adjust to Swenson’s personal obligations. As discussed above, LIRC’s focus on deBoer’s failure to change its check-ride policy to assist Swenson in meeting his personal obligations was based on an erroneous interpretation of Wis. Stat. § 102.35(3). Consequently, deBoer’s failure to present evidence that it would have been an unreasonable burden to change its check-ride policy for the sake of Swenson’s personal care obligations cannot be used as a rationale for LIRC’s pretext finding” (¶ 56).
Justice Bradley dissented, joined by Chief Justice Abrahamson, on grounds that the majority’s “elaborate gymnastics” (¶ 67) failed to accord LIRC’s findings adequate deference and that sufficient evidence supported LIRC’s conclusions.
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