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    Wisconsin Lawyer
    April 01, 1998

    Wisconsin Lawyer April 1998: Court of Appeals Digest

    Court of Appeals Digest

    By Prof. Daniel D. Blinka & Prof. Thomas J. Hammer

    | Administrative Law | Civil Procedure | Commercial Law | Contracts | Criminal Law | Criminal Procedure | Employee Benefits | Insurance | Municipal Law | Torts |


    Administrative Law

    DNR - Navigable Streams - Chapter 227 Administrative Challenges

    Turkow v. Wisconsin Dept. of Natural Resources, No. 97-1149 (filed 13 Jan. 1998) (ordered published 25 Feb. 1998)

    In 1994 the Department of Natural Resources (DNR) advised the plaintiff that two walkways and a fence obstructed a navigable stream on his property and ordered him to remove all three structures within 45 days or face a citation. The plaintiff did not pursue any administrative remedy available under chapter 227 of the Wisconsin Statutes and one of the issues on appeal was whether the circuit court should have granted DNR's motion to dismiss a declaratory judgment action brought by the plaintiff. In that declaratory judgment action the plaintiff was seeking a declaration that DNR lacked jurisdiction to make orders regarding the stream.

    In a decision authored by Judge Cane, the court of appeals concluded that, based on state sovereign immunity principles and chapter 227 of the Wisconsin Statutes, the proper method for challenging the DNR's navigability determination of the stream on the plaintiff's property was to pursue relief afforded under chapter 227.

    The principle of state sovereign immunity is clearly established and this immunity has been extended to state agencies. Plaintiff must point to a legislative enactment authorizing suit against the state in order to maintain his or her action. The consent to sue a state agency is set forth in chapter 227 and constitutes the exclusive method for judicial review of administrative agency determinations. The record in this case established that the plaintiff did not pursue any remedy available under chapter 227 and, accordingly, the DNR's motion to dismiss his declaratory judgment action should have been granted by the circuit court on that basis.


    Civil Procedure

    Issue Preclusion - Nonmutual Offensive Use - Invocation Against Government Agency Defendant

    Gould v. Wisconsin Dept. of Health and Social Services, No. 97-2602 (filed 29 Jan. 1998) (ordered published 25 Feb. 1998)

    Gould received a lump sum payment for retroactive Social Security Disability Income (SSDI) benefits while she was receiving Aid to Families with Dependent Children (AFDC) benefits for herself and her son. A Department of Health and Social Services (DHSS) hearing officer decided that Gould was overpaid AFDC benefits as a result of that lump sum payment and was properly terminated from AFDC; and that her subsequent application for AFDC benefits for her son was properly denied. Gould appealed the circuit court's order affirming that decision. Among the issues before the court of appeals was whether the doctrine of issue preclusion should have prevented DHSS from litigating the question of the plaintiff's AFDC eligibility under the facts described above when two prior circuit court decisions involving different plaintiffs decided the same issue adversely to DHSS.

    In an opinion authored by Judge Vergeront, the court of appeals concluded that issue preclusion did not apply in this case. In Northern States Power Co. v. Bugher, 189 Wis. 2d 541, 525 N.W.2d 723 (1995), the Wisconsin Supreme Court adopted the terms "claim preclusion" and "issue preclusion" to replace the terms "res judicata" and "collateral estoppel." Issue preclusion refers to the effect of a judgment in foreclosing relitigation in a subsequent action of an issue of law or fact that actually has been litigated and decided in a prior action.

    Here, Gould recognized that she was not a party in the prior cases as to which she wished to assert issue preclusion, but contended that issue preclusion was nevertheless appropriate under Michelle T. v. Crozier, 173 Wis. 2d 681, 495 N.W.2d 327 (1993). Crozier held that trial courts may apply issue preclusion when invoked by a plaintiff (offensive use) who was not a party in the prior litigation (nonmutual use) against a defendant who was, if application of the doctrine is fundamentally fair to the defendant. The court listed several factors to be considered in the fundamental fairness analysis.

    Gould argued to the court of appeals that under the Crozier factors, it was fundamentally fair to apply issue preclusion against DHSS in this case. DHSS responded that the defendant in Crozier was a private party, not a governmental agency; that there is no authority in Wisconsin for using offensive nonmutual issue preclusion against governmental agencies; and that there is persuasive authority from other jurisdictions against this.

    The court of appeals concluded that a state agency's position as a litigant is sufficiently different from that of a private litigant such that the economy of interests underlying a broad application of issue preclusion do not, as a general rule, justify the nonmutual offensive application of the doctrine against the agency. The court indicated that it did not need to decide whether there are any circumstances that might justify applying the doctrine against a state agency and, if so, what they might be. It was satisfied that the case before it did not present circumstances that would justify the creation of such an exception.

    Summary Judgment - "Four-corners" Rule - Insurance - Business Exception

    Monfils v. Charles, No. 97-1158 (filed 21 Jan. 1998) (25 Feb. 1998)

    Thomas Monfils was killed by coworkers at a Green Bay paper mill. His widow and children brought a civil action against Marlyn Charles and his homeowner's insurer. Charles was the paper mill's union representative who allegedly counseled the disgruntled coworkers to "confront" Monfils over his behavior. The complaint alleged that Charles was negligent in the handling of the matter. The circuit court granted the homeowner insurer's motion for summary judgment and dismissed it from the case.

    The court of appeals, in an opinion by Judge Myse, reversed. First, the trial judge erred by "looking outside the four corners of the complaint" to determine whether the insurer had a duty to defend its insured. Specifically, the trial judge examined an affidavit because the pleadings were ambiguous. A 40-year-old A.L.R. article, cited in the case law, at "first blush" supported the argument that "a court can review extraneous materials in considering coverage issues when the complaint is ambiguous or incomplete," but a "closer look at the article reveals that, in fact, the opposite is true." Thus, where a complaint is ambiguous as to coverage, the court cannot look to materials outside the complaint to determine coverage.

    Second, the evidence was insufficient to warrant summary judgment on the ground that the business exception vitiated coverage. The record clearly demonstrated that "Charles's primary occupation was as a paper worker, not a union president." Although observing that the facts must be more fully developed at trial, the court noted that Charles's union presidency was an elected post that involved "intermittent duties," "nominal compensation and the lack of a profit motive."


    Commercial Law

    Lien Priority - Wage Claim Lien

    Pfister v. Milwaukee Economic Development Corp., No. 96-0314 (filed 13 Jan. 1998) (ordered published 25 Feb. 1998)

    In June 1994 Pfister filed a wage lien claim against his former employer, PAL, alleging that PAL owed him more than $200,000 in unpaid commissions and penalties. Years before, First Bank and the Milwaukee Economic Development Commission (MEDC) perfected security interests against PAL for about $750,000 in debts. The bankruptcy court established that PAL's assets amounted to no more than $350,000. A trial judge determined that under the 1993 amendments to sections 109.03(5) and 109.09(2) of the Wisconsin Statutes, "an employee's wage claim lien is a 'superpriority lien' taking precedence over all other security interests (except those excluded by the statute), including all security interests perfected prior to the date an employee's wage claim lien is established." The judge also concluded, however, that the statutes could not be applied retroactively.

    The court of appeals, in an opinion written by Judge Schudson, affirmed in part and reversed in part. First, it agreed that "secs. 109.03(5) and 109.09(2), Stats., as amended, do establish that an employee's wage claim lien has priority over all other liens (except those explicitly excluded by statute), including preexisting ones." The 1993 amendments effected no substantive changes; rather, they "simply added an enforcement mechanism to a previously established right, thus producing a procedural change." Thus, the amended statutes apply retroactively. The court rejected First Bank's and MEDC's argument that the amended statutes unconstitutionally impaired preexisting contracts. Their "contracts with PAL still carry the unaltered right to enforce their security interests. Their contracts, however, could never include any implied right to somehow elevate their liens over wage claims liens given priority under sec. 109.09(2), Stats., both before and after the amendments."

    Second, the court addressed First Bank's challenge to the trial court's finding that "the amended statutes do establish that wage claim liens have priority over pre-existing liens." The court of appeals concluded that under section 109.09(2) "'all' means 'all.'" Thus, the statute gives employee wage claim liens priority "over all others."

    Judge Fine concurred, pointing out several issues that the majority decision did not, in his opinion, decide.


    Contracts


    Settlements - Failing to Read Contract - Mistake

    Nauga Inc. v. Westel Milwaukee Co. Inc., No. 95-3263 (filed 20 Jan. 1998) (ordered published 25 Feb. 1998)

    This dispute involved an agency contract between Nauga and Westel Milwaukee Company to market cellular telephone services. In the midst of rather protracted and complicated litigation, Westel submitted a new agency agreement to Nauga that contained a provision that released Westel from liability in several pending law suits. Realizing the consequences of the release, Nauga's lawyer added a paragraph that accepted the terms upon payment of $250,000. Nauga and Westel executed the agreement, but Westel later claimed that it had not seen the payment provision when it signed the contract. The circuit court refused to enforce the "new agreement" because there had been no "meeting of the minds."

    The court of appeals, in a decision authored by Judge Schudson, reversed. The contract terms were unambiguous. The agreement was reached without fraud or mutual mistake. Rather, Westel simply "failed to properly and thoroughly review the contract before executing it." Although enforcement of the $250,000 settlement "may seem harsh where one party, in fact, did not intend to assent," the outcome was supported by "sound principles embodied in contract law." Only one party made the mistake; thus, no "mutual" mistake occurred.

    Judge Wedemeyer dissented, agreeing with the trial judge that recission was appropriate.


    Criminal Law


    Burglary - Intent to Commit a Felony in the Burglarized Premises - Jury Instructions Regarding Intent of the Actor

    State v. Hammer, No. 96-3084-CR (filed 23 Dec. 1997) (ordered published 25 Feb. 1998)

    Three women and a man were at a party at a residence in Milwaukee. Three men broke into this residence, beat the man, and sexually assaulted the women. Defendant Hammer was charged with several felonies arising out of this incident, including armed burglary with the intent to commit a felony in the premises entered. (This charge is distinguishable from the ordinary form of burglary, which is committed with the intent to steal from the premises entered.)

    When the trial judge instructed the jury about the crime of armed burglary, she advised the jurors about the specific intent element of the offense as follows: "The fourth element requires that the defendant enter the building with the intent to commit a felony. That is, that the defendant intended to commit a felony at the time he entered the building. A first-degree sexual assault is a felony, an armed robbery is a felony, a substantial battery causing substantial bodily harm to another without consent and with intent to cause bodily harm or substantial bodily harm is a felony. ... If you are satisfied beyond a reasonable doubt that the defendant intentionally entered a building, that the entry of the building by the defendant was without the consent of the person in lawful possession, that the defendant knew that he did not have such consent and that the defendant entered the building with the intent to commit a felony, you should find the defendant guilty."

    The trial court declined the defendant's request to instruct the jury that the verdict had to be unanimous with respect to the exact felony that he intended to commit when he entered the dwelling. The court of appeals, in a decision authored by Judge Wedemeyer, affirmed. It concluded that the defendant was not entitled to a unanimity instruction regarding the felonies that formed the basis of his intent to enter the dwelling. The jury merely needed to conclude that the defendant unlawfully entered the dwelling with intent to commit a felony.


    Criminal Procedure


    Revocation of Parole - Successive Certiorari Proceedings

    State ex rel. Macemon v. Christie, No. 97-0660 (filed 28 Jan. 1998) (ordered published 25 Feb. 1998)

    In State v. Escalona-Naranjo, 185 Wis. 2d 168, 517 N.W.2d 157 (1994), the Wisconsin Supreme Court considered the issue of whether a defendant is prohibited from raising a constitutional claim in a post-conviction motion under Wis. Stat. section 974.06, if such a claim could have been raised in a previously filed section 974.02 motion and/or on direct appeal. The court concluded that a prisoner was compelled by section 974.06 to raise all grounds for post-conviction relief in an original motion and that "successive motions and appeals, which all could have been brought at the same time, run counter to the design and purpose of the legislation."

    The question presented in this case was whether the bar of Escalona-Naranjo against successive appeals should be extended to appeals by writ of certiorari from parole and probation revocation hearings. As proclaimed by the U.S. Supreme Court in Morrissey v. Brewer, 408 U.S. 471 (1972), a revoked parolee is guaranteed one full and fair hearing which "must lead to a final evaluation of any contested relevant facts and consideration of whether the facts as determined warrant revocation." Additionally, a right to appeal to the court of appeals is guaranteed by the State of Wisconsin Constitution. A thread runs through our entire jurisprudence that not only is an appeal guaranteed, but it should be meaningful.

    However, said the court in an opinion authored by Judge Snyder, there is no requirement in our system of jurisprudence that a defendant be permitted to file successive appeals from the same action. Because Escalona-Naranjo determined that due process for a convicted defendant permits him or her a single appeal of that conviction and a single opportunity to raise claims of error, it logically follows that a system that permits a revoked parolee or probationer the same opportunity to contest a revocation comports with due process. An aggrieved probationer or parolee should raise all of the issues of which he or she is aware in the original writ of certiorari proceeding; those claims then can be reviewed by the circuit court and, if desired, by the appellate court.

    The court of appeals also adopted the exceptions allowed by Escalona-Naranjo in this case. Thus, if a defendant can offer a sufficient reason for failing to raise an issue of constitutional dimension or for a claim that such an issue was argued inadequately at the time of the original certiorari proceeding, the action may proceed.

    Hearsay - Exposing Children to Harmful Materials

    State v. Kevin L.C., No. 97-1087-CR (filed 4 Dec. 1997) (ordered published 25 Feb. 1998)

    The defendant was convicted of first-degree sexual assault and exposing a child to harmful materials. The court of appeals, in a decision authored by Judge Deininger, affirmed.

    First, the trial court did not violate the defendant's right of confrontation by admitting a child's out-of-court statements made to a social worker. The statements were admitted under the so-called residual exception to the hearsay rule, but the Sixth Amendment right of confrontation requires that the prosecutor take reasonable steps to actually produce the hearsay declarant and demonstrate that the hearsay is reliable. The child-declarant, age six, was ruled "unavailable" after she appeared in court but was unable to testify about the events. The court of appeals observed that the defendant was permitted the "opportunity" to cross-examine the child before the jury. In the alternative, the court also ruled that the state had "produced" the declarant for confrontation purposes. The hearsay statements also passed muster under the second prong of the confrontation analysis. Although the residual exception is not "firmly rooted" and hence does not carry presumptive reliability, the statements carried sufficient "indicia of reliability." In making this assessment the court considered the statements' contents and the circumstances surrounding the utterances to the social worker.

    Second, the court held that section 948.11 of the Wisconsin Statutes was constitutional. The statute comported with First Amendment protections by reasonably imposing "upon an individual the obligation to ascertain the age of persons to whom he or she wishes to exhibit materials deemed harmful to children." In particular, the court distinguished United States v. X-Citement Video Inc., 513 U.S. 64 (1994), which struck down a federal statute for omitting any scienter requirement regarding age. The federal statute covered actions in which it was unlikely that the defendant would personally confront a child, thus depriving the defendant of any opportunity to assess the victim's age.


    Employee Benefits


    Wisconsin Retirement System - Disability Benefits - Employer Certification that Termination Was Because of Disability

    State ex rel. Bliss v. Wisconsin Retirement Board, No. 97-1639 (filed 8 Jan. 1998) (ordered published 25 Feb. 1998)

    Wis. Stat. section 40.63(1) provides that a participating employee is entitled to a disability annuity from the Wisconsin Retirement System if, prior to attaining his or her normal retirement date, certain conditions are met, including the following:

    "The employee is not entitled to any earnings from the employer and the employer has certified that it has paid to the employee all earnings to which the employee is entitled, that the employee is on a leave of absence and is not expected to resume active service, or that the employee's participating employment has been terminated, because of a disability as described in [section 40.63(1)(b)] and as a consequence the employee is not entitled to any earnings from the employer."

    In this case the petitioner was terminated from employment with a municipal police department for violating department rules. Prior to the discharge, he applied for disability benefits under the Wisconsin Retirement System. The Department of Employee Trust Funds and the Wisconsin Retirement Board (board) denied the application for a disability annuity because the petitioner's employer did not certify that termination was due to disability. In fact, the employer certified that termination was for a reason other than disability.

    The petitioner commenced this action to obtain certiorari review of the board's action. The circuit court affirmed the board and the court of appeals, in a decision authored by Judge Deininger, affirmed the circuit court.

    The court of appeals concluded that the board's interpretation of the statutory eligibility requirements for a disability benefit under the Wisconsin Retirement System was entitled to great weight deference. Applying that standard of review, it concluded that the board's interpretation of the statute quoted above to condition disability benefit eligibility on the employer's certification that the petitioner was terminated (or on indefinite leave) because of a disability, did not directly contravene the words of the statute. Nor did the petitioner show that the board's interpretation was contrary to legislative intent or without a rational basis. Accordingly, the employer's failure to certify that the petitioner's termination was because of a disability was fatal to his application for a disability annuity. The court indicated that it would reach the same conclusion if the petitioner had been on an indefinite leave of absence that the employer failed to certify as being caused by a disability.


    Insurance


    UIM Coverage - Stacking - Business Policies

    Reed v. General Casualty Co., No. 96-2371 (filed 23 Dec. 1998) (ordered published 25 Feb. 1998)

    Douglas Reed was killed by a negligent driver who carried only $25,000 in liability coverage. Reed's car carried $500,000 in UIM coverage under a business auto policy issued to Software Resources, a company for which he worked and in which he held 10 percent of the stock. The coverage also extended to four other vehicles. The plaintiffs (Mrs. Reed and her two young children) sought to "stack" the UIM coverage on the other vehicles. The trial judge ruled that Reed was not a named insured but rather an "occupancy" insured and refused to permit stacking.

    The court of appeals, in an opinion written by Judge Wedemeyer, affirmed. The court framed the issue as follows: "whether a corporate officer/director/shareholder in a small corporation should be included under the definition of 'you' or 'family member' as those terms are used in a business auto insurance policy that identifies only the corporation as the 'named insured' so that the officer/director/ shareholder would qualify as a 'named insured' rather than an 'occupancy insured.'" The court distinguished Carrington v. St. Paul Fire & Marine Ins. Co., 169 Wis. 2d 211 (1992), based on its unique facts (a corporation acting in loco parentis to children in its care) and differences in policy language, which clarified that "coverage will extend to a family member only if you [that is, the insured] are an individual."

    Named Insureds - Coverage - Business Auto and Umbrella Coverage

    Greene v. General Casualty Co., No. 96-2578 (filed 19 Nov. 1997) (ordered published 25 Feb. 1998)

    Michael Riekkoff seriously injured three girls when his Ford Bronco jumped a curb. Michael was working for a family business, Riekkoff Installation Services Inc., at the time of the accident. Riekkoff Installation carried a business auto policy and a comprehensive liability policy (umbrella) with General Casualty under which it was the sole named insured. The circuit court ruled that coverage existed for Michael under both policies.

    The court of appeals, in a decision authored by Judge Anderson, affirmed. First, the court concluded "that the business auto policy has been modified to provide insurance to two named additional interests for any auto that they may drive. The additional interest endorsement amends the policy to include Michael within the class of insured persons. Michael was added to the 'Who Is an Insured' provision which is another class of insured persons in addition to the 'you' class, which is the named insured, Riekkoff Installation." Moreover, "[w]hen the named insured is a corporation, but the insurer knows that the covered vehicles are owned by individuals and used by family members, section 632.32 [the omnibus statute] does not distinguish between the owner of the vehicle and the named insured for purposes of determining coverage." The coverage also extended to "any" vehicle driven by Michael. This construction furthered the state's public policy that protects injured third parties, especially where General Casualty accepted premiums knowing that the policy covered "vehicles owned by the corporation's employees which were also used for non-business purposes." Finally, since Michael qualified as an insured under the business auto policy, he also was covered under the umbrella policy.


    Municipal Law


    Municipal Board of Review - Receipt of Advice from Municipal Attorney - Due Process

    Rite-Hite Corporation v. Brown Deer Board of Review, No. 96-3178 (filed 9 Dec. 1997) (ordered published 25 Feb. 1998)

    Rite-Hite Corporation appealed a judgment entered by the trial court upholding, on certiorari review, a determination by the Village of Brown Deer Board of Review sustaining a $4.1 million assessment of property owned by plaintiff White and leased to Rite-Hite Corp. Among the issues on appeal was whether Rite-Hite was denied due process because Brown Deer's village attorney represented both the village and its Board of Review at the board hearing.

    In support of its position, Rite-Hite cited authorities for the proposition that it is a violation of due process for a "decisionmaker" to have "previously acted as counsel to any party in the same action or proceeding." But these authorities, said Judge Fine for the court of appeals, were not applicable in this case. First, the village attorney was not a "decisionmaker" - the Board of Review was, and the village attorney was not a member of the board. Second, the plaintiffs pointed to no instance in the transcript where the village attorney's advice to the board was anything other than impartial.

    Members of Boards of Review generally are lay persons, without legal or technical backgrounds. Giving the board access to legal advice on technical and procedural matters advances rather than retards the goal of setting a fair tax assessment. Thus, the Manual for Boards of Review published by the Department of Revenue recognizes that the municipal attorney "should act as counsel for the Board of Review," by, among other things, "advising the board on legal matters." Accordingly, the plaintiffs were not denied any statutory or due process rights by the village attorney acting as a legal advisor to the board.


    Torts


    Recreational Immunity - Ice Fishing - "Property" - "Occupier"

    Doane v. Helenville Mutual Ins. Co., No. 97-1420 (filed 29 Jan. 1998) (ordered published 25 Feb. 1998)

    Ehle invited Doane to go ice fishing in his portable shanty. Ehle's propane heater (lantern?) exploded and injured Doane. Doane sued Ehle and his insurer, who claimed immunity under section 895.52 of the Wisconsin Statutes, the recreational immunity statute. The circuit court granted summary judgment to the defendants.

    The court of appeals, in an opinion written by Judge Roggensack, reversed. No one disputed that Doane was engaged in recreational activity at the time of the injury. Rather, the dispute centered on whether the portable shanty on the frozen lake qualified as recreational property or Ehle was an "occupant" of the lake. Although the shanty was a "structure," the court concluded "that structures located completely on water and which are not affixed to the lake bed or to the shore, are not located on real property, and are therefore not themselves 'property' within the meaning of the recreational immunity statute." Nor was Ehle an "occupier" because "the shanty could be more fully analogized to a fishing boat which is anchored for a time on a lake." One does not "occupy" a lake by dropping anchor; rather, Ehle was a "user of the lake."

    This column summarizes all decisions of the Wisconsin Court of Appeals. 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.

    Wisconsin Lawyer


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