Court of Appeals Digest

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

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.

Civil procedure

Issue Preclusion - Standard of Review

Ambrose v. Continental Ins. Co., No. 96-1522 (filed 30 Jan. 1997) (ordered published 25 Feb. 1997)

Cook and Ambrose were injured when their automobile collided head-on with another vehicle. Each claimed the other was driving. Cook was charged with driving under the influence of an intoxicant (OWI). Ambrose testified for the prosecution that Cook was the driver. Cook was convicted following a bench trial. Ambrose then filed this civil action against Cook for injuries sustained during the accident. Citing the doctrine of issue preclusion, Ambrose moved the court for an order precluding Cook from "producing any evidence contradicting the fact that he was driving and he (Cook) was intoxicated at the time of the accident." The trial judge rejected Ambrose's motion, finding that issue preclusion was inappropriate in this case.

The court of appeals, in an opinion written by Judge Vergeront, affirmed. First, the court addressed the appropriate standard of review. It "harmonized" the "apparent conflict" between two leading cases on issue preclusion. The controlling case remains Michelle T. v. Crozier, 173 Wis. 2d 681, 495 N.W.2d 327 (1993), which set forth a variety of factors that the trial court must weigh in exercising its discretion. Some factors involve questions of law. They are reviewed de novo and subject to reversal only if the exercise of discretion is based upon an error of law.

In this case, the judge properly exercised his discretion. Cook claimed that he received ineffective assistance of counsel at the OWI trial. Little weight was assigned to the fact that the defense lawyer waived jury in the OWI case and was later disbarred for other misconduct. More critical was defense counsel's failure to present a witness and medical evidence showing that Cook was not the driver. Although some of the factors plainly supported issue preclusion, the trial judge appropriately ruled that the failure to introduce relevant evidence in the OWI proceeding so affected the quality of that trial that it would be fundamentally unfair to apply issue preclusion.

Criminal law

Loan Sharking - Extortionate Extensions of Credit

State v. Green, No. 96-0652-CR (filed 21 Jan. 1997) (ordered published 25 Feb. 1997)

The defendant was convicted of making an extortionate extension of credit in violation of section 943.28(2) of the Wisconsin Statutes, which provides: "Whoever makes any extortionate extension of credit, or conspires to do so, if one or more of the parties to the conspiracy does an act to effect its object, is guilty of a Class C felony." Section 943.28(1)(b) defines "extortionate extension of credit" as "any extension of credit with respect to which it is the understanding of the creditor and the debtor at the time it is made that any delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation or property of any person." (Emphasis supplied.)

The defendant argued that this definition of "extortionate extension of credit" permits a conviction only if there is evidence proving that, at the time the debt was created, the parties had a mutual understanding that delay in payment could result in the use of violence or other criminal means to cause harm to the person, reputation or property of any person. Stated differently, the defendant urged that if the parties came to the belief that a failure to pay might result in the use of violence but did so after the original extension of credit, this would not satisfy the statute's definition of "extortionate extension of credit." The latter was the situation in this case.

The victim purchased cocaine from the defendant for years and was only charged for the value of the drugs. However, the arrangement changed when the victim got behind in her payments and was then repeatedly threatened with harm if she did not comply with the wishes of the defendant regarding repayment of her drug debt.

The court of appeals, in a decision authored by Judge Curley, concluded that the phrase "at the time it is made" found in the definition of "extortionate extension of credit" encompasses credit extensions and renewals as well as the initial loan transaction between the parties. The court found support for this conclusion in the statute's legislative history and in the interpretation given to a similar federal statute. In so finding, the court rejected the defendant's position that the definition of an extortionate extension of credit is time-sensitive and that a conviction can be obtained only if the threat is made at the time of the original extension of credit.

Rejecting the defendant's argument as being contrary to common sense, the court stated that the evil being addressed by the statute - the lending of money outside the normal channels and rules, enforced by threats of physical harm and by actual violence - is as great at a later extension of credit as it is at the initial transaction. "To embrace [the defendant's] argument would leave a hapless and threatened victim unprotected whenever the original debt was extended or renewed."

Criminal procedure

Sentencing - Imposition of Consecutive Sentences

State v. Thompson, No. 96-0124-CR (filed 14 Jan. 1997) (ordered published 25 Feb. 1997)

In the present case the circuit court sentenced the defendant to a period of incarceration to run consecutively to any other previously imposed sentence. At the time of sentencing, the defendant was on probation for a previous conviction. In that prior case the court had imposed and stayed a prison sentence and placed the defendant on probation. Approximately two months after the sentencing in the present case, the defendant's probation in the prior case was revoked.

Seeking to avoid the consecutive prison terms, the defendant sought postconviction relief challenging the trial court's power in the present case to impose a sentence consecutive to that which had been imposed and stayed in the previous case. The circuit court denied the postconviction challenge and the court of appeals, in a decision authored by Judge Wedemeyer, affirmed the circuit court.

The issue before the appellate court was whether section 973.15(2) of the Wisconsin Statutes authorizes a trial court to impose a sentence consecutive to a previously imposed and stayed sentence where the previous sentence is to be served only upon revocation of probation and that probation has not yet been revoked. The court of appeals concluded that such authority exists under the statute. The key statutory language states that "the court ... may provide that any ... sentence be ... consecutive to any other sentence imposed at the same time or previously."

In the defendant's prior case, the trial court did impose a sentence, but then stayed it and placed the defendant on probation. In the present case, no violation of the statute occurred because the circuit judge sentenced the defendant to a period of incarceration consecutive to that "imposed" in the prior case. The fact that the probation in the prior case had not been revoked at the time of sentencing in the present case did not defeat the court's authority in the present case to make the present sentence consecutive to that which had been imposed in the prior prosecution.

Confessions - Miranda -"Fruitless Tree"

State v. Ambrosia, No. 95-3393-CR (filed 15 Jan. 1997) (ordered published 25 Feb. 1997)

The defendant was arrested while police executed a search warrant. A police officer briefly interrogated the defendant without reading him the Miranda rights. The defendant made an incriminating response. The officer then read him the Miranda warnings and the defendant gave a more detailed statement. The trial judge suppressed the first interrogation and all parts of the second interrogation that directly or indirectly related to the first interrogation.

The court of appeals, in an opinion written by Judge Snyder, affirmed in part and reversed in part. The State conceded that the first interrogation violated Miranda and was properly suppressed. The court of appeals rejected, however, the defendant's argument that the first interrogation also was involuntarily obtained under the Fifth Amendment due process right. Thus, the first interrogation was a "voluntary but unwarned statement."

Under the rule of Oregon v. Elstad, 470 U.S. 298 (1985), Miranda is a "fruitless tree." Elstad held that while a voluntary but unwarned statement must be suppressed, Miranda does not require the suppression of later statements obtained after a valid waiver. Thus, the statements obtained during the second interrogation were admissible because they were obtained voluntarily after the defendant waived his Miranda rights. It did not matter that the statements related to the same subject matter as the first unwarned interrogation. Only those parts of the second interrogation that specifically referred to the first interrogation should have been suppressed: "Elstad instructs us that only information which specifically refers back to the pre-Miranda questioning should be suppressed, not those responses which are only indirectly related to the original questioning."

Family law

Modification of Child Support - Effect
of Amendment to the Administrative Code

Beaupre v. Airriess,No. 96-0336 (filed 9 Jan. 1997) (ordered published 25 Feb. 1997)

Sandra Beaupre and Eric Airriess were divorced in January 1995. Beaupre was given primary placement of the parties' two children. Airriess received placement of the children for one night a week, alternate weekends, and some holidays and school vacations. The parties stipulated that Airriess would pay child support in the amount of 25 percent of his gross income in accordance with Wis. Admin. Code section HSS 80.03 guidelines for two children. The stipulation was incorporated into the divorce judgment.

Six weeks after the judgment was entered, Airriess filed a motion to decrease his child support obligation pursuant to Wis. Admin. Code section HSS 80.04(2). This rule, which had been revised shortly after the parties' divorce, sets guidelines for determining child support for shared-time payers. Airriess did not allege any change in the parties' financial circumstances or the financial needs of the children.

The circuit court granted the motion to reduce child support, finding that there had been a substantial change in circumstances by the adoption of the Administrative Code revision referred to above and, applying that revision, reduced Airriess' child support obligation.

The court of appeals, in a decision authored by Judge Deininger, reversed. The court concluded that a change in an administrative regulation alone does not constitute the kind of substantial change in "circumstances" that must be present in order for there to be a modification of child support. The court agreed with Beaupre's argument that an individual seeking to modify support must show a change in the factual circumstances of the parties, not simply an administrative rule change, before child support may be modified under section 767.32(1)(a).

Divorce - Marital Property -Gifted Property

Spindler v. Spindler,No. 96-0591 (filed 4 Dec. 1996) (ordered published 28 Jan. 1997)

In 1982 Fredric Spindler was gifted a parcel of land with a cottage on it. The gift was made by two of his aunts and title remains in his name. Among the issues on appeal in this case was whether the circuit court erred when, presiding over a 1995 divorce trial between Fredric and his wife Bonita, it concluded that the character of the cottage had changed from inherited to marital property and therefore the cottage should be included in the marital property division.

The court of appeals, in a decision authored by Judge Anderson, reversed. It found that the circuit court erred when it concluded that Bonita had proven that, because of her labors and the use of marital funds to make improvements, the cottage had lost its gifted character and should be included in the marital estate.

Whether gifted or inherited property is to remain exempt from a division of the marital estate depends upon a confluence of the property's original status, its identity and its character. Each component must be separately evaluated and the evaluations brought together to ascertain whether the property has in fact become marital property. A substantial change in any of the factors can be enough to transmute gifted property into marital property.

In this case the focal point was whether the property's character had sufficiently changed to transmute it into marital property. Said the court, it is not enough that the parties continue the marital relationship and carry out the usual obligations in relationship to the property or that some marital funds are expended on routine maintenance. The changes to the property as a consequence of the marital relationship must substantially increase its value. The court could find no evidence in the record to establish that Bonita's efforts substantially increased the cottage's value. Simply because a spouse does routine maintenance is not enough of a reason to conclude that the property's character has been changed. Likewise, simply because marital funds are used for routine maintenance, as was the situation in this case, is not enough to conclude that the property's character has been changed. There must be more.

According to the testimony of both parties, Bonita's labor and efforts focused on the property's maintenance and upkeep, such as general cleaning and maintenance of the yard. Testimony also revealed that the appreciation in the property's value from l982 to 1995 was due to an increase in the value of the land alone and not the improvements. Bonita's work around the property constituted maintenance and ordinary repairs, but provided no more than de minimis value to the enhanced value of the real estate and cottage.

The court of appeals had held previously that merely maintaining the marital relationship and performing customary obligations of one spouse to the other do not constitute a contribution of the nonowning spouse requiring the appreciation in value of separately owned property to be treated as part of the marital estate. Rather, the trial court should determine whether the nonowning spouse's efforts and modifications constituted improvements to the real estate. An improvement is a permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable, as distinguished from ordinary repairs. Clearly, Bonita's efforts did not constitute improvements and therefore did not alter the property's character.

Further, the mere use of marital funds for maintenance and upkeep was insufficient to alter the property's character. The key test is whether, despite the use of commingled funds, the inherited portion of the asset can still be identified and valued. Here, the marital funds expended in maintaining and upkeeping the cottage were easily ascertained. Fredric's gifted portion can be valued by subtracting the few expenditures made to the property from its total value. The expenditure amount for marital funds would be subject to division, while the remaining portion would be awarded to Fredric.

Finally, the court observed that Bonita is not necessarily barred from sharing in the increased value of the property. On remand, the circuit court still may make an award to Bonita if it concludes that a lack of division will cause her to suffer hardship under section 767.255 of the Wisconsin Statutes.

Government law

Notice of Claim - Substantial Compliance

Probst v. Winnebago County, No. 96-0186 (filed 15 Jan. 1997) (ordered published 25 Feb. 1997)

The single issue before the court was whether the filing of a federal district court action complied with the notice of claim requirement, section 893.80(1)(b) of the Wisconsin Statutes. Probst, an alcohol and drug treatment provider, filed a federal action against the county. The federal suit alleged that the county's decision not to use Probst for drunk driving assessments had unconstitutionally infringed upon Probst's rights. The federal court granted summary judgment dismissing the suit. Probst then filed this suit in circuit court. The judge dismissed the complaint because Probst had not filed a notice of claim under section 893.80(1).

The court of appeals, in an opinion written by Judge Snyder, affirmed. The federal complaint did not satisfy the notice of claim statute. The federal complaint lumped Probst's state law claims into one sentence: "The acts and conduct hereinbefore alleged constitute abuse of process, prima facie tort, intentional tort and negligence under the laws of the State of Wisconsin." Even under the "substantial compliance standard" the federal complaint failed to give the county adequate notice about whether to settle or litigate. Finally, prior case law clearly required the dismissal of the state court claim based upon Probst's omission to file the notice of claim.

Notice of Claim - Tax Exempt Status - Judicial Review

Little Sissabagama Lake Shore Owners Association Inc. v. Town of Edgewater, No. 96-1800 (filed 14 Jan. 1997) (ordered published 25 Feb. 1997)

The lake shore owners' association was a tax exempt nonprofit corporation under the Internal Revenue Code. The Sawyer County Board denied the association's request for tax exempt status for its land. Within 90 days of the notice denying their request, the association appealed under the writ of certiorari procedure provided by section 70.47(13) of the Wisconsin Statutes. The circuit court dismissed the action because the association had not given a notice of claim as required by section 893.80(1).

The court of appeals, in an opinion written by Judge Myse, reversed. Although DNR v. Waukesha, 184 Wis. 2d 178 (1994), extended the notice of claim to all actions, "including those in equity," the court concluded that "a notice of claim is no more required when appealing a county board's determination under 70.11(2), Stats., than it would be for an inmate filing a habeas corpus action." A notice of claim allows a county to consider and compromise a claim, considerations that are entirely absent where the county board already has heard and denied a claim. Moreover, all other determinations under section 70.11 are reviewable without a notice of claim. Finally, a contrary holding would conflict with the policy of promptly resolving property tax disputes.

In the alternative, the court observed that even if section 893.80 applied, the association had complied with it and so would any party operating under section 70.11. The county had actual notice of the incident giving rise to the dispute and had received in substance the information required by section 893.80(1)(b).

Insurance

"Slander" of Title - Coverage - "Property Damage"

Bank One v. Breakers Development Inc., No. 95-3223 (filed 8 Jan. 1997) (ordered published 25 Feb. 1997)

A construction company acquired a lender's rights to a financially troubled condominium project known as "Phase III." The company attempted to clear title to the land in order to sell it. A group of condominium owners counterclaimed against the construction company, claiming it had slandered their title to the same land. The company sought coverage from American Family for the slander of title counterclaim. The court granted summary judgment to American Family, agreeing that there was no coverage for slander of title.

The court of appeals, in an opinion written by Judge Brown, affirmed. First, slander of title did not fall within the coverage for personal and advertising injuries. This coverage extended only to slandering of an owner's "goods," "products" or "services." The reasonable insured would have understood "goods" or "products" to mean "things that have value in and of themselves, as opposed to 'titles,' which only have value if they become officially recognized." Second, slander of title did not fall within the policy's bodily injury and property damage liability coverage. No party alleged that the insured had caused the "loss of use" of any property. The condominium owners sought only a declaration of their ownership in the land in question.

Municipal law

Challenges to Property Tax Assessments
- Exhaustion of Statutory Remedies

Hermann v. Town of Delavan, No. 96-0171 (filed 27 Dec. 1996) (ordered published 25 Feb. 1997)

Several Town of Delavan residential property owners appealed from a dismissal of their section 893.80 of the Wisconsin Statutes complaint alleging that the town's system of property tax assessment is unfair and violates the uniformity clause of article VIII, section 1 of the Wisconsin Constitution. The circuit court dismissed the taxpayers' action for failure to state a claim upon which relief could be granted, concluding that the taxpayers had failed to exhaust exclusive statutory remedies for pressing their overassessment claims. The court of appeals, in a decision authored by Judge Snyder, agreed with the circuit court.

The critical issue presented in the case was whether the taxpayers' action, which they conceded did not comply with the statutory procedures for contesting a residential property assessment, can nevertheless be maintained. They admitted that each of the provisions of sections 70.47(13), 70.85 and 74.37 of the Wisconsin Statutes, which provide the exclusive method for residents to challenge a municipality's bases for the assessment of individual parcels, requires that property owners first appeal assessments to the local board of review. Nonetheless, the taxpayers in this case argued that a board of review appeal is not the exclusive remedy if residents challenge the constitutionality of the entire assessment process.

The appellate court rejected these arguments, concluding that the instant action cannot be maintained without initial compliance with the statutory mandates for review by the board of review. Said the court, it is a fundamental principle of statutory construction that when a Legislature has enacted a comprehensive statutory scheme, such is deemed to be exclusive. Additionally, when the statutory scheme provides for administrative proceedings, followed by judicial review of the administrative decision, a plaintiff must exhaust the administrative remedy before recourse to the courts. By failing to seek review by the board of review, the taxpayers in this case prevented the board from considering the claimed uniformity violation and concomitantly reviewing the bases for the evaluation of properties in the town. While there may have been unique instances in the past when a court has found the statutory requirements for board review to be inapplicable, the court concluded that the instant action was not such a case.

Police and Fire Commissions - Disciplinary
Actions - Appeals to Circuit Court

Truttschel v. Martin, No. 96-2183-FT (filed 30 Jan. 1997) (ordered published 25 Feb. 1997)

The local police and fire commission held a disciplinary hearing to consider charges brought by the police chief against a subordinate officer. The commission upheld the charges and imposed a four-day suspension. Pursuant to section 62.13(5)(i) of the Wisconsin Statutes, the officer served written notice of appeal to the circuit court on the commission's secretary within 10 days after the commission filed its suspension order. Within five days thereafter the commission transmitted the record of its proceedings to the clerk of circuit court, who then assigned the matter a circuit court case number.

At issue in this case was whether the officer's serving a written notice of appeal on the secretary of the police and fire commission was sufficient to preserve her appeal rights under the statute cited above when the commission thereafter transmitted the record of its proceedings to the clerk of circuit court or, alternatively, whether the officer was first required to commence an action in circuit court and then serve a copy of those pleadings on the secretary of the commission in order to preserve the officer's appeal rights.

Section 62.13(5)(i) provides in relevant part that "any person suspended, reduced, suspended and reduced, or removed by the board [of police and fire commissioners] may appeal from the order of the board to the circuit court by serving written notice of the appeal on the secretary of the board within 10 days after the order is filed. Within 5 days after receiving notice of the appeal, the board shall certify to the clerk of the circuit court the record of the proceedings, including all documents, testimony and minutes. The action shall then be at issue."

In a decision authored by Judge Roggensack, the court of appeals concluded that the statute's language is clear and unambiguous with respect to what an officer must do to initiate an appeal to the circuit court from an order of discipline imposed by a police and fire commission. The officer must serve written notice of appeal on the secretary of the commission within 10 days after its decision is filed. The commission's certification of the record of proceedings to the clerk of circuit court causes the action to be "at issue" under the statute's terms. Said the court, in section 62.13(5)(i), only the commission is required to provide anything to the clerk of court, that is, to transmit the record. If the Legislature had intended to require disciplined employees appealing under this statute to file with the clerk of court in order to commence their appeals, it could have directed that they do so.

Worker's compensation

Basis for Award - "Unusual Stress" Test
- Mental Injuries - Physical Injuries

UPS Inc. v. Lust, No. 96-0137 (filed 29 Jan. 1997) (ordered published 25 Feb. 1997)

Lust, a UPS employee, filed a worker's compensation claim asserting that he suffered from mental and emotional distress as well as Ramsey-Hunt syndrome, which involves a deterioration of the brain stem. The administrative law judge (ALJ) found that Lust had not suffered "unusual stress" at the workplace and dismissed the claim for mental injury. The ALJ did not address the issue of Lust's physical injury. On review by the Labor and Industry Review Commission (LIRC), the commission agreed that Lust had not suffered a mental injury but awarded him compensation for the physical injury relating to the Ramsey-Hunt syndrome.

The court of appeals, in an opinion written by Judge Nettesheim, affirmed. First, LIRC did not err in finding a physical injury even though the ALJ did not decide that issue. Lust's application for a hearing listed the physical injury and his evidence supported the finding. Thus, UPS was not "blindsided by the LIRC action." The LIRC was entitled to review the entire evidentiary record when Lust sought LIRC review.

Second, the LIRC did not err by failing to apply the "unusual stress" test to Lust's claim of physical injury. The court held "that the elements of proof placed on a claimant alleging a definable physical injury as a result of emotional stress in the workplace are governed by the conventional standard set out in [Lewellyn v. DILHR, 38 Wis. 2d 43 (1968)]. That standard requires that the 'work activity' precipitate, aggravate or accelerate beyond normal progression a progressively deteriorating or degenerative condition. ... This standard does not require that the work activity involve 'unusual stress.'" (Emphasis original.) The court explained earlier case law that distinguished claims of physical injury (like this case) from "claims of physical injury based on physical symptomology of mental injury" which are subject to the "unusual" stress test.

Finally, the evidence supported the LIRC's determination. Although this is largely a fact-intensive discussion, the court clarified that "a failure to establish 'unusual stress' does not preclude a finding that conditions in the workplace, such as 'extreme stress,' precipitated, aggravated and accelerated a progressively degenerating preexisting condition."