Supreme Court Digest

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

Civil Procedure

Notice of Appeal - Signature of Attorney Required - Unauthorized Practice of Law

Jadair Inc. v. United States Fire Ins. Co., No. 95-1946 (filed 29 April 1997)

The court of appeals dismissed an appeal filed by Blueprint Engines Inc. (Blueprint) for lack of jurisdiction. The notice of appeal had been signed by Mr. Rachinski, the company's "nonlawyer" president.

The supreme court, in an opinion written by Justice Geske, affirmed. Blueprint correctly argued that the rules of appellate procedure do not expressly state who may sign a notice of appeal on behalf of a corporation. But the plain language of the statutes governing the unauthorized practice of law specifies that "only lawyers can appear on behalf of, or perform legal service for, corporations in legal proceedings before Wisconsin courts." Moreover, this requirement did not violate the corporation's constitutional rights to represent "itself," to obtain justice freely, to equal protection, or to due process. Finally, the nature of the defect warranted the loss of jurisdiction. "[W]hen a nonlawyer signs and files a notice of appeal on behalf of a corporation, the assurance required by Wis. Stats. sec. (Rule) 802.05, that the appeal is well-grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law, is not present."

Criminal Procedure

Post-conviction Relief - Recantations - Newly Discovered Evidence - New Trial Standard - Corroboration

State v. McCallum, No. 95-1518 (filed 18 April 1997)

Based upon an Alford plea, the defendant was convicted of sexually assaulting a young girl. The prosecution relied solely upon the victim's uncorroborated testimony. Later, the victim recanted. The trial judge denied a motion for a new trial but the court of appeals reversed because the judge had applied the wrong standard. The supreme court, in an opinion written by Justice Bablitch, affirmed.

The court addressed two issues. First, the court set forth the appropriate legal standard for determining whether there is a "reasonable probability of a different outcome" following a new trial. The "criteria is whether there is a reasonable probability that a jury, looking at both the accusation and the recantation, would have a reasonable doubt as to the defendant's guilt." Second, the court reaffirmed Wisconsin's rule that newly discovered recantation evidence must be corroborated. In recantation cases the corroboration requirement is met if: "1) there is a feasible motive for the initial false statement; and 2) there are circumstantial guarantees of the trustworthiness of the recantation." Both criteria were met in this case, but the court refused to order a new trial. The case was remanded to the circuit court to make that determination based upon the standards announced in this case.

Chief Justice Abrahamson concurred, writing separately to discuss the standard of review in recantation cases and the "reasonable probability of a different outcome" criteria.

Restitution Proceedings - Statute Of Limitations

State v. Sweat, No. 95-1975-CR (filed 18 April 1997)

The defendant was convicted on a negotiated no contest plea of a single count of racketeering (securities fraud). By his plea, he admitted that, as president of Sweat Insurance Inc., he intentionally and feloniously, in connection with the offer, sale or purchase of securities, participated in the corporate enterprise through a pattern of racketeering by committing acts of securities fraud on at least three occasions.

The issue before the supreme court was whether in restitution proceedings, section 973.20(14)(b) of the Criminal Procedure Code allows a defendant to assert a civil rather than criminal statute of limitations and its related civil tolling and discovery rules, to bar individual crime victims' claims for restitution. In pertinent part the statute provides that "the defendant [ordered to pay restitution] may assert any defense that he or she could raise in a civil action for the loss sought to be compensated."

In a majority decision authored by Justice Steinmetz, the court concluded that the same statute of limitations that applies in the underlying criminal proceedings (Wis. Stat. 939.74), including its tolling provisions, also applies in the related restitution proceedings.

Said the court, in restitution proceedings, a defendant should be able to raise substantive defenses, such as mitigation, set-off or accord and satisfaction, which go to the measure or amount of total restitution. However, other civil defenses available in a civil action, such as contributory negligence, lack of jurisdiction or lack of capacity to sue or to be sued, simply do not make sense in a restitution hearing. Neither does the application of a civil statute of limitations after a defendant has been convicted of a criminal offense.

The trial court is, with limited exceptions, authorized to "waive the rules of practice, procedure, pleading or evidence" in service of the goal of "conducting the proceeding so as to do substantial justice." See Wis. Stat. 973.20(14)(d). Technical or procedural defenses that might be proper in a civil proceeding may be asserted only to the extent that they are not inconsistent with the informal nature of a restitution proceeding and with the general policy goal of achieving "substantial justice."

Justice Bradley filed a dissenting opinion in which Chief Justice Abrahamson joined.

Employment

Worker's Compensation Act -Exclusive Remedy -
Fair Employment Act

Byers v. LIRC, No. 95-2490 (filed 18 April 1997)

The sole issue before the supreme court was whether "the exclusive remedy provision of the Worker's Compensation Act (WCA), bars a claim brought under the Wisconsin Fair Employment Act (WFEA), prohibiting discrimination in employment, when the facts that are the basis for the discrimination claim might also support a worker's compensation claim." The court, in an opinion written by Chief Justice Abrahamson, held that the legislature intended to allow petitioners to pursue discrimination claims under the WFEA regardless of the exclusive remedy provision of the WCA.

The WCA and the WFEA serve very different purposes. "The WCA focuses on the employee and his or her work-related injury while the WFEA focuses on employer conduct that undermines equal opportunity in the workplace." The WCA does "not identify, fully remedy or adequately deter an employer's discriminatory conduct. ... Sole reliance on the WCA would neither address employment discrimination nor serve as a deterrent against employment discrimination." The supreme court discussed several factors that justified its construction of the statutes. In particular, the court wished to avoid a construction that limited claims under the WFEA to those not covered by the WCA, which would eliminate claims by those most harmed by discriminatory conduct under the WFEA. The supreme court expressly overruled or limited several decisions by the court of appeals that conflicted with the reasoning in this case.

Family Law

Divorce - Child Support Arrearages - Imposition of Trust

Cameron v. Cameron (Wise), No. 95-0311 (filed 22 April 1997)

Cameron and his wife Wise were granted a divorce in the spring of 1987. The divorce judgment included an order for joint custody and gave Wise primary physical placement of the couple's three minor children. Under the divorce judgment terms, Cameron was ordered to pay child support. The parties did not ask that any child support money be placed in a trust for the benefit of the children.

Cameron made some payments toward his child support obligation but fell behind in those payments. In 1993 Wise moved the circuit court for an order requiring Cameron to immediately pay all past-due child support. The circuit court determined that Cameron owed $118,000, including interest, in past-due child support through the end of 1993. With respect to the arrearages owed, the court ordered a trust created for the children's benefit, which was to be funded by the arrearages, including interest. The circuit court made this order without Wise's consent or without any evidence to support a finding that Wise was unable or unwilling to appropriately manage the support money. The circuit court provided that Wise and Cameron would own the trust, but the court would control the disbursements.

The issue before the supreme court was whether the circuit court erred by imposing a trust on past-due child support owed by Cameron when it made no finding that Wise was unable or unwilling to wisely manage the child support money owed. In a unanimous decision authored by Justice Geske, the court held that the circuit court erred when it imposed a trust without the consent of Wise, the primary custodian, or without any evidence to support a finding that she was unable or unwilling to wisely manage the support money. The court limited its holding to the facts of this case which concern support arrearages stemming from a support order entered before Aug. 1, 1987. The court did not address the propriety of imposing a trust upon arrearages stemming from a child support order entered after that date.

With reference to the imposition of such trusts, the court was persuaded that the standard articulated in Resong v. Vier, 157 Wis. 2d 382, 459 N.W.2d 591 (Ct. App. 1990), with the modification specified below, is the appropriate standard for assessing the limited circumstances under which a trust may be imposed on child support arrearages stemming from a support order entered before Aug. 1, 1987. The Resong standard involves determining whether the trust is necessary to the child's best interests, parallel to the statutory scheme for child custody matters. In the present case the court modified that standard to require a determination only that the trust is in the child's best interests. When a noncustodial parent seeks imposition of a trust on arrearages owed, that parent must demonstrate by substantial evidence that the trust, which substantially alters the custodial parent's decision-making authority, is in the children's best interests. The Resong standard also requires, when the primary custodian does not consent to the trust, a factual finding as to whether the primary custodian was incapable or unwilling to wisely manage the child support money. Without such a finding, a court may not strip the primary custodian of his or her decision-making authority.

The court also concluded that the circuit judge misapplied the law in this case by using a trust mechanism, funded by arrearages, to meet potential future support needs. Said the court, a trust funded with money earmarked for past needs is not the proper mechanism by which to address future support needs.

Insurance

Environmental Response Costs - Duty to Defend - "Damages"

General Casualty Co. v. Hills, No. 95-2261 (filed 22 April 1997)

The circuit court granted summary judgment in favor of an insurer finding that it had no duty to defend its insured in a third-party action seeking recovery for environmental response costs. The court of appeals reversed.

The supreme court, in an opinion written by Justice Crooks, affirmed the court of appeals. The sole issue before the court was whether the action sought "damages" within the meaning of the insurance policies. The court extensively discussed its construction of "as damages" insurance language in Shorewood v. Wausau Ins. Co., 170 Wis.2d 347 (1992), and City of Edgerton v. General Cas. Co., 184 Wis.2d 750 (1994). "Shorewood and Edgerton demonstrate that in order to determine whether an action seeks 'damages,' we must consider the nature of the relief being sought - whether it is remedial, substitutionary relief that is intended to compensate for past wrongs, or preventive and focusing on future conduct."

Both cases were distinguishable on three grounds that comported with the "expectation of a reasonable insured" in the insured's position. "First, unlike Edgerton, neither the EPA nor DNR have requested or directed [the insured] to develop a remediation plan or incur remediation and response costs under CERCLA or an equivalent state statute. Second, unlike Edgerton, the contaminated property in this case does not fit within the owned-property exclusion contained in the insurance policies. Third, unlike Shorewood, [the insured] is not being sued to comply with an injunction."

Chief Justice Abrahamson concurred, writing separately to state that "[r]ather than leaving Shorewood and Edgerton to be overturned in small measures by debatable judicial distinctions, I would embrace the inevitable by expressly overruling Shorewood and thereby recognizing the limited application of the Edgerton decision on damages." (Editor's note: Please see related article elsewhere in this issue.)

Environmental Response Costs - Duty to Defend - "Damages" - Pollution Exclusion

Wisconsin Public Service Corp. v. Heritage Mutual Ins. Co., No. 95-2109 (filed 22 April 1997)

The supreme court affirmed the court of appeals in this case based upon its reasoning in the companion case of General Cas. Co. v. Hills (see above). Thus, the action sought "damages" within the meaning of the policy and the insurer had the duty to defend and indemnify its insured.

This case raised one additional issue, however. A policy contained a pollution exclusion that stated: "This insurance does not apply to ... [a]ny loss, cost or expense arising out of any governmental direction or request that you test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants." The supreme court agreed with the court of appeals that this exclusion did not apply because the insured never received a request from the EPA or the DNR to remediate the property. (Editor's note: Please see related article elsewhere in this issue.)

Juvenile Law

CHIPS Proceedings - Applicability to Viable Fetuses

State ex rel. Angela M.W. v. Kruzicki, No. 95-2480-W (filed 22 April 1997)

The petitioner was an adult carrying a viable fetus. Numerous drug tests revealed that she was using cocaine or other drugs. The petitioner's obstetrician reported his concerns to county authorities who initiated proceedings "to take an unborn child into custody" pursuant to section 48.l9(1)(c) of the Wisconsin Statutes (1993-94). The county's motion set out the obstetrician's observations and medical opinion that "without intervention forcing the petitioner to cease her drug use," her fetus would suffer serious physical harm. The juvenile court directed that the petitioner's unborn child be detained under section 48.207(1)(g) and be transported to a local hospital for inpatient treatment and protection. The court recognized that such detention would by necessity result in detention of the mother as well.

The petitioner responded by presenting herself voluntarily at an inpatient drug treatment facility. The juvenile court then amended its order to provide that the detention would be at the inpatient facility and that, if the petitioner attempted to leave or did not participate in the facility's drug treatment program, then both she and the fetus were to be detained and transported to a local hospital.

The county also filed a CHIPS petition in the juvenile court, alleging that the petitioner's viable fetus was in need of protection or services.

The petitioner commenced an original action in the court of appeals seeking a writ of habeas corpus or, in the alternative, a supervisory writ staying all proceedings in the juvenile court and dismissing the CHIPS petition. In support of her request, she asserted that chapter 48 does not vest the juvenile court with jurisdiction over her or her viable fetus. A divided court of appeals determined that the juvenile court did not exceed its jurisdiction in this case.

The supreme court, in a majority decision authored by Justice Bradley, reversed the court of appeals. The court's opinion is clear that this case presented but a single issue: whether a viable fetus is included within the definition of "child" codified in section 48.02(2) of the Wisconsin Statutes. This statute defines a "child" as "a person who is less than 18 years of age." The majority concluded that the Legislature did not intend to include a fetus within the Children's Code definition of "child." Rather, it found a compelling basis for holding that the Legislature intended the term "child" to mean "a human being born alive." Despite ample opportunity, said the court, the Legislature has not expressly provided that a fetus is a "child" under the Children's Code. The court declined the guardian ad litem's invitation to "take on this burden" to fill the legislative void and it indicated that the sensitive social policy issues raised in this case weigh strongly in favor of refraining from exercising CHIPS jurisdiction over a fetus until the Legislature has spoken definitively on the matter.

Judge Crooks, joined by Justices Steinmetz and Wilcox, dissented.

Municipalities

Zoning - Mining Operations - Conditional Use Permits -Procedures

Weber v. Town of Saukville,No. 94-2336 (filed 29 April 1997)

Payne & Dolan, a construction firm that builds roads and bridges, secured a conditional use permit from a town that permitted it to extract crushed stone from its quarries. The court of appeals affirmed a circuit court order that negated the conditional use permit.

The supreme court, in an opinion written by Justice Bradley, affirmed the court of appeals. The case presented four issues of potential statewide significance: "1) whether the town's zoning ordinance empowers the Town Board to issue a conditional use permit which authorizes blasting and crushing as part of a mineral extraction operation; 2) whether operation of the quarry is forbidden under the zoning ordinance proscription against mineral extraction operations where 30 or more families reside within one-half mile of the proposed site; 3) whether the town complied with the notice requirements prescribed by the zoning ordinance; and 4) whether the conditional use application submitted by Payne & Dolan met the requirements of the zoning ordinance."

First, the court held that blasting and crushing were part of the mineral extraction process; thus, the ordinance did not prohibit the quarrying of stone in this manner. Second, the conditional use permit was not proscribed by the "30 families" rule which barred mineral extraction operations if 30 or more families resided within a half mile of the proposed site. Only 27 families actually resided within the targeted area; the court refused to count "property owners" within the total. The conditional use permit failed, however, to pass muster under the third and fourth issues. Specifically, the Town's notice was defective on a variety of grounds. Although some of the problems were entirely technical and nonprejudicial, the court held that the failure to mail or personally notify nine of 36 property owners was fatal. Payne & Dolan failed to carry its burden of demonstrating that this omission was not prejudicial. Finally, the conditional use application was itself incomplete when notice was given of the last public hearing. For example, the application failed to describe the quantity of water to be used in the quarry operation or provide a topographic map describing the quarry's proposed depth.

Taxation

Cruise Vessels on Mississippi River - "Interstate Commerce" Sales Tax Exemption

La Crosse Queen Inc. v. Wisconsin Department of Revenue, No. 95-2754 (filed 18 April 1997)

From 1989 until 1991 La Crosse Queen Inc. was the owner and lessor of a boat known as the La Crosse Queen, an excursion paddle wheeler exceeding 50 tons. The boat was leased to a related corporation (Riverboats America Inc.) to provide sightseeing and dinner cruises exclusively on the Mississippi River. During these excursions the vessel crossed between Wisconsin and Minnesota waters on the Mississippi. However, because there are no facilities along its routes where the boat can dock, all passengers embark and disembark at the same dock in La Crosse, Wis.

Section 77.54(13) of the Wisconsin Statutes exempts from taxes "the gross receipts from the sales of and the storage, use or other consumption in this state of commercial vessels and barges of 50-ton burden or over primarily engaged in interstate or foreign commerce or commercial fishing, and the accessories, attachments, parts and fuel therefor."

The issue before the supreme court was whether the boat leased by La Crosse Queen Inc. to Riverboats America Inc. was used primarily in interstate commerce so as to exempt the gross receipts from the lease from sales tax pursuant to the statute quoted above.

In a majority decision authored by Justice Steinmetz, the supreme court concluded that the La Crosse Queen was not engaged in interstate commerce during the years in question and therefore La Crosse Queen Inc. was not entitled to the tax exemption described above. When the boat picks up passengers at the wharf in La Crosse for the purpose of an excursion cruise on the Mississippi River and then returns them to the same wharf, it is not conducting interstate commerce or interstate business. Although the vessel crosses over into Minnesota waters, there is no commerce or business carried on between Wisconsin and Minnesota as a result of the excursion. The people who use the taxpayer's boat are not using it for the purpose of being transported from Wisconsin to Minnesota, but rather for the purpose of recreation and entertainment. The passengers are in no way involved "with commerce among the states" simply because they might sail over Minnesota waters during their excursion.

Chief Justice Abrahamson filed a dissenting opinion in which Justice Bradley joined.

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