Court of Appeals Digest

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

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Frivilous Appeals - Credibility Issues

Lessor v. Wangelin, No. 97-2974 (filed 6 Aug. 1998) (ordered published 28 Oct. 1998)

Wangelin appealed a judgment against himself for faulty workmanship in the construction of a duplex. Wangelin's sole issue on appeal was whether the court's findings on damages were clearly erroneous. More particularly, Wangelin argued that the trial judge, sitting as trier of fact, ignored testimony by two experts. Although this was true, the trial judge spelled out the experts' shortcomings in explaining why he did not credit their testimony. (One expert admitted that he was not "up to snuff" on current building costs and could only "speculate" about a repair estimate.)

The court of appeals, in an opinion written by Judge Dykman, affirmed the judgment against Wangelin and also agreed with the plaintiff's assertion that the appeal was frivolous. Long-standing rules of appellate procedure set forth that appellate courts must defer to lower courts' findings of fact, particularly on issues of credibility. In essence, Wangelin sought only a "redetermination of witness credibility," which his attorney should have known "could not be successful under the long-standing law of this state." The case was remanded for a determination of costs and reasonable attorney fees.

Subsidiaries - Financial Connections - Cemetery Regulations

Cemetery Services Inc. v. Wis. Dept. of Regulation and Licensing, No. No. 97-2115 (filed 10 Sept. 1998) (ordered published 28 Oct. 1998)

Wisconsin law prohibits the combination of funeral homes and cemeteries. Sections 157.067(2) and 445.12(6) of the Wisconsin Statutes flatly prohibit the following types of connections between funeral homes and cemeteries: "(1) operating out of the same location, (2) receiving benefits from the other form of business, and (3) having financial connections to the other form of business."

In this case, the court of appeals, in an opinion written by Judge Roggensack, affirmed a finding that two corporations, Cemetery Services and Funeral Services, violated the statutes. Delineating the complex corporate web, the court found that a parent corporation, SCI, fostered direct and indirect financial connections between the two corporations through other subsidiaries. Specifically, the court concluded that "[t]he corporate structure established by SCI is formalistic, not substantive, allowing SCI to make a strong financial connection between Cemetery Services and Funeral Services, and giving it the opportunity to connect its funeral and cemetery services in Wisconsin, contrary to law."

The court also fended off several challenges to the statutes' constitutionality. The statutes were not impermissibly vague nor did they offend the commerce clause, the contract clause, or the due process clause. (The court opted not to address the merits of some of these arguments because they were inadequately developed in the briefs.)

Prevailing Parties - Fee Shifting

Community Credit Plan Inc. v. Johnson , Nos. 97-0574 et al. (filed 8 Sept. 1998) (ordered published 28 Oct. 1998)

A creditor brought small-claims replevin actions against the defendants in seven cases that were consolidated for appeal. Although the creditor received a default judgment in all seven cases, the defendants moved to reopen the judgments and dismiss the complaints, without prejudice, based upon improper venue. The trial judge reopened the cases and granted the creditor's motion to voluntarily dismiss the actions before he ruled on the defendants' motions to dismiss. The defendants also sought to recover attorney fees and expenses as prevailing parties under the fee-shifting provision of the Wisconsin Consumer Act (the WCA). The trial court denied the motion.

The court of appeals, in an opinion written by Judge Wedemeyer, reversed and held that the defendant debtors were "prevailing parties" within the meaning of Wis. Stat. section 425.308 of the WCA. First, the defendants attained a "significant benefit" because the opening and dismissal of the adverse judgments "hopefully halted" the negative repercussions that flow from them, such as a bad credit record or replevin of secured goods; and second, the benefits derived from a violation of the WCA. The dismissals, even without prejudice, flowed from the creditor's violation of the WCA's venue provisions. The court of appeals also concluded that under recent case law the defendants satisfied the two-part "catalyst test" that was used under the fee-shifting provisions of 42 U.S.C. section 1988.

Judge Curley dissented on grounds that the defendants had not attained a "significant benefit" (the actions could be recommenced in the proper county, rendering any benefit temporary at best) and because the venue defect did not comprise a violation of the WCA (the trial judge has an independent duty to screen cases for improper venue given the "fluid" nature of venue in consumer actions).

Venue - WCA Violations

Kett v. Community Credit Plan Inc., Nos. 97-3620 et al. (filed 23 Sept. 1998) (ordered published 28 Oct. 1998)

In all three consolidated cases, the creditor obtained a default judgment in a replevin action and later repossessed the debtor's car. The default judgments were entered in Milwaukee County. The finance agreements, however, were made in Waukesha and Walworth counties; the cars were all repossessed in these counties as well. Later, the Milwaukee County circuit court reopened the judgments and the actions were dismissed without prejudice. The debtors then brought these suits alleging that the creditor violated the Wisconsin Consumer Act (WCA) by wrongfully repossessing collateral and engaging in prohibited practices. The creditor counterclaimed and sought a deficiency judgment for the amounts still owed. The Walworth court granted summary judgment to the creditor on the wrongful repossession claim and ordered a trial on the prohibited practices and the deficiency counterclaim. The Waukesha court granted summary judgment to the creditor on the plaintiffs' claim and ordered a trial on the deficiency counterclaim.

The court of appeals, in an opinion written by Judge Brown, reversed. First, Milwaukee County clearly lacked venue. None of the agreements were made in Milwaukee and none of the collateral was seized there. The creditor's attempt to fob off responsibility for the improper venue was labeled as either evincing a "complete and utter misunderstanding of the purpose behind the WCA" or a "brazen misrepresentation" of long-standing state law.

A more substantial issue involved whether the Milwaukee judgments were void or merely voidable. The court held that the plain meaning of Wis. Stat. section 421.401(2)(b) was as follows: "[W]hen the action arises out of a consumer credit transaction, a defect in venue deprives the court of authority to act and thus renders any judgment void for lack of jurisdiction." Moreover, the lack of venue constituted a violation under Wis. Stat. section 425.206. Nor were the debtors required to prove that the violation was intentional. The court rejected the contention that the debtors waived their claim by not appearing in the Milwaukee action to object to venue. Finally, the court held that the creditor engaged in prohibited debt collection practices. Specifically, the creditor violated section 427.104(1)(h) and (j) of the Wisconsin Statutes, "since the filing could reasonably be expected to harass or threaten the customer and was an attempt or threat to enforce a right with knowledge or reason to know the right does not exist." The court remanded the matter for a determination of damages and reasonable attorney fees.

Uttering a Forgery - Fraudulent Use of a Credit Card - Elements

State v. Shea, Nos. 97-2345-CR (filed 13 Aug. 1998) (ordered published 1 Oct. 1998)

In this case the court of appeals was asked to decide certain issues regarding elements of the crimes of uttering a forgery and fraudulent use of a credit card.

The forgery statute provides that whoever, with intent to defraud, falsely makes or alters certain writings or objects is guilty of a felony. See Wis. Stat. § 943.38(1). The uttering statute, section 943.38(2), provides that it is a felony to "utter as genuine or possess with intent to utter as false or as genuine any forged writing or object ... knowing it to have been thus falsely made or altered." The issue before the court was whether "intent to defraud" is an element of the uttering offense. In a decision authored by Judge Dykman, the court concluded that section 943.38(2) does not require an offender to act with an intent to defraud. Section 943.38(2) incorporates various writings or objects described within subsection 1, but does not incorporate the requirement of subsection 1 that the offender act with an intent to defraud.

The court also considered the fraudulent use of a financial transaction card statute. Wis. Stat. section 943.41(5)(a)1.a prohibits the use, for the purpose of obtaining money, goods, services, or anything else of value, a financial transaction card obtained or retained in violation of section 943.41(3) when such is done with intent to defraud. Section 943.41(3)(a) provides in part that "no person shall acquire a financial transaction card from the person, possession, custody or control of another without the cardholder's consent." In this case the defendant used the information on another's credit card to obtain goods and services, but he did not have actual possession of the card at the time. The defendant argued that simply using the information on the card to make a purchase was insufficient. The court of appeals disagreed, interpreting the terms of the statute to be broad enough to indicate that the Legislature did not intend actual possession of the credit card to be an element of the crime.

Said the court, this interpretation of the unambiguous statutory language is appropriate because the account number can be used by the cardholder in the same manner as the actual credit card to perform most of the functions of a credit card. For example, cardholders can obtain items on credit by calling a merchant on the phone and providing their account number. The court was satisfied that the language of the statute should not be read so narrowly as to require proof that an offender acquired actual possession of the victim's financial transaction card.

Gambling - Video Poker - Constitutionality of "Gambling Machine" Statute

State v. Hahn, Nos. 97-3065-CR (filed 20 Aug. 1998) (ordered published 28 Oct. 1998)

The defendant was convicted on six counts of intentionally collecting proceeds of a gambling machine, contrary to Wis. Stat. section 945.03(5). Section 945.01(3) defines a "gambling machine" as "a contrivance which for a consideration affords the player an opportunity to obtain something of value, the award of which is determined by chance, even though accompanied by some skill and whether or not the prize is automatically paid by the machine." The statute specifies certain exceptions from its coverage.

In this case the defendant argued that the definition of gambling machine was unconstitutionally vague and therefore a violation of due process. In a decision authored by Judge Vergeront, the court of appeals disagreed. Specifically addressing the defendant's claims, the court concluded that the phrase "some skill" is not vague. It means that chance, rather than skill, must be the dominant factor controlling the award. The requirement that chance predominate over skill gives sufficient warning to persons of reasonable intelligence who desire to comply with the law what conduct is proscribed by this element of the definition of "gambling machine" and provides a sufficiently objective standard for the trier of fact.

The same is true with respect to the element "whether or not automatically paid by the machine." The ordinary dictionary definition of the term "automatically" in this context would be "acting or operating in a manner essentially independent of external influence or control; self-regulating." Accordingly, this portion of the statute requires that the machine have a role in providing the opportunity to obtain something of value, but that something of value need not be provided by the machine alone without external influence or control.

Controlled Substance Violations Within 100 Feet of a "Center" -
Application to Day Car Centers

State v. Van Riper, Nos. 97-3367-CR (filed 24 Sept. 1998) (ordered published 28 Oct. 1998)

The defendant sold marijuana to a police informant at a residence located within 1,000 feet of a day care center. As part of a plea agreement, she entered a guilty plea to delivering marijuana within 1,000 feet of a "youth center," contrary to various statutory provisions including Wis. Stat. section 961.49. This statute establishes increased penalties for distributing, or possessing with intent to deliver, controlled substances on or near certain places, including youth centers.

The defendant filed a postconviction motion challenging the use of the penalty enhancer. She argued that a day care center did not come within the definition of "youth center." The circuit court rejected this challenge and the court of appeals, in a decision authored by Judge Roggensack, affirmed.

The term "youth center" is defined in the controlled substances laws to mean "any center that provides, on a regular basis, recreational, vocational, academic or social services activities for persons younger than 21 years old or for those persons and their families." The court concluded that day care centers provide recreational and social services activities because they provide for the welfare of children by affording physical and emotional care, diversions, and amusements for them, while their parents are otherwise occupied. Additionally, day care centers provide care for children, who fall within the age group set out in the statutory definition of a youth center.

The court further observed that the youngest, most vulnerable children gather at day care centers and that including such facilities within the zone of places protected against drug trafficking would be consistent with the legislative policy of protecting children from the violence and danger associated with drug trafficking. Accordingly, the court concluded that the plain meaning of the statute, consistent with the legislative purpose underlying it, required it to hold that day care centers are included within the "youth centers" described in section 961.49(2)(a).

Solicitation for Prostitution - Extortion - Elements of Offenses

State v. Kittilstad, Nos. 98-1456-CR (filed 29 Sept. 1998) (ordered published 28 Oct. 1998)

This case concerns the sufficiency of the evidence at the preliminary hearing in a case in which the defendant was charged with solicitation for prostitution and extortion.

The testimony at the preliminary hearing established that the defendant, a minister, sponsored several students to travel to Wisconsin from Panama to pursue an education at a technical college. Shortly after their arrival, the defendant would inquire into each student's sexual history. He offered each student either money or other consideration if a student would bring home different "girls" and have sex with them in the defendant's presence. The defendant also threatened one of the students that, if he did not bring home a "girl" and have sex with her, the defendant would send the student back to Panama. While the defendant continually made these requests, none of the students obliged him.

Wis. Stat. section 944.32 provides that "whoever intentionally solicits or causes any person to practice prostitution or establishes any person in a place of prostitution is guilty of a Class D felony." The defendant conceded that sufficient evidence was presented at the preliminary hearing to establish that he solicited the students. However, he argued that the evidence did not show that he solicited the students to "practice prostitution." Specifically, he urged that the state was required to prove that he solicited the students to have sex with a "paying customer" or as a "paying customer." Because the women would not be paying the students for sex, or vice versa, the defendant argued that he was not soliciting prostitution. He further argued that the evidence was insufficient to show that he solicited the students to "practice" prostitution in that the proofs failed to show that there would be continual or ongoing activity between the parties.

In a decision authored by Judge Hoover, the court concluded that the prostitution statute unambiguously criminalizes practicing nonmarital intercourse, sexual contact, and various other activities for anything of value. Nothing in the statute requires that the exchange of sex for value be between the persons involved in the nonmarital act. Said the court in footnote, to interpret the statute any other way would create absurd and unreasonable results by excluding circumstances that fit comfortably within the concept of soliciting prostitution. For example, it would exclude the father who hires a prostitute for his son or the businessman who hires prostitutes for his clients. As long as one of the individuals engaging in the sexual act is receiving compensation for the act, the elements of the statute are met.

The court also concluded that the evidence was sufficient to show that the defendant solicited the students to "practice prostitution" within the meaning of section 944.32. Standard dictionary definitions reveal that the term "practice" means "to do or perform often, customarily, or habitually." The court concluded that sufficient evidence was presented at the preliminary hearing to establish that the defendant probably solicited "ongoing" acts of prostitution. The students testified that he continually requested them to bring home different "girls," which supports the reasonable inference that he wanted the students to engage in sex acts on multiple, continual occasions.

Finally, the defendant argued that his alleged threat to send a student back to Panama if he did not bring women home did not constitute extortion. Wis. Stat. section 943.30(1) provides that, among other things, it is a felony to threaten or commit any injury to the person, property, business, profession, calling, or trade of another with intent thereby to extort money or any pecuniary advantage whatever, or with intent to compel the person so threatened to do any act against the person's will or omit to do any lawful act.

In this case the defendant asserted that a threat to interfere with a person's education does not constitute a violation of the statute. The court of appeals disagreed. It concluded that a prerequisite for a profession is an education, which provides an instruction in skills. An education is so inextricably connected to obtaining a profession that a threat to the former necessarily constitutes a threat to the latter. Accordingly, there was sufficient evidence presented at the preliminary hearing to show that the defendant probably engaged in extortion.

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