Court of Appeals Digest

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

| Civil Procedure | Criminal Procedure | Evidence |
| Family Law | Insurance | Juvenile Law | Torts |
| Worker's Compensation |

Pleadings ­ Failure to Respond ­ Default Judgment

Holman v. Family Health Plan, No. 97-1490-FT (filed 30 Dec. 1997) (ordered published 28 Jan. 1998)

Plaintiff was injured in a car accident. She named Family Health Plan (FHP), her group health insurer, as a defendant because of its potential claim for subrogation and reimbursement. The complaint sought to foreclose FHP's subrogation claim if FHP did not make a timely appearance in the action. FHP conceded that it was properly served and did not answer or interpose any other responsive pleading within the 20-day limit provided by section 802.06(1) of the Wisconsin Statutes. The plaintiff obtained a default judgment against FHP. The trial judge later denied FHP's motion to reopen the default judgment; FHP argued unsuccessfully that it had been inaccurately named as a defendant, rather than an involuntary plaintiff, and hence was under no obligation to respond.

The court of appeals, in an opinion written by Judge Nettesheim, affirmed. Section 803.03(2)(a) of the Wisconsin Statutes requires joinder of parties with subrogated or derived claims but fails to specify whether such parties are joined as plaintiffs or defendants. Assuming "arguendo" that the plaintiff improperly designated FHP as a defendant instead of a plaintiff, the issue remained whether FHP was obligated to raise this issue by a timely responsive pleading. The court held that "[e]ven though misjoinder is not a basis for dismissal of an action under sec. 803(6)(1), Stats., ... it constitutes a 'defense in law' which must be raised pursuant to sec. 802.06(2)(a), Stats." Motions to amend the caption are "routinely filed" within the 20-day period "and the improperly joined defendant may then be excused from answering." But here FHP filed its motion beyond the 20-day limit and without excusable neglect as required by section 806.07. Common sense also supported this construction because "otherwise, a misjoined party could simply ignore an otherwise proper pleading which has been properly served and which provides full notice of the claim." Since a default judgment can be taken against a party "who may not actually be liable to the claimant, it logically follows" that the law permits a default against a tardy party whose misjoinder defense "raises no such prospect."

Substitution ­ Chapter 980 Commitments

State v. Brown, Nos. 96-1211 and 96-1393 (filed 23 Dec. 1997) (ordered published 28 Jan. 1998)

The state filed petitions against the respondents seeking to commit them as sexually violent persons under chapter 980 (the "sexual predator" law). They appealed from trial court orders stating that they had no right to judicial substitution in the chapter 980 proceedings. The court of appeals, in an opinion authored by Judge Curley, reversed. The court held "that Chapter 980 ... is subject to the provisions of Chapters 801 to 847. The only exception to the general rule embodied in sec. 801.01(2) that 'Chapters 801 to 847 govern procedure and practice ... in all civil actions and special proceedings' is 'where [a] different procedure is prescribed by statute or rule.' There is no language in Chapter 980 prescribing a different procedure. Thus, the right to judicial substitution embodied in section 801.58 applies to Chapter 980 proceedings."

Sentencing ­ Imposition of Costs at Restitution Hearing

State v. Perry, No. 97-0847-CR (filed 18 Dec. 1997) (ordered published 28 Jan. 1998)

The defendant was convicted of four counts of uttering a forged writing and was sentenced to a term of imprisonment. At sentencing the judge also ordered that the defendant pay restitution to the victims of his forgeries and directed the state to submit a proposed restitution order.

At a restitution hearing held two months after sentencing, the court ordered the defendant to pay the cost that the state had incurred to extradite him from Texas to answer these charges. Among the issues on appeal was whether the court had the power at a proceeding conducted subsequent to sentencing to order payment of extradition costs.

The court of appeals, in a decision authored by Judge Deininger, reversed the circuit court. Extradition expenses are statutory costs under Wis. Stat. section 973.06; they are not included within the concept of "restitution." The court of appeals agreed with the defendant that the judge lacked authority to impose these additional costs at a point in time subsequent to sentencing. The restitution hearing had been convened solely for the purpose of determining an appropriate amount of restitution ­ it was not for the purpose of a continued sentencing hearing. Said the court, a judge may not, subsequent to sentencing, impose costs under section 973.06 that were not ordered during the sentencing proceedings.

Interstate Agreement on Detainers ­Time Limitations

State v. Grzelak, No. 97-1454-CR (filed 9 Dec. 1997) (ordered published 28 Jan. 1998)

Article III of the Interstate Agreement on Detainers (Wis. Stat. § 976.05(3)) requires that a prisoner who demands final disposition of "any untried indictment, information or complaint" must be brought "to trial within 180 days." In this case the court of appeals had to confront the issue of whether this time limitation applies to detainer requests where the prisoner has already been convicted but not sentenced.

The defendant was charged with multiple counts of burglary and entered pleas of no contest to them. The trial court accepted his pleas, found him guilty, and scheduled sentencing. The defendant failed to appear at sentencing and a bench warrant was issued for his arrest.

At some point after his failure to appear, the defendant was imprisoned in Iowa. Pursuant to the detainer statute, he filed a demand to be returned to Brown County, Wis., to conclude the pending burglary charges. He was in fact returned to Brown County circuit court, but his sentencing on the burglaries took place more than 180 days after the prosecutor received the demand described above. His motion to dismiss all charges with prejudice was denied by the circuit court, and the court of appeals, in a decision authored by Judge Hoover, affirmed.

The appellate court concluded that the Interstate Agreement on Detainers requires that the detainee be brought to trial within 180 days ­ not that the trial be concluded within that time limit. The time limitation is satisfied upon the trial commencing within 180 days of the prosecutor's receipt of the detainee's demand. The time limit does not apply when the defendant has already been convicted but not yet sentenced. Accordingly, the circuit court properly denied the defendant's motion to dismiss.

Civil Actions ­ Discovery of Nonparty's Medical Records

Winnebago County Department of Social Services v. Harold W., No. 96-2733 (filed 3 Dec. 1997) (ordered published 28 Jan. 1998)

Harold W. appealed a trial court order removing him as coguardian of his daughter, who suffers from severe disabilities and is thus incompetent and unable to care for herself. The petition for the appointment of a successor guardian, which was filed by the county department of social services, was based upon allegations that Harold had engaged in sexual improprieties with his daughter.

Among the issues on appeal was Harold's contention that the trial court erroneously refused him access to the medical records of a critical nonparty witness. That witness was a woman with a lengthy psychiatric history, including a diagnosis of schizophrenia. Harold maintained that when the trial court denied his request to access her psychiatric records, he was deprived of crucial information that may have been used to demonstrate that the witness's "perception, memory, judgment and concentration were all adversely affected by such conditions."

In a decision authored by Judge Nettesheim, the court of appeals affirmed. Harold conceded before the appellate court there was no case law that supports his request that the trial court order discovery of a nonparty witness's medical records in a civil action. Instead, he urged the court of appeals to extend its holdings in certain criminal cases to civil actions.

In those criminal cases the court of appeals addressed the circumstances under which a defendant could have access to the victim's ­ a nonparty witness's ­ medical records. It held that a defendant who seeks access to a witness's medical records must make a preliminary showing that the evidence is relevant and necessary to a fair determination of guilt or innocence.

In this case Harold contended that there should be no distinction drawn between the alleged victim in a criminal case and a nonparty opposing witness in a civil case. The court of appeals disagreed. It concluded that a party to a civil proceeding is not entitled to the full panoply of rights accorded persons subject to criminal process. The standard of discovery set forth in criminal cases concerns an accused's right to present a defense; it does not extend to the civil forum.

The proper basis upon which a party may obtain access to the medical records of a party to a civil matter under the discovery rule (Wis. Stat. § 804.01(2)(a)) was considered by the court of appeals in Ranft v. Lyons, 163 Wis. 2d 282, 471 N.W.2d 254 (Ct. App. 1991). In that case the court determined that a party's medical records that fall under the physician/patient privilege could only be accessed if the party has put his or her physical or mental condition in issue as a component of the party's claim or defense. However, the Ranft holding does not extend to a nonparty witness in a civil proceeding.

Divorce ­ Division of Property ­
Inherited Corporation ­ Retained Earnings

Metz v. Keener, No. 97-1443-FT (filed 14 Dec. 1997) (ordered published 28 Jan. 1998)

Metz appealed from a property division provision in a divorce judgment involving her former husband, Keener. Before her marriage to Keener, Metz had inherited the shares of a corporation. The trial court did not include Metz's inherited shares of stock in the marital estate, but it did include a retained earnings fund of the inherited corporation. On appeal Metz challenged this ruling.

The court of appeals, in a decision authored by Judge Nettesheim, affirmed. The court began its analysis by observing that much of the wife's appeal was premised upon her view that the corporation's retained earnings represent appreciation in the value of the corporation itself rather than income generated by the corporation. While the court of appeals understood the distinction she was drawing and fully accepted that a corporation's retained earnings may serve to increase the value of the stockholder's shares, the property division law of Wisconsin clearly views income generated by an exempt asset as separate and distinct from the asset itself. On this threshold basis, the appellate court rejected much of the wife's arguments.

The appellate court concluded that the trial judge properly determined that the retained earnings generated by the wife's inherited corporation represented income separate and distinct from the corporation itself and, as such, the retained earnings fund was properly included in the marital estate for purposes of property division.

In its opinion the court noted that case law has held that retained earnings are treated differently for purposes of property division and maintenance: As to property division, retained earnings (or the appreciation in value occasioned by the expenditure of such earnings) are a marital asset subject to property division; however, as to maintenance, retained earnings are not an income stream to the shareholder if the earnings are retained for a legitimate business reason.

Child Support ­ Percentage Guidelines ­
Calculation of Gross Income ­
Value of Employer-awarded Vacations

In re the Marriage of Wall v. Wall, No. 97-0826 (filed 10 Dec. 1997) (ordered published 28 Jan. 1998)

Michael and Debra Wall were divorced in 1992. Debra was awarded primary physical placement of the two minor children and Michael was ordered to pay 25 percent of his gross income as child support, which his employer deducted from his paycheck.

In 1993 and again in 1994, Michael's employer rewarded him for his job performance with trips to Mexico. The employer included the cash value of both trips in Michael's wages; however, the company did not withhold any money for child support from these additional wages.

In 1996 the state, through the local child support agency, brought an arrearage hearing before the circuit court. It sought to collect as child support arrearages 25 percent of the value of the trips awarded to Michael. At the hearing the court found that the two trips fell within the definition of gross income under Wis. Admin. Code section HHS 80.02(13)(a). However, the court held that it would be unfair to include the trips in Michael's gross income because they could not readily be converted to cash, traded or sold. Therefore, the court exercised its discretion and excluded the value of the trips from the child support percentage standards. The state appealed and, in a decision authored by Judge Brown, the court of appeals affirmed.

Both parties agreed that the trips to Mexico fell within the definition of gross income under the Wisconsin Administrative Code. Thus, the sole issue before the appellate court was whether the circuit judge erroneously exercised his discretion when he deviated from the percentage standards under section 767.25(1m). The state claimed that once a court determines that a form of income falls within the guidelines' definition of gross income, it has no choice but to include it in the payor's gross income under the percentage standards.

The court of appeals disagreed. Courts may deviate from the percentage standards only upon a finding by the greater weight of the credible evidence that applying the percentage standards would be unfair to the child or to either party. Here, the appellate court agreed that it would be unfair to include in Michael's gross income the value of the two trips to Mexico because they did not generate any cash or assets that would enhance his net worth and his financial means to make additional child support payments. Unlike other types of assets, such as a television or a car, the trips could not be assigned or sold to a third party; they had no marketable value. Further, Michael did not have the option of receiving the cash value of the trips; his only options were to take the trips or lose them all together.

Next Page