Court of Appeals Digest
By Prof. Daniel D. Blinka & Prof. Thomas J.
Hammer
| Civil Procedure | Criminal
Procedure | Family Law | Insurance
| Sex Predator Law | Torts |
Civil Procedure
Summary Judgement - Issue Preclusion - Other Parties
Precision Erecting Inc. v.
M&I Marshall & Ilsley Bank, No. 97-3029 (filed 16 Dec.
1998) (ordered published 23 Feb. 1999)
The underlying facts of this case concerned a contract dispute and
the liability for the remaining payments. One party, AFW, filed a motion
for summary judgment against another, Antonic. The motion requested that
summary judgment be entered in accordance with the demands in the
complaint and asserted that the balance due was about $85,000. Antonic
submitted a letter to the court indicating he would not oppose the
motion. Another party, Nambe Mills Inc., did not appear or respond to
the motion.
The court ruled that the contract between AFW and Antonic called for
general contracting services, that AFW was only liable for the remaining
balance ($85,000), and that the court's decision was binding on all
parties, including Nambe. Nambe's share of the $85,000 was less than 20
percent of what it claimed. Nambe asserted that it should not be bound
by the summary judgment disposition between the other two parties.
The court of appeals, in an opinion written by Judge Brown, affirmed.
The court's opinion begins with a summary of the holding and a caution
to lawyers involved in multi-party litigation: "If a litigant who is not
the subject of the motion for summary judgment nonetheless has reason to
dispute the facts supporting the motion, it is that litigant's duty to
appear and object to the motion. If not, and summary judgment is
granted, the facts underlying that judgment are binding on all other
parties to the suit as a matter of issue preclusion."
After addressing several issues relating to long-arm jurisdiction and
the propriety of granting a stay, the court reviewed Wisconsin law on
issue preclusion. Although the case law had never explicitly applied the
label "issue preclusion" to a ruling like this one, the court found
several cases that had, in effect, done so. Judge Brown ruled that no
sound reason limited the application of issue preclusion to "subsequent
independent actions" as opposed to the determination of issues between
other parties in the case. Applying the well-established factors set
forth in earlier cases, the court held that issue preclusion had been
properly applied to bar Nambe's claims against AFW. Any other approach
only "encourage[d] parties in Nambe's position to sit on their hands and
wait to see what happens instead of opposing summary judgment on an
issue crucial to their claims."
Frivolous Lawsuits - Attorney Fees - Duty to Investigate - Reliance
on Client's Story
State v. Lamontae
D.M., No. 98-1700 (filed 2 Dec. 1998) (ordered published 27
Jan. 1999)
The plaintiff sued the defendant alleging that he stole $60,000 while
replacing windows in her home. The defendant moved for and received
summary judgment in his favor. The court struck the plaintiff's response
because it was not filed in a timely manner. The court also granted the
defendant's motion for attorney fees under section
802.05 of the Wisconsin Statutes based on plaintiff's counsel's
failure to make a reasonable inquiry into whether the plaintiff's "story
was well-grounded in fact."
The court of appeals, in an opinion written by Judge Anderson,
affirmed. First, it ruled that summary judgment had been properly
granted. Although plaintiff could rely on circumstantial evidence to
prove that the defendant stole the money, the undisputed evidence did
not raise any fair or reasonable inference that he had stolen the money
in the first place.
Second, the court addressed the award of attorney fees under sections
802.05 and 814.025.
The defendant moved for attorney fees pursuant to the frivolous claims
statute, section 814.025, but the court awarded them under section
802.05. Plaintiff's counsel alleged that he was denied a right to
respond to the allegation under section 802.05. The court disagreed. The
Legislature intended the two provisions "work together to deter the
filing of frivolous claims." The court also possessed inherent authority
to sanction a party for failing to comply with a court order or
rule.
The court was further satisfied that the record supported the finding
under section 802.05. The plaintiff's counsel relied exclusively on what
his client said without "performing even the most rudimentary check on
his client's statements." Lawyers are obliged to determine whether their
client's story "passes the smell test." Here the client failed to
discover the missing money until three days after the defendant's
departure and said nothing to her husband for another 30 days. "Holes"
apparent to the police, who refused to pursue charges or any further
investigation, should have been addressed by counsel. In short, the
statute and case law "admonishes lawyers to 'read and consider' before
litigating."
Criminal Procedure
Change of Venue - Tactical Decision to be Made by Defense
Counsel
State v. Hereford,
No. 98-1270 (filed 28 Jan. 1999) (ordered published 23 Feb. 1999)
In Wisconsin a defendant has the right under the state constitution
and state statutes to be tried by an impartial jury in the county or
district where the crime was committed. The Sixth Amendment of the U.S.
Constitution, as applied to the states by the Fourteenth Amendment, also
provides that the district where the crime is alleged to have occurred
is the place where the jury should be selected and the trial should take
place. A defendant may move for a change of venue if an impartial jury
is not possible in the county where the crime occurred.
In this case the court of appeals was presented with a question
involving a change of venue: whether the right to venue in the county
where the crime was committed is a fundamental right requiring a
personal waiver by the defendant before venue can be changed, or whether
moving to change venue is a tactical decision delegated to defense
counsel.
In a unanimous decision authored by Judge Roggensack, the court
concluded that decisions impacting venue are tactical decisions that are
delegated to counsel when a defendant in a criminal trial appears by
counsel. The court also concluded that the defendant's presence at the
hearing on the motion was not required because he delegated the right to
make tactical decisions to trial counsel when he decided to be
represented by counsel at trial.
Guilty Plea Hearings - Advice to Defendant Regarding Sex Predator
Law and Sex Offender Registration Law
State v. Bollig,
No. 98-2196-CR (filed 28 Jan. 1999) (ordered published 23 Feb. 1999)
The defendant entered a plea of no contest to a charge of attempted
sexual contact with a child under the age of 13. Prior to sentencing he
moved to withdraw that plea because the trial court did not advise him
at the plea colloquy that as a result of his conviction: 1) he might be
determined in the future to be a sexual predator under Wis. Stat. chapter
980; and 2) he would be required to register as a convicted sex
offender and, if he failed to do so, he could be fined or imprisoned.
The circuit court denied the motion and sentenced the defendant to
prison. In a decision authored by Judge Dykman, the court of appeals
affirmed.
The motion to withdraw the plea of no contest in this case occurred
prior to sentencing. When the motion is made in that time frame, a
defendant should be allowed to withdraw his or her plea if there is a
"fair and just" reason for doing so. Any fair and just reason, including
a genuine misunderstanding of the consequences of a plea, may justify
withdrawal prior to sentencing, so long as the prosecution has not been
substantially prejudiced by relying on the plea.
When the trial court informs the defendant of his or her rights at a
guilty plea proceeding, it is required to notify him or her of the
"direct consequences" of the plea. The court is not, however, required
to notify defendants of "collateral consequences" of the plea. The
distinction between direct and collateral consequences turns on whether
the result represents a definite, immediate, and largely automatic
effect on the range of the defendant's punishment.
The court of appeals previously has held that a commitment under the
sex predator law is not a direct consequence of a guilty plea because it
does not automatically flow from a sex-related conviction. Rather, a
commitment will depend upon the defendant's condition at the time of the
sex predator proceeding and the evidence the state will then present
about that condition. With regard to the sex offender registration law,
the court likewise concluded that, because the registration requirement
operates as a safeguard to protect past victims and the public in
general, it is not punishment and that a trial court is not required to
notify a defendant of this registration requirement in order for the
plea to be valid.
The court admitted that its conclusion that sex predator commitments
and sex offender registration law requirements are not direct
consequences of a guilty or no contest plea did not resolve the ultimate
question in this case: whether the defendant offered a "fair and just"
reason for withdrawing his plea. The circuit court held that even if the
defendant's proffered reason was fair and just, it was outweighed by the
prejudice to the state and the victim. To withdraw a plea, the defendant
must offer a fair and just reason and prove that the state would not be
substantially prejudiced by its reliance on the plea. The court of
appeals concluded that the circuit judge did not erroneously exercise
discretion in denying defendant's motion to withdraw his plea. The trial
court articulated concerns with the ability of the victim, who was 4 at
the time of the alleged assault, to accurately recollect the events at a
trial that would occur two years after the assault if the motion to
withdraw the plea was granted.
Family Law
Marital Property - Separate Civil Action Involving Marital
Property
Knafelc v. Dain Bosworth
Inc., No. 98-0067 (filed 12 Jan. 1999) (ordered published 23
Feb. 1999)
Dale Knafelc appealed an order dismissing her complaint against Greg
Knafelc, her husband/stockbroker, and Dain Bosworth, Greg's employer.
The complaint, which was filed during the course of divorce proceedings
between Dale and Greg, alleged securities fraud violations by Greg and
vicarious liability and negligent supervision by Dain Bosworth.
During the course of their marriage, Greg was employed as a
stockbroker with Dain Bosworth. His wife Dale set up an individual
account with Dain Bosworth and Greg directly handled the trades on the
account. The source of funds in Dale's individual account was marital
property. After the petition for divorce was filed and while the divorce
was still pending, Dale filed a separate civil action alleging
securities fraud violations against Greg and the aforementioned claims
against Dain Bosworth. A marital settlement agreement was entered into
and approved which resolved the divorce action, and the securities fraud
case was continued for trial. On the eve of trial, Greg filed a motion
to dismiss the complaint. The trial court granted the motion for lack of
subject matter jurisdiction concluding that Wisconsin's divorce laws
provide the sole remedy for spouses to litigate claims involving marital
property. The trial court further concluded that the claims against Dain
Bosworth also were subject to dismissal as they were derivative of the
claims against Greg. In a decision authored by Judge Myse, the court of
appeals reversed.
Wisconsin statutes create a cause of action predicated on a breach of
the duty of good faith, between spouses, on matters concerning marital
property. See Wis. Stat. §766.70(1).
They also require that once a divorce action is filed, a claim made
encompassing such cause of action must be resolved in divorce court.
See Wis. Stat. §
767.05(7). Cases interpreting this statutory scheme have analyzed
the nature of the claims asserted to determine whether they are the type
of claim that section 767.05(7) requires to be resolved as part of the
divorce action. Accordingly, the court had to focus upon the nature of
Dale's claim to determine whether it could properly be pursued as a
separate civil action.
None of the allegations in the securities fraud complaint referred to
Greg as Dale's husband or alleged that Greg's actions were conducted
pursuant to his status as her husband, nor could the court draw such
inferences from the complaint. In fact, the allegations identify Greg as
a Dain Bosworth employee and focus on his actions as the stockbroker who
handled the trades in Dale's account. Accordingly, Dale's claim was
based upon conduct that arose out of a relationship other than the
marital relationship. The allegations in the complaint identify a
broker/dealer relationship between Dale and her brokerage firm and its
agent Greg. The account was accessible to Greg only by virtue of his
employment with Dain Bosworth and his position as agent directly
handling trades on the account. The marital relationship did not provide
Greg with the authority to act on the account since the funds, though
marital property, were vested in an individual account in Dale's
name.
The court concluded that a section 766.70(1) cause of action requires
that the conduct complained of must arise as a result of the marital
relationship, because it depends upon a duty of good faith based on that
relationship. Inasmuch as the conduct complained of in this case arose
out of a relationship other than the marital relationship, the claim did
not assert a breach of good faith duty between spouses and is not
precluded by the statutes from being raised as a separate civil
action.
Insurance
Auto Coverage - Notice of Policy Changes - Stacking
Hanson v. Prudential
Property & Casualty Ins. Co., No. 98-0692 (filed 12 Jan.
1999) (ordered published 23 Feb. 1999)
Hanson was involved in a serious car accident. He settled with the
tortfeasor for $150,000 and then filed claims with his own insurer,
Prudential, for uncompensated injuries. Prudential denied coverage.
Prudential filed this appeal from a judge's determination that Hanson
was an "underinsured motorist" according to a "'damages basis'
definition" set forth in a "prior coverage period automobile liability
policy" and that Hanson could "stack" his underinsured (UIM) coverage.
The court of appeals, in an opinion written by Judge Myse, affirmed in
part and reversed in part.
As to the first issue, Prudential argued that Hanson failed to meet
the "limits basis" definition of "underinsured motorist" contained in a
renewal policy. The court held, however, that Prudential failed to
comply with the statutory notification procedures required by section
631.36(5), of the Wisconsin Statutes and thus could not assert the
new definition. The statute "requires that when an insurer offers to
renew a policy on new, less favorable terms within sixty days of the
renewal date, the insurer must inform the insured that the new terms do
not become effective until sixty days after the renewal is sent or
delivered and that the insured has a corresponding sixty days within
which to elect to renew or cancel the policy. Because Prudential's right
to cancel notice did not provide this information, it is insufficient
under the statute."
On the second issue, the trial judge erred by ruling that Prudential
failed to notify Hanson of statutory changes that affected the
anti-stacking clause in the policy. Case law requires statutory
notification of only those changes initiated by the insurer.
Sexual Predator Law
Discovery - Court-appointed Experts - Reports
State v. Rachel,
No. 98-2074 (filed 27 Jan. 1999) (ordered published 23 Feb. 1999)
Rachel was committed as a sexually violent person under chapter 980
of the Wisconsin Statutes. Because of his indigency, Rachel asked the
court to appoint an expert to examine him under section
980.03(4). The issue is whether chapter 980 commitment proceedings
are subject to the discovery mechanisms in the rules of civil procedure.
In particular, Rachel opposed the state's efforts to depose his expert
and discover the expert's notes, recordings, or reports. Although
chapter 980 specifically provides that the so-called "rules of criminal
evidence" govern sexual predator commitment trials, the court held that
the "rules of civil procedure" govern discovery and related matters
(emphasis added). On the record, however, it was not clear that Rachel
intended to call this expert as a witness. Absent such a showing, Rachel
could shield the expert's opinions through the work product
doctrine.
Torts
Economic Loss Doctrine - Used Equipment - Damage to "Other
Property"
Cincinnati Insurance Co. v.
AM International Inc., No. 98-0006 (filed 13 Jan. 1999)
(ordered published 23 Feb. 1999)
Harris-Intertype Corporation was a manufacturer of printing presses.
In 1975 Harris ceased manufacturing presses but continued to manufacture
and sell replacement parts for those presses. Harris later was purchased
by another company which in turn was purchased by defendant AM
International in 1986. AM continued to operate the replacement parts
business until 1995.
Burton & Meyer Inc. is a commercial printing company in
Milwaukee. In 1991 it purchased a 1973 Harris printing press in an "as
is/where is" condition. Sometime between 1986 when AM International
acquired Harris's replacement parts business and 1991 when the press was
purchased by Burton & Meyer, a gear in the press was removed and
replaced by a gear manufactured and sold by AM International. In 1994
one or more of the teeth on the gear broke off and caused damage to the
press, bringing production to a halt. Burton & Meyer suffered more
than $130,000 in property damage, repair costs, and loss of business
income. It was compensated for its loss by its insurer, Cincinnati
Insurance Company. Cincinnati then brought this subrogation action
against AM International for negligence and strict liability. AM filed a
motion for summary judgment, arguing that Cincinnati's claims were
barred by the economic loss doctrine. The circuit court denied the
motion.
The sole issue on appeal was whether the economic loss doctrine
applies where a commercial purchaser buys used equipment containing a
defective replacement part that later causes damage to the equipment and
results in repair costs and loss of business income. According to the
economic loss doctrine, a commercial purchaser of a product cannot
recover from a manufacturer under tort theories of negligence or strict
products liability damages that are solely "economic" in nature.
Generally, economic loss refers to a decrease in the value of a product
because it is inferior in quality and does not work for the general
purposes for which it was manufactured and sold. The economic loss
doctrine does not bar a commercial purchaser's claims based upon
personal injury or damage to property other than the product, or
economic loss claims that are alleged in combination with noneconomic
losses. "In short, economic loss is damage to a product itself or
monetary loss caused by the defective product, which does not cause
personal injury or damage to other property." See Daanen & Janssen Inc. v. Cedarapids
Inc., 216 Wis. 2d 394, 573 N.W.2d 842 (1998).
In a decision authored by Judge Snyder, the court of appeals was
persuaded that AM International's gear was a component part of the
Harris press and that the rest of the press that was damaged cannot be
considered "other property" for purposes of the economic loss doctrine.
The replacement gear was specifically designed by AM to replace gears in
the press. As such, it has no function apart from the machine for which
it was manufactured. The court's conclusion was not altered by the fact
that the replacement gear was manufactured at a different time and by a
different company than the press itself. Considering the age of the
press, it should have been no surprise to Burton & Meyer that the
press contained replacement parts. The court concluded that it was
immaterial that defective parts of a machine are replacements for
purposes of the economic loss doctrine.
The court noted that contract law and warranty law are better suited
than tort law for dealing with purely economic loss in the commercial
arena. In this case Burton & Meyer's losses were solely economic.
Because Cincinnati's claims were for negligence and strict liability, it
was attempting to recover in tort what are essentially contract damages.
For these reasons, the court of appeals reversed the trial court's
judgment and remanded with directions that the trial court enter summary
judgment in favor of AM International.
Superseding Causes - Arson
Giebel v.
Richards, No. 97-2085 (filed 19 Jan. 1999) (ordered published
23 Feb. 1999)
An arsonist started a fire at an apartment building which spread and
destroyed an adjacent garage and attached building owned by the
Giebelses. The Giebelses sued the apartment building owners under a
variety of theories. A jury allocated causal negligence at 55 percent
for the apartment owners, 30 percent for the tenants who placed the
garbage that the arsonist ignited, and 15 percent to the Giebelses.
The court of appeals, in an opinion written by Judge Schudson,
reversed. The court agreed that the doctrine of "superseding cause"
relieved the apartment owners of liability. Even assuming that the
owners bore some responsibility for the garbage that accumulated behind
the apartment building, it was "highly unlikely" that an arsonist would
ignite it.
Medical Malpractice - Chiropractors - Statute of Limitations
Arenz v. Bronston,
No. 98-1357 (filed 21 Jan. 1999) (ordered published 23 Feb. 1999)
The sole issue in this case concerned whether the plaintiff's
malpractice action against a chiropractor was governed by the general
personal injury statute of limitations, section
893.54 of the Wisconsin Statutes, or the medical malpractice statute
of limitations, section 893.55 of the Wisconsin Statutes. The former
permits actions to be filed within three years of the discovery of an
injury while the latter restricts such actions to within one year of the
discovery. The court held that a chiropractor is a "health care
provider" within the meaning of section 893.55; thus, the one-year
statute applies. Chiropractors diagnose, treat, and care for their
patients and are licensed by the state examining board. The plaintiff's
failure to file the action within one year of the injury's discovery
rendered her complaint time-barred.
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
