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Vol. 72, No. 4, April 1999

Court of Appeals Digest

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

| Civil Procedure | Criminal Procedure |
| Family Law | Insurance |
| Sex Predator Law | Torts |

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."

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.

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.

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