Supreme Court Digest
By Prof. Daniel D. Blinka & Prof. Thomas J.
Hammer
| Civil Procedure | Criminal Law |
Criminal Procedure | Evidence | Taxation | Torts |
Civil Procedure
Offers to Settle - Clarification - Insurer's Duty - Coverage
Disputes
Prosser v. Leuck, No.
97-0686 (filed 21 April 1999)
In 1992 Leuck, then a minor, started a fire that destroyed Prosser's
warehouse. In 1993 Prosser sued Leuck and his parents' homeowner's
insurer. The insurance policy's limit was $100,000. In October 1993
Prosser offered to settle for $99,750 "plus the actual costs of this
action." The offer, addressed only to the insurer and its attorneys,
promised to dismiss "this pending litigation and the entirety of
defendant's liability" upon receipt of the payment. The insurer did not
respond, choosing instead to litigate coverage under an intentional acts
exclusion. Eventually, the courts ruled that the Leucks were covered and
the insurer tendered the $100,000 policy limit to Prosser. Prosser
declined and filed a motion for summary judgment for double costs and
interest pursuant to sections
807.01(3) and (4) of the Wisconsin Statues based upon the insurer's
earlier refusal of his settlement offer. The trial court granted
interest but excluded the time period during which the coverage issue
was litigated. It refused to grant double costs as well, reasoning that
most of the cost incurred involved the coverage dispute. The court of
appeals held that the original offer was ambiguous and therefore
invalid; thus, Prosser was not entitled to interest or costs.
The supreme court, in an opinion written by Justice Bablitch,
reversed. The court held that "an insurer, as part of its fiduciary duty
to its insured, has a duty to clarify an offer of settlement that is
ambiguous with respect to whether the offer applies to only the insurer
or both the insurer and the insured. Failure to clarify the ambiguity
results in a valid offer pursuant to Wis. Stat. sec. 807.01." Obviously,
Leuck's interests were directly affected by the terms of the offer. If
it extended only to the insurer, Leuck was left without coverage. If it
applied both to him and the insurer, he was released from additional
exposure. The court also held that "Prosser is entitled to double costs,
including costs associated with determining coverage, and interest from
the date of the settlement offer throughout the trial on determining
coverage." The issues of double costs and interest are governed by the
same standard in "determining whether a judgment is greater than or
equal to a rejected settlement offer." In this case, the stipulated
judgment of $100,000, exclusive of costs, exceeded the rejected
settlement offer of $99,750, exclusive of costs. The court's conclusion
that coverage costs also are subject to doubling was supported by the
policy behind section 807.01 - "to encourage pretrial settlement."
Finally, the accrual of interest was not stayed because "the underlying
action is stayed pending determination of coverage." The statute
encompasses no such exception.
Justice Bradley, joined by Chief Justice Abrahamson and Justice
Steinmetz, concurred for the reason that the majority opinion unwisely
"forces settlement" by imposing double costs and interests even while
coverage is disputed.
Criminal Law
Attempted First-Degree Intentional Homicide - Consumption of Alcohol
by Mother During Pregnancy - Alleged Injury to Fetus That Was Later Born
Alive
State v. Deborah J.Z.,
No. 96-2797-CR (filed 9 April 1999)
[EDITORS' BACKGROUND NOTES TO PER CURIAM OPINION: The criminal
complaint in this case charged the defendant with one count of attempted
first-degree intentional homicide and one count of first-degree reckless
injury claiming that the defendant intentionally consumed toxic
quantities of alcohol in the last days of her pregnancy in an attempt to
kill her baby. The child was born alive with a blood alcohol level of
0.199 GM/DL and was suffering fetal alcohol effects. The case proceeded
to preliminary hearing and the defendant was bound over for trial.
Charges filed in the information tracked those alleged in the criminal
complaint. The defendant moved to dismiss the information arguing that
the evidence adduced at the preliminary hearing was insufficient to
support the bindover. The circuit court denied the motion. An
interlocutory appeal from that decision was taken and the supreme court
accepted the case on certification from the court of appeals.]
The supreme court was equally divided on whether to affirm or reverse
the order of the circuit court on the charge of attempted first-degree
intentional homicide. Justices Steinmetz, Wilcox, and Crooks would have
affirmed; Justices Bablitch, Bradley, and Prosser would have reversed.
Chief Justice Abrahamson did not participate.
Accordingly, the supreme court vacated its order granting
certification and remanded this case to the court of appeals.
Criminal Procedure
Appeals - Harmless Error
State v. Armstrong, No.
97-0925-CR & 97-0926-CR
This brief per curium opinion clarifies the supreme court's
"original" opinion at 223 Wis. 2d 331, 369-70, 588 N.W.2d 606 (1999), by
expanding upon the harmless error discussion in footnote 38. In essence,
the court clarified that State v. Monahan, 76 Wis. 2d 387, does
not "preclude, in any way, the use of a harmless error approach in sec.
971.31(10) appeals and we withdraw from [State v. Pounds,
176 Wis. 2d 315 (Ct. App. 1993), and State v. Esser, 166 Wis.
2d 897 (Ct. App. 1992)] all language to the contrary." With this
clarification, the court denied the defendant's motion for
reconsideration.
Justice Bradley, joined by Chief Justice Abrahamson, concurred but
wrote separately to stress that the supreme court should have requested
additional briefing on this issue.
Guilty Pleas - Withdrawal Before Sentencing - Fair and Just Reason -
Recantations
State v. Kivioja, Nos.
97-2932-CR & 97-2933-CR (filed 4 May 1999)
This is a tale of two plea bargains. The defendant and an accomplice
were arrested and charged with a series of burglaries. The accomplice
agreed to testify against the defendant in exchange for charging and
sentencing concessions by the state. The agreement postponed the
accomplice's sentencing until after the defendant's trial, but the
accomplice later insisted upon being sentenced before he testified
against the defendant. The judge sentenced the accomplice to 20 years in
prison and 10 years of probation plus more than $13,000 in restitution.
The sentence angered the accomplice. About two weeks later the
accomplice gave statements to the defendant's investigator recanting
earlier statements implicating the defendant. Meanwhile, the defendant
had reached his own plea agreement with the state. By the time the
accomplice recanted, the defendant already had pleaded guilty and was
awaiting sentencing. Based on the recantation the defendant moved to
withdraw his guilty plea. Following an evidentiary hearing in which the
accomplice testified and repeated his recantation, the circuit court
denied the motion. The court of appeals certified this case to the
supreme court to clarify the test to be applied where a key prosecution
witness recants in a plea withdrawal case before sentencing.
The supreme court, in an opinion written by Justice Steinmetz,
affirmed the circuit court's ruling, although on very different grounds.
The court held that when the defendant moves to withdraw a guilty plea
prior to sentencing, he need not show that the recantation is
corroborated or that a reasonable person would believe the recantation.
The recantation must, however, be "plausible." Put another way, "a
defendant must bring forward evidence that the circuit court finds
believable, without which any reason offered in support of withdrawal
would not be fair and just." The supreme court formulated this standard
to "help cir-cuit courts determine whether a recantation is worthy of
belief and therefore a fair and just reason for withdrawal" prior to
sentencing:
"New evidence should constitute a fair and just reason where the
defendant shows by a preponderance of the evidence that (1) the evidence
was discovered after entry of the plea; (2) the defendant was not
negligent in seeking the evidence; (3) the evidence is material to an
issue in the case; and (4) the evidence is not merely cumulative." In
addition to these four criteria, the "circuit court must determine that
the recantation has reasonable indicia of reliability." The court also
explained how this standard differs in "significant ways" from the more
"onerous" test that governs plea withdrawals after sentencing. In its
independent review of the record, the supreme court held that the
accomplice's recantation lacked the reasonable indicia of reliability
required, and thus did not constitute a fair and just reason for the
plea withdrawal.
Chief Justice Abrahamson, joined by Justice Bradley, dissented. The
dissent argues that the majority opinion departs from Wisconsin's
traditional approach to guilty plea withdrawals and unwisely commingles
doctrine governing newly discovered evidence. The dissent formulated
what it deems is a better standard for adjudicating post-plea,
presentence withdrawals.
Revocation of Probation - Certiorari Review in the Court of
Conviction
Drow v. Schwarz, No.
97-1867 (filed 5 May 1999)
Venue in a certiorari action to review a revocation of probation is
in the county in which the relator was last convicted of an offense for
which he or she was on probation. See Wis. Stat. §
801.50(5). The issue in this case was whether a certiorari
proceeding to review a probation revocation must be heard by the same
branch of the circuit court in the county in which the probationer was
convicted of the offense for which he or she was on probation.
In a unanimous opinion authored by Chief Justice Abrahamson, the
supreme court concluded that a certiorari proceeding to review a
probation revocation need not be heard by the same branch of the circuit
court in the county in which the probationer was convicted of the
offense for which he or she was on probation. Certiorari proceedings of
this sort may be heard in any branch of the circuit court in the county
in which the probationer was last convicted of an offense for which he
or she was on probation.
The court indicated that its holding does not restrict circuit courts
from developing and implementing local rules relating to the assignment
of certiorari petitions for review of probation revocations as long as
the rules are consistent with law and the supreme court's rules of
judicial administration.
Interstate Agreement on Detainers - Writ of Habeas Corpus Ad
Prosequendum
State v. Eesley, No.
97-1839-CR (filed 30 April 1999)
The defendant was serving a federal prison sentence at the Federal
Correctional Institute in Sandstone, Minn. During that time, he was
charged with numerous separate state offenses by a Wisconsin district
attorney. To secure the defendant's presence for his initial appearance,
preliminary hearing, and arraignment on the state charges, the state
circuit judge issued writs of habeas corpus ad prosequendum. Following
each appearance in the Wisconsin circuit court, the defendant was
returned to the federal institution.
The defendant filed a motion to dismiss all state charges pending
against him on grounds that the state had violated the Interstate
Agreement on Detainers (IAD). The IAD requires that after a detainer is
filed against a prisoner in another jurisdiction, a trial must be held
within 120 days of the arrival of the prisoner in the state in which the
trial is to be had. The sanction for non-compliance with the IAD is
dismissal of the pending charges and, since the defendant was not tried
on the state charges within 120 days of his first arrival in Wisconsin
to answer the state criminal charges, he claimed entitlement to
dismissal.
The issue before the supreme court was whether a writ of habeas
corpus ad prosequendum constitutes a detainer under the IAD. If it does,
the IAD is triggered and the state must comply with the speedy trial and
other provisions of the agreement. If a writ of habeas corpus ad
prosequendum does not constitute a detainer, the IAD is not
implicated.
In a unanimous decision authored by Justice Bablitch, the supreme
court concluded that a writ of habeas corpus ad prosequendum is not a
detainer under the IAD. Accordingly, because no detainer was ever filed
in this case, the IAD and its protections were never triggered.
Stop and Frisk - Anonymous Tips - Frisks of Vehicles
State v. Williams, No.
96-1821-CR (filed 27 April 1999)
The Milwaukee police dispatcher received an anonymous tip indicating
that people were dealing drugs from a blue and burgundy Ford Bronco
parked in the driveway on the side of the caller's apartment building.
This information was relayed to a patrol squad which arrived at the
location within four minutes. Upon arrival the officers observed a blue
and burgundy Chevy Blazer with two occupants parked at the address to
which the officers had been sent. The defendant was sitting in the
driver's seat; a woman was sitting in the front passenger's seat. The
officers did not observe any drug activity in progress nor did they
conduct any surveillance. Instead they approached the vehicle
immediately. While doing so one of the officers observed that the
defendant's right hand was behind the passenger's seat and, although he
did not see a weapon, the officer was concerned for his safety.
Therefore, he and his partner approached with weapons drawn.
Both occupants were removed from the vehicle, patted down, and placed
in the squad car. One of the officers then searched the area behind the
seat where he had earlier noticed the defendant's hand hidden from view.
The officer testified that the purpose of the search was officer safety
because the defendant may have had a gun in his hands and possibly
dropped it behind the seat. During this protective search of the
vehicle, the officer recovered marijuana and cocaine.
The circuit court denied the defendant's motion to suppress the
marijuana and cocaine. However, the court of appeals reversed. It held
that the information contained in the 9-1-1 anonymous call and
independently corroborated by the police did not reach the requisite
level of reasonable suspicion necessary for a stop. It held that
reasonable suspicion under the circumstances in this case requires not
only that the police corroborate anonymous tips with independent
observation of the details of such calls, but that they also must either
corroborate the predictions contained in those tips or make independent
observations of suspicious activities.
In a majority opinion authored by Justice Steinmetz, the supreme
court reversed the court of appeals. In executing a valid investigatory
stop of an individual, the law enforcement officer need only reasonably
suspect, in light of his or her experience, that some kind of criminal
activity has taken or is taking place. In determining what facts are
sufficient to authorize police to stop a person, the totality of the
circumstances must be taken into account. In this case the officers had
the following facts and information before them: an anonymous 9-1-1
phone call from a citizen informant detailing information concerning his
or her contemporaneous observation of illegal drug dealing activity;
independent corroboration of the readily observable information from
that tip; a quick response time in which the officers arrived at the
scene; the observation that the vehicle involved did not have any
license plates; and the officers' inability to observe the defendant's
hand. Considering the totality of these circumstances, the court
concluded that the officers had the requisite reasonable suspicion to
"stop" the defendant.
In so holding the court rejected adoption of a categorical rule
requiring police corroboration of predictive information as a
precondition to reliance on anonymous tips. The absence of information
predicting the future behavior of an individual who is the subject of an
anonymous tip does not necessarily make that tip worthless. An anonymous
tip that is, as in the present case, supplied by a citizen informant,
lacking in predictions but describing a crime in progress, can be
accorded some weight in an officer's consideration of reasonable
suspicion.
With regard to the protective frisk of the vehicle, the court noted
that the officers were investigating suspected drug dealing. As they
approached the defendant's vehicle, the defendant's hand was hidden from
their view. When the defendant was frisked, he did not have any weapons
on his person. Under these circumstances the court concluded that it was
not unreasonable for the officer to suspect, as he did, that the
defendant may have had a weapon and dropped it on the floor of the
vehicle before he exited it. These circumstances justified the limited
search of the vehicle for they lead a reasonably prudent individual to
the conclusion that his or her safety is in danger.
Justice Prosser filed a concurring opinion. Justice Bablitch filed a
dissent that was joined by Chief Justice Abrahamson and Justice
Bradley.
Evidence
Other Acts - Sentencing - Probation Modification
State v. Gray, No.
96-3363-CR (filed 16 April 1999)
The defendant was originally convicted of obtaining controlled
substances by misrepresentation (forged prescriptions). The primary
issue on appeal concerned the state's introduction of "other acts"
evidence.
Affirming the conviction, the supreme court applied the three-step
analysis that it formulated last term in State v. Sullivan (1998). The other
acts consisted of a 1990 conviction for obtaining drugs by
misrepresentation and several uncharged instances involving the use of
forged prescriptions. Under the first step, the court examined whether
the trial court properly admitted the other acts evidence for an
"acceptable purpose" under section
904.04(2). Discussing each proffered purpose separately, the court
held that the evidence was properly admitted to prove identity, plan,
proof of motive, and absence of mistake. It also found that the evidence
was relevant to establish each purpose. Other acts need not take the
form of prior convictions. In response to the defendant's contention
that the state had not offered sufficient proof that he had committed
the other acts, the supreme court applied the test of conditional
relevancy applied in federal court and several Wisconsin court of
appeals cases: Could a jury acting reasonably find that it is more
likely than not that the defendant committed the other act? On this
record the state had satisfied this standard. Finally, the court held
that the evidence was not so "unfairly" prejudicial under section 904.03
that it warranted exclusion. It noted that the trial judge read the
standard cautionary instruction, Wis JI - Criminal 275.
The second issue concerned the trial judge's power to modify the
defendant's probation sentence before the probation period actually
began. Originally the defendant was convicted and sentenced on three
counts. On postconviction motions the trial court overturned two of the
judgments and then modified the disposition on the remaining count. The
supreme court held that section
973.09(3), of the Wisconsin Statutes "allows circuit courts to
modify conditions of probation at any time before the period of
probation expires, even before the period of probation begins."
Taxation
Property Taxes - Exemption for Benevolent Associations - Wis. Stat.
section 70.11
Deutsches Land Inc. v. City of
Glendale, No. 96-2489 (filed 16 April 1999)
Deutsches Land Inc. is a nonstock, nonprofit corporation organized
under Chapter 181 of the Wisconsin Statutes. It primarily serves as a
holding corporation for the real estate and fixed assets of five
incorporated nonstock, nonprofit benevolent associations that exist for
the purpose of preserving Germanic heritage and culture.
For the benefit of the benevolent associations, Deutsches Land holds
title to roughly 14 acres of property located in the City of Glendale.
Though the property officially comprises a single parcel, Deutsches Land
treats the property as if it were four lots. Two of the lots have
buildings upon them and the remaining two lots, totaling approximately
5.5 acres, are soccer fields.
One of the two lots containing buildings is called "Old Heidelberg
Park," which covers about 4.5 acres. It is the sight at which the
benevolent associations conduct two major public festivals. While
Deutsches Land does not officially lease the park to any entity, it
allows Bavarian Waldhaus Inc. to use it on approximately 20 occasions
annually. Waldhaus is a for-profit corporation created by the benevolent
associations. Waldhaus uses the park to host corporate picnics at which
it supplies food and beverages.
The last parcel, which is four acres in size, contains a parking area
for the entire 14-acre parcel and a significant structure that houses
the Bavarian Inn Restaurant, which is a full-service, for-profit bar and
banquet facility open to the public. Deutsches contracts with Waldhaus
to operate the Bavarian Inn Restaurant.
Deutsches Land sought a full exemption from property taxes for the
soccer fields and Old Heidelberg Park and a 25 percent exemption for the
Bavarian Inn building for the years 1993-95. Glendale denied the
applications and Deutsches Land filed suit. The circuit court ruled that
Deutsches Land was entitled to a full exemption on the soccer fields and
Old Heidelberg Park, and a 25 percent exemption for the Bavarian Inn
building. The court of appeals reversed the circuit court.
In a majority opinion authored by Justice Bradley, the supreme court
affirmed the court of appeals. It concluded that Deutsches Land did not
sufficiently show that it was entitled to an exemption from real
property taxes for the years in question. Deutsches Land is a benevolent
association under Wis. Stat. section
70.11(4). This was never in dispute. However, Deutsches Land did not
produce sufficient evidence showing that the corporate use of Old
Heidelberg Park was incidental in comparison to the benevolent use of
the park. Similarly, it did not sustain its burden of proving
entitlement to a real property tax exemption for the Bavarian Inn
inasmuch as it failed to produce sufficient evidence to measure a
comparison between for-profit and exempt use of space, time, and income.
The court further concluded that because of its evidentiary failure to
support an exemption for any building, Deutsches Land was not entitled
to an exemption on the soccer fields either. It failed to show that the
fields are "necessary for the location and convenience" of any building
that is exempt under section 70.11.
Justice Prosser filed an opinion concurring in part and dissenting in
part. Justice Wilcox joined Justice Prosser's opinion.
Torts
Child Labor Laws - Street Trades - Employer's Knowledge - Protected
Class
Beard v. Lee Enterprises
Inc., No. 96-3393 (filed 9 April 1999)
Jane Beard's husband was killed in a collision with AK, a minor.
Beard alleged that AK was employed by a newspaper at the time and was
working in a "street trade" during prohibited hours, contrary to section
103.21(1) (1991-92). AK's father had a "bundle delivery agreement" with
the newspaper to distribute the papers. The fatal collision occurred at
about 4:15 a.m. on a Friday. AK had just finished delivering papers for
his brother, who was a paper carrier, and had bundles of Sunday
supplements in the van for his father. The circuit court dismissed the
complaint and the court of appeals affirmed. It held that the plaintiffs
had to show that the employer (the newspaper) exercised some control
over the method or route of AK's travel home before it could be found to
have violated the child labor laws.
The supreme court, in an opinion written by Justice Wilcox, reversed.
First, the court held that "knowledge, actual or constructive, is
implicit in the employer/employee relationship involving a publisher, or
an intervening agency, and a minor involved in a street trade under sec.
103.21(1), on the part of the employer as to whom it is employing." In
this case the evidence conflicted as to what the employer knew, if
anything, about AK's distribution of newspapers and bundles. For this
reason, summary judgment was inappropriate.
Second, the court also held that "whether there was a child labor law
violation and whether that violation occurred while [AK] was acting
within the scope of his employment are factual questions which should
also be determined by a jury and not decided on summary judgment."
Finally, the court addressed whether the deceased victim fell within
the class of persons protected by the child labor laws. It held that "if
it is determined that: (1) [The employer] had actual or constructive
knowledge of [AK's] employment; (2) [the employer] violated a child
labor law; (3) such violation occurred at or about the time of the
injury; then we conclude that the public highway could be [AK's] place
of employment and [the deceased], who was driving on the public highway,
could be a frequenter intended to be protected by the child labor laws
to the extent that [AK] was present and may have been engaged in the
distribution of newspapers - a street trade." If all these predicates
are established, the employer is liable for the victim's death.
Justice Bradley, joined by Chief Justice Abrahamson, concurred but
disagreed with the majority's conclusion that "absolute liability
automatically results from a violation of the child labor laws
regardless of who is injured."
Damages - Economic Loss Doctrine - Consumer Actions
State Farm v. Ford Motor
Co., No. 97-2594 (filed 4 May 1999)
In 1994 Renberg bought a used 1990 model Ford truck along with an
extended service contract. In 1996 the truck burst into flames as it sat
parked at Renberg's workplace. Renberg's insurer, State Farm, paid him
the value of the vehicle. Later that same year Renberg received a recall
notice from Ford warning about a faulty ignition switch that could cause
a fire. State Farm brought this subrogation action to recover the money
it had paid to Renberg. Its claims sounded in negligence and strict
liability; contract-based claims were dismissed because the truck was
purchased "as is" and the extended warranty had expired. The circuit
court dismissed the action because the economic loss doctrine barred
recovery.
The supreme court, in an opinion written by Justice Bablitch,
affirmed. The court held "that the same policies that justify applying
the economic loss doctrine to commercial transactions apply with equal
force to consumer transactions"; thus the economic loss doctrine barred
"State Farm's tort claims for purely economic loss." "Economic loss" is
defined as "the diminution in the value of the product because it is
inferior in quality and does not work for the general purpose for which
it was manufactured and sold." Since 1989 Wisconsin has applied the
economic loss doctrine to bar tort claims in commercial transactions;
put another way, persons suffering damages are left to their remedies
under contract law. The majority opinion offers a lengthy policy
discussion that justifies the application of the economic loss doctrine
to consumer transactions as well as commercial transactions. The primary
theme is the need to distinguish tort from contract claims. There is,
however, a critical caveat. The majority specifically did not "reach the
issue of the preclusion of a strict-liability claim when the parties are
of unequal bargaining power, the product is a necessity, no alternative
source for the product is readily available, and the purchaser cannot
reasonably insure against consequential damages."
Chief Justice Abrahamson dissented, joined by Justice Bradley. The
dissent noted that this case involved an insurer asserting it
subrogation rights and that the breadth of the majority's holding is
limited by the caveat quoted above.
Damages - Economic Loss Doctrine - Consumer Actions - No "Sudden and
Calamitous Event" Exception
General Casualty Co. v. Ford Motor
Co., No. 97-3607 (filed 4 May 1999)
This case is a companion to State Farm v. Ford Motor Co.
(see digest above). The Willards' Lincoln Town Car burst into flames
while it was parked in front of their house. Their insurer, General
Casualty, reimbursed them for the value of the car. The insurer then
brought this subrogated action joined by the Willards, who sought
recovery of their deductible. The circuit court dismissed the action
because of the economic loss doctrine.
The supreme court, in an opinion written by Justice Bablitch,
affirmed based on its decision in State Farm v. Ford Motor Co.
In this opinion the court refused to adopt an exception to the economic
loss doctrine for damages suffered in a "sudden and calamitous event."
Other courts that have recognized the economic loss doctrine have
rejected such an exception.
Chief Justice Abrahamson, joined by Justice Bradley, dissented for
the reasons set forth in their dissent to State Farm v. Ford Motor
Co.
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
