Vol. 73, No. 5, May 2000

Supreme Court Digest

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

Editor's Note: Each case summarized in the Supreme Court Digest includes its new public domain citation.

| Civil Procedure | Family Law | Insurance | Torts |

Civil Procedure

Remands - Substitutions - Supervisory Writs - Chief Judge's Review

State ex rel. J. H. Findorff & Son Inc., 2000 WI 30 (filed 6 April 2000)

In an earlier action the court of appeals reversed and remanded a circuit court decision against the petitioner relating to a breach of contract. On remand, the petitioner requested a judicial substitution, the trial judge granted the request, but the chief judge later denied the request on review. The petitioner then asked the court of appeals to issue a supervisory writ of mandamus, which it refused to do because the "original directives on remand required 'specific action,' and therefore, the right of substitution did not attach."

The supreme court, in a decision written by Justice Crooks, reversed. The original directives on remand called for "'further proceedings' that required the circuit court to exercise its discretion," not merely discharge a ministerial duty. The supreme court also held "that the chief judge was without authority to review and reverse the circuit court judge's decision" granting the substitution request. Wisconsin statutes and court rules provide that a chief judge may only review orders denying substitution, not those granting the request.

Chief Justice Abrahamson, joined by Justice Bradley, concurred but wrote separately to strongly suggest that the supreme court and the court of appeals expressly address the right to substitution in any decision mandating a remand.

Justices Wilcox and Bradley (also joined by the Chief Justice) each filed separate concurring opinions. Justice Wilcox expressed concern about the scope of the phrase "specific action" and whether the court's decision will result in "more liberal substitution of judges in civil actions on remand" (¶ 39). Justice Bradley concluded that "the majority misconstrues and misapplies prior cases, and precludes the circuit court from exercising even a scintilla of discretion" (¶ 49).

Family Law

PR - Statutory Notice - Testimony Required

Waukesha County v. Steven H., 2000 WI 28 (filed 24 March 2000)

A circuit court terminated the parental rights of Steven H. to his daughter Brittany. The court of appeals reversed because some of the orders removing Brittany from her home failed to include the written notice required by section 48.356(2) of the Wisconsin Statutes (1997-98).

The supreme court, in a decision written by Chief Justice Abrahamson, reversed. Two issues were before the court. First, did sections 48.356(2) and 48.415(2) "require each and every order placing a child outside his or her home contain the written notice prescribed by sec. 48.356(2) in order for the termination of parental rights to proceed?" The court held that the statutes do not require that "each and every order removing a child from his or her home contain the written notice prescribed by sec. 48.356(2)." Rather, the statutes "require that the last order specified in sec. 48.356(2) placing a child outside the home, which must be issued at least six months before the filing of the petition to terminate parental rights, must contain the written notice required by sec. 48.356(2)." This construction ensures timely notice and "does not vitiate a termination of parental rights proceeding when one or more previous orders fails to contain the statutorily prescribed written notice." The court cautioned, however, that "the better practice" is to include the statutorily required written notice in all orders to which the statute applies.

Second, the circuit court violated section 48.356(2) when it failed to hear testimony in support of the petition's allegations. Nevertheless, the supreme court reviewed the entire record and concluded that under the totality of the circumstances Steven H. was not prejudiced by the error. Among the factors considered was that Steven H. voluntarily and knowingly waived his right to contest the fact-finding hearing and the testimony by one of his attorneys that Steven H. understood the facts alleged in the petition. The statutes nevertheless require the court to hear testimony in support of the petition's allegations.

Insurance

"Property Damages" - "CGL" Policies - Business Losses

Wisconsin Label Corp. v. Northbrook Property & Casualty Ins. Co., 2000 WI 26 (filed 21 March 2000)

A company mislabeled various products causing them to be sold at less than half their intended value. The products' distributor paid the retailers for their loss and then sought reimbursement from the label company. The label company notified its insurer, which denied the claim because no covered "property damage" had occurred. In this lawsuit, the label company sued the insurer and sought coverage. The circuit court ruled that the insurer had no duty to defend or indemnify for the losses stemming from the mislabeling. The court of appeals affirmed.

The supreme court, in a decision written by Justice Wilcox, also affirmed. The insurer had issued a standard commercial general liability or "CGL" policy. It protected the insured against liability for damages caused by its own negligence. The policy defined "property damage" as "'[p]hysical injury to tangible property, including all resulting loss of use of that property,' or '[l]oss of use of tangible property that is not physically injured.'" In sum, the policy covered damages resulting from "(1) physical injury to tangible property, including all resulting loss of use of that property, or (2) loss of use of tangible property that is not physically injured."

The court rebuffed the insured's multiple arguments seeking coverage. Clearly, the simple act of mislabeling did not physically "damage" the products, and this foreclosed the argument that the products had "diminished in value" as covered by the policy. Wisconsin joins those courts holding "that diminution in value caused by incorporation of a defective product does not constitute 'property damage' under post-1973 [CGL] policies unless it is the result of 'physical injury' or 'loss of use.'" Nor had the insured demonstrated that a "loss of use" had occurred as a result of its mislabeling. Charges stemming from the lost profits due to undercharging and the cost of inspecting and relabeling did not constitute "loss of use." Finally, this CGL policy did not cover all species of "economic loss." Rather, coverage applied "only when damages are because of 'physical injury to tangible property' or 'loss of use of tangible property.' The economic losses in this case did not result from either of these types of damages."

Torts

Emergency Doctrine - Safety Statutes - Management and Control - Subrogation - Appeals

Totsky v. Riteway Bus Service Inc., 2000 WI 29 (filed 28 March 2000)

A bus skidded through an intersection on ice and hit another car. The plaintiff, Totsky, sued the bus company and others. A jury found that neither the bus driver nor Totsky was negligent. In motions after verdict, the trial judge ruled that Totsky was entitled to a directed verdict on negligence on several grounds. First, the bus driver had violated a safety statute when she skidded through the stop sign. Second, the emergency doctrine did not excuse her negligence because the case did not present an issue of management and control. Moreover, her own excessive peed produced the emergency, rendering the emergency doctrine inapplicable. In the alternative, the trial judge granted the plaintiff a new trial because the verdict was against the weight of the evidence.

The court of appeals reversed both rulings. It held that the emergency doctrine applied to violations of safety statutes and that credible evidence supported the doctrine's application in this case. The court of appeals also held that the trial court had improperly found that the bus driver was negligent based on excessive speed.

The supreme court, in a decision written by Justice Crooks, affirmed. First, the court addressed whether the emergency doctrine applied to a violation of a safety statute (requiring vehicles to stop at stop signs). Such violations constitute negligence per se, but the emergency doctrine can excuse the conduct. The court's construction was rooted in the case law, the restatement, and "other leading authorities." Moreover, the statutory language at issue - section 346.46 - also supported this view. Applying the law to the facts of record, the emergency doctrine was properly before the jury because "management and control is involved in at least two of the duties pertaining to obeying a stop sign" (¶ 39). For similar reasons, the circuit court also erred in awarding a new trial. Finally, the circuit court erred by granting a new trial based on the bus driver's speed on icy roads. A reasonable jury could have concluded that her speed was reasonable.

Second, the court addressed whether the subrogees have a duty to separately petition the supreme court for review to preserve their subrogation claims. In its summary holding, the court stated that two of the subrogated parties were not required to file separate petitions "because they stipulated to waive their rights to participate at trial and agreed to be bound by the judgment." But a third subrogee who refused to so stipulate was required to file a petition to preserve its claim.

Justice Bablitch filed a separate concurring opinion. Justice Bradley dissented, joined by Chief Justice Abrahamson and Justice Prosser.

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.

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