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Vol. 73, No. 8, August 2000

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Supreme Court Digest

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

| Civil Procedure | Corporations |
| Criminal Law | Criminal Procedure |
| Debtor-creditor Law | Employment Law |
| Family Law | Insurance | Labor Law |
| Municipal Law | Torts | Zoning |

Exclusions - Loading Operations

Mullenberg v. Kilgust Mechanical Inc., 2000 WI 66 (filed 23 June 2000)

Mullenberg drove truck for a common carrier that carried liability insurance issued by Great West. Mullenberg stopped at Kilgust Mechanical to deliver a load of pipe in 1996 and was injured when a Kilgust employee caused the pipes to roll off the truck onto Mullenberg. Mullenberg sued Kilgust and its insurer in federal court, which in turn impleaded Great West as the primary insurer. Great West argued that a policy exclusion foreclosed coverage.

The Seventh Circuit certified this case to the supreme court to resolve the following issue of state law:

"Whether Wis. Stat. section 194.41 because of its use of the term 'negligent operation' requires insurers to cover the loading activities of third-parties and, if not, whether Wis. Stat. section 194.41 incorporates the Omnibus Statute, Wis. Stat. section 632.32, so that an insurer who issues and delivers a policy outside of Wisconsin must comply with the requirements of the Omnibus Statute."

The supreme court, in a decision written by Justice Bablitch, concluded that "the word 'operation' in Wis. Stat. section 194.41(1) includes loading and unloading and an individual permissively unloading the vehicle is covered by the motor carrier's policy." For this reason, the insurer's exclusion of such coverage was invalid.

Wage Claims for On-duty Meal Periods - Suits Brought Under State Wage Claim Law

German v. Wisconsin Department of Transportation, 2000 WI 62 (filed 21 June 2000)

Officers of the Wisconsin State Patrol filed suit against the Department of Transportation (DOT), asserting that they were neither relieved from duty during their 30-minute lunch breaks, nor compensated for this on-duty time as required by Wis. Admin. Code section DWD 274.02(3). As a result, the officers alleged that they were entitled to compensation for these hours worked. Their suit to compel payment of wages due was filed pursuant to Wisconsin's wage claim law. See Wis. Stat. §§ 109.01 and 109.03.

The DOT moved to dismiss the suit. The circuit court denied the motion and the court of appeals affirmed the order of the circuit court. In a majority opinion, which was authored by Justice Bablitch, the supreme court affirmed the court of appeals.

The first issue before the court was whether the officers could bring a claim under section 109.03(5) seeking wages for on-duty meal periods, or whether the officers' exclusive remedy is to be found in the administrative procedures codified in section 103.005. [Wis. Stat. chapter 103 is the Hours of Work Law]. The supreme court held that section 103.005 is not the exclusive means to enforce a wage claim grounded upon the administrative code section cited above and that the right of action created by section 109.03(5) allows for claims based upon the hours and overtime regulations to be brought in circuit court without first obtaining administrative review by the Department of Workforce Development.

Secondly, the court held that the Legislature has waived the state's immunity in chapter 109 for the type of claim brought by the officers in this case.

Chief Justice Abrahamson filed a concurring opinion that was joined by Justice Sykes.

Wis. Stat. Chapter 68 Certiorari Proceedings - 42 U.S.C. section 1983 Actions for Money Damages

Hanlon v. Town of Milton, 2000 WI 61 (filed 21 June 2000)

The plaintiff sought a conditional use permit from the Town of Milton to operate a gravel quarry on his agricultural property. The application was denied and the plaintiff sought certiorari review pursuant to Wis. Stat. chapter 68. The circuit court reversed, but that decision was subsequently overturned by the state court of appeals.

Thereafter, the plaintiff brought an action in federal district court under 42 U.S.C. section 1983, alleging that the defendants deprived him of his constitutional rights to due process and equal protection of the law by denying his conditional use permit application. The suit sought money damages. The town moved for summary judgment, which was granted. The plaintiff appealed to the U.S. Court of Appeals for the Seventh Circuit.

The federal appellate court certified a question of law to the Wisconsin Supreme Court. In sum, the supreme court was asked to address a narrow question of law: When a municipal administrative determination gives rise to an equal protection claim for money damages actionable under section 1983, must this equal protection claim be brought and heard in a Wis. Stat. section 68.13 certiorari proceeding brought by the litigant?

In a unanimous decision authored by Justice Bablitch, the supreme court concluded that a litigant cannot bring a claim for money damages grounded upon 42 U.S.C. section 1983 in a certiorari proceeding brought under Wis. Stat. chapter 68. The court further concluded that although the plaintiff could have joined his section 1983 claim with his chapter 68 certiorari review, he was not required to do so. Failure to join these actions does not preclude him from now bringing his section 1983 claim.

County Sheriffs - Disciplinary Procedures - Arbitration Clause in Collective Bargaining Agreements

Eau Claire County v. General Teamsters Union Local No. 662, 2000 WI 57 (filed 20 June 2000)

The circuit court enjoined the Wisconsin Employment Relations Commission from acting on a prohibited practice complaint filed by the union. The union's complaint alleged that Eau Claire County refused to arbitrate the dismissal of a deputy sheriff pursuant to the collective bargaining agreement between the county and the union. The circuit court dismissed the complaint, holding that Wis. Stat. section 59.52(8)(c) establishes the circuit court as the exclusive forum in which an aggrieved county law enforcement employee may challenge an order of a civil service commission to dismiss, demote, suspend, or suspend and demote the employee. The court of appeals reversed the circuit court and the supreme court, in a majority decision authored by Chief Justice Abrahamson, affirmed the court of appeals.

The issue before the supreme court was whether a county law enforcement employee's appeal to circuit court pursuant to the statute cited above is the employee's exclusive appeal procedure in the disciplinary context. Or may the county law enforcement employee use the grievance procedures, including arbitration, provided in the applicable collective bargaining agreement in lieu of an appeal to the circuit court?

The majority concluded that the circuit court is not the exclusive forum in which a county law enforcement employee may challenge an order of the civil service commission to dismiss, demote, suspend, or suspend and demote the employee. The court held that after a civil service commission issues such an order, the employee may either appeal to the circuit court pursuant to the statute cited above or pursue grievance procedures, including arbitration, as provided for in any applicable collective bargaining agreement. The employee may not, however, pursue both remedies.

At numerous points in the decision, the court distinguished City of Janesville v. WERC, 193 Wis. 2d. 492, 535 N.W.2d 34 (Ct. App. 1995), wherein the court of appeals held that when an irreconcilable difference exists between a statutory procedure and the arbitration provisions of a collective bargaining agreement, the statute controls. City of Janesville dealt with municipal public safety employees, whereas this case involves county law enforcement personnel.

Justice Sykes filed a dissenting opinion that was joined by Justice Prosser.

Child Sexual Abuse - Negligence - Failure to Warn

Gritzner v. Michael R., 2000 WI 68 (filed 23 June 2000)

A 10-year-old boy, Michael, sexually assaulted a 4-year-old girl, Tara. The assault occurred at Michael's home, where he lived with his mother and his mother's boyfriend, Bubner. Tara's parents sued Bubner (and others), alleging that Bubner had: 1) negligently failed to warn them of Michael's propensity to engage in inappropriate sexual behavior; and 2) negligently failed to control Michael's conduct. The circuit court dismissed both claims. The court of appeals reinstated the claim for negligent failure to control but reluctantly affirmed the dismissal of the failure to warn claim. Both parties appealed.

The supreme court affirmed in part and reversed in part. Justice Wilcox wrote the lead opinion. All members of the court agreed that the case should be remanded. Those joining the lead opinion would affirm the court of appeals on both claims. More particularly, the lead opinion concludes that public policy considerations preclude the claim for negligent failure to warn. The justices joining the lead opinion were particularly concerned that "in this case there are no just and sensible guidelines for defining liability for negligent failure to warn" (¶ 36). The lead opinion did, however, recognize the claim for negligent failure to control "only because liability for failure to control can be imposed on distinct, narrow grounds that do not raise the same public policy considerations that preclude liability for failure to warn." Such claims may be predicated on the doctrine of in loco parentis or on the theory that the adult (Bubner) voluntarily undertook Tara's protection.

Chief Justice Abrahamson concurred in an opinion that agreed with the lead opinion's "failure to control" analysis. The concurrence asserted, however, that the public policy factors should be applied first by the circuit court based on a complete evidentiary record. The concurrence was joined by Justices Bablitch, Bradley, Crooks, and Sykes. This means that the lead opinion is the court's opinion on the negligent failure to control, but that the concurrence is the opinion of the court on the negligent failure to warn.

Collateral Source Rule - Medical Assistance Payments

Ellsworth v. Schelbrock, 2000 WI 63 (filed 22 June 2000)

The defendant struck a car driven by the plaintiff, who was severely injured. The trial court found that the plaintiff had received past medical services valued at nearly $600,000. The state-sponsored Medical Assistance program (Title 19), which provides health insurance to certain needy individuals, had paid about $355,000 for past medical expenses. (By law, the health-care providers had to accept the payment schedules set by Title 19.) The trial court rejected the defendant's argument that she was limited to the actual amount of the payments. The court of appeals affirmed.

The supreme court, in a decision written by Justice Bablitch, affirmed as well. The collateral source rule provides that "the amount of damages awarded to a person injured because of another individual's tortious conduct is not reduced when the injured party receives compensation from another source, such as insurance or sick leave." The court held that the rule applies to Medical Assistance payments. The collateral source rule imposes "upon the tortfeasor full responsibility for the loss he has caused." The defendant was not entitled "to reap the benefit of [the plaintiff's] eligibility for public assistance or from the government's economic clout in the health care market place" (¶ 17). The court also rebuffed several other arguments rooted in the county's right to subrogation and several public welfare statutes.

Justice Sykes dissented, joined by Justices Wilcox and Crooks.

Settlements - Covenants not to Sue - Admissibility

Morden v. Continental AG, 2000 WI 51 (filed 16 June 2000)

The plaintiffs sustained serious injuries when their car rolled over following a tire blowout. They sued the car's manufacturer (VW), the dealer, and the tire manufacturer, Continental AG. Prior to trial, the plaintiffs settled with VW. A jury returned verdicts for the plaintiff on claims alleging both negligence and strict product liability. The trial judge approved the verdict as to the negligence finding, but the jury's defective answers to the strict liability questions precluded entry of judgment on that claim. The court of appeals reversed on the ground that there was insufficient evidence of Continental AG's negligence.

The supreme court, in a decision written by Justice Prosser, reversed the court of appeals. The case presented four issues on appeal, but the supreme court needed to address only two. First, the court held that the evidence was sufficient to sustain the judgment against Continental AG. Since this discussion is extremely fact-intensive and involves application of long-settled legal principles, it will not be addressed further.

The second issue alleged that error occurred when the trial judge excluded evidence about a settlement between the plaintiffs and VW, the car's manufacturer, about two weeks before trial. In exchange for $500,000, the plaintiffs executed a covenant not to sue VW, which the trial judge excluded. Section 904.08 generally excludes evidence of compromise or settlement except where it is relevant to show bias, particularly where it appears that a witness may have changed his or her testimony. In this case, the trial judge did not abuse his discretion by excluding the covenant not to sue. The judge found that an expert witness had not "changed" his testimony; rather, he had not been asked about certain facets of the crash. And the omissions did not amount to a "change" in testimony. In sum, Continental AG was not entitled to a new trial based on the exclusion of this evidence.

Contributory Negligence - Mental Illness

Jankee v. Clark County, 2000 WI 64 (filed 22 June 2000)

While hospitalized at a county mental health complex, Jankee severely injured himself while attempting to escape out of a window. Jankee sued the county and various contractors. The circuit court granted summary judgment to the contractors based on the government contractor immunity doctrine. The judge dismissed the claims against the county on the ground that Jankee's contributory negligence exceeded that of the county (if any). The court of appeals affirmed as to the contractors but reversed as to the county. The court held that Jankee's conduct should be assessed under a subjective standard of care because of his mental illness and the circumstances of his commitment.

The supreme court, in a decision written by Justice Prosser, reversed as to the claim against the county. (The court did not reach the plaintiff's argument that the defendant contractors could not claim immunity as government contractors.) The supreme court held that Jankee's own negligence exceeded any attributed to the defendants, including the county, as a matter of law. The majority opinion extensively discusses the standard of care applicable to mentally ill plaintiffs. It ruled that Jankee's conduct must be assessed under a reasonable person standard of care, not a subjective test, except in two relatively narrow instances addressed by prior cases and not implicated in this case. See ¶ 78.

The court stressed two points. First, Jankee's hospitalization arose because he failed to comply with his medication program, something a reasonable person would not have done. Second, Jankee's injury occurred during an escape attempt which, under the circumstances, also failed the reasonable person standard ("Jankee was a major cause of his own injuries." ¶ 89). In short, Jankee's conduct failed the reasonable person standard and did not fit within the two narrow exceptions set forth by the cases.

Chief Justice Abrahamson, joined by Justice Bradley, dissented on a variety of grounds, including the ripeness of the case for summary judgment and the policy determination that the institutionalized mentally ill should be held to a reasonable person standard.

Equal Protection - Substantive Due Process - Procedural Due Process

Thorp v. Town of Lebanon, 2000 WI 60 (filed 21 June 2000)

The plaintiffs own approximately 255 acres in the Town of Lebanon, which is located in Dodge County. The property is a mix of open land, woods, and wetlands. Before 1994, the land was zoned with a classification of rural development. In that year, the Town of Lebanon Board of Supervisors approved a rezoning map that extensively revised the zoning classification of most of the town from a rural development classification to a general agricultural classification. The Dodge County Board of Supervisors thereafter amended its official zoning map to incorporate the town's zoning reclassifications.

The plaintiffs subsequently petitioned the town to rezone their property to its original classification. The town acquiesced, but the Dodge County Board of Supervisors declined to further amend the county zoning map, and thus the plaintiffs' entire property remained zoned in an agricultural classification.

The plaintiffs filed suit against the town and the county seeking declaratory, injunctive, and monetary relief. They claimed that the town and county zoning ordinances were invalid and violated their due process and equal protection rights.

In a majority decision authored by Justice Crooks, the supreme court first considered whether the plaintiffs complied with the notice of claims statute. The court concluded that, as to their federal constitutional claims, the plaintiffs did not have to comply with the Wisconsin notice statute. See Felder v. Casey, 487 U.S. 131 (1988). Further, upon review of the record, the court concluded that the plaintiffs did in fact comply with the notice statute.

Next, the court concluded that the plaintiffs' complaint stated a valid claim for relief under the Equal Protection Clause. The complaint had to allege facts showing that the rezoning ordinance was not rationally related to its purpose. This was satisfied by allegations that the highest and best-suited use of the plaintiffs' property is not agricultural but rather rural development, and that the new zoning map left numerous "islands" throughout the town that have not been rezoned and have been left with a rural development classification without any logical explanation. The county argued that the plaintiffs are barred from making an equal protection claim because they did not avail themselves of an adequate state law remedy, namely certiorari review under Wis. Stat. section 68.13. The court rejected this argument because the plaintiffs could not have received adequate relief by certiorari review of their equal protection violation claim. Monetary damages are not available to a plaintiff seeking relief under section 68.13. While a plaintiff may join a claim for monetary damages with a chapter 68 certiorari review, he or she is not required to do so.

The court next considered the plaintiffs' due process claims. It held that they did not state a claim for a violation of substantive due process. The Substantive Due Process Clause protects individuals against governmental actions that are arbitrary and wrong, regardless of the fairness of the procedures used to implement them. It forbids a government from exercising power without any reasonable justification in the service of a legitimate governmental objective. The court concluded that the plaintiffs' complaint did not make any allegations that the zoning ordinance was clearly arbitrary and unreasonable.

With regard to the procedural due process claim, the court concluded that the state provides the plaintiffs with an adequate post-deprivation remedy in the form of certiorari. The adequate state remedy available to the plaintiffs was to petition for certiorari review under section 68.13. Because the plaintiffs did not use the available state law remedy, they may not now claim that they were denied procedural due process.

Lastly, the court considered whether the Town of Lebanon was properly dismissed from the lawsuit below. The court of appeals found that the town could not be dismissed as to the equal protection claim because that claim related to the invalidity of the zoning ordinance itself. The supreme court agreed with the court of appeals.

Chief Justice Abrahamson filed a concurring opinion in which she joined the majority opinion except for the discussion about substantive due process. Justices Bradley and Sykes joined the concurrence.

Regulation of Game Bird Farms - DNR Authority - Municipal Immunity - Equitable Estoppel

Willow Creek Ranch v. Town of Shelby, 2000 WI 56 (filed 20 June 2000)

Willow Creek owns 115 acres of land in the Town of Shelby. The property is zoned as "exclusive agricultural." In 1993, Willow Creek contacted the town to inquire whether a zoning change would be required in order to operate a game bird farm on its property. The town chairperson allegedly informed Willow Creek that no county rezoning was needed to make the change. Shortly before opening the farm in late 1994, and after already having expended substantial sums of money, Willow Creek obtained a Department of Natural Resources (DNR) license to operate a game bird farm.

The county thereafter notified Willow Creek that because it was conducting a commercial hunting enterprise on property zoned exclusively for agricultural purposes, it needed to petition for rezoning. Although the county ultimately granted the rezoning petition, it was vetoed by the Town of Shelby. Willow Creek filed multiple lawsuits in the wake of the town's actions, seeking declaratory judgment, injunctive relief, and money damages. These lawsuits were dismissed by the circuit court on summary judgment. The court of appeals affirmed.

In a majority decision authored by Justice Bradley, the supreme court affirmed the court of appeals. The first issue considered by the court was whether DNR's exclusive right to license the operation of game bird farms precludes the town and county from regulating the zoning of such farms. The court concluded that DNR's statutory authority does not preclude the authority of the town and county to regulate the zoning of the game bird farm.

The court also concluded that the actions of the town and county were immune from suit under Wis. Stat. section 893.80(4). Willow Creek argued that the denial of rezoning was a ministerial duty for which there is no municipal immunity. The supreme court disagreed. It concluded that decisions to enforce a zoning ordinance and to veto zoning changes represent legislative acts and are therefore discretionary decisions subject to immunity protection. The immunity bars Willow Creek's suit for money damages as well as its suit for injunctive relief. There is no immunity under the statute cited above for declaratory actions; however, because the actions of the town and the county were neither illegal nor unconstitutional, declaratory relief is unavailable.

Finally, the court considered whether the town and county should be equitably estopped from asserting immunity as a defense due to the allegedly negligent misrepresentations of the town chairperson. The court concluded that although municipalities are not wholly immune from the doctrine of equitable estoppel, it is well established that erroneous acts or misrepresentations of municipal officers do not afford a basis to estop a municipality from enforcing zoning ordinances enacted pursuant to the police power.

Justice Prosser filed a dissenting opinion that was joined by Justices Bablitch and Crooks.

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.