Supreme Court Digest
This column summarizes all decisions of the
Wisconsin Supreme Court (except those involving lawyer or judicial
discipline, which are digested elsewhere in the magazine). Profs. Daniel
D. Blinka and Thomas J. Hammer invite comments and questions about the
digests. They can be reached at Marquette University Law School, 1103 W.
Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.
by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer
Civil Procedure
Personal Jurisdiction - Long-arm Statute - Minimum Contacts
Kopke v. A. Hartrodt S.R.L.,
2001 WI 99 (filed 10 July 2001)
A truck driver was injured when a pallet loaded with paper fell out
of a ship's cargo container. The paper had been shipped to Wisconsin
from Italy. The truck driver sued the paper manufacturer, "Binda," and
"L'Arciere," an Italian cooperative that supplied Binda with workers to
help load the cargo containers. L'Arciere moved to dismiss based upon
lack of personal jurisdiction, but the circuit court ruled that its
workers' acts of stabilizing the product for shipment were part of a
processing of the product itself. The court of appeals certified the
appeal to the supreme court.
The supreme court affirmed the circuit court in a decision written by
Justice Bablitch. The first issue concerned the applicability of
Wisconsin's long-arm statute, Wis. Stat. section 801.05(4) (1997-98).
The court held that because the objective of the long-arm statute is to
expand personal jurisdiction, it was most appropriate to adopt the
"broad definition" of "process" set forth by the Seventh Circuit
(¶: 17). This "broad definition" extends beyond the act of
manufacture and includes "handling" the product and processes that
prepare it for market (see ¶: 11). The court considered and
rejected a host of arguments assailing the broad definition.
Second, the court held that the long-arm statute's application was
constitutional. The plaintiff met his burden of showing that L'Arciere
had sufficient contacts to satisfy the due process requirement of the
Fourteenth Amendment. More specifically, the court applied the "stream
of commerce" theory as propounded by Justice Brennan in Asahi Metal
Indus. v. Superior Court of Cal. (1987). Critical factors here included
the contractual relationship between Binda and L'Arciere, the
identification of Appleton, Wis., in the loading plans as the cargo's
destination, and the not insignificant volume of such business conducted
between Binda and the Wisconsin company. The court then analyzed whether
L'Arciere carried its burden of demonstrating that "fair play" and
"substantial justice" negated personal jurisdiction. Considering the
plaintiff's severe injury, Wisconsin's interest in providing justice,
and the minimal burden imposed on L'Arciere to conduct its defense here,
the court declined to excuse this defendant.
Dissenting were Justices Crooks, Wilcox, and Sykes. Justice Crooks
was not persuaded that minimum contacts were present. Justice Sykes
disagreed as well with the majority's construction of the "broad
definition" that governs the long-arm statute.
Commercial Law
Secured Creditors - UCC Remedies - Issue Preclusion
National Operating L.P. v. Mutual
Life Ins. Co. of New York, 2001 WI 87 (filed 3 July 2001)
As succinctly framed by Justice Prosser, this case "addresses the
rights of a debtor in default under Article 9 (Secured Transactions) of
the Uniform Commercial Code (UCC), both before and after a declaratory
judgment obtained by the secured party to declare its rights in relation
to the debtor" (¶: 1).
In 1978 a partnership, National Operating, borrowed $3 million from
Mutual of New York (MONY) to purchase a shopping plaza. The parties also
entered into various mortgages and security agreements. In 1990 National
Operating sold the property to Bridgeview in exchange for a "wrap-around
note" and a mortgage. The deal did not, however, alter National
Operating's original debt to MONY. In 1993 MONY and National Operating
renegotiated their original agreement in order to avoid default and
foreclosure. The renegotiated loan also involved an assignment of the
Bridgeview "wrap note" and mortgage. Following National Operating's loan
default in 1996, MONY brought a declaratory judgment action that sought
confirmation of the 1993 assignments. MONY later received a default
judgment against National Operating that tracked its complaint.
In 1998 MONY and Bridgeview negotiated an agreement that allowed
Bridgeview to satisfy its debt of $5.5 million by paying only $4
million. Since only $2.4 million remained unpaid on National Operating's
underlying note, MONY stood to gain an additional $1.6 million. National
Operating stood to realize nothing from this deal, so it tendered full
payment on the underlying note in order to reacquire the Bridgeview wrap
note and mortgage. MONY rejected the tender and argued that National
Operating's rights were terminated by the 1996 declaratory judgment. The
circuit court agreed based upon the doctrine of claim preclusion. The
court of appeals affirmed.
The supreme court, in an opinion written by Justice Prosser,
reversed. A declaratory judgment is binding only as to matters that
actually were decided in the action; thus, claim preclusion does not
extend to matters that could have been raised or decided. In this case,
the 1996 declaratory judgment did not specifically waive National
Operating's right to redeem collateral upon payment of the loan, nor did
it explicitly "extinguish" the debtor's rights under Article 9 of the
UCC (Wis. Stat. chapter 409). Summarizing debtors' protections under the
UCC, the court explained that "a secured transaction debtor in default
may not waive or vary its right to surplus equity upon the disposition
of the collateral, or its right to contest the commercial reasonableness
of the disposition of its collateral. It may waive or vary its right to
redeem the collateral by tendering fulfillment of its obligation, but
only in writing, after default" (¶: 47).
In short, the 1996 default judgment merely confirmed and enforced the
earlier assignment and eliminated any doubt that Bridgeview should make
payments on the wrap note to MONY, the assignee. MONY also could sell
the property to Bridgeview, provided it did so in a commercially
reasonable manner. MONY could not, however, sell the collateral without
notice to National Operating. Nor could it behave in a commercially
unreasonable manner or keep surplus equity for itself. (¶:¶:
97-98).
Justice Crooks, joined by Justice Wilcox, dissented.
Criminal Procedure
Search Warrants - No-knock Entry
State v. Henderson, 2001 WI
97 (filed 9 July 2001)
Police executed a search warrant for evidence of drug dealing at
defendant's dwelling without knocking and announcing their presence. The
trial court denied the defendant's motion to suppress and he later
pleaded guilty. The court of appeals certified the case to the supreme
court to resolve several issues relating to no-knock entries in light of
recent case law.
The supreme court, in an opinion written by Justice Sykes, affirmed.
Recent case law established the following propositions: "1) the rule of
announcement is a requirement of the Fourth Amendment's reasonableness
clause, not its warrant clause; 2) the validity of a no-knock execution
of a search warrant is subject to after-the-fact judicial review for
constitutional reasonableness, which is determined by reference to the
circumstances as they existed at the time of the entry; and 3) the
manner in which a search warrant is executed is not subject to the
requirements of the warrant clause and therefore does not require prior
judicial authorization" (¶: 29).
Applying these principles, the supreme court held "that a court
reviewing the reasonableness of a no-knock execution of a search warrant
is not precluded from considering facts known to the police but not
included in the search warrant application" (¶: 30). Put
differently, the cases "establish quite clearly that as a matter of
Fourth Amendment law, a no-knock entry is subject only to an
after-the-fact judicial review for reasonableness; it does not require
prior judicial authorization inasmuch as it is not a component of the
Fourth Amendment's warrant clause" (¶: 35). The facts of record in
this case supported the circuit court's conclusion that the no-knock
entry was reasonable.
Chief Justice Abrahamson, joined by Justice Bradley, dissented
because they would find that the record did not meet the standard
required for no-knock entries.
Biased Jurors - Harmless Error
State v. Lindell, 2001 WI
108 (filed 11 July 2001)
A jury convicted the defendant of assorted felonies, including
murder, burglary, and arson. In post-conviction proceedings, he alleged
that reversible error occurred because the trial judge failed to strike
for cause a juror who was biased, thus forcing the defendant to use one
of his peremptory challenges. The trial court denied the post-conviction
challenge and the court of appeals affirmed.
The supreme court, in an opinion written by Justice Prosser, also
affirmed in an opinion that canvasses Wisconsin's newly developed
doctrine on juror bias and which reverses State v. Ramos, 211 Wis.
2d 12, 564 N.W.2d 328 (1997), which required an automatic reversal in
any situation in which the defendant used a peremptory strike to remove
a prospective juror who should have been removed for cause, irrespective
of prejudice or harmless error analysis (¶: 5).
First, the supreme court held that the juror in question should have
been stricken for cause based on "objective bias." Among a host of
factors, the prospective juror knew the murder victim, attended his
funeral, and was well aware of a long-standing business relationship
between her parents and the murder victim. The supreme court reiterated
its cautionary warning from other cases that trial judges should excuse
jurors when they "reasonably suspect" a bias exists.
Second, and most important, the court reversed the Ramos remedy,
described above. The majority decision carefully reviewed Ramos, which
had "neglected to fully describe and analyze long-standing Wisconsin law
on peremptory challenges and harmless error" (¶: 53). These earlier
cases are explicated in the opinion. Ramos also ran counter to the
subsequent decision by the Supreme Court in United States v.
Martinez-Salazar, 528 U.S. 304 (2000). Finally, the majority
considered the "systemic problems" induced by the Ramos automatic
reversal remedy. "The reality of Ramos is that whenever two members of
the court of appeals or four members of the supreme court make a
different call on bias than the circuit court, the automatic result is a
new trial" (¶: 103). Henceforth, the failure to excuse a juror for
bias will be analyzed according to whether the error affected the
defendant's substantial rights, according to Wis. Stat. section
805.18(2), unless the defendant claims that the error actually deprived
him of an impartial jury in violation of the Sixth Amendment (¶:
111).
The majority stressed that its opinion changes "nothing" in the
fundamental law that guarantees an impartial jury. "Our decision
requires a defendant to make a conscious choice between exercising a
peremptory challenge or waiting for a Sixth Amendment challenge after
conviction." The defense strategy, in turn, leaves the state with three
options: "1) It can join the defendant in urging the court to remove a
juror for cause; 2) it can exercise one of its own limited peremptory
strikes to remove a juror who should have been struck for cause; or 3)
it can do nothing and risk a new trial if an appellate court finds that
a biased juror sat on the panel" (¶: 118). (The majority opinion
also found that defendant had not been denied effective assistance of
counsel based on how trial counsel impeached a state's witness.)
Justice Bradley concurred but argued that the majority opinion
"erases the deference that a reviewing court owes to a circuit court's
objective bias determination" (¶: 133). She also expressed concern
that the overruling of Ramos undercut the principle of stare
decisis.
Dissenting, Chief Justice Abrahamson, joined by Justice Bablitch,
argued that the majority opinion traduced stare decisis, violated
principles of statutory construction, and leaves defendants bereft of a
satisfactory remedy.
Probation Conditions That Infringe on Constitutional Rights -
Challenge to State's Withdrawal from Plea Agreement
State v. Oakley, 2001 WI 103
(filed 10 July 2001)
The defendant has fathered nine children with four different women.
He was convicted of multiple counts of intentionally refusing to support
his children. Part of the disposition in the case was a term of
probation that imposed the following condition: while on probation, the
defendant cannot have any more children unless he demonstrates that he
has the ability to support them and that he is supporting the children
he already has. A critical issue before the supreme court was the
lawfulness of this probation condition. The defendant argued that the
condition violates his constitutional right to procreate.
In a majority decision authored by Justice Wilcox, the court
concluded that "in light of [the defendant's] ongoing victimization of
his nine children and extraordinarily troubling record manifesting his
disregard for the law, this anomalous condition - imposed on a convicted
felon facing the far more restrictive and punitive sanction of prison -
is not overly broad and is reasonably related to [the defendant's]
rehabilitation. Simply put, because [the defendant] was convicted of
intentionally refusing to pay child support - a felony in Wisconsin -
and could have been imprisoned for six years, which would have
eliminated his right to procreate altogether during those six years,
this probation condition, which infringes on his right to procreate
during his term of probation, is not invalid under these facts" (¶:
1).
The court concluded that the probation condition does not eliminate
the defendant's ability to exercise his constitutional right to
procreate. He can satisfy the condition of probation by making efforts
to support his children as required by law. Further, the probation
condition will expire at the end of the term of probation. The condition
is narrowly tailored to serve the state's compelling interest in having
parents support their children and is reasonably related to the goal of
rehabilitation.
There also was an issue in this case about whether the defendant
waived his claim of error that the state was impermissibly allowed to
withdraw from an earlier plea agreement when he entered into a
subsequent plea agreement with the state. The change occurred when the
state moved to withdraw from the original plea agreement at sentencing.
As part of the second plea agreement, pursuant to which the defendant
entered no contest pleas to the multiple counts described above, he
agreed that he would not complain on appeal about the state's withdrawal
from the first plea agreement.
The supreme court concluded that it is well established that a plea
of no contest, knowingly and understandingly made, constitutes a waiver
of nonjurisdictional defects and defenses, including claimed violations
of constitutional rights. "Therefore, when a defendant pleads no
contest, he or she waives all defenses based on a denial of due process
because the prosecutor breached an earlier plea agreement" (¶: 23).
In this case, the defendant pled no contest based on the second plea
agreement. By doing so, he waived any claim of error that may have
occurred when the circuit court permitted the state to withdraw from the
first plea agreement.
Justice Bablitch filed a concurring opinion that was joined by
Justices Wilcox and Crooks. Justice Crooks filed a concurring opinion
that was joined by Justices Bablitch and Wilcox. Justice Bradley filed a
dissent that was joined by Chief Justice Abrahamson and Justice Sykes.
Justice Sykes filed a dissent that was joined by Chief Justice
Abrahamson and Justice Bradley.
Effectiveness of Counsel - Failure to Object to Six-person
Misdemeanor Juries
State v. Franklin and State v.
Huck, 2001 WI 104 (filed 11 July 2001)
The defendants were convicted in separate trials on misdemeanor
counts by six-person juries at a time when the statutes allowed for a
jury of six in misdemeanor cases. Both defendants argued that they
received ineffective assistance of counsel because their trial attorneys
failed to object to the six-person juries, even though around the time
of their trials the court of appeals certified the case of State v.
Hansford to the supreme court and the supreme court accepted the
certification. The certified issue in Hansford was whether Wis. Stat.
section 756.096(3)(am) (1995-96), the statute authorizing six-person
juries in misdemeanor cases, was constitutional. Ultimately, the supreme
court held the statute unconstitutional. See State v. Hansford, 219 Wis.
226, 580 N.W.2d 171 (1998).
In a challenge to the effectiveness of counsel, a defendant must show
that his or her counsel's representation was deficient and that this
deficient performance resulted in prejudice to the defense. See
Strickland v. Washington, 466 U.S. 668 (1984). With respect to the
prejudice prong of the Strickland analysis, a defendant is required to
show that counsel's errors were so serious as to deprive the defendant
of a fair trial, a trial whose result is reliable. The defendant must
show that there is a reasonable probability that, but for counsel's
unprofessional errors, the result of the proceeding would have been
different. A reasonable probability is a probability sufficient to
undermine confidence in the outcome. The defendant's burden is to show
that counsel's errors actually had an adverse effect on the defense. See
¶: 14.
Applying this test, a majority of the supreme court, in a decision
authored by Justice Bablitch, concluded that the defendants failed to
prove prejudice. In particular, they did not show that, but for their
attorney's failure to object, there was a reasonable probability for a
different result in their cases. Said the court, "a six-person jury in
and of itself is an insufficient basis upon which to conclude that the
defendants were deprived of a fair trial whose result is reliable"
(¶: 15). "We do not find any reason why six-person juries would
undermine the confidence of an otherwise fair and error-free trial.
Thus, beyond mere speculation, we cannot conclude that the six-person
juries had an actual adverse effect on the defense in the defendants'
cases, and therefore, the defendants are not entitled to a reversal of
their convictions" (¶: 16). The court rejected the argument that it
ought to find automatic prejudice in six-person jury cases.
Chief Justice Abrahamson filed a dissenting opinion that was joined
by Justices Bradley and Sykes.
Fourth Amendment - Exclusionary Rule - "Good Faith" Exception
Recognized
State v. Eason, 2001 WI 98
(filed 9 July 2001)
This case involved a no-knock search warrant that authorized police
officers to enter an apartment without first knocking on the door and
announcing their presence. The defendant moved to exclude evidence
obtained during the execution of the warrant, arguing that the part of
the search warrant that authorized a no-knock entry was not supported by
any specific information that anyone in the premises possessed weapons
or would destroy evidence if the officers knocked and announced their
presence. The circuit court agreed, granting the motion to suppress. The
court of appeals affirmed.
In a majority decision authored by Justice Crooks, the supreme court
reversed. It agreed that the information in the affidavit submitted in
support of the search warrant was not sufficiently particularized to
establish reasonable suspicion that knocking and announcing would have
been dangerous or would have inhibited the effective investigation of
the crime by allowing, for example, for the destruction of evidence.
However, the court concluded that the evidence should not be suppressed
even though the no-knock portion of the warrant was invalid. "Although
the exclusionary rule typically operates to exclude evidence obtained
from unreasonable searches and seizures - and a search based upon an
invalid search warrant is per se unreasonable - there are exceptions.
Here, because the police officers acted in objectively reasonable
reliance upon the search warrant, which had been issued by a detached
and neutral magistrate, the laudable purpose of the exclusionary rule -
deterring police from making illegal searches and seizures - would not
be furthered by applying the exclusionary rule. Accordingly, we
recognize a good faith exception to the exclusionary rule" (¶:
2).
Under similar circumstances, the U.S. Supreme Court has recognized
that applying the exclusionary rule would not effectuate its purpose.
Thus, in United States v. Leon, 468 U.S. 897 (1984), it formulated a
good faith exception to the exclusionary rule where police officers act
in objectively reasonable reliance on a facially valid search warrant
issued by a neutral and detached magistrate that later was held to be
invalid.
In this case, the Wisconsin Supreme Court held that "the good faith
exception applies where the state has shown, objectively, that the
police officers reasonably relied upon a warrant issued by an
independent magistrate. The burden is upon the state also to show that
the process used in obtaining the search warrant included a significant
investigation and a review by either a police officer trained and
knowledgeable in the requirements of probable cause and reasonable
suspicion, or a knowledgeable government attorney [see next paragraph].
We hold that this process is required by Article I, Section 11 of the
Wisconsin Constitution, in addition to those protections afforded by the
good faith exception as recognized by the United States Supreme Court in
United States v. Leon ...." (¶: 3).
In various footnotes the court fleshed out its holding. With regard
to the "government attorney" referred to in the preceding paragraph, the
court stated that this term does not refer to the magistrate or court
commissioner or judge who issues the search warrant. The court also
indicated that in the future the better practice will be that search
warrant applications should reflect not only substantial investigation,
but a review by a knowledgeable government attorney or police officer
trained to be knowledgeable in such matters. Finally, the court
articulated its expectation that there will be testimony offered at
suppression hearings on questions concerning significant investigation
and review by a knowledgeable police officer or government attorney.
Chief Justice Abrahamson filed a dissenting opinion that was joined
by Justice Bradley. Justice Prosser filed a dissent that was joined by
Justice Bradley.
Probation Conditions - Requirement That Probationer Notify Immediate
Neighbors Regarding His Sex Offender Status
State ex rel. Kaminski v.
Schwarz, 2001 WI 94 (filed 9 July 2001)
The defendant was convicted of second-degree sexual assault of a
child and placed on probation. Both the court and the Department of
Corrections (DOC) placed numerous conditions on the probation. One of
the DOC conditions required the defendant to inform his immediate
neighbors of his status as a convicted sex offender.
The issue before the supreme court was whether this probation
condition was valid. In a majority decision authored by Justice Prosser,
the supreme court concluded that Wisconsin's sex offender registration
laws do not occupy the entire field in regulating the dissemination of
sex offender registration information or prohibit a probation agent from
imposing a rule requiring a convicted sex offender to notify his or her
immediate neighbors of his or her sex offender status.
The sex offender registration laws (see Wis. Stat. §§
301.45, 301.46) reflect a legislative intent to protect the public and
assist law enforcement, and are related to community protection.
"Mindful of these legislative intentions, we think it unlikely that the
Legislature intended, by creating secs. 301.45 and 301.46, to prohibit
probation agents from requiring actively-supervised convicted sex
offenders to disclose limited information to specified persons or narrow
categories of persons such as employers, landlords, neighbors, and new
social acquaintances, whom offenders are likely to encounter, perhaps on
a daily basis" (¶: 41).
The majority also concluded that the rule requiring neighbor
notification was reasonably tailored to further the dual goals of
probation, which are to protect the public from criminal conduct and to
help the probationer become a useful member of society.
Chief Justice Abrahamson filed a dissenting opinion that was joined
by Justices Bablitch and Bradley.
Employment Discrimination
Sexual Harassment and Gender Discrimination - Front Pay - Back Pay -
Damage Caps
Salveson v. Douglas County,
2001 WI 100 (filed 10 July 2001)
The plaintiff began work as a part-time employee with Douglas County
Ambulance Service in 1981. Over the next several years she enhanced her
credentials and in 1986 was given a full-time position. "During her
employment with the county ambulance service, [the plaintiff] was
subjected to crude sexual harassment and discrimination by her
supervisor, Richard Collyard. The long litany of epithets, insults,
abuses, actions, and discrimination which she endured eventually led to
serious psychological problems affecting [her] future employment"
(¶: 7). Near the end of her employment, the plaintiff suffered some
physical injuries. In November 1995, she was granted a disability
pension due to these injuries and her employment with Douglas County was
terminated.
Two months later Gold Cross Ambulance took over the operations of the
Douglas County Ambulance Service, and Collyard began to work for Gold
Cross. His presence with the company made it impossible for the
plaintiff to seek employment with the new operation, even though the
circuit court found that she would have been hired by Gold Cross either
as a paramedic instructor or in some other limited capacity.
In 1996 the plaintiff filed suit under Title VII of the Civil Rights
Act of 1964, alleging that she had been subjected to illegal sexual
harassment and gender discrimination during virtually the entire time of
her service with the county. In 1998 a jury awarded $356,220 in damages.
The circuit court denied the county's post-trial motion to reduce the
award to $200,000 pursuant to 42 U.S.C. section 1981a(b)(3), a provision
that limits awards of compensatory and punitive damages based upon the
number of persons employed by the employer. As to "equitable remedies"
that were left to the court to determine separately, the judge awarded
the plaintiff back pay, front pay, attorney fees, interest, and costs
which brought the total judgment to $555,779. The court of appeals
affirmed.
In a unanimous decision authored by Justice Prosser, the supreme
court affirmed. It first considered whether the circuit judge properly
exercised his discretion in awarding back pay. Whether to award back pay
in Title VII cases is a discretionary decision for the circuit court.
Once a court finds unlawful discrimination, it is to presume that back
pay should be awarded. The appropriate amount of back pay is determined
by ascertaining the difference between actual wages earned and what
would have been earned if not for the discrimination.
The court concluded that back pay for the period between termination
by the county and the date of the verdict was equitable and appropriate
in this case because evidence in the record indicated that the plaintiff
would likely have been hired by Gold Cross had she applied. Evidence
further supported the circuit court's finding that the plaintiff was
unable to work for Gold Cross because of the psychological injury she
suffered as a result of sexual harassment and discrimination and because
Collyard was employed by Gold Cross.
Front pay is used to compensate an employee for the difference in
earnings between what the employee would have received in his or her
former employment, and what he or she can expect to receive in his or
her present or future employment. The supreme court concluded that the
circuit judge properly exercised his discretion in awarding the
plaintiff one year of front pay. The county did not establish that the
plaintiff could have found a position comparable to the one she held as
a paramedic for Douglas County. Nothing in the record indicated that the
plaintiff could have mitigated her damages by obtaining employment
comparable to her position as a paramedic, other than by working for
Gold Cross (which she could not reasonably be expected to have
done).
The court next considered whether the amount of back pay and front
pay awarded to the plaintiff should have been offset by disability
payments she received. Under the federal collateral source rule, it is
within the circuit court's discretion to determine whether benefits
received from a source collateral to employment should offset an award
of back pay or front pay. The rule operates not to prevent the plaintiff
from being overcompensated, but rather to prevent the tortfeasor from
paying twice. The court concluded that the plaintiff's awards of back
pay and front pay should not be offset by benefits she received for her
disability because she and other paramedics paid for those benefits by
foregoing pay increases and other benefits in conjunction with the
paramedic union's collective bargaining. "Douglas County should not
benefit simply because [the plaintiff] also received collateral
disability benefits. The county will not pay twice" (¶: 61).
The next issue was whether the circuit court erred in determining
that the award of front pay is not subject to the damages cap imposed by
42 U.S.C. section 1981a(b)(3), which limits compensatory and punitive
damages. The supreme court concluded that the circuit court correctly
determined that front pay does not fall under compensatory or punitive
damages and therefore is not subject to the damages cap.
Finally, the court considered the question of whether the size of an
employer for purposes of the statutory damages cap should be measured at
the time of the discrimination or at the time the award is made. [Note:
The cap varies according to the size of the employer]. The supreme court
concluded that the circuit judge properly measured the number of
employees at the time the discrimination occurred.
Family Law
Termination of Parental Rights - Abandonment - Default Judgment
Evelyn C.R. v. Tykila S.,
2001 WI 110 (filed 12 July 2001)
In this termination of parental rights case, the mother violated a
court order to appear in person at the fact-finding hearing intended to
determine whether she had abandoned her son. The circuit court entered a
default judgment against the mother on the issue of abandonment without
first taking any evidence on the matter. At the subsequent dispositional
hearing, the circuit court accepted testimony supporting the termination
of the mother's parental rights and, based on this testimony, reaffirmed
the default judgment against the mother and entered an order terminating
her parental rights to her son. The court of appeals affirmed. In a
majority decision authored by Justice Wilcox, the supreme court affirmed
the court of appeals.
The supreme court first considered whether the circuit court erred in
entering a default judgment on the issue of abandonment without first
taking evidence sufficient to support a finding of abandonment by clear
and convincing evidence. The supreme court concluded that by entering a
default judgment against the mother on the issue of abandonment without
first taking evidence sufficient to support such a finding, the circuit
court failed to comply with the constitutional and statutory
requirements for termination of parental rights. Accordingly, the
circuit court erroneously exercised its discretion in entering a default
judgment.
Nevertheless, upon review of the entire record in this case, the
supreme court held that the circuit court remedied the error described
above at the dispositional hearing when, prior to reaffirming the
default judgment and entering the order terminating parental rights, the
court took sufficient evidence to support by clear and convincing
evidence a finding that the mother had abandoned her son. As such, the
error was harmless.
Chief Justice Abrahamson filed a concurring opinion. Justice Crooks
filed a concurrence that was joined by Justice Wilcox.
Incompetents
Protective Placements - Continuation - Hearings - Factual
Findings
County of Dunn v. Goldie H.,
2001 WI 102 (filed 10 July 2001)
The supreme court, in an opinion written by Justice Prosser, affirmed
lower court orders that continued an elderly woman's, Goldie H.'s,
protective placement even though she was not given even a summary
hearing and the circuit court had made no factual findings. The issues
in this case were: "1) whether Goldie H. had a right to a hearing before
her protective placement was continued; and 2) whether the circuit court
had a duty to make findings of fact to supports its continuation order"
(¶: 3).
The supreme court held that "a person is entitled to a hearing on the
record before his or her protective placement is continued, and that the
circuit court must make factual findings to support the need for
continuation, as required by Wis. Stat. § 55.06(1) (1999-2000)"
(¶: 6). Such hearings, however brief, promote accountability and
permit more informed fact finding. The court explained that such
hearings need not be extensive nor need they take on an "evidentiary"
character (¶: 35). Although the court in this case failed to
conduct even a summary hearing, its determination was "undoubtedly
correct" and a remand for a second hearing was unnecessary.
Insurance
Notice of Accident - Timeliness - Prejudice - Presumption
Neff v. Pierzina, 2001 WI 95
(filed 9 July 2001)
Plaintiffs were ascending an elevator in a chicken coop when the
elevator's cable snapped and plunged them from the second to the first
floor. The accident occurred in July 1996 and plaintiffs commenced this
action one year later in July 1997. American Family had issued a
renter's policy to the wife of one of the defendants, but the insurer
did not receive notice that its insured was involved until a second
amended complaint was filed in June 1998, nearly two years after the
fall. The circuit court held a coverage trial which found that the
insured had breached his duty to provide American Family with timely
notice and had prejudiced the insurer by his omission. The court of
appeals affirmed.
The supreme court, in an opinion written by Justice Prosser, affirmed
in an opinion that clarified the standard of review governing the
timeliness and prejudice issues. The timeliness issue raises a question
of fact that is subject to the clearly erroneous standard of review. The
insurer bears the burden of establishing that its insured failed to
provide notice within the notice requirements of the policy, although
the insured may claim that he did not have reasonable grounds to believe
that he "participated" in an accident or that notice was not reasonably
possible within the prescribed time. Prejudice to the insurer also
raises a question of fact that is subject to a clearly erroneous
standard (¶: 47).
Applying these standards to the record before it, the court found no
clear error in the trial court's determination that the notice was
untimely. The same held for prejudice. Moreover, the insured's "failure
to provide timely notice within one year of the accident created a
presumption that American Family was prejudiced by the lack of notice"
(¶: 58). Although another insurance company had conducted an
"investigation" shortly after the elevator accident, the record raised
substantial questions about its thoroughness and its germaneness to
American Family's very different coverage concerns.
UIM Coverage - "Illusory" Coverage - Frivolous Claim
Brunson v. Ward, 2001 WI 89
(filed 6 July 2001)
The court of appeals certified the following question to the supreme
court: "Does the remedy in Meyer v. Classified Ins. Co., 192
Wis. 2d 463, 531 N.W.2d 416 (Ct. App. 1995), prohibiting illusory
insurance coverage, still hold where an insurer fails to update its
underinsured motorist (UIM) insurance coverage pursuant to Wis. Stat.
§ 632.32(4m) (1995-96), but has included a provision stating that
the policy shall conform to the Wisconsin Statutes?" The supreme court,
in an opinion authored by Justice Sykes, answered no to this question.
The alleged tortfeasor had insurance coverage of $100,000. By operation
of Wis. Stat. section 632.32(4m)(d), the law required UIM coverage of at
least $50,000 even though the plaintiff's policy carried facial UIM
limits of $25,000. Clearly, the $25,000 would have been illusory except
that the law "read in" the $50,000 minimum mandatory limit, which was
not an "illusory" amount (¶: 24). In any event, the required
$50,000 was still less than the tortfeasor's $100,000; thus, the
plaintiff was not underinsured.
The supreme court reversed the circuit court's determination that
plaintiff's motion to reconsider its ruling was frivolous. Noting the
"delicacy" of such determinations, the court pointed to the unsettled
law on this point and its own decision to accept this case on
certification. Although the plaintiff lost the appeal, his arguments
were reasonable.
Justice Bradley dissented, joined by Chief Justice Abrahamson. The
dissenters contend that the majority ignored the plain meaning of Wis.
Stat. section 631.15(3m), which is designed to protect the insured, not
to shield noncomplying insurers whose policies violate state law.
Bad Faith - Implied Covenant and UIM - Time of Breach
Danner v. Auto-Owners Ins.,
2001 WI 90 (filed 6 July 2001)
Following an accident in 1990 with an underinsured motorist and her
increasing frustration with her own insurer, the plaintiff brought this
bad faith action in 1995. A jury found that the insurer acted in bad
faith by denying her claim. It awarded her $125,000 in attorney fees for
the bad faith claim but no damages (including attorney fees) for the
underlying claim. At post-verdict proceedings, the trial judge increased
the bad faith attorney fee award to $142,000 and also changed the
verdict to reflect an award of $81,000 in attorney fees on the
underlying claim. The court of appeals affirmed.
The supreme court, in an opinion written by Justice Crooks, affirmed.
(Justice Bradley did not participate.) The first issue before the court
was whether an insurer who provides underinsured motorist (UIM) coverage
had a duty to act in good faith at all times with its insured. The
insurer argued that UIM claims are "fundamentally different" from other
first-party bad faith claims and that no bad faith action arises until
liability is first established by verdict or arbitration. The court
rejected the argument. Wisconsin case law firmly establishes that every
insurance contract carries an "implied covenant" of good faith and fair
dealing, the breach of which are torts apart from any contract damages.
The "special duty of good faith and fair dealing runs throughout the
contract relationship between the insurer and the insured" (¶: 49).
The court held that "every insurance contract from its inception has an
implied covenant of good faith and fair dealing between the insured and
the insurer" (¶: 54), a principle that applies to the
"investigation, evaluation and processing" of UIM claims (¶:
57).
The court also affirmed the sufficiency of the verdict finding bad
faith and upheld the circuit court judge's changes to the verdict after
trial. These issues are record-intensive and raise no novel issues of
law.
UIM - Settlements - Liability Limits - "Exhaustion"
Danbeck v. American Family Mut. Ins.
Co., 2001 WI 91 (filed 6 July 2001)
The plaintiff, who had underinsured motorist (UIM) coverage of
$100,000, was injured by a driver who carried only $50,000 in liability
coverage. While settling with the other driver for $48,000, the
plaintiff advised his insurer, American Family, of his UIM claim.
American Family refused to pay the UIM claim because the plaintiff had
settled for less than the other driver's liability limits, and thus had
not "exhausted" the limit within the meaning of the UIM coverage. The
circuit court ruled in the plaintiff's favor and concluded that UIM
coverage must be reduced by the difference between the settlement amount
and the tortfeasor's liability limits. The court of appeals
reversed.
The supreme court, in an opinion written by Justice Sykes, affirmed
the court of appeals. The "narrow issue" before the court was "whether a
UIM insurer's obligation to pay UIM benefits to its insured is triggered
when the insured settles with the tortfeasor's liability insurer for
less than full liability limits and then credits the UIM carrier for the
difference" (¶: 11). The policy language governing the "exhaustion"
of the underlying liability limits was clear and unambiguous. Although
the "practical effect" of the "settlement plus credit" approach was
identical to payment of full policy limits, the practice nonetheless
violated the policy language. Its merits from a public policy position
did not permit the court to ignore the "clear language of the contract"
(¶: 22).
Justice Bradley, joined by Chief Justice Abrahamson, dissented on the
ground that case law had long established the ambiguity of the UIM
exhaustion language at issue in this case.
UIM Coverage - "Illusory" Coverage
Taylor v. Greatway Ins. Co.,
2001 WI 93 (filed 6 July 2001)
In 1993 the plaintiff's husband was killed in a car accident. The
other driver carried liability limits of $50,000. Plaintiff settled with
the liability insurer for the limits and filed underinsured motorist
(UIM) claims against American Family based on her two automobile
insurance policies, each of which provided $50,000 UIM coverage.
American Family denied coverage. The circuit court, however, agreed with
plaintiff's argument that the net effect of the policy's reducing clause
and statutes that require at least $25,000 in liability coverage
rendered the $50,000 UIM coverage illusory. The court of appeals
reversed. It found that the other driver's vehicle was not
"underinsured" as defined by the policy; it did not reach the "illusory
coverage" issue.
The supreme court, in an opinion written by Justice Crooks, affirmed.
The court held that this appeal was governed by Smith v. Atlantic Mut.
Ins. Co., 155 Wis. 2d 808, 456 N.W.2d 597 (1990). As in Smith,
plaintiff's policy defined an underinsured vehicle as one whose
liability limits are "less than" UIM limits. Thus, her policy clearly
and unambiguously excluded UIM coverage where the tortfeasor's liability
coverage is equal to the UIM limits.
Based on this reasoning, the supreme court declined to address
whether American Family's reducing clause created illusory coverage. The
majority went on, however, to explain why the cases on illusory coverage
cited by plaintiff did not govern the result of this case. It also
rejected an argument advanced in WATL's amicus brief that the UIM policy
language combined with the reducing clause contravened Dowhower v. West
Bend Mut. Ins. Co., 2001 WI 73.
Justice Bradley, joined by Chief Justice Abrahamson and Justice
Bablitch, dissented. They argue that the policy's language is
inconsistent with the stated purpose of UIM coverage and defeats an
insured's reasonable expectations. The dissent observes that there are
two competing definitions of UIM coverage: the "limits of coverage
approach," which the dissenters find flawed, and one that compares the
"at-fault driver's liability limits with the damages sustained by the
insured (limits of damages)," a definition that does accord with
insureds' reasonable expectations (¶: 34).
Coverage Disputes - Attorney Fees
Reid v. Benz, 2001 WI 106
(filed 11 July 2001)
Reid sued Benz for injuries incurred when he fell on her driveway.
Benz tendered her defense to American Family, which had issued a
homeowner's policy to her. American Family assigned counsel to Benz,
reserved its rights, and later moved to bifurcate coverage and liability
issues. American Family alleged that the "business pursuits" exclusion
eliminated coverage for Reid's injuries. In the coverage proceeding, the
judge ruled that an exception to the business pursuits exclusion
applied; thus, American Family was obligated to defend and indemnify
Benz. The trial court also awarded Benz attorney fees with respect to
the coverage litigation. The court of appeals certified the issue of
attorney fees to the supreme court.
The supreme court, in an opinion written by Justice Crooks, reversed
the award of attorney fees in an opinion that clarifies the reach and
rationale of Elliott v. Donahue, 169 Wis. 2d 310, 485 N.W.2d 403 (1992).
The award of attorney fees in Elliott was predicated upon the insurer's
failure to follow the coverage dispute procedures set forth in Mowry v.
Badger State Mut. Cas. Co., 129 Wis. 2d 496, 385 N.W.2d 171 (1986)
(insurers should bifurcate coverage and liability issues, staying the
latter until the former is resolved). The award of attorney fees "should
not be the usual result" (¶: 27), and the court refused to apply
Elliott to the situation in this case. Benz presented no authority to
support her argument that incurring attorney fees to establish coverage
denies her benefits under the policy (¶: 33). The court also
rebuffed Benz's contention, supported by WATL as amicus, that insurance
companies should pay the insured's attorney fees whenever the insurer
fails to prevail. Nonetheless, insurers may escape attorney fees only
where coverage is "fairly debatable" (¶: 37).
Justice Bablitch, joined by Chief Justice Abrahamson, dissented on
grounds that the majority opinion is "bad law," "anti-consumer," and
permits insurers to "win" under any scenario.
Renter's Policy - Business Pursuits Exclusion - Exception
Vandenberg v. Continental Ins.
Co., 2001 WI 85 (filed 3 July 2001)
Riehl provided paid day care services for three children, including
Justin V., while also caring for her own three children. The day care
services took place in her rented home, which was covered by renter's
insurance. While Riehl was caring for the other children, her own son,
age five, accidentally smothered and killed eight-month-old Justin V.
Justin's mother (the plaintiff) sued Riehl, alleging she had negligently
supervised both Justin and Riehl's own son. The plaintiff also named
Riehl's renter's insurance carrier as a defendant. The insurer contended
that the incident was excluded by the policy's business pursuits
exclusion. The plaintiff argued that her claim against Riehl for the
negligent treatment of Riehl's own son fell within the "usual to
nonbusiness pursuits" exception to the business pursuits exclusion. The
circuit court ruled in the insurer's favor.
On certification from the court of appeals, the supreme court, in an
opinion written by Chief Justice Abrahamson, reversed the circuit court.
Under the policy, the home day care business clearly constituted a
"business pursuit" that fell within the exclusion. The issue, however,
was whether Riehl's care for her own son while operating the day care
business was an activity that is "usual to nonbusiness pursuits" and
thus within an exception to the exclusion (¶: 16). In resolving the
issue, the supreme court analyzed three somewhat conflicting court of
appeals decisions, that also involved different policy language, and
five different approaches taken by other jurisdictions. The supreme
court elected to follow precedent that construed similar policy language
as ambiguous and applied a rule of narrow construction "in which the
ambiguity exists as an exception to liability." Put differently,
"[r]easonable persons in the position of the plaintiff in the present
case could reasonably believe that they had coverage under this
exception for the supervision and control of their own child" (¶:
42). The court also rejected arguments that the exception, so construed,
would swallow the rule.
Finally, the court addressed whether the contract should be reformed
to provide coverage on the claim that Riehl had negligently supervised
Justin V. On this issue the circuit court had also granted summary
judgment in the insurer's favor. The supreme court reversed on this
point as well, finding that an issue of fact was raised concerning a
"mutual mistake" based on the "Riehls' belief that the policy provided
coverage and the mistake or neglect of the agent in failing to provide
the intended coverage" (¶: 57).
Justice Wilcox, joined by Justices Prosser and Crooks, dissented on
points concerning the policy's ambiguity and the problem of unlicensed
day care facilities.
Municipal Law
Property Taxes - Limited Judicial Review in Populous Counties - Wis.
Stat. Section 74.37(6) Held Unconstitutional
Nankin v. Village of
Shorewood, 2001 WI 92 (filed 6 July 2001)
A property owner who disagrees with the assessment of his or her
property may file a formal objection with the local board of review.
After the board renders its decision, the statutes provide for multiple
avenues of appeal as follows:
1) An owner can appeal from the board's determination by an action
for certiorari to the circuit court under Wis. Stat. section
70.47(13).
2) Pursuant to section 70.85, a property owner may submit a written
complaint with the Department of Revenue requesting that the department
revalue the property. The department's decision may then be appealed
through an action for certiorari in the county in which the property is
located.
3) The property owner may proceed under section 74.37 with a claim
for an excessive assessment against the taxing entity after first paying
the tax on the assessment. If this claim is denied, the aggrieved
property owner may then commence an action in the circuit court using
ordinary civil procedure and practice to recover the amount of the claim
not allowed.
Except in Milwaukee County, property owners may use any of these
three mechanisms to appeal the decision of the board of review. However,
in Milwaukee County, section 74.37(6) limits property owners to the
first two mechanisms (involving review by certiorari) but prohibits the
full trial "de novo" in the circuit court under the third option.
A property owner in a village located within Milwaukee County
challenged this statutory scheme, contending that section 74.37(6) is
unconstitutional because it violates the constitutional guarantee of
equal protection of the law, that is, it treats owners of property
located in Milwaukee County differently than owners of property located
in other counties without a rational basis.
In a majority decision authored by Justice Bablitch, the supreme
court agreed. The court concluded that, in enacting section 74.37(6),
the Legislature created a distinct classification of citizens, that is,
owners of property located in counties with a population of 500,000 or
more. Secondly, this legislation treats the class of people in Milwaukee
County significantly different than all others who are similarly
situated inasmuch as a property owner who is able to pursue a circuit
court "de novo" action is placed at a significant advantage when
compared to those who are limited to certiorari review. Finally, the
court concluded that the property owner met his burden of proving beyond
a reasonable doubt that there is no rational basis for the
classification under section 74.37(6): the Legislature did not
articulate any rationale for the classification and the court was unable
to construct a rationale for the classification.
The court also concluded that section 74.37(6) is severable from the
remainder of the statute.
Justice Crooks filed a dissenting opinion that was joined by Justice
Wilcox. Justice Sykes did not participate in this case.
Prisoner Litigation
Prisoner Litigation Reform Act - Exhaustion of Administrative
Remedies Required
State ex rel. Hensley v.
Endicott, 2001 WI 105 (filed 11 July 2001)
The plaintiff, who was incarcerated in a state correctional
institution, filed a complaint for declaratory judgment against the
Department of Corrections (DOC) challenging the validity of an
administrative regulation prohibiting prisoners from having pornographic
materials, and another prohibiting prisoners from having cassette tapes
and tape players. His challenges were premised on First Amendment and
Equal Protection grounds.
DOC responded with a motion to dismiss because the plaintiff failed
to plead exhaustion of administrative remedies pursuant to the Prisoner
Litigation Reform Act (PLRA). Although the circuit court found that the
plaintiff stated a claim, it concluded that he was required by the PLRA
to exhaust his administrative remedies before filing suit and, because
he did not, it dismissed his complaint.
The court of appeals reversed. It concluded that the constitutional
questions raised by the plaintiff are unsuited to resolution by the
prison's inmate complaint review committees and appeal personnel (the
administrative remedies available to the prisoner). The appellate court
also found that Wis. Stat. section 806.04, which sets forth the general
rules governing declaratory relief, and section 227.40(1), which deals
with contesting the validity of administrative rules through declaratory
judgment proceedings, trumped the PLRA's exhaustion requirement.
In a majority decision authored by Justice Wilcox, the supreme court
concluded that the PLRA is clear on its face in requiring prisoners to
exhaust their administrative remedies prior to bringing an action in
circuit court. Accordingly, there is no common law futility exception to
the PLRA, as urged by the plaintiff. The court also concluded that
because the PLRA is more specific and was passed later in time than
section 227.40, it should have been applied to require the prisoner to
exhaust his administrative remedies.
[Note: Before reaching these conclusions, the court determined that
it would address the issues described above even though the underlying
dispute in this case may have been rendered moot by the implementation
of an emergency administrative rule which temporarily supplanted the
particular prison regulations challenged by the plaintiff.]
Justice Bradley filed a dissenting opinion that was joined by Chief
Justice Abrahamson.
Property
Depositing Fill on Lands Sometimes Submerged by Navigable Water -
Wis. Stat. Section 30.12(1)(a)
State v. Kelley, 2001 WI 84
(filed 3 July 2001)
The Town of Little Rice completed construction of a town dam on the
Little Rice River in 1961, creating Lake Killarney. The defendants own
property bordering the lake. The western edge of their property includes
a parcel of land which, during certain periods of high water, is
inaccessible because the old logging roads leading to it are submerged.
In 1988 the defendants deposited fill on a section of their land that
was at times submerged. No Department of Natural Resources (DNR) permit
was applied for or issued to deposit the fill.
This action arose as a civil proceeding in which the state sought an
injunction ordering the defendants to remove the fill and pay a
forfeiture and penalties. The state proceeded under Wis. Stat. sections
30.12(1)(a), 30.15(1)(a), and 30.15(1)(d). The circuit court granted
summary judgment in favor of the state holding that the defendants
violated these statutes by depositing fill on a section of land
submerged at times by Lake Killarney, a navigable water, without a
permit. The court of appeals affirmed.
The first issue before the supreme court was whether a property owner
is required to obtain a permit before depositing fill on land submerged
below navigable water regardless of whether the land is above or below
the ordinary high water mark. "This issue presents a complex question
that affects not only the parties to the present lawsuit but the people
of the State of Wisconsin. Because this issue has not been sufficiently
explored in the briefs or at oral argument to enable us to decide it,
this case provides an inappropriate vehicle for resolving the issue the
case presents. Nevertheless, because the issue seems to be of statewide
importance, we take the unusual step of remanding the matter to the
circuit court where the parties can develop the facts and legal analysis
to enable the circuit court to address the legal issue presented"
(¶: 7).
The defendants also raised constitutional challenges involving
uncompensated taking, excessive fines, and a five-year delay in
enforcement. As to these, the court concluded that the constitutional
arguments were not fully developed and are "unpersuasive." See ¶:
8.
Finally, the supreme court concluded, as did the circuit court, that
the dam permit did not set forth mandatory water levels and, therefore,
the water levels about which the defendants complained did not violate
the dam permit.
Accordingly, in a decision authored by Chief Justice Abrahamson, the
court reversed the court of appeals and remanded the case to the circuit
court to determine whether the defendants were required in 1988 to
obtain a permit from the DNR before depositing fill on the section of
land described above.
Justice Wilcox filed a concurring opinion as did Justice Crooks.
Justices Bablitch and Wilcox joined Justice Crooks' concurrence. Justice
Bradley did not participate.
Lis Pendens - Relationship of Common Law and Statutory Lis
Pendens
Gaugert v. Duve, 2001 WI 83
(filed 2 July 2001)
The Gaugerts held an option to purchase real estate owned by Duve.
Notwithstanding the option, Duve entered into an offer to purchase
contract with Hansen. The Gaugerts sued Duve and Hansen seeking specific
performance of their contract. After a trial the circuit court dismissed
the complaint and the Gaugerts appealed. Following the filing of this
appeal but before the court of appeals issued its decision, the circuit
court discharged a statutory lis pendens filed by the Gaugerts pursuant
to Wis. Stat. section 840.10. The Gaugerts did not obtain a stay of the
order discharging the statutory lis pendens or an injunction prohibiting
the sale of the property from Duve to Hansen. While the case was pending
before the court of appeals, Duve conveyed the real estate to
Hansen.
The court of appeals reversed the circuit court. On remand the
circuit court denied the Gaugerts' motion for specific performance. The
Gaugerts brought another appeal and the court of appeals affirmed the
denial of specific performance. That denial was before the supreme court
in the current appeal.
In a unanimous decision authored by Justice Bablitch, the supreme
court reversed the court of appeals. Two issues were presented to the
supreme court. First, following a discharge of a filing of lis pendens
pursuant to section 840.10, to what extent, if any, does the common law
of lis pendens apply to a party to a lawsuit affecting the disputed real
property? The court held that because Hansen was a party to the lawsuit
and thus had actual notice of the pendency of the appeal, under the
doctrine of common law lis pendens he purchased the property subject to
the final outcome of the litigation on appeal.
Under the lis pendens doctrine, when property that is the subject of
a suit is conveyed, the purchaser or encumbrancer pendente lite (while
the action is pending) is bound by the outcome of the litigation. Under
the common law doctrine of lis pendens all purchasers were bound by the
result of pending litigation even when they had no actual notice of the
litigation. The pending action itself was deemed notice of the title, or
claim of title, being asserted by the particular parties to the
litigation. The common law method of deeming a pending suit to be
constructive notice of lis pendens proved unsatisfactory, due to the
potentially harsh impact on purchasers who did not have actual notice of
pending real estate transactions. As a result, Wisconsin and most other
jurisdictions enacted lis pendens statutes. However, the plain language
of section 840.10(1)(a) leads to the conclusion that Wisconsin's lis
pendens statute plays no role as to a purchaser who is a party to the
relevant litigation. Parties have actual notice of the dispute and,
therefore, as to these individuals the statute plays no role.
In this case, because Hansen was a party to the lawsuit and thus had
actual notice of the pending appeal, the doctrine of common law lis
pendens continued to protect the Gaugerts' interest. Therefore, Hansen
took the property subject to the outcome of the litigation on
appeal.
This result was not affected by the Gaugerts' failure to obtain a
stay pursuant to section 808.07(2) of the circuit court order expunging
statutory lis pendens. Hansen was bound by the original decision of the
court of appeals to reverse the circuit court dismissal order because of
the common law of lis pendens and his party status. The order expunging
statutory lis pendens had no effect on the Duve to Hansen
transaction.
The supreme court next considered whether the circuit judge
erroneously exercised his discretion in denying the Gaugerts' request
for specific performance. The court held that the Gaugerts were entitled
to specific performance on their contract. "We find it unreasonable to
conclude that the Gaugerts should be denied specific performance when
the law of lis pendens protected their interest" (¶: 47).
Landlord-tenant - Leases - Unfair Trade Practice
Baierl v. McTaggart, 2001 WI
107 (filed 11 July 2001)
In 1996 the McTaggarts entered into a one-year residential lease with
Baierl for an apartment. The lease contained a provision purportedly
requiring the tenant to indemnify the landlord for all costs and
attorney fees incurred in enforcing the lease. This provision was in
direct violation of Wis. Admin. Code § ATCP 134.08(3), which
labeled it an unfair trade practice. The McTaggarts vacated the
apartment about six months early and moved to Ohio for employment
reasons. They instructed Baierl to deduct a month's rent from the
security deposit. Baierl deducted for the rent as well as damages, and
when he was unable to re-rent the unit, he sought to enforce the
lease.
Baierl later brought this action to collect damages under the lease.
The McTaggarts countered that the lease was void and unenforceable
because of § ATCP 134.08(3). They also counterclaimed that Baierl
had wrongfully retained their security deposit to satisfy rent for which
they had no obligation under the void lease. Accordingly, they sought
double damages, costs, and attorney fees under Wis. Stat. section
100.20(5) (1995-96). The circuit court granted summary judgment to the
McTaggarts. A divided court of appeals reversed.
The supreme court, in an opinion written by Justice Bradley, reversed
the court of appeals. The court held that a landlord who includes a
provision specifically prohibited by Wis. Admin. Code § ATCP
134.08(3) in a residential lease may not enforce the lease. Severing the
invalid provision and enforcing the remainder of the lease, said the
court, would undermine the regulatory scheme (¶: 37).
Justice Crooks, joined by Justice Wilcox, concurred and wrote
separately to emphasize that landlords may pursue noncontract remedies
against tenants.
Torts
Medical Negligence - Burden of Proof - Jury Instructions
Nommensen v. American Continental Ins.
Co., 2001 WI 112 (filed 12 July 2001)
In this case the supreme court, in an opinion written by Justice
Prosser, affirmed the court of appeals' decision in this medical
negligence case. The sole issue before the court was "whether the
circuit court erred in failing to grant the plaintiff's request to
modify the standard jury instruction on the ordinary burden of proof in
a civil case by substituting the word 'probability' for the word
'certainty'" (¶: 1). More precisely, the circuit court opted to
give the standard burden of proof instruction, Wis JI - Civil 200, which
states, in pertinent part, that the "burden of proof ... rests upon the
party contending that the answer to a question should be 'yes.' This
burden is to satisfy you to a reasonable certainty by the greater weight
of the credible evidence that 'yes' should be the answer" (emphasis
original) (¶: 2).
In essence, plaintiff contended that the instruction was confusing,
ambiguous, and perhaps erroneous. On this record the supreme court
declined to grant the relief requested, namely, a new trial. The
majority opinion carefully reviews the history behind the present
instruction, which has remained unchanged since 1972, and concluded that
the "reasonable certainty" language is well-grounded in Wisconsin case
law. More compelling was the argument that the instruction is possibly
misleading and confusing because it potentially conflates two different
elements: "1) that the jurors must be convinced in their own mind, and
2) that they must be convinced that one side's evidence is probably more
true than the other side's" (¶: 33). Yet a change in Wis JI - Civil
200 would affect language in dozens of other instructions, a prospect
that the parties had failed to consider. In conclusion, the court found
that plaintiff had failed to demonstrate that his "substantial rights"
were affected by the flawed but adequate instruction.
Nonetheless, the supreme court requested the Wisconsin Civil Jury
Instructions Committee to "revisit the instruction for a thorough
review" (¶: 55). In particular, it is hoped that the committee will
eliminate the instruction's unfortunate potential to mislead ordinary
jurors into thinking that the burden of proof is to a "reasonable
certainty."
Chief Justice Abrahamson concurred and incorporated her concurrence
on the issue of harmless error in Evelyn C.R. v. Tykila S., 2001 WI 110,
¶:¶: 37-42. Justice Crooks, joined by Justice Wilcox, also
concurred, but wrote separately because they disagreed with the
majority's harmless error analysis which, they believed, confounded the
required "reasonable probability" of error with that of a "reasonable
possibility."
Damages - Medical Expenses - Collateral Source Rule
Koffman v. Leichtfuss, 2001 WI
111 (filed 12 July 2001)
The plaintiff was injured in a car accident. Although his total
medical bills were $187,000, health care providers and insurers entered
into agreements that reduced the total amount paid to about $65,000. At
a trial on the issue of damages, the judge permitted evidence of the
amount actually paid by the insurers. In post-verdict motions, the
circuit court ruled that the collateral source rule was inapplicable in
a subrogation setting and reduced the jury's medical expense award from
$98,000 to the amount actually paid by insurers (about $65,000).
On certification from the court of appeals, the supreme court, in an
opinion written by Justice Bradley, reversed the circuit court. This
appeal involved the "intersection of three concepts central to the law
of damages: The Wisconsin rule of valuation of medical expense damages,
the collateral source rule, and subrogation" (¶: 23). Resolving
confusion that had arisen in the wake of Ellsworth v. Schelbrock, 2000
WI 63, the court reconciled the three principles, which operate in the
following manner: "1) the plaintiff is entitled to seek recovery for the
reasonable value of medical services rendered in treating the claimed
injury; 2) the collateral source rule allows the plaintiff to seek
recovery for the reasonable value of medical services without
consideration of payments made by the plaintiff's insurer; and 3) the
insurer's subrogation rights entitle it to recoup the amounts it paid on
the plaintiff's behalf" (¶: 46). Applying these rules to this case,
the supreme court remanded the matter for a new trial on damages because
the trial judge had erroneously admitted evidence of the amounts paid by
the plaintiff insurers and thus prejudiced the plaintiff (¶:
52).
Chief Justice Abrahamson concurred and incorporated her harmless
error analysis set forth in Evelyn C.R. v. Tykila S., 2001 WI 110,
¶:¶: 37-42. Justice Wilcox also concurred in order to
emphasize that the civil harmless error test should be understood in
terms of a "reasonable probability," not possibility, of a different
outcome. Justice Crooks dissented and wrote separately on the harmless
error issue. And Justice Sykes, joined by Justice Crooks, dissented from
the majority's construction of the collateral source rule.
Expert Evidence - Causation - Fear of Surgery
Martindale v. Ripp, 2001 WI
113 (filed 12 July 2001)
The plaintiff was injured when a fully loaded garbage truck plowed
into the back of his stopped vehicle. He claimed that as a result of the
accident he suffered injury to his temporomandibular joints (TMJs) when
his head and neck were violently "whiplashed" by the collision.
Moreover, the plaintiff was a tall man whose head was positioned above
his car's headrest. A jury found that the collision did not cause the
TMJ and awarded about $6,000 for past and future pain and suffering. The
trial judge excluded expert evidence regarding the "mechanism" or manner
by which the plaintiff sustained the TMJ injury in the accident, and
also excluded evidence of possible complications arising as a result of
possible future surgery.
The supreme court, in an opinion written by Justice Prosser,
reversed. The trial judge erroneously excluded the plaintiff's expert
medical evidence on the cause of his TMJ injury. First, the evidence
would have assisted the jury in understanding the cause of plaintiff's
TMJ. Indeed, the trial judge permitted the expert to opine on cause but
precluded the expert from explaining the very "mechanism" that supported
the opinion on cause.
Second, the judge erroneously ruled that there was no "foundation"
for the doctor's opinion regarding causation. The expert was clearly
qualified to testify about TMJs and the plaintiff himself testified to
the "whiplash" motion stemming from the collision.
Third, the trial judge mistakenly assumed that the medical expert was
testifying as an "accident reconstruction expert." The record clearly
indicated, however, that the doctor "testified that the whiplash injury
caused the TMJ problem, not that the accident had caused the whiplash
injury" (¶: 56). The city did not contest the fact that plaintiff
had suffered a whiplash injury.
Fourth, an "accident reconstruction expert or an expert in kinematics
is not required for an elementary discussion of whiplash, which is the
abrupt jerking motion of the head, either backward or forward. Expert
testimony on kinematics is not necessary to confirm the potential for
whiplash when a fully loaded garbage truck smashes into a barely moving
or stopped automobile, pushing it into another vehicle, sending it 100
to 150 feet from the point of origin, and causing $9,000 in damages to
the vehicle" (¶: 65). Finally, the record also established that the
expert's opinions carried the requisite degree of professional certainty
and were not speculative or conjecture.
The court next determined that this erroneous exclusion of evidence
affected the plaintiff's substantial right and raised a reasonable
possibility of a different outcome. A new trial was thus warranted.
The plaintiff also argued that error occurred because the trial judge
erroneously excluded testimony regarding his fears of possible future
surgery. Rejecting this claim, the supreme court held that claims for
fear of future surgery carry two elements: "1) The plaintiff must
establish a reasonable fear of the possibility of future surgery, ...
which may be accomplished with a doctor's realistic prediction as to the
possibility of future surgery; and 2) the plaintiff may not present
evidence of fear of future surgery if the evidence relates to 'remotely
conceivable complications' or 'a fictitious or imagined or highly
unlikely consequence'" (¶: 83). On this record the trial judge
properly determined that the plaintiff's fear was based upon only
"remotely conceivable implications."
Chief Justice Abrahamson concurred and incorporated her harmless
error analysis set forth in Evelyn C.R. v. Tykila S., 2001 WI 110,
¶:¶: 37-42. Justice Wilcox, joined by Justice Crooks,
dissented on the ground that the trial judge properly excluded the
expert testimony on the "mechanism" of causation. And Justice Crooks,
joined by Justice Wilcox, dissented from the majority's standard for
harmless error.
Product Liability - Consumer Expectations - Foreseeable Harm -
Percentage Affected - Experts
Green v. Smith & Nephew AHP
Inc., 2001 WI 109 (filed 12 July 2001)
The plaintiff, a former health care worker, sued the defendant latex
glove manufacturer, S&N, for damages she suffered as a result of a
debilitating allergic reaction to latex contained in the gloves. A jury
found that S&N's gloves were defective, unreasonably dangerous, and
had caused her injuries. The court of appeals affirmed the judgment.
The supreme court, in an opinion written by Justice Wilcox, affirmed
the court of appeals in a decision that comprehensively reviews and
analyzes Wisconsin's product liability doctrine while clarifying several
critical matters. First, the court held that the jury was properly
instructed "that a product can be deemed defective and unreasonably
dangerous based on consumer expectations about that product" (¶:
26). Rejecting the argument that case law had "abrogat[ed] or
redefin[ed] Wisconsin's product liability standard," the court held
unequivocally that "Wisconsin strict products liability law applies the
consumer-contemplation test and only the consumer-contemplation test in
all strict products liability cases" (¶: 34). In particular, the
court rebuffed a policy-based analysis that argued toward a different
standard (see ¶:¶: 36-44). Second, the supreme court
reiterated that "foreseeability of harm" is not an element of strict
products liability claims (although "duty of care" and "foreseeability"
are, of course, elements of negligence claims).
The court also took the opportunity to clarify the relationship
between contributory negligence and strict products liability claims.
Although a contributory negligence defense implicates a consumer's
"foreseeable use" of the product, this should not be confused with a
"foreseeable risk of harm": "the latter concept relates [sic] the
manufacturer's conduct and, hence, solely to negligence liability"
(¶: 60). On a related point, the court refused to adopt a new
standard for strict products liability set forth in Restatement (Third)
of Torts § 2(b) (1998).
The third and fourth issues involved more fact-specific matters.
S&N contended that there was insufficient evidence to support the
verdict "where the evidence introduced at trial showed that the gloves
contained a substance that causes an allergic reaction in 5 to 17
percent of their consumers" (¶: 75). In finding the evidence
sufficient, the court held that case law discussing "idiosyncratic
reactions" does not set forth a "legal prohibition" as such, but rather
highlights a "frequent evidentiary shortcoming" (¶: 80). Put
differently, there is no percentage threshold that must be satisfied;
rather, plaintiff must satisfy the consumer expectation test on a
case-by-case basis. Fourth, the court found error - albeit harmless - in
the admission of testimony by an expert witness who had "specifically
declaimed any expertise regarding the safety of different protein levels
in latex gloves." The witness, an "expert" in latex glove manufacturing
processes and quality control, was permitted to testify about "safety"
anyway. The court's majority focused on the witness's specific
"disavowal" of such expertise (yet found the error harmless anyway).
Chief Justice Abrahamson, joined by Justice Bradley, concurred and
wrote separately to explain why she believed that the expert's testimony
was properly admitted. Justice Crooks, joined by Justice Wilcox, also
concurred and wrote separately only to "remark" upon the majority's
harmless error standard. Dissenting were Justice Sykes, joined by
Justice Prosser, who disagreed with the majority's statement of strict
products liability law.
Comparative Negligence - Strict Products Liability - 1995
Amendment
Fuchsgruber v. Custom Accessories
Inc., 2001 WI 81 (filed 2 July 2001)
The plaintiff was injured when the handle to his car jack broke as he
lifted it from the box. This appeal posed a single issue for the supreme
court: Did the 1995 amendment to the comparative negligence statute,
Wis. Stat. section 895.045(1) (1999-2000), apply to strict products
liability actions? The court held that it did not.
Writing for the court, Justice Sykes observed that the 1995 amendment
had two apparent purposes: "1) the codification of the pre-existing
requirement in negligence actions that, where there are multiple
defendants, a plaintiff's negligence is compared against the separate
rather than the combined negligence of the defendants for purposes of
determining liability; and 2) the modification of joint and several
liability" (¶: 13). Under the modified statute, only a defendant
found 51 percent or more causally negligent can be jointly and severally
liable for a plaintiff's damages, as adjusted by contributory
negligence, and those defendants whose causal negligence is less than 51
percent are limited to their apportioned percentage. The court stressed
the differences between negligence liability and strict products
liability.
Conceding that contributory negligence and contribution claims in
products cases raise somewhat related issues, and that language in some
cases may have been misleading, the court clarified that the statutory
comparative negligence scheme played no role in strict products
liability. In particular, "the comparison in strict product liability
actions is not a comparison of one party's conduct against another, but,
rather, a comparison of the extent to which the plaintiff's injuries
were attributable to his own contributory negligence as against the
product's defective condition" (¶: 24).
Justice Prosser did not participate.
Joint and Several Liability - 1995 Amendment
Matthies v. The Positive Safety Mfg.
Co., 2001 WI 82 (filed 2 July 2001)
When plaintiff injured his hand in a punch press accident in 1992,
Wisconsin law permitted recovery from any one of two or more persons
whose joint or concurring acts of negligence caused the plaintiff's
injuries. After the accident but before plaintiff filed his complaint,
the Legislature changed the law to limit joint and several liability to
a person found 51 percent or more causally negligent. Wis. Stat. §
895.045(1) (1995-96). The defendant in this case filed a declaratory
order that sought to apply the new rules on joint and several liability
to plaintiff's claim in this case. The trial judge refused to grant the
order, and the court of appeals certified the issue to the supreme
court.
The supreme court, in an opinion written by Justice Crooks, affirmed.
The retroactive application of the new rules would unconstitutionally
limit the plaintiff's rights to recover all of the damages adjudged to
him. The court carefully laid out the history of comparative negligence,
joint and several liability, and contribution in Wisconsin. Although the
supreme court had steadily resisted requests to modify joint and several
liability based on contribution, the Legislature "significantly changed"
the rules in 1995. Moreover, the Legislature expressly intended that the
change be retroactively applied to events that occurred before the
amended statute's effective date.
The court held that the plaintiff had a "vested right" to recover
damages even before there was a formal judgment. Thus, the date of the
injury triggered the plaintiff's rights under section 895.045(1)
(¶: 22). And clearly, the amended statute adversely affected those
rights, if retroactively applied. For example, under the present statute
he could not recover all of his damages from any tortfeasor who is less
than 51 percent causally negligent (¶: 23).
Next, the court applied a balancing test to determine if the
statute's retroactive application violated the plaintiff's due process
rights. The court was not convinced that the public's interest in
retroactive application outweighed the statute's adverse effect on
plaintiff's private interest in recovering his damages.
Safe Place Statute - "Unsafe Condition" - Notice - Nondelegable
Duties
Barry v. Employers Mutual Cas.
Co., 2001 WI 101 (filed 10 July 2001)
Plaintiff, a project manager for a contractor, was injured when he
fell down stairs at a job site. The building's owner had hired another
company to install vinyl "nosings" on the front of the stairs to hold
the carpeting in place. The nosings were somewhat higher than the
carpet, however, which created a gap that caused plaintiff to stumble. A
jury apportioned negligence as follows: 45 percent to the building's
owner, 45 percent to the "nosing" installer, and 10 percent to
plaintiff. The trial judge ruled that the nosing constituted a
"structural defect" and therefore the plaintiff did not carry the burden
of showing that the owner was on notice. The court of appeals reversed
on the ground that the loose nosing constituted an "unsafe condition
associated with the structure." It refused, however, to remand the case
for a new trial on the notice issue because the plaintiff had not
requested one.
The supreme court, in an opinion written by Justice Sykes, reversed
in a decision that addressed three issues. First, the court agreed that
the loose nosing constituted an "unsafe condition associated with the
structure." Extrapolating from the statute and case law, it held that "a
breach of the statutory duty to repair or maintain (as distinct from the
statutory duty to safely construct) creates an 'unsafe condition
associated with the structure'" (¶: 25). In this case the loose
stairway nosing "resulted from a failure to repair or maintain the
stairway, not a failure to safely construct the stairway" (¶: 30).
Second, the plaintiff was nonetheless entitled to a new trial where he
might attempt to establish the owner's notice. Because the required
supplemental instruction on the notice issue was not given, the jury
decided the case on an erroneous statement of law (¶: 38).
Finally, the court agreed with plaintiff's position that duties under
the safe place statute are nondelegable; thus, the stairway contractor's
negligence, if any, should be imputed to the owner. Nonetheless, the
jury must still apportion negligence for purposes of the owner's
contribution claim against the stairway contractor.
Medical Malpractice - Request for Mediation - Time Limitation for
Commencing Suit Tolled
Landis v. Physicians Ins. Co. of Wis.
Inc., 2001 WI 86 (filed 3 July 2001)
The plaintiff filed a mediation request before she filed her medical
malpractice action in circuit court. A mandatory 90-day mediation period
followed. During this mediation period, the plaintiff was prohibited
from filing a lawsuit. See Wis. Stat. § 655.44(5). However, during
this mediation period, the five-year deadline for filing suit, as
codifed in section 893.55(1)(b), passed.
The issue before the supreme court was whether the five-year deadline
for filing a medical malpractice action is tolled when a party requests
mediation of a medical malpractice suit pursuant to section 655.44.
[Note: Section 655.44 allows a claimant to request mediation before
filing an action in circuit court.] In a majority decision authored by
Justice Prosser, the supreme court concluded that the section 655.44
mediation process tolls the five-year deadline for filing a medical
malpractice action.
Justice Bradley filed a concurring opinion, joining the majority
opinion in its entirety but writing separately to address the dissenting
opinion. Chief Justice Abrahamson joined Justice Bradley's concurrence.
Justice Crooks filed a dissenting opinion that was joined by Justices
Bablitch and Wilcox.
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