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    Court of Appeals Digest

    Daniel BlinkaThomas Hammer

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    Wisconsin Lawyer
    Vol. 77, No. 3, March 2004

    Court of Appeals Digest

    This column summarizes selected published opinions of the Wisconsin Court of Appeals. 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.

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

    * *

    Criminal Procedure - Trial Procedure

    Search and Seizure - Garbage Searches - Violation of In Limine Orders at Trial

    State v. Sigarroa, 2004 WI App 16 (filed 10 Dec. 2003) (ordered published 28 Jan. 2004)

    The defendant was convicted on various drug charges. On appeal he argued that the police search of his trash, which had been bagged in a black plastic garbage bag and placed in a trash receptacle located outside of his apartment building, violated his Fourth Amendment rights, because he had a reasonable expectation of privacy in his trash. [The receptacle was 53 feet from the apartment building and 170 feet from the public street.] The defendant also contended that the trial court erred in denying his motion for a mistrial when a key state witness violated an in limine ruling by implying to the jury that the defendant had a prior criminal record.

    In a decision authored by Judge Anderson, the court of appeals affirmed. With regard to the warrantless search of the defendant's garbage, the court concluded that the issue should be analyzed under a two-part test: 1) whether the individual by his or her conduct has exhibited an actual, subjective expectation of privacy, and 2) whether that expectation is justifiable in that it is one which society will recognize as reasonable. [The court indicated that any argument regarding whether the garbage was within the curtilage would be properly analyzed as falling within the expectation-of-privacy analysis and not as a separate factor.]

    With regard to the subjective prong of the two-part test described above, the court concluded that the defendant did not have an actual subjective expectation of privacy in his trash. "We reach this conclusion based on the following evidence. The garbage was placed in a dumpster located at the far rear of the apartment building property. The garbage was placed in the dumpster with the knowledge of and expectation that it would be picked up for disposal by the garbage collection service. While the property was surrounded on three sides by a fence, the fence did not impede access to the property or to the dumpster. Although the property had a 'Private Property' sign and signs warning that there should be no playing around the dumpster, the signs did not bar observation of the dumpster from the street or impede access to the dumpster. The dumpster was located in an area totally unassociated with activities that would normally be associated with notions of privacy"(¶ 21).

    On the objective component of the two-part test, the court concluded that society would not recognize a reasonable expectation of privacy when garbage is thrown into a trash receptacle with the knowledge and the expectation that control of the garbage would be turned over to third parties. "Society would expect that while the most immediate third-party recipient of garbage in a dumpster would be a garbage collector, that is not the only third party one can envision taking control of this garbage. It would not be unreasonable under these facts for society to expect access to the garbage by other third parties (i.e., scavengers and the like) when such garbage is easily accessible to the public. As noted, this garbage was abandoned in a dumpster that was both visible from the street and had unimpeded access from the street" (¶ 22) (citations omitted). Accordingly, the court held that the defendant's Fourth Amendment protection claim failed.

    With regard to the testimony in violation of the in limine order, the court concluded that, under the entirety of the evidence, the testimony was not so prejudicial as to affect the verdict, given that the court struck the testimony at the time and, at the end of the trial, gave the standard jury instruction telling the jury to ignore all things stricken. Nonetheless, the court expressed serious concerns about what it perceived as an increasing pattern of witness and/or attorney violations of in limine orders. Accordingly, it offered the following suggestions to trial courts to prevent such violations:

    "(1) Prior to trial, outside the presence of the jury, the court could address the attorney bound by the motion in limine order and get that attorney's assurance that each and every witness has been instructed about the order;

    "(2) Prior to a pertinent witness testifying before the jury, the witness could be put on the stand, outside the presence of the jury, sworn, and then asked:

    "a. if he or she is aware of the motion in limine order,

    "b. if he or she understands what evidence is barred and,

    "c. if he or she will abide by the court's order;

    "(3) Prior to the witness testimony, reduce the motion in limine order to writing and have a copy served upon each witness" (¶ 30).

    Jury Waiver - Approval of the Court

    State v. Burks, 2004 WI App 14 (filed 2 Dec. 2003) (ordered published 28 Jan. 2004)

    The defendant shot a police officer and was convicted by a jury of attempted first-degree intentional homicide. Before trial the defendant attempted to waive his right to a jury trial. The state consented to the waiver, but the trial court refused to approve it. In a decision authored by Judge Fine, the court of appeals affirmed.

    The right of a criminal defendant to a trial by jury is guaranteed by both the U.S. and Wisconsin Constitutions. The legislature has granted defendants a limited right to relinquish a trial by jury. Pursuant to Wis. Stat. section 972.02(1), a jury trial waiver requires the state's consent and the court's approval. It is established in Wisconsin that a prosecutor's decision to withhold consent to a defendant's waiver of his or her right to a jury is not reviewable because, absent extraordinary circumstances, the courts have no authority to compel that consent. Moreover, the state is not required to justify its refusal to consent to a jury waiver.

    With regard to the trial court's approval of jury waivers, the appellate court concluded that the approval function is not a "quasi-ministerial rubber-stamping" of the parties' request. Rather, like the prosecution's decision to withhold consent to a defendant's request to waive jury, the trial court need not explain its decision to withhold its approval of waiver and, absent extraordinary circumstances that were not present in this case, the court's decision to withhold approval is not reviewable. See ¶ 10.

    Lastly, the court concluded that there was nothing in the record of this case that indicates that the trial court's refusal to approve the defendant's waiver of jury operated to prejudice him. Rather, it operated to subject the defendant "to an impartial trial by jury - the very thing that the Constitution guarantees him." Singer v. United States, 380 U.S. 24, 36 (1965).

    Confessions - Voluntariness - Remands - New Trial

    State v. Agnello, 2004 WI App 2 (filed 11 Dec. 2003) (ordered published 28 Jan. 2004)

    Agnello was convicted of first-degree intentional homicide. He pleaded guilty after the circuit court denied his motion to suppress his confession. He appealed the conviction judgment and the supreme court concluded that the prosecutor had improperly questioned Agnello about the truthfulness of his confession at the suppression hearing. The supreme court vacated the conviction and remanded the case for a new suppression hearing. Upon remand, the trial court conducted another suppression hearing and again found Agnello's confession voluntary. It reinstated his conviction, and Agnello filed this appeal.

    The court of appeals, in an opinion written by Judge Vergeront, affirmed in part and reversed in part. First, the court held that the confession was properly found to be voluntary under the totality of the circumstances. Agnello unsuccessfully argued that the following factors rendered the confession involuntary: 1) he was handcuffed to a ring in the interrogation room; 2) he was sleep deprived; 3) police used psychological coercion involving his foster mother (there was no showing that he was "unusually vulnerable" to such appeals); and 4) the length of the interrogation. The court rejected Agnello's contention that he was improperly subjected to interrogation by "relay teams." The trial court found that there were breaks during the interrogation session and that one change in "teams" was caused by a shift change.

    Although his confession was voluntary, the court of appeals held that Agnello nonetheless was entitled to a new trial based on the earlier remand by the Wisconsin Supreme Court, which stated: "'[W]e reverse the court of appeals, vacate Agnello's conviction, and remand the cause to the circuit court for a new Goodchild hearing'" (¶ 23).

    Examining the supreme court's actions in similarly situated cases, the court of appeals was satisfied that the supreme court intent was to grant Agnello a new trial following the suppression hearing on remand.

    Judge Lundsten concurred in the determination that the confession was voluntary but dissented from the decision permitting Agnello to withdraw his guilty plea. "It follows that, absent some additional factor or express remand language to the contrary, when the supreme court or this court vacates a conviction and remands for a new suppression hearing, neither court intends that the defendant's plea be vacated if the original suppression ruling is reached a second time. To repeat, in the typical case, a circuit court decision on remand affirming an earlier suppression ruling validates the propriety of the original conviction" (¶ 38).

    Interrogation - Juvenile Confessions - Voluntariness

    State v. Jerrell C.J., 2004 WI App 9 (filed 23 Dec. 2003) (ordered published 28 Jan. 2004)

    Jerrell C.J. appealed from an order adjudicating him delinquent for the commission of armed robbery as party to the crime. He contended that the trial court erred in denying his motion to suppress a statement he gave to the police. He argued that the statement was involuntary and that the police officer should have granted his request to call his parents.

    In a majority decision authored by Judge Wedemeyer, the court of appeals concluded that the trial judge did not err in denying the motion to suppress. Applying the usual analysis for evaluating the voluntariness of a confession, it held that there was no evidence of police coercion or improper conduct and that the trial court did not erroneously exercise its discretion in denying the motion to suppress.

    Nonetheless, the majority commented at length to express its grave concerns about the interrogation of juveniles and to address the requests of amici curiae for: 1) a per se rule that would exclude confessions from any child under age 16 who has been denied access to a parent or guardian, and 2) a mandatory rule requiring police to videotape all juvenile interrogations.

    Although the court found both of these requests compelling, it believed it was without authority to order either. "We are currently bound by the dictates of Theriault [v. State, 66 Wis. 2d 33, 223 N.W.2d 850 (1974)], which recognizes 'that special problems may arise with respect to waiver of the [Miranda] privilege by or on behalf of children,' but applies the totality of the circumstances test. Our supreme court rejected a request that a per se rule be applied when a minor confesses without the presence of a parent or legal guardian. The court held that the absence of the parent or guardian is one factor to be considered under the totality of the circumstances test. Consideration of this factor affords the trial court the discretion to determine the reason behind denying a juvenile's request to call his or her parents. 'If the police fail to call the parents for the purpose of depriving the juvenile of the opportunity to receive advice and counsel, that would be strong evidence that coercive tactics were used to elicit the incriminating statements.' Accordingly, we are bound by that precedent" (¶ 27) (citations omitted).

    Despite this precedent, the court noted that Theriault was decided in 1974 and that the debate concerning the totality of the circumstances test versus a per se rule has been the focus of much recent attention. At least 13 states have adopted, by case law or legislative action, some form of the per se rule. After articulating reasons for a per se rule (including the problem of false confessions) and the measures some states have implemented, the majority opined that "it is time for Wisconsin to tackle the false confession issue. We need to take appropriate action so that the youth of our state are protected from confessing to crimes they did not commit. We need to find safeguards that will balance necessary police interrogation techniques to ferret out the guilty against the need to offer adequate constitutional protections to the innocent" (¶ 32).

    Judge Schudson filed a concurring opinion.

    Deferred Prosecution Agreements - Plea Agreement with Deferred Entry of Judgment

    State v. Wollenberg, 2004 WI App 20 (filed 9 Dec. 2003) (ordered published 28 Jan. 2004)

    The defendant was originally charged with four counts of burglary, one count of felony theft, and one count of misdemeanor theft. Pursuant to a plea negotiation, he pleaded no contest to the four burglary counts and to four misdemeanor theft accounts. Under the agreement, his sentence on the theft counts was withheld and he was placed on probation for each count with 180 days' jail time as a condition of probation. Entry of judgment on the burglary counts was deferred for six years, provided that the defendant committed no additional crimes and abided by the terms of his probation.

    The defendant's probation subsequently was revoked and the state moved for the entry of the deferred judgments on the burglary counts. The court granted the motion and imposed lengthy prison terms on each count. The defendant filed a postconviction motion to withdraw his plea, claiming that he pleaded no contest pursuant to a deferred prosecution agreement (DPA) that was defective because it failed to conform to the statutory requirement that a DPA be in writing. See Wis. Stat. § 971.39. The circuit court denied the motion.

    In a decision authored by Judge Hoover, the court of appeals affirmed. The court concluded that, under the facts as described above, there was no statutory DPA in this case. Rather, the record established that the defendant entered a plea agreement with the state that contemplated a deferred entry of judgment on the burglary charges.

    Next, the court concluded that, even if there was a DPA in this case, the defendant's claim that the judgment was void because it was not in writing was an error he invited. The defense expressly urged the court to adopt the terms of the plea agreement as described above and the defendant agreed to the order deferring entry of judgment. The circuit court followed the parties' joint recommendations and, under such circumstances, "we do not allow a defendant to cry foul on appeal" (¶ 13).

    Lastly, the court considered the power of a circuit judge to defer entering a conviction judgment. Although there is no specific statutory procedure for deferred entries of judgment, "we know of no reason to prohibit a trial court from doing so if, in the appropriate exercise of discretion and upon agreement of the parties, a court determines such deferral is proper" (¶ 16).

    Trial - Waiver of Right to Testify - Defense Attempt to Revoke Waiver After Evidence Is Closed

    State v. Arredondo, 2004 WI App 7 (filed 23 Dec. 2004) (ordered published 28 Jan. 2004)

    The defendant was charged with first-degree intentional homicide and second-degree sexual assault. He entered pleas of not guilty and went to trial. After the state rested its case-in-chief, the trial court had an on-the-record colloquy with the defendant to determine if he wanted to testify. His attorney told the trial court that the defendant did not want to testify and that this decision was "99 percent definite" pending the testimony of two defense witnesses. The defendant then assured the trial court that he understood, and he waived his right to testify.

    After the defendant waived his right to testify, the defense called two witnesses. The defense then rested and the trial court informed the jury that the evidentiary phase of the trial was complete, and it dismissed the jury for lunch. After the lunch break, the defendant told the court that he wanted to rescind his decision not to testify because he did not understand what rights he was giving up.

    The defense attorney informed the court that, before the defense rested, he asked the defendant if he wanted to testify and the defendant confirmed that he did not. The trial court then asked the prosecutor about potential prejudice, and the prosecutor told the court that its rebuttal witnesses had been released but that they could be relocated. The trial court declined to reopen the evidence, concluding that the defendant had been fully advised of his rights and had made an informed, knowing, and voluntary waiver.

    In a majority decision authored by Judge Fine, the court of appeals affirmed. Among the issues on appeal was the defendant's claim that his constitutional rights were violated when the trial court declined to reopen the evidence to allow him to testify. The appellate court began its analysis with the principle that a defendant's right to testify is a fundamental constitutional right. The accused may, however, waive that right. The defendant argued that his waiver was not valid because it was conditional and that the trial court should have conducted another colloquy with him after the two defense witnesses testified to determine whether he still wanted to refrain from testifying. The appellate court disagreed.

    The right to testify must be exercised at the evidence-taking stage of the trial and, once the evidence has been closed, whether to reopen for submission of additional testimony is a matter left to the trial court's discretion. A trial court must consider "whether the likely value of the defendant's testimony outweighs the potential for disruption or prejudice in the proceedings and, if so, whether the defendant has a reasonable excuse for failing to present the testimony during his case-in-chief." United States v. Peterson, 233 F.3d 101, 106 (1st Cir. 2000).

    In this case, the judge considered the potential for prejudice. The defendant made his request after the court told the jury that the evidence-taking stage of the trial was complete and after the state dismissed its rebuttal witnesses. The judge determined that substantial prejudice would exist to the state and the system and the sequestered jury in order to reopen the case. Moreover, the trial court found that the defendant was engaging in "theatrics and ... playing for the cameras, perhaps, and that this is a gross attempt to manipulate the system."

    Said the appellate court, "under the circumstances, we see no infringement of [the defendant's] constitutional right to testify. Further, it is clear from the context of the trial court's statements that the trial court did not mean that [the defendant's] decision to waive his right to testify was irrevocable as a matter of law. Rather, it determined that it should not re-open based on what it believed was [the defendant's] 'attempt to manipulate the system.' The trial court did not erroneously exercise its discretion in not re-opening the evidence" (¶ 21).

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    Reducing Clause - UIM

    Dowhower v. Marquez, 2004 WI App 3 (filed 10 Dec. 2003) (ordered published 28 Jan. 2004)

    The plaintiff, a minor, was injured by a negligent motorist, whose insurer paid the policy's limits of $25,000. The plaintiff's insurer, West Bend, in turn paid the plaintiff just $25,000 of the $50,000 in underinsured motorist (UIM) coverage based on the policy's reducing clause. The plaintiff sought an action declaring unenforceable the reducing clause in the policy's UIM section.

    The court of appeals, in a decision written by Judge Brown, affirmed the circuit court because the policy was "contextually ambiguous" and the reducing clause was therefore unenforceable. For those keeping score, this opinion is Dowhower III - the third appellate opinion rendered in this litigation. In Dowhower II the court had applied the methodology set forth in Badger Mutual Insurance Co. v. Schmitz, 2002 WI 98, and concluded that the reducing clause was ambiguous "within the context of the whole policy." Dowhower v. Marquez, 2003 WI App 23, ¶ 1. The Wisconsin Supreme Court, however, vacated the decision and remanded the matter for reconsideration in light of Folkman v. Quamme, 2003 WI 116, which held that that "'crystal clear' language in Schmitz had produced the unintended effect of altering the analytical focus in cases involving alleged contextual ambiguity" (¶ 2). Folkman "clarified" Schmitz and set forth an "analytical framework" for lower courts to use in assessing contextual ambiguity. Applying the Folkman framework, the court held that "[t]he policy's inadequate and misleading organization, labeling and explanations make it nearly impossible for a reasonable insured to locate, let alone comprehend the extent of, his or her UIM coverage. We are convinced that even after carefully working his or her way through the policy, a reasonable insured might not arrive at the conclusion that he or she has purchased a fixed level of UIM recovery that would be determined by combining payments made from all sources" (¶ 29).

    Reducing Clause - UIM

    Commercial Union Midwest Ins. Co. v. Vorbeck, 2004 WI App 11 (filed 10 Dec. 2003) (ordered published 28 Jan. 2004)

    Alan Vorbeck was fatally injured in a car accident. The tortfeasor's insurer paid policy limits of $250,000. Vorbeck had underinsured motorist (UIM) coverage of $500,000 with Commercial Union, which applied the policy's reducing clause and paid only $250,000. Commercial Union then filed this action seeking a declaration that its obligation was fully satisfied by the payment of just $250,000. The trial court found the policy "cumbersome" but upheld the reducing clause.

    The court of appeals, in a decision written by Judge Nettesheim, affirmed. As in Dowhower III (see digest above), the court applied the methodology recently announced in Folkman v. Quamme, 2003 WI 116. In essence, Folkman is concerned with the issue of contextual ambiguity ("a clear phrase within a policy can be rendered ambiguous by contradictory language elsewhere in the policy") (¶ 11). Addressing an "important preliminary manner," the court of appeals clarified that contextual ambiguity is not allayed by policy directives warning the insured to read the policy carefully: "If a policy is contextually ambiguous thereby producing a reasonable alternative meaning, no amount of directives to read the policy will alleviate that situation" (¶ 23).

    Turning to the policy's organization, especially with respect to the reducing clause, the court found "nothing in the location, labeling or language of these provisions that produces any contextual ambiguity." The provisions were not "inconsistent" and did not "set up roadblocks or diversions that would befuddle a reasonable insured while navigating through the policy" (¶ 30). The only "arguable failing" was that the policy's "Quick Reference" index did not refer to the Wisconsin Endorsement, which contains the reducing clause (¶ 31). Nor was the policy language itself ambiguous as scrutinized under Folkman. "First, when considering alleged contextual ambiguity, we must look to the contract as a whole. Second, we sometimes must look beyond a single clause or sentence to capture the essence of an insurance agreement. Third, the language of a policy should not be made ambiguous by isolating a small part from the text of the whole. Finally, '[f]erreting through a policy to dig up ambiguity should not be judicially rewarded because this sort of ambiguity is insufficient'" (¶ 38) (citations omitted). Read as a whole and in conjunction with the policy's other provisions, the Wisconsin Endorsement was not ambiguous.

    Judge Brown concurred, writing separately to emphasize the problem of prolix insurance policies: "It is my view that although policy language is now written in a simple, concise, short and uncomplicated way, too much industry jargon is used without much, if any, attempt to define the jargon for the consumer. Moreover, the policies quite often could be presented in much more meaningful sequences" (¶ 47).

    Nonowned Vehicle Exclusion - "Separation of Protected Persons"

    Gulmire v. St. Paul Fire & Marine Ins. Co., 2004 WI App 18 (filed 23 Dec. 2003) (ordered published 28 Jan. 2004)

    Gulmire was injured by a vehicle driven by another employee while both were working. State Farm insured the employee/tortfeasor and St. Paul insured the employer, an auto auctioneer, under a commercial automobile liability policy. Gulmire appealed judgments in favor of both St. Paul and State Farm.

    The court of appeals, in a decision written by Judge Cane, affirmed as to State Farm but reversed as to St. Paul. The State Farm policy excluded coverage for "nonowned vehicles." Such exclusions, said the court, are not prohibited by Wis. Stat. section 632.32(6)(b)2a, which precludes only coverage exclusions "for certain individuals relating to the insured vehicle" (¶ 14). Next addressing public policy, the court held that the parties' "freedom of contract" was not outweighed by the "general public policy" to compensate victims (¶ 17).

    The St. Paul policy provided liability coverage to various protected persons. It was undisputed that the tortfeasor was driving a covered automobile owned by one of the named insureds (a wholesaler). The policy's "separation of protected persons" provision operated to make the tortfeasor a "separate and distinct insured under his own policy," which in turn eliminated various exclusions. Specifically, the court considered the fellow employee exclusion, the employer's liability exclusion, and the worker's compensation exclusion. Finally, the conclusion did not produce an "absurd result."

    Fidelity Bonds - Losses "Resulting Directly"

    Tri City National Bank v. Federal Ins. Co., 2004 WI App 12 (filed 9 Dec. 2003) (ordered published 28 Jan. 2004)

    A bank sued Federal Insurance Co. (Federal) for reimbursement under a fidelity bond issued by Federal to the bank for monies paid to two mortgage companies in the form of settlements as the result of fraudulent acts of two former bank employees. The fraudulent scheme involved fictive downpayments and false bank statements that defrauded the two mortgage companies, with whom the bank settled. The circuit court found that the standard fidelity bond at issue here limited losses to those "resulting directly" from an employee's fraudulent acts, and the losses here did not fall within that coverage.

    The court of appeals, in a decision authored by Judge Curley, affirmed. "A fidelity bond differs from a liability policy of insurance because of the risk being insured. ... A fidelity bond is an indemnity contract that 'guarantee[s] reimbursement for losses sustained by the insured resulting from the dishonesty of the insured's employees'" (¶ 13). The court rejected the bank's contention that the policy was ambiguous and should be construed in its favor.

    "First, the bond clearly restricts indemnification to those losses that occur as a direct result of an employee's dishonest acts. This language is not susceptible to more than one meaning. Here, the loss was not direct. It was only after the mortgage defaults occurred, some three years after the employees' deceitful actions, that [the bank's] liability to the mortgage companies came into being. The losses did not 'result[] directly from dishonest or fraudulent acts committed by employe[es,]' as the losses did not exist until the unsuitable mortgage holders defaulted on their loans and the mortgage companies sued [the bank]." Nor would a "reasonable banker" expect coverage for these losses, in light of the "history of fidelity bonds" (¶ 19). Moreover, the "majority of cases" on point have concluded that the phrase is not ambiguous and that the bond's language should be interpreted narrowly (¶ 23). Finally, the "better public policy" supported this reasoning as well. (Several other claims of error were also briefly addressed.)

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    Sheriff's Sale - Redemption - Full Payment

    M&I Marshall & Ilsley Bank v. Kazim Investment Inc., 2004 WI App 13 (filed 23 Dec. 2003) (ordered published 28 Jan. 2004)

    A bank foreclosed on an apartment building that had become a public nuisance. At the sheriff's sale several years later, Resnant, which owned an adjacent property, was the successful bidder at $273,000, which would have left the bank with a deficiency of nearly $400,000. With the aid of several adjournments, the bank negotiated a "plan of redemption," which did not provide for immediate full payment, but instead permitted payment within six months. The circuit court granted the bank's motion to set aside the sheriff's sale to Resnant.

    The court of appeals, in an opinion written by Judge Schudson, reversed. "Here, Wis. Stat. § 846.13 provides 'a clear and valid legislative command' removing a circuit court's discretion to alter the clear and unambiguous prerequisite of full payment for redemption before the sale" (¶ 12) (citation omitted). Since the bank's buyer lacked the "full payment," the court had no choice but to permit the sale to the highest bidder, Resnant.

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    Economic Loss Doctrine - Spoliation

    Insurance Co. of N. Am. v. Cease Elec. Inc., 2004 WI App 15 (filed 17 Dec. 2003) (ordered published 28 Jan. 2004)

    The court of appeals, in a decision written by Judge Brown, affirmed a judgment awarding damages to an egg farm for losses sustained when a ventilation system failed in one of the barns. The appellants first argued that the economic loss doctrine precluded the farm's tort claims. Initially, the court determined that the "transaction" involved the failure to provide a "service" - namely, "the installation of the ventilation system" - and not a defective product (¶ 20). Although the supreme court has yet to address whether the economic loss doctrine covers claims for negligent provision of services, the court of appeals held that the doctrine did not preclude the farm's claim. To hold otherwise, based on extant authority (including cases involving services rendered by accountants and architects), would be an expansion of the economic loss doctrine and beyond the authority of the court of appeals (¶ 23).

    Second, the court rejected the appellants' claim that the doctrine of spoliation precluded the farm's claim. When problems arose with the ventilation, the farm had the building rewired, which resulted in a "loss of evidence" that was nonetheless fully justified by the need to operate the business. The farm could not have "foreseen that litigation concerning the loss was a distinct possibility, let alone that the evidence would be relevant to such litigation" (¶ 17).

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