Wisconsin Lawyer
Vol. 78, No. 12, December 2005

Court of Appeals Digest

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

Commercial Law Contracts Criminal Law Criminal Procedure

Family Law Property Torts

Commercial Law

Receivership - Intervention

M&I Marshall & Ilsley Bank v. Urquhart Cos., 2005 WI App 225 (filed 15 Sept. 2005) (ordered published 28 Oct. 2005)

Reinhart Foodservice Inc. supplied food to three nursing homes that were in receivership. This appeal followed the circuit court's denial of Reinhart's request to intervene in the receivership proceeding. Although Reinhart had supplied more than $14,000 worth of food for which it had not been paid, the circuit court ruled that Reinhart was an "unsecured creditor" to which the receiver owed no duty.

The court of appeals, in a decision authored by Judge Deininger, reversed. First, the court said, "Reinhart, as a supplier of goods to the receiver, has an interest in ensuring that the receiver carries out his court-ordered and statutory obligations to pay `the current expenses of carrying on' the nursing home business. See Wis. Stat. § 813.17. Because Reinhart claims to have furnished goods necessary to the receiver's operation of the nursing homes during the receivership, Reinhart must be allowed to present its claim for payment in the receivership proceeding, provided it satisfies the remaining requirements for intervention as a matter of right" (¶ 14).

Second, Reinhart also demonstrated that its ability to protect its interest will be impaired by the disposition of the original action (see ¶ 15). "If Reinhart is not permitted to intervene and the receiver is discharged in this action, a subsequent attempt by Reinhart to sue either the receiver or M&I might well be met with claims that the receiver can no longer be sued, or that Reinhart should be precluded from `re-litigating' M&I's entitlement to all moneys remitted to it by the receiver, an issue that was arguably litigated and determined by the foreclosure judgment, the order approving sale and any subsequently entered order for discharge of the receiver. These potential obstacles to Reinhart's ability to protect its interest in being paid for goods it supplied to the receiver are simply not present if Reinhart is permitted to intervene in this action" (¶ 17). The court also "easily conclude[d]" that the existing parties did not adequately represent Reinhart's interest (see ¶ 18).

Finally, the court held that Reinhart timely moved to intervene. Reinhart acted "promptly" (¶ 22), and any prejudice to M&I's interests as a secured creditor was "slight" compared to the prejudice that Reinhart would suffer if it could not present its claim in the receivership proceeding (see ¶ 23). (The court also determined that Reinhart's related request to sue the receiver was properly denied in light of Reinhart's opportunity to now pursue its claims in the receivership proceeding.)

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Contracts

Employment - Tortious Interference - Noncompetition Clause - Wage Claims

Wolnak v. Cardiovascular & Thoracic Surgeons of Cent. Wis. S.C., 2005 WI App 217 (filed 7 Sept. 2005) (ordered published 28 Oct. 2005)

This appeal arose out of claims and counterclaims in a dispute between Dr. Wolnak and the Cardiovascular & Thoracic Surgeons physician group, headed by Dr. Riveron (collectively CATS). The plaintiff alleged that CATS had breached his contract and defamed him, while the defendants countered that the plaintiff had tortiously interfered with another doctor's contract, breached his own contract, and made misrepresentations. A jury found that CATS had breached the plaintiff's contract and awarded the plaintiff about $225,000, but it also determined that the plaintiff had misrepresented his background (although CATS had not relied on any such falsehoods) and tortiously interfered with the other doctor's contract. The jury awarded CATS damages of $125,000. Both sides appealed.

The court of appeals, in an opinion authored by Judge Hoover, affirmed. (The physician group's individual cross-appeal raised sufficiency of the evidence issues that were resolved against it (see ¶¶ 61-66). These fact-intensive issues will not be further discussed.) The court began by analyzing and rejecting the plaintiff's claims of error as to the tortious interference counterclaim. The court said that the plaintiff was not entitled to summary judgment on this issue and that the jury's determination was supported by the evidence. The fact that the other doctor in question did not resign and at one point indicated that he did not think that the plaintiff "had anything to do with his promotion" did not eliminate the causal element (see ¶ 16). Also, Wisconsin law protects against interference that causes honoring of a contract to be more expensive or "onerous" for the wronged party, as occurred here when CATS had to "accelerate" a promotion to retain the affected doctor (¶ 36).

The record also adequately supported a finding of the plaintiff's intent to interfere with the other contract. The court of appeals distinguished another case in which a party had simply asserted his legal claim to real estate. "Inviting Johnkoski to abandon his contract with CATS to start a new practice because Wolnak disagreed with or disliked Riveron is not the same thing as asserting a claim to real estate" (¶ 25). Finally, the court rebuffed the plaintiff's assertion that his acts were "privileged": "[A]ssuming without deciding that competition is, in fact, privileged, the privilege does not extend to encouraging the breach of an existing contract" (¶ 29).

The plaintiff raised several additional issues. First, the court held that harmless error occurred when the trial court dismissed the plaintiff's defamation claim based on its misinterpretation of the noncompetition clause. The evidence showed that regardless of CATS's conduct, the plaintiff had himself disclosed the noncompetition clause to a potential employer and had later voluntarily abandoned pursuit of that job (see ¶ 44). Second, the plaintiff did not raise a wage penalty claim pursuant to Wis. Stat. section 103.455 by simply alleging that he had not been "paid according to his contract" (¶ 49). The statute identifies specific prohibited types of acts, which must be alleged (see ¶ 51). Nor does the statute permit punitive damages (see ¶ 52).

Third, the trial court properly exercised its discretion in denying the plaintiff's request for penalty wages and costs pursuant to Wis. Stat. chapter 109. "[J]ust as we concluded a Wis. Stat. § 103.455 claim must be pled with specificity, so too must a Wis. Stat. ch. 109 claim. Such a conclusion is even more strongly supported in this instance, because the chapter refers multiple times to a wage claim. Wolnak did not bring a wage claim, he brought a contract action. While the contact dealt with a dispute over compensation, Wis. Stat. § 109.03(5) establishes a distinct cause of action and enforcement procedure for a wage claim, wholly apart from any contract claims Wolnak might pursue. Additionally, we again have a situation where Wolnak seeks to have penalties assessed on a contract action. Thus, we conclude that merely pleading a contract action based on nonpayment of wages is insufficient to trigger a Wis. Stat. ch. 109 wage claim under notice pleading" (¶ 57).

"More to the point, we are not convinced that CATS's withholding wages was dilatory or otherwise unjust. There appears to have been a legitimate dispute over the terms of Wolnak's compensation following an oral agreement to modify his contract" (¶ 58).

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Criminal Law

Possession of Cocaine with Intent to Deliver - Holding Drugs with Intent to Return Them to Person from Whom Originally Acquired

State v. Pinkard, 2005 WI App 226 (filed 7 Sept. 2005) (ordered published 28 Oct. 2005)

The defendant was convicted of possession of cocaine with intent to deliver, contrary to Wis. Stat. section 961.41(1m)(cm)1r. The issue on appeal was whether a person who is holding drugs for someone else and plans to return the drugs to that other person has the "intent to deliver" required for conviction of the crime. In a decision authored by Judge Kessler, the court of appeals answered in the affirmative.

The term "deliver," as used in this statute, is defined by Wis. Stat. section 961.01(6) as follows: "`[d]eliver' or `delivery', unless the context otherwise requires, means the actual, constructive or attempted transfer from one person to another of a controlled substance or controlled substance analog, whether or not there is any agency relationship." The court concluded that the defendant's intent to transfer the drugs to the person from whom he received them satisfies this definition (see ¶ 10).

Said the court, "[the defendant] cannot escape liability for participating in the drug trade by holding drugs with the purpose of returning them to the person from whom they were originally acquired. Whether [the defendant] had delivered the drugs to the original owner for distribution to buyers, or to a third party for distribution to buyers, the ultimate conduct would have been the same: delivering drugs for use by others, a crime the legislature intended to punish under Wis. Stat. § 961.41(1m)" (¶ 12).

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Criminal Procedure

Hearsay - Confrontation

State v. King, 2005 WI App 224 (filed 27 Sept. 2005) (ordered published 28 Oct. 2005)

A jury convicted the defendant, King, of the substantial battery of S.J. as well as substantial battery and armed robbery of C.T. He was acquitted of other related felonies. C.T. testified at trial. S.J. did not testify at trial but the state introduced her preliminary examination testimony and statements she made to officers. In a postconviction proceeding, the trial court ruled that the defendant's right of confrontation, as the right has recently been construed in Crawford v. Washington, 541 U.S. 36 (2004) and State v. Manuel, 2005 WI 75, had been violated. The court vacated the conviction for the crime involving S.J. but left intact the conviction for the crimes involving C.T.

The court of appeals, in an opinion written by Judge Fine, affirmed. The defendant had argued on appeal that the hearsay evidence of S.J. also violated his right of confrontation with respect to the convictions for the crimes involving C.T. Under Crawford, so-called "testimonial" hearsay may not be introduced against a defendant unless the declarant is unavailable and the defendant had a prior opportunity to cross-examine the declarant.

The court first held that the state had failed to show that S.J. was "unavailable" to testify. "[W]hether a hearsay declarant is constitutionally unavailable `is too important' to be satisfied by going-through-the-motions efforts; rather, the efforts must be adapted to the circumstances and must be unstinting. . . . Not serving [S.J.] with a subpoena when that was possible and when that step was a foreseeable potential condition to her presence at trial was not reasonable, and does not reflect the constitutionally required good-faith effort to secure [the defendant's] right to confront his accuser. Accordingly, the State has not demonstrated that [S.J.] was constitutionally unavailable, and the trial court erred in permitting the jury to hear her preliminary-examination testimony" (¶ 17). The court held that S.J.'s statements to detectives at the hospital were also "testimonial," because they were the product of "structured police questioning" (¶ 18). The court also analyzed the hearsay status of S.J.'s statements to another police officer, a nurse, and a detective at a lineup (see ¶¶ 19-21).

Although the court of appeals concluded that error occurred in the admission of S.J.'s hearsay statement, the court held that the error was harmless beyond a reasonable doubt with respect to the offenses against C.T., especially because the two attacks were separate in time and place, a jury acquitted the defendant of 8 of 11 offenses anyway, and other compelling evidence (physical evidence and his own admissions) linked the defendant to the attack on C.T. (see ¶ 23).

Substitution Requests - Offers to Plead Guilty - Other Acts

State v. Norwood, 2005 WI App 218 (filed 21 Sept. 2005) (ordered published 28 Oct. 2005)

The defendant was convicted at trial of sexually assaulting a child. The court of appeals affirmed in an opinion authored by Judge Brown. The court addressed three claims of error and held as follows.

First, the defendant's request for substitution of the trial judge was properly denied. The issue arose on the day of trial, when the originally assigned judge became ill and a different judge took over the calendar. After hearing the parties on several points and permitting the defendant to withdraw his not guilty by reason of mental disease or defect plea, the sitting judge then asked the defendant if he objected to her presiding over the case. Although the defendant did object, the prosecutor pointed out that the objection came only after the sitting judge had taken action. The sitting judge agreed and denied the defendant's request for substitution. The court of appeals affirmed on this issue, holding that the "preliminary contested matter" rule does not apply to substitutions of judge pursuant to Wis. Stat. section 971.20(5), which concerns "subsequently assigned" judges and requires only that "proceedings' have commenced" (¶ 12).

Second, the trial court erred by admitting into evidence a letter written by the defendant to the court expressing his desire to plead guilty and not go through a trial. The court of appeals held that the letter clearly fell within Wis. Stat. section 904.10, which bars admission in evidence of offers to plead guilty and similar offers and pleas. (Although the trial lawyers unfortunately muddied the record, the court refused to deem the issue "waived" (see ¶¶ 17-19).) "We construe the letter as a whole as an offer to plead and conclude that any incriminating statements in the letter were integrally intertwined with this offer. We cannot feasibly separate a defendant's expressed willingness to enter a plea agreement from his or her reasons for wanting to do so" (¶ 20). The court concluded, however, that the error was harmless, because other evidence that was properly introduced, including the defendant's "confession" on the witness stand, would alone "have sealed [the defendant's] fate" (¶ 23).

Third, the trial court properly admitted other acts evidence, although the evidence was presented before the jury heard any evidence about the charged assault. "Norwood cites no authority for the proposition that otherwise admissible evidence is rendered unfairly prejudicial by the timing of its presentation, and we know of none. Further, the order of presentation did not obfuscate the identity of the victim" (¶ 25).

Identifications - Suggestiveness - No Police Involvement

State v. Hibl, 2005 WI App 228 (filed 28 Sept. 2005) (ordered published 28 Oct. 2005)

The defendant, Hibl, was charged with causing great bodily harm to another by reckless driving. A witness saw some of the events that occurred before and after the collision but could only describe the driver of the van in question as a "white male." The witness was never shown photos or asked to view a lineup. On the day of trial, however, he positively identified Hibl in the hallway outside the courtroom and later, in court, identified Hibl as the van's driver. When the defense moved for a mistrial, the state did not object and the judge granted the motion. The defense later moved to suppress the witness's identifications, and the trial court granted the motion.

The state appealed the suppression order. The court of appeals, in an opinion written by Judge Snyder, affirmed. The court of appeals applied State v. Dubose, 2005 WI 126, in which the supreme court "provided a substantial history of the evolution of the relevant law and articulated the new legal standard to be applied in matters of pretrial witness identification" (¶ 10). The Dubose court, "departing" from precedent, held "that evidence obtained from an out-of-court showup is inherently suggestive and will not be admissible unless, based on the totality of the circumstances, the procedure was necessary. A showup will not be necessary, however, unless the police lacked probable cause to make an arrest or, as a result of other exigent circumstances, could not have conducted a lineup or photo array" (id., quoting Dubose, 2005 WI 126, ¶ 33). The court of appeals found that the hallway confrontation was "accidental"; hence, a Dubose "necessity" analysis was not required (see ¶ 12).

The court said that even in the absence of a "police-arranged" confrontation, however, concerns remained about the likelihood of misidentification under Dubose (see ¶ 16). The trial judge properly considered the "impermissibly suggestive" encounter between the witness and the defendant in the courtroom hallway in light of the witness's limited opportunity on the day of the offense to observe the face of the van driver, who was in a vehicle some 50 feet away that was traveling at 35 to 40 miles per hour toward the witness. Moreover, the witness had been unable on the day of the offense to provide any descriptive details about the appearance of the van driver (see id.). In sum, the trial court properly exercised its discretion in excluding the witness's identification (see ¶ 17).

Motion to Reconsider Trial Court's Ruling Granting Leave to Withdraw No Contest Plea - Timeliness of Motion

State v. Williams, 2005 WI App 221 (filed 27 Sept. 2005) (ordered published 28 Oct. 2005)

On Aug. 11, 2003 the defendant entered a plea of no contest to a felony offense, and he was sentenced on Oct. 30, 2003. The defendant later filed a motion seeking to withdraw his plea, and the court granted the motion on April 6, 2004. On May 25, 2004 the state filed a motion in the circuit court asking the court to reconsider its April 6 order. The circuit court granted the motion for reconsideration, and this appeal to the court of appeals followed.

The defendant argued that the circuit court should not have granted the state's motion for reconsideration. The defendant said that because the state filed the motion five days after the 45-day deadline for filing a notice of appeal, the state waived its right to challenge the circuit court's order granting the defendant's motion to withdraw his plea. In a decision authored by Judge Wedemeyer, the court of appeals concluded that the circuit court did not err in granting the state's motion seeking reconsideration.

The court of appeals said that "[t]he resolution of this appeal rests with whether the April 6th order was a final order. If the plea withdrawal order was final, the State had an obligation to file a notice of appeal within the forty-five-day time period. Failure to do so would result in waiver of its right to challenge the trial court's ruling. If the plea withdrawal order was not a final order, the State was not obligated to file an appeal and its motion to reconsider was timely" (¶ 11).

Ordinarily, an order is "final" when it disposes of the entire matter in litigation. See Wis. Stat. § 808.03(1). Using this definition, the court concluded that the April 6 order was not a final order. "An order granting a plea withdrawal is not final because it plainly anticipates further proceedings in the criminal case either a trial or a guilty or no-contest plea. The April 6th order did not dispose of the entire matter in litigation. The order itself noticed a status conference for [a future date]. Clearly, such order cannot be construed as a final order" (¶ 15).

Accordingly, the state was not obligated to file an appeal within the 45-day time period and its failure to do so did not constitute waiver. Because a circuit court has the inherent authority to reconsider any of its non-final rulings before entry of the final order or judgment in the case, the circuit court in this case did not err in entertaining the state's motion for reconsideration (see ¶ 17).

Sentencing - Restitution - Lost Profits

State v. Johnson, 2005 WI App 201 (filed 24 Aug. 2005) (ordered published 20 Sept. 2005)

The defendant was convicted of burglarizing the offices of Puestow & Associates and of stealing computers and related equipment and accessories. The circuit court ordered him to pay a substantial restitution amount to Puestow for lost profits associated with its prospective sale of computer software and consulting services to Apio. The circuit court noted that the defendant's criminal activity precluded Puestow from conducting an important product demonstration, and that the evidence revealed with reasonable certainty that the sale of software and services to Apio would have occurred but for the defendant's criminal activity.

On appeal the defendant challenged the restitution award. In a decision authored by Judge Anderson, the court of appeals upheld the award. The court of appeals concluded that lost profits, if shown with reasonable certainty, are an appropriate item of restitution under Wis. Stat. section 973.20(5)(a), which permits restitution for "all special damages" that could be recovered in any type of "civil action." "As a general rule in tort actions, there may be recovery for loss of profits if the plaintiff can show with reasonable certainty the anticipation of profit" (¶ 17). In this case the parties recognized that the defendant's criminal conduct could give rise to a civil action based on the torts of conversion and interference with prospective contractual relationships (see ¶ 16).

The court next considered whether the defendant's criminal activity was a substantial factor in causing Puestow to suffer lost profits related to the prospective sale to Apio. "[W]hen the claim for restitution for loss of profits is based on a prospective contractual relationship, the victim must prove with reasonable certainty that the prospective contractual relationship would have accrued absent the defendant's wrongful conduct" (¶ 20) (citations omitted). The court concluded that the evidence in this case established with reasonable certainty that Puestow's sale of software and consulting services to Apio would have occurred but for the defendant's burglary and theft.

Lastly, with regard to the amount of restitution, the court noted that the restitution statute places the burden on the victim to show by a preponderance of the evidence the amount of loss sustained. "The issue of lost profits damages ... should be addressed on a case-by-case basis and they are recoverable where a claimant can present credible comparable evidence or business history and business experience sufficient to allow a fact finder to reasonably ascertain the amount of future lost profits. Here, [Puestow] presented sufficient credible comparable evidence, business history and business experience to permit the trial court's finding of $34,800 in lost profits" (¶ 26) (citation omitted).

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Family Law

Divorce - Parenting Plans - Procedures

Guelig v. Guelig, 2005 WI App 212 (filed 31 Aug. 2005) (ordered published 20 Sept. 2005)

As stated by Judge Brown in the opening sentence of the opinion, "[t]his case presents us with the opportunity to review the proper procedures surrounding the parties' submission of parenting plans where the parents contest placement" (¶ 1). Several principles regarding the submission and consideration of parenting plans can be distilled from this lengthy decision. The statute regulating parenting plans provides in pertinent part as follows: "In an action for ... divorce ... in which legal custody or physical placement is contested, a party seeking sole or joint legal custody or periods of physical placement shall file a parenting plan with the court before any pretrial conference. Except for cause shown, a party required to file a parenting plan under this subsection who does not timely file a parenting plan waives the right to object to the other party's parenting plan." Wis. Stat. § 767.24(1m).

The family court adopted the mother's parenting plan at the scheduling conference, which the father did not attend. The father had not received a copy of the mother's plan, nor did he get any notice that the court would consider the merits of the placement and custody issues at the scheduling conference. The court of appeals concluded that "the [family] court should not have considered placement and custody issues when the father had not yet received a copy of the mother's proposal. Our statutes, as well as due process, contemplate such an exchange" (¶ 1). Further, the father had a right to an adequate opportunity to be heard on the matters of custody and placement before the court made its decision (see ¶¶ 32-33).

The court of appeals further held that the father did not waive his right to object to his wife's proposal by failing to file his own parenting plan before the scheduling conference. The statute quoted above requires submission before any "pretrial conference," and the court of appeals concluded that a scheduling conference is not a pretrial conference. There never was a pretrial conference in this case, and thus the father could not have violated the statute (see ¶¶ 34-40).

The court of appeals reversed and remanded the case to the family court with directions that the family court hold a hearing on the placement and custody issues and consider both parties' proposed parenting plans (the father's plan was submitted after the scheduling conference but otherwise in a timely manner) and all relevant statutory factors. The court of appeals noted that although the family court considered the mother's parenting plan, the record did not show that it did so in light of the proper legal standard - the best interests of the child (see ¶ 47). In deciding to adopt the mother's plan, the family court emphasized the father's uncooperative behavior in the case (see ¶ 48). The court of appeals indicated that "[a]lthough the court may consider one party's uncooperative behavior a salient factor, it must clearly articulate how the parent's recalcitrance bears on the child's best interests" (¶ 1).

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Property

Holdover Tenant - Surrender - Prevailing Party

Vander Wielen v. Van Asten, 2005 WI App 220 (filed 22 Sept. 2005) (ordered published 28 Oct. 2005)

This case concerns a commercial lease. The circuit court dismissed the landlord's claim for unpaid rent and awarded the former tenant nearly $8,000 in attorney fees and costs. The court of appeals, in an opinion written by Judge Deininger, affirmed.

First, the circuit court properly determined that the tenant became a year-to-year holdover tenant after the parties' lease terminated on May 31, 2000 and the landlord accepted the tenant's June rent payment. "The parties' lease was of non-residential property for a term of more than one year, and nothing in the lease or extension agreements disavows the applicability of § 704.25" (¶ 12). The court agreed "with the landlord that, absent contrary provisions in the parties' lease, § 704.25 requires a commercial landlord to choose among three courses of action when a tenant remains in possession of the leased premises after the expiration of a lease: (1) the landlord may commence an action to remove the tenant; (2) the landlord may reach an agreement with the tenant regarding the terms of the tenant's post-expiration occupancy; or (3) if neither of the first two have occurred, the landlord may accept rent from the tenant for the tenant's post-expiration occupancy, thereby creating a holdover tenancy whose duration is determined by the statute, in this case, year-to-year" (¶ 15). Thus, acceptance of the June rent payment created a tenancy terminating one year later on the same terms and conditions as the expired lease.

Second, the circuit court also properly found that the landlord accepted the tenant's surrender of the property in August 2000. The court held that "Wis. Stat. § 704.29(4) does not preclude a court from determining that a landlord, by his or her conduct, clearly evidenced an intent to accept surrendered premises, even if the landlord's conduct includes the re-renting of the premises. We further conclude that the statute also does not prevent a court from determining that a landlord, by his or her actions, clearly evidenced the intent to accept a surrender, even where the landlord has not `expressly agreed to accept a surrender of the premises.' See § 704.29(1). Rather, the statute, as applied here, imposes two requirements. First, whenever a landlord does not, by word or deed, accept the surrender of leased premises following a tenant's removal, the landlord must mitigate damages by attempting to re-rent the premises. Second, if a landlord elects to hold the tenant to the tenancy, the statute provides that the landlord's re-renting the premises to another cannot, standing alone, `constitute an acceptance of surrender of the premises.' See § 704.29(4)" (¶ 25). On this record, "the landlord's actions in dealing exclusively with the successor, proposing a new long-term lease to the successor, accepting higher rent from the successor as called for in the proposed lease, and failing to communicate in any way to the tenant that she deemed him responsible for the tenancy through May 31, 2001, `clearly evidence[d] an intent' to accept the tenant's surrender of the premises" (¶ 27).

Third, under terms of the lease, the tenant was the prevailing party and entitled to attorney fees and costs. The court rejected the landlord's argument that this provision also became null when the lease effectively terminated in August 2000. "Paragraph 20 of the parties' lease, however, is not a one-sided fee-recovery provision in favor of the landlord. It is a reciprocal provision that authorizes attorney fees to be shifted from `the successful party' to the losing party `[i]n any legal proceeding instituted by either party for the enforcement of the terms and provisions of this lease.' That is precisely the nature of the present action. It is a `legal proceeding instituted by' the landlord to enforce `the terms and provisions' of the parties' lease, in which the tenant has become the `successful party.' It makes no difference to the operation of paragraph 20 that the tenant, in order to successfully defend, established that the lease provisions were no longer effective after August of 2000. Under the attorney fee provision in the parties' lease, it is the nature of the plaintiff's claims, not the theory of defense, that determines whether the prevailing party is entitled to recover his or her attorney fees" (¶ 33).

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Torts

OSHA Report - Compensatory Damages - Punitive Damages

Staskal v. Symons Corp., 2005 WI App 216 (filed 1 Sept. 2005) (ordered published 28 Oct. 2005)

A worker who was seriously injured in a construction site accident sued Symons, the manufacturer of the defective concrete forming system, for compensatory and punitive damages. A jury awarded the plaintiff and his family more than $23 million. It found that Symons was 80 percent causally negligent and also found Symons liable on the plaintiff's products liability claim.

The court of appeals, in a decision authored by Judge Vergeront, affirmed. First, the trial court properly excluded from evidence the Occupational Safety and Health Administration (OSHA) report, which Symons offered to cast responsibility on the general contractor, which employed the plaintiff. The OSHA report was proffered as a public record pursuant to Wis. Stat. section 908.03(8). Among other factors, the trial court properly considered certain factual errors made by the investigator along with the lack of any opportunity to cross-examine him. In short, the report was insufficiently trustworthy (see ¶¶ 18-19). Nor was the OSHA report "admissible" under Wis. Stat. section 907.03, contrary to Symons' arguments. Case law clearly holds that section 907.03 is not a hearsay exception; rather, it merely permits experts to base their opinions on certain inadmissible types of evidence (see ¶ 22). The record did not support disclosure of the OSHA report on direct or cross-examination.

Second, the evidence sufficiently supported the jury's award of compensatory damages. According to the record, the trial court stated that "while these amounts may have been greater than the court itself would have awarded, they did not shock the conscience. The court noted the unusual circumstances of Staskal being pinned while conscious under the rubble and the significant pain, fear, and expectancy of death that he experienced, as well as the resulting post-traumatic stress. The court also noted the substantial and permanent physical injuries, the permanent pain, the inability to return to his chosen employment, the testimony that he could no longer do most of the things he had enjoyed doing, and the testimony of an increase in his pain and disability in the future, noting that all of this testimony was uncontested. In the court's view, the jury had sorted through the evidence and deliberated over it, as indicated by the fact that it did not give the higher awards the plaintiffs asked for" (¶ 36). Applying a deferential standard of review, the court of appeals affirmed the compensatory damages. The court said that the damages were not "perverse" (¶ 42) and were supported by the evidence.

Third, punitive damages also were properly awarded. The trial court's instruction comported with prevailing case law on punitive damages. After presenting a lengthy, fact-intensive analysis, the court of appeals concluded that the evidence provided a clear and convincing basis for a reasonable jury to find punitive damages. "A reasonable jury could reach this result by believing that Symons was aware that the two-piece legs it specified were dangerous if used without bracing at the extension lengths and with the loads planned for this project, and by believing that Symons nonetheless deliberately did not inform Kraemer [the general contractor] that bracing on the legs was needed even though the plans did not specify that" (¶ 68).

Symons asked the court of appeals to also address the interrelationship of a defendant's wealth and the existence of liability insurance that covers punitive damages. Case law permits juries to hear evidence of a defendant's wealth (see ¶ 69). The trial court had ruled that it would exclude evidence of the insurance coverage but would reconsider the ruling if Symons argued that a punitive damages award would be financially devastating. The court of appeals noted that the case law is decidedly mixed, but it nevertheless held that Symons waived the claim by not pressing the issue further before the trial court (see ¶ 74).

Finally, the $15 million punitive damages award was not excessive, because Symons' conduct was egregious. "Symons intentionally did not supply Kraemer with information that would inform Kraemer of the need for bracing of the legs and this was done because of a corporate decision that it was easier to sell the system in this way. There is no reasonable dispute on this record that Symons knew that if the two-piece legs failed, serious physical injury could result to Kraemer's employees. The financial vulnerability of the target is not relevant in this case, because the relevant harm and injury is not economic. The conduct was not isolated ...." (¶ 81). Moreover, the punitive damages award did not bear an unreasonable relationship to the compensatory damages and properly accounted for the defendant's wealth (see ¶¶ 83, 85).

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