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    Vol. 78, No. 8, August 2005

    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

    Frivolous Claims - Frivolous Appeals

    Howell v. Denomie, 2005 WI 81 (filed 22 June 2005)

    As a result of litigation concerning a real estate transaction, a circuit court found frivolous the answer and counterclaim of the defendants, the Denomies. The court of appeals, in a summary disposition, affirmed the circuit court and further determined that the defendants' appeal also was frivolous.

    The supreme court, in an opinion written by Justice Roggensack, affirmed the court of appeals. The court's analysis was fact intensive. A "mountain of evidence" supported the circuit court's determination: "Given what the circuit court found the Denomies knew or should have known regarding the transaction, the Denomies' initial position that Howell defrauded them out of ownership in the property and fabricated the mortgage was without any reasonable basis in law or equity" (¶ 14).

    The more significant issue before the court was "whether the court of appeals, on its own motion and without a hearing, can declare an appeal frivolous, as it did here. [The court] also ordered the parties to 'address the procedure by which the court of appeals may determine an appeal is frivolous pursuant to Wis. Stat. § (Rule) 809.25(3)(c)'"

    (¶ 16). The supreme court held that "there should be notice and an opportunity to respond whenever the court of appeals is considering ruling that an appeal is frivolous. We agree with the Appellate Practice Section of the State Bar's position and conclude that in order to determine that an appeal is frivolous, the court of appeals is required to give notice that it is considering the issue. It must also give an opportunity to respond to the issue before a determination is made" (¶ 17).

    More precisely, "[i]n order for parties before the court of appeals to have the proper notice and opportunity to be heard, parties wishing to raise frivolousness must do so by making a separate motion to the court, whereafter the court will give the parties and counsel a chance to be heard. We caution that a statement in a brief that asks that an appeal be held frivolous is insufficient notice to raise this issue. The court of appeals may also raise the issue of a frivolous appeal on its own motion, but it must give notice that it is considering the issue and grant an opportunity for the parties and counsel to be heard before it makes a determination" (¶ 19).

    In this case, the Denomies did not have a proper opportunity to be heard before the court of appeals. But because the supreme court had provided such notice and opportunity to be heard, the court therefore could determine, as it did, that the Denomies' appeal was frivolous.

    Claim Preclusion - Compulsory Counterclaim Rule

    Menard Inc. v. Liteway Lighting Prods., 2005 WI 98 (filed 29 June 2005)

    From 1993 to 1999, Liteway supplied Menard with lighting fixtures for Menard to sell at retail. Menard often "held back" sums of money because some of Liteway's products were allegedly defective. When Menard and Liteway terminated their business relationship in 1999, they disputed the amount of this "credit." Liteway initially sued Menard and obtained a default judgment for unpaid invoices when Menard failed to file its answer on time. Menard then sued Liteway for unjust enrichment and breach of obligations under the Uniform Commercial Code. The circuit court denied Liteway's summary judgment motion, a trial was held, and Menard obtained a judgment against Liteway. The court of appeals reversed on the ground that Liteway's earlier default judgment precluded Menard's subsequent action.

    In a decision authored by Justice Wilcox, the supreme court affirmed. "The issue presented is whether a buyer's claims based on credit for returned goods are barred under the doctrine of claim preclusion and the common-law compulsory counterclaim rule when the seller had previously sued the buyer for breach of contract based on unpaid invoices, a default judgment was entered due to the buyer's failure to timely file an answer, the parties had terminated their business relationship prior to the instigation of the first suit, the defective goods were returned prior to the time the first lawsuit was filed, and the issue of credit for the defective goods was the basis of the entire dispute between the parties that led to the filing of the initial lawsuit" (¶ 20).

    The court held "that under these facts, the doctrine of claim preclusion and the common-law compulsory counterclaim rule bar any subsequent suit by the buyer for credit for the returned goods" (¶ 20). The court extensively reviewed the law on counterclaims and claim preclusion. "Claim preclusion, in addition to precluding a plaintiff in a subsequent action from asserting claims that were litigated or could have been litigated in a prior action, may operate to preclude a plaintiff from asserting claims in a subsequent action that the party failed to assert in a previous action in which it was a defendant" (¶ 27).

    "The common-law compulsory counterclaim rule creates an exception to the permissive counterclaim statute and bars a subsequent action by a party who was a defendant in a previous suit if 'a favorable judgment in the second action would nullify the judgment in the original action or impair rights established in the initial action.' ... [F]or the common-law compulsory counterclaim rule to apply, a court must conclude that all the elements of claim preclusion are present and that a verdict favorable to the plaintiff in the second suit would undermine the judgment in the first suit or impair the established legal rights of the plaintiff in the initial action" (¶ 28).

    As to the first element of claim preclusion, the supreme court held that there was an identity of parties in both actions (see ¶ 29). More contentious was the second element: whether there was an "identity of claims" between the actions. Applying a "transactional approach" to the record, the court held there was. "Therefore, it is clear that all the facts giving rise to Menard's suit were in existence at the time Liteway filed its original action. More importantly, it is obvious that these facts formed the foundation of both lawsuits. Liteway sold goods to Menard on credit. Menard returned some of the goods as allegedly defective and took a 'credit' for these and future customer returns. Liteway demanded payment on the open accounts. The parties stopped doing business and Menard did not pay the sum demanded by Liteway for the invoices because it disputed the amount of 'credit' to which it was entitled for the returned goods. The claims Menard asserts in its second suit are not based on a separate series of underlying events; rather, they are defenses and counterclaims to Liteway's original claims and are premised on the same common nucleus of operative facts" (¶ 38). "Despite the different substantive theories asserted by Menard, its position has always been that Liteway was not entitled to as much money as it claimed because Menard was entitled to an offset for defective products that were returned" (¶ 39). (The supreme court explicitly rejected the court of appeals' conclusion that shipment of goods followed by acceptance or return should be treated as a "unit" (see ¶ 40).)

    The final element concerned "whether a judgment in favor of Menard in its suit would undermine Liteway's judgment or impair the rights of Liteway that were established in the previous action" (¶ 46). Emphasizing that "Wisconsin, by statute, is a permissive counterclaim state," the court held that the "narrow exception" for compulsory counterclaims "applies only where a favorable verdict to the plaintiff in the second suit would undermine the judgment in the first suit or impair legal rights established in the first suit"

    (¶ 47). A fact-intensive analysis established that the compulsory counterclaim rule applied.

    Justice Crooks, joined by Justice Butler, dissented on the ground that "there is no identity of claims or causes of action between the first and second suits involving these parties, and Menard's claim here does not come within the narrow exception to Wisconsin's permissive counterclaim statute" (¶ 57).

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    Criminal Law

    Homicide by Intoxicated Use of Vehicle - Jury Instructions - Constitutionality of Wis. Stat. section 940.09

    State v. Fonte, 2005 WI 77 (filed 15 June 2005)

    The defendant was convicted of homicide by intoxicated use of a vehicle under Wis. Stat. section 940.09 after a boati ng accident resulted in the death of one of his friends. The court of appeals reversed the conviction based on its conclusion that the jury instruction regarding chemical tests for intoxication was misleading. In a unanimous decision authored by Justice Roggensack, the supreme court reversed.

    During the investigation of the accident, the defendant submitted to a breath test. The breath sample was obtained more than three hours after the accident. Wis. Stat. section 885.235(3) provides: "If the sample of breath, blood or urine was not taken within 3 hours after the event to be proved, evidence of the amount of alcohol in the person's blood or breath as shown by the chemical analysis is admissible only if expert testimony establishes its probative value and may be given prima facie effect only if the effect is established by expert testimony." At trial the court instructed the jury that, if it found beyond a reasonable doubt that at the time of operation of the vehicle, there was 0.1 percent or more by weight of alcohol in the defendant's blood or 0.1 grams or more of alcohol in 210 liters of the defendant's breath, the jury could find from that fact alone that the defendant was under the influence of an intoxicant at the time of the alleged operation of the vehicle, but that it was not required to do so.

    The defendant argued that this instruction was not appropriate in a case involving a breath test conducted more than three hours after the alleged operation of the vehicle. The supreme court disagreed. It concluded that because the state's expert testified to a reasonable degree of certainty as to what the defendant's blood alcohol level was at the time of the accident, the circuit court did not err in giving the objected-to instruction (see ¶ 18).

    The court also concluded the following: there was sufficient evidence in the record that the defendant was operating the boat at the time of the accident to support the conviction; the defendant was not denied effective assistance of counsel; and the circuit court's decision to deny a defense motion for change of venue due to pretrial publicity was appropriate (see ¶ 39).

    Lastly, the court considered the defendant's argument that the homicide by intoxicated use of a vehicle statute unconstitutionally relieves the state of the burden of proving beyond a reasonable doubt a causal connection between a defendant's intoxication and the death by requiring the state to prove only that operation by an intoxicated driver caused the death. The court previously rejected this precise argument in State v. Caibaiosai, 122 Wis. 2d 587, 363 N.W.2d 574 (1985). In this decision it reaffirmed Caibaiosai.

    Justice Crooks did not participate in this case.

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    Criminal Procedure / Criminal Evidence

    Hearsay - Confrontation

    State v. Manuel, 2005 WI 75 (filed 10 June 2005)

    A jury convicted Manuel of attempted first-degree murder and related offenses. The victim was shot in the neck as he sat in his car speaking with a fellow gang member, Stamps. Several days later Stamps made several statements to his girlfriend, Rhodes, that incriminated Manuel by naming him as the shooter. Rhodes later related the statements to police. At Manuel's trial, Stamps refused to testify and asserted the privilege against self-incrimination. When Rhodes was called to the stand, she asserted that she no longer recalled what she may have said to police or what, if anything, Stamps had said about the shooting (see ¶ 13). The trial court nonetheless admitted Stamps' alleged statements (as related by police) into evidence. Manuel was found guilty, and the court of appeals affirmed the conviction.

    The supreme court, in an opinion written by Justice Butler, affirmed the court of appeals. The court's opinion literally draws the map for how hearsay may be used by the state in criminal trials after Crawford v. Washington, 541 U.S. 36 (2004). The first issue was whether the hearsay was properly admitted under the rules of evidence. The court held that Stamps' statements to Rhodes fell within the exception under Wis. Stat. section 908.045(2) for statements of recent perception. They were not made in response to a person investigating the claim, and Stamps did not act in bad faith or with a litigation-related motive (see ¶¶ 27-34).

    The court next addressed the critical confrontation issue. The Crawford court held that so-called "testimonial" hearsay may be admitted against a defendant only if the defendant has had a prior opportunity to cross-examine an unavailable declarant. The Crawford analysis turns on whether the hearsay in question is "testimonial," yet the U.S. Supreme Court expressly declined to offer any precise definition of the term "testimonial."

    Observing that Crawford contains "three various formulations" of testimonial hearsay (¶ 37), the Manuel court "save[d] for another day whether any of these formulations, or for that matter different formulations, surpass all others in defending the right to confrontation. For now, at a minimum, we adopt all three of Crawford's formulations" (¶ 39). Justice Butler next applied all three Crawford formulations and concluded that Stamps' statements were not "testimonial" under any of them. Of particular interest was the third category, statements "made under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial" (¶ 42). The court reviewed case law from across the country that struggled to give meaning to this formulation. Of central importance to the court was the fact that "Stamps made the statements to Rhodes, his girlfriend, during what appears to be a spontaneous, private conversation that occurred shortly after the shooting" (¶ 53).

    The court next held that even nontestimonial hearsay is subject to the confrontation protections afforded by Ohio v. Roberts, 448 U.S. 56 (1980). "While the Crawford Court abrogated Roberts by highlighting its shortcomings and failures, the Court declined to overrule Roberts and expressly stated that the states were free to continue using Roberts when dealing with nontestimonial hearsay" (¶ 60). On this record, the court found that Stamps' hearsay statements satisfied both prongs of the Roberts test for admissibility: the declarant (Stamps) was "unavailable" to testify and his statements evinced sufficient indicia of reliability even though the particular hearsay exception (recent perception) was not "firmly rooted" for confrontation purposes (see ¶¶ 62-70).

    The final issue concerned whether Manuel's trial counsel was ineffective for failing to attempt to impeach Stamps with evidence of his four prior convictions. (Hearsay declarants may be impeached like any witness.) The court held that Manuel was not prejudiced by this omission, as Stamps' credibility was impeached by other evidence and "overwhelming evidence" supported the verdict (see ¶¶ 71-75).

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    Criminal Procedure

    Collateral Attack on Prior Conviction - Procedures for Litigating Whether Defendant Validly Waived Counsel in Prior Proceeding

    State v. Ernst, 2005 WI 107 (filed 7 July 2005)

    This case involved a collateral attack on a prior conviction on the basis that the defendant did not validly waive counsel in the prior proceeding. The defendant, Ernst, is subject to a prosecution for operating a vehicle while intoxicated (OWI), in which the state seeks enhanced penalties on the basis of a prior OWI conviction that resulted from a guilty plea entered while Ernst was not represented by counsel.

    The first question addressed in the majority opinion, authored by Justice Crooks, was whether the waiver-of-counsel requirements the court imposed in State v. Klessig, 211 Wis. 2d 194, 564 N.W.2d 716 (1997), survive Iowa v. Tovar, 541 U.S. 77 (2004). In Klessig the Wisconsin Supreme Court mandated the use of a colloquy in every case in which a defendant seeks to proceed pro se, in order to establish a knowing and voluntary waiver of counsel. "To prove such a valid waiver of counsel, the circuit court must conduct a colloquy designed to ensure that the defendant: (1) made a deliberate choice to proceed without counsel, (2) was aware of the difficulties and disadvantages of self-representation, (3) was aware of the seriousness of the charge or charges against him, and (4) was aware of the general range of penalties that could have been imposed on him. If the circuit court fails to conduct such a colloquy, a reviewing court may not find, based on the record, that there was a valid waiver of counsel" (¶ 14, quoting Klessig).

    In Tovar the U.S. Supreme Court held that the Sixth Amendment requirements for a valid waiver of counsel are satisfied "when the trial court informs the accused of the nature of the charges against him, of his right to be counseled regarding his plea, and of the range of allowable punishments attendant upon the entry of a guilty plea" (¶ 15, quoting Tovar). The Wisconsin Supreme Court concluded that the Klessig requirements are not based on the Sixth Amendment and thus do not conflict with Tovar. "We conclude that the Klessig colloquy requirement was and is a valid use of the court's superintending and administrative authority ... and that such a rule does not conflict in any way with the United States Supreme Court's decision in Tovar, but rather receives endorsement from the Supreme Court's language in that decision" (¶ 21).

    Having reaffirmed the procedures mandated in Klessig for waivers of counsel, the court issued several additional holdings regarding collateral attacks on prior convictions when the claim is that those convictions occurred when the unrepresented defendant had not validly waived counsel: "Second, we hold that an alleged violation of the requirements of Klessig can form the basis of a collateral attack, as long as the defendant makes a prima facie showing [by affidavit (see ¶ 27)], pointing to facts that demonstrate that he or she did not knowingly, intelligently, and voluntarily waive his or her constitutional right to counsel. Third, we conclude that when the defendant successfully makes a prima facie showing, the burden to prove [by clear and convincing evidence (see ¶ 27 n.6)] that the defendant validly waived his or her right to counsel shifts to the State (State of Wisconsin). Fourth, we hold that the State may call and elicit testimony from the defendant at an evidentiary hearing in an attempt to meet its burden and, in turn, the defendant may not raise his or her Fifth Amendment privilege against testifying. Finally, we conclude that the defendant's refusal to testify under these circumstances allows a circuit court reasonably to infer that the State has satisfied its burden of showing a knowing, intelligent, and voluntary waiver of the right to counsel" (¶ 2).

    The supreme court reversed the circuit court's order and remanded the case for further proceedings consistent with its opinion.

    Chief Justice Abrahamson filed a concurring opinion. Justice Prosser filed a concurring opinion. Justice Wilcox filed an opinion concurring in part and dissenting in part.

    Right to Counsel - New Trial - Harrison Hearing

    State v. Anson, 2005 WI 96 (filed 29 June 2005)

    In State v. Anson, 2002 WI App 270 (Anson I), the court of appeals found that the defendant was interrogated by police in violation of his Sixth Amendment right to counsel. It then remanded the matter for an evidentiary hearing to determine whether the state's use of the unlawfully obtained statement "induced" Anson to testify at his trial. The circuit court determined that any error was harmless. In State v. Anson, 2004 WI App 155 (Anson II) (this case), the court of appeals reversed the circuit court's decision. The court of appeals relied on its independent review of the record and its conclusion that the unlawfully obtained statement had induced Anson's testimony.

    The supreme court, in an opinion written by Justice Wilcox, affirmed the court of appeals. The case involves a highly technical issue of postconviction criminal procedure. When a so-called "Harrison hearing" is conducted to determine whether the unlawful conduct by the state induced the defendant's testimony, the "hearing is a paper review during which a circuit court makes findings of historical fact based on the record. The circuit court should make findings of historical fact based on the entire record. While a circuit court may make credibility determinations based on material in the record when making its historical factual findings, it may not rely on its personal knowledge of events not appearing in the record. The circuit court thus may state that it found a witness' testimony at trial not credible or implausible in light of other testimony and evidence presented. However, the circuit court may not state, for example, its opinion [that] the witness was being intimidated by the presence of several well-known gang members in the courtroom, if the presence and behavior of these individuals was not documented in the record. Once a circuit court has made the requisite findings of historical fact, it must determine, as a matter of law, whether the State proved beyond a reasonable doubt that its prior constitutional violation did not impel the defendant to testify under the standards set forth in Harrison. A Harrison analysis is a two-part inquiry. First, the circuit court must consider whether the defendant testified 'in order to overcome the impact of [statements] illegally obtained and hence improperly introduced[.]' Second, even if the court concludes that the defendant would have taken the stand, it must determine whether the defendant would have repeated the damaging testimonial admissions 'if the prosecutor had not already spread the petitioner's confessions before the jury'" (¶¶ 13-14) (citation omitted).

    The court held that the state failed to prove beyond a reasonable doubt that Anson did not take the stand "'in order to overcome the impact of ... [the] illegally obtained and ... improperly introduced [statement].'" Nor did the State dispel the "'natural inference [] that no testimonial admission so damaging would have been made if the prosecutor had not already spread [Anson's] confession [] before the jury'" (¶ 15) (citation omitted) (alterations in original).

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    Environmental Law

    New Power Plants - Public Service Commission Certificate of Public Convenience and Necessity to Wisconsin Electric Corporation Upheld

    Clean Wisconsin Inc. v. Public Serv. Comm'n of Wis., 2005 WI 93 (filed 28 June 2005)

    This appeal involved a consolidation of five separate actions seeking judicial review of a final decision and order of the Public Service Commission of Wisconsin (PSC) in which the PSC issued a certificate of public convenience and necessity (CPCN) to the Wisconsin Electric Corp. (WEC) for the construction of two large super-critical, coal-fired electric power plants on the shore of Lake Michigan in the city of Oak Creek.

    The circuit court vacated the PSC's order and remanded for further proceedings, concluding that the PSC erred in determining that the WEC's application was complete and that the PSC erred in commencing the CPCN approval process based on that application. Additionally, the circuit court concluded that the PSC erroneously issued its order because the PSC did not comply with several statutes that govern the granting of CPCNs. Finally, the circuit court vacated the PSC's modification of a mitigation payment agreement between the city of Oak Creek and the WEC. The PSC had ordered the WEC to reduce the amount of its mitigation payment to Oak Creek, the host municipality, in light of increased shared revenue payments that were available to the city under 2003 Wis. Act 31.

    The case was before the supreme court on bypass from the court of appeals. In a majority decision authored by Justices Wilcox, Prosser, Roggensack, and Butler, the supreme court reversed the decision of the circuit court. In a 142-page decision complete with a table of contents and a glossary of terms, it issued the following holdings:

    "First, we uphold the PSC's determination that WEC's application was 'complete.' In reaching this conclusion, we hold: that the PSC's determination of completeness is judicially reviewable; that the PSC reasonably concluded that WEC's application contained two distinct site alternatives; that WEC's application contained all necessary information relating to DNR permits; and that WEC's application contained all necessary information relating to transmission line agreements" (¶ 32).

    "Second, we conclude that the PSC's approval of WEC's CPCN application was not contrary to law or unreasonable. When it approves an application for a power-generating facility like the one WEC proposed, the PSC must interpret, harmonize, and apply the provisions of Wisconsin's Energy Priority Law (Wis. Stat. § 1.12(4)), the Plant Siting Law (Wis. Stat. § 196.491(3)(d)), and the Wisconsin Environmental Policy Act (Wis. Stat. § 1.11). Applying a deferential standard of review, we find that the PSC reasonably performed all these tasks in issuing the CPCN. We also conclude that the PSC did not exceed its authority in conditionally issuing the CPCN" (¶ 33).

    "Third, we conclude the PSC did not exceed its authority or act irrationally when it reduced the mitigation payments from WEC to the City of Oak Creek, as we conclude this decision was a proper exercise of the PSC's ratemaking authority" (¶ 34).

    Justice Butler filed a concurring opinion but joined the decision and mandate of the court. Justice Bradley filed a dissenting opinion that was joined by Chief Justice Abrahamson. Justice Crooks did not participate.

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    Reducing Clauses - Underinsured Motorist Policies - Relief from Judgment

    Sukala v. Heritage Mut. Ins. Co., 2005 WI 83 (filed 22 June 2005)

    This appeal addresses the issue of a party's entitlement to relief from a judgment or order because of a change in law. Thus, its procedural context is critical. In litigation stemming from a 1996 auto accident, Sukala sought to recover from two underinsured motorist (UIM) policies issued by his insurer. The policies had limits of $250,000 each and included reducing clauses that lowered the limits for payments received from liability insurance and worker's compensation benefits. Sukala had already received $100,000 from the tortfeasor's liability carrier and about $800,000 in worker's compensation benefits.

    Sukala challenged the legality of the reducing clauses, but the circuit court upheld them and the court of appeals affirmed. The supreme court denied Sukala's petition for review in 2000 (Sukala I) but seven months later granted review in another case that raised similar issues, Badger Mutual Insurance Co. v. Schmitz, 2002 WI 98. While Schmitz was pending, Sukala settled with his insurer, and pursuant to stipulation, the case was dismissed in July 2001. After the supreme court decided Schmitz, Sukala moved under Wis. Stat. section 806.07(1)(h) for relief from all judgments, orders, releases, and stipulations from his case. The circuit court denied the motion, but the court of appeals reversed.

    The supreme court, in a decision authored by Justice Roggensack, reversed the court of appeals. Section 806.07(1)(h) "permits reopening of judgments based on subsequent changes in the law only in very limited circumstances, and only if the motion is made within a reasonable time"

    (¶ 9). "Unique and extraordinary circumstances are those where 'the sanctity of the final judgment is outweighed by the incessant command of the court's conscience that justice be done in light of all the facts.' Courts should not interpret paragraph (1)(h) so broadly as to erode the concept of finality, nor should courts interpret it so narrowly that truly deserving claimants are denied relief. In construing § 806.07(1)(h), courts seek to 'achieve a balance between the competing values of finality and fairness in the resolution of a dispute.' The party seeking relief bears the burden to prove that the requisite conditions exist" (¶ 12).

    The supreme court held that the circuit court properly exercised its discretion in denying Sukala's motion. Although Schmitz discussed and criticized Sukala I, the former did not overrule the latter. Nor did the criticism "result in unique or extraordinary facts that are necessary to grant relief" (¶ 18). "The Sukalas are not unique 'victims of circumstances' ... but rather, the Sukalas are similar to many parties who are not entitled to relitigate their claims through Wis. Stat. § 806.07(1)(h) due to our consideration of a similar issue" (¶ 20).

    Justice Wilcox, joined by Justice Bradley, concurred in a separate opinion that emphasized "that absent the most unique set of circumstances, 'a change in the judicial view of an established rule of law is not an extraordinary circumstance which justifies relief from a final judgment'" (¶ 24).

    Settlements - Underinsured Motorist Policies - "Consent-or-Substitute"

    Pitts v. Knueppel, 2005 WI 95 (filed 29 June 2005)

    Pitts was injured in a car accident. She had $250,000 in underinsured motorist (UIM) coverage issued by Sentry Insurance; the other driver had liability coverage of $100,000. Shortly before trial, the other driver's liability carrier tendered its $100,000 policy limits. When notified of the tender, Sentry elected to substitute its own funds in order to preserve its subrogation rights. The other driver's estate later offered to pay Pitts $40,000 in return for a release. Sentry objected and claimed that it was not required to consent or substitute its own funds under the contract or existing case law. The circuit court agreed with Sentry, and the court of appeals certified the appeal to the supreme court.

    The supreme court, in an opinion written by Justice Prosser, reversed the circuit court. "The issue again is whether an underinsured motorist (UIM) insurer has an obligation to consent to, or substitute its funds for, a proposed settlement between its insured and the tortfeasor, where the tortfeasor's insurer has already settled for its policy limit and the tortfeasor is offering an additional settlement payment in exchange for a full release" (¶ 12). The "starting point" was Vogt v. Schroeder, 129 Wis. 2d 3, 383 N.W.2d 876 (1986), in which the court "confirm[ed] that an underinsurer does have a right to subrogation as long as it substitutes its funds for those proffered by the tortfeasor's insurer. However, if the underinsurer chooses simply to consent to the settlement, it forfeits its right to subrogation" (¶ 35).

    The court next addressed the "stylized dance between the underinsurer and its insured" brought on by the underinsurer's conflicting interests in minimizing its insured's damages "while it is negotiating with its insured" and maximizing those same damages should it pursue payment from the tortfeasor (¶¶ 41-42). Sentry had asked the trial court to adjudicate Pitts' damages so that all three parties (Sentry, the tortfeasor, and the Pittses) would have a "rock-solid number from which to negotiate," but this approach was foreclosed by Vogt. And although Vogt involved a single settlement, its reasoning applied with full force to this case's dual settlement, which had the same effect - "the full release of both the tortfeasor and the tortfeasor's insurer" (¶ 49).

    "In summary, we believe that the procedure prescribed in Vogt to govern allocation of risk has equal applicability here. When the subrogated underinsurer substitutes its own funds for the settlement funds, it gains the right to proceed against the party or parties that would have been fully released by the settlement agreement. Our continued endorsement of the prescribed Vogt procedure will afford a higher degree of certainty to the settlement process in underinsurance claims. Therefore, we hold that an UIM insurer has an obligation to consent to, or substitute its own funds for, a proposed settlement between its insured and the tortfeasor, where the tortfeasor's insurer has already settled for its policy limit and the tortfeasor is offering an additional settlement payment. This obligation is not triggered, however, if the insured has failed to satisfy its contractual obligation to provide information to the underinsurer to assist the underinsurer in determining damages" (¶¶ 58-59).

    Justice Wilcox did not participate in this case.

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    Juvenile Law

    Delinquency Proceedings - Personal Jurisdiction

    State v. Aufderhaar, 2005 WI 108 (filed 7 July 2005)

    In this case the defendant contended that the juvenile court, which held a waiver hearing and waived him into adult criminal court, failed to follow the statutory requirements for service of process in juvenile cases and that therefore neither the juvenile court nor the adult court had personal jurisdiction over him. In a unanimous decision authored by Justice Roggensack, the supreme court concluded that the failure to follow the statutory requirements for service defeated the state's assertion of personal jurisdiction and requires the circuit court to dismiss the criminal charges without prejudice and the juvenile court to vacate the waiver order.

    Wis. Stat. section 938.27(3)(a)1. requires a circuit court to "notify, under s. 938.273, the juvenile, any parent, guardian and legal custodian of the juvenile ... of all hearings involving the juvenile under this subchapter, except hearings on motions for which notice need only be provided to the juvenile and his or her counsel." The parties agreed that section 938.27(3)(a)1. plainly requires service of a summons or notice on both the defendant and his parents and that section 938.273(1) describes how such service is to be accomplished. The latter statute describes three ways in which statutorily sufficient notice may be provided: "(1) by mailing a summons or notice for appearance in regard to the delinquency petition and the juvenile and any parent appear; (2) by personal service on the juvenile and any parent; or (3) if the court is satisfied that it is impracticable to serve the summons or notice personally, by certified mail addressed to the last known addresses of the persons to be served" (¶ 17).

    In this case the defendant did not appear at his initial hearing. Thus the statute required the juvenile court to grant a continuance and to order personal service or service via certified mail. The juvenile court did none of these things, but instead ordered a capias under section 938.28. "This was insufficient to cause personal jurisdiction to attach" (¶ 19). "[U]nless the defect is waived by appearance, compliance with statutory provisions regarding service of process is required before a juvenile court has personal jurisdiction" (¶ 27). The court rejected the state's argument that personal jurisdiction attaches simply by the filing of a delinquency petition (see ¶¶ 23-26). It also noted that "a juvenile's actual knowledge of the pendency of the action is not equivalent to service" (¶ 27).

    With regard to the appropriate remedy in this case, the court concluded that "because personal jurisdiction never attached, the juvenile court could not waive [the defendant] into adult court. Therefore, the waiver order was ineffective, and we reverse the court of appeals['] decision affirming the circuit court's denial of [the defendant's] motion to dismiss the criminal action in adult court. However, we do so without prejudice. Additionally, because the juvenile proceeding commenced before [the defendant] turned seventeen years old ... this proceeding should be returned to the point at which the jurisdictional defect occurred. Thereafter, the juvenile court can determine whether it will attempt service sufficient to satisfy Wis. Stat. § 938.273(1). If it does obtain sufficient service to accord personal jurisdiction over [the defendant], it may file yet another waiver petition to transfer the matter into adult court. Or in the alternative, the court may dismiss the delinquency petition. We leave that decision to the judgment of the juvenile court" (¶ 28).

    Delinquency - Expiration of Dispositional Orders - Temporary Extension of Orders

    State v. Michael S., 2005 WI 82 (filed 22 June 2005)

    The issue before the supreme court in this case was whether a circuit court may, pursuant to Wis. Stat. section 938.365(6), extend a juvenile's one-year dispositional order temporarily for 30 days if the 30-day extension order is entered after the one-year dispositional order has expired. The statute provides that if a request to extend a dispositional order is made before termination of the order, but the circuit court is unable to conduct a hearing on the request before the order's termination date, the circuit court may extend the dispositional order for not more than 30 days. In this case the state requested an extension of the dispositional order before its termination. The circuit court was unable to conduct a hearing before the termination date of the order. The court did not, however, extend the order before its termination.

    In a majority decision authored by Chief Justice Abrahamson, the supreme court held that "after a juvenile's one-year dispositional order expires, a circuit court may not grant a 30-day temporary extension of the order under Wis. Stat. § 938.365(6). Further, consistent with caselaw, the expiration of the one-year dispositional order cannot be waived. Because no 30-day temporary extension or new dispositional order was granted prior to the expiration of the one-year dispositional order, the circuit court could not act with respect to [the respondent juvenile] once the one-year dispositional order expired" (¶ 2).

    The state argued that the circuit court can extend a dispositional order by implication, by inference, or nunc pro tunc. The supreme court disagreed. "A circuit court must follow the statutory procedure for extending an order. The statute does not allow for an extension by implication, by inference, or after the fact" (¶ 40, citing Wis. Stat. § 938.365(1m)).

    The court addressed the state's reliance on a new provision in the Juvenile Justice Code (Wis. Stat. § 938.315(3)), on which the state relied to argue that the juvenile's failure to object to the delay waived the time limit. Section 938.315(3) provides that "[f]ailure to comply with any time limit specified in this chapter does not deprive the court of personal or subject matter jurisdiction or of competency to exercise that jurisdiction. Failure to object to a period of delay or a continuance waives the time limit that is the subject of the period of delay or continuance." The court concluded that section 938.315(3) does not apply in the present case to extend the one-year dispositional order. The court said, "the expiration date of a dispositional order is not a 'time limit' contemplated in Wis. Stat. § 938.315(3)" (¶ 61).

    Justice Roggensack filed a dissenting opinion that was joined by Justices Wilcox and Prosser.

    Termination of Parental Rights - Failure to Comply with Statutory Time Limits - Loss of Competency - Waiver

    Sheboygan County Dep't of Social Servs. v. Matthew S., 2005 WI 84 (filed 22 June 2005)

    In this termination of parental rights case, the petitioner (the mother) argued that the circuit court lost competency to proceed because it violated the mandatory statutory time limitation set forth in Wis. Stat. section 48.422(2), which provides that "[i]f the petition is contested the court shall set a date for a fact-finding hearing to be held within 45 days of the hearing on the petition, unless all of the necessary parties agree to commence with the hearing on the merits immediately."

    The issue before the supreme court was whether a competency challenge based on a violation of this statutory time limitation is waived if not first made before the circuit court. In a majority decision authored by Justice Crooks, the court concluded that "such a competency challenge based on the violation of the statutory time limitation of Wis. Stat. § 48.422(2) cannot be waived, even though it was not raised in the circuit court. The court of appeals erred in extending the holding in Village of Trempealeau v. Mikrut, 2004 WI 79, 273 Wis. 2d 76, 681 N.W.2d 190, to violations of such a mandatory statutory time limitation under Wis. Stat. ch. 48. The circuit court did not hold the fact-finding hearing within the time limits established by § 48.422(2), and never granted a proper extension or continuance pursuant to Wis. Stat. §§ 48.315(1)(a) and (2), and thus it lost competency to proceed before it ordered the termination of [the mother's] parental rights" (¶ 2).

    The court also addressed the impact of recently enacted Wis. Stat. section 48.315(2m)(b), which provides that "failure to comply with any time limit specified in [sec. 48.315(2m)(a)] does not deprive the court of personal or subject matter jurisdiction or of competency to exercise that jurisdiction." It concluded that the mandatory statutory time limit at issue in this case is not among those referred to in section 48.315(2m)(a) (see ¶ 33).

    Justice Wilcox filed a dissenting opinion that was joined by Justices Prosser and Roggensack.

    Termination of Parental Rights - Definition of "Parent"

    State v. James P., 2005 WI 80 (filed 17 June 2005)

    A circuit court terminated the parental rights of James P. on the ground that he had failed to assume parental responsibility for the child. The court of appeals affirmed.

    The supreme court, in a decision authored by Justice Wilcox, affirmed the court of appeals. James argued that because he had not been adjudicated the biological father of the child before the alleged abandonment, he was not her "parent" within the meaning of Wis. Stat. section 48.02(13). The court disagreed. "We hold that an individual who is in fact the biological father of a nonmarital child satisfies the definition of 'parent' in § 48.02(13), as he is a 'biological parent,' notwithstanding that he has not officially been adjudicated as the child's biological father. Because such an individual satisfies the definition of 'parent,' he may have his parental rights terminated based on periods of abandonment that occurred prior to his official adjudication as the child's biological father, assuming he has failed to establish a 'good cause' affirmative defense to the ground of abandonment" (¶ 15).

    The court said that its conclusion followed from the statute's plain text (see ¶ 38). "[O]ur interpretation - which recognizes that an individual who is, in fact, the biological father of a child has always been the child's biological parent - encourages putative fathers to acknowledge their fatherhood or have a court determine their parenthood as soon as possible, encourages such individuals to fulfill their responsibilities as parents, and holds such individuals accountable when they fail to do so. If someone who is the actual biological father of a nonmarital child establishes a substantial relationship with that child and thereafter refuses to fulfill his legal duties and responsibilities by abandoning the child, our interpretation protects the child by allowing the State to terminate the father's rights 'at the earliest possible time'" (¶ 42).

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    Municipal Law

    Zoning - Conditional Use Permits - Power of County Boards of Adjustment

    Osterhues v. Board of Adjustment for Washburn County, 2005 WI 92 (filed 28 June 2005)

    The Washburn County Highway Department applied to the county zoning committee for a conditional use permit to open a gravel pit. Despite opposition from individuals who owned property near the proposed site, the committee granted the highway department's application.

    The property owners appealed to the Washburn County Board of Adjustment. They argued that the board could conduct a de novo review of the zoning committee's decision. The board concluded that its only role was to correct errors, and because the zoning committee had made none, it could not reverse the granting of the permit. On certiorari review the circuit court agreed with the plaintiffs and remanded the case to the board to conduct a de novo review of the zoning committee's decision. The court of appeals reversed the circuit court, holding that a county board of adjustment does not have the authority to conduct a de novo review of a county zoning committee's decision. See 2004 WI App 101.

    In a unanimous decision authored by Justice Prosser, the supreme court reversed the court of appeals. It concluded that, "[w]hen reviewing the decision to grant or deny a conditional use permit, a county board of adjustment has the authority to conduct a de novo review of the record and substitute its judgment for the county zoning committee's judgment. Moreover, under the applicable state statute, a board has authority to take new evidence. Wis. Stat. § 59.694 (2001-02)" (¶ 2).

    The court reached this conclusion for the following reasons: "First, the plain language of the statute gives the board 'all of the powers of the officer from whom the appeal is taken' when 'error is alleged.' [See Wis. Stat. § 59.694(8).] Second, the Wisconsin law is based on a model statute enacted by almost all states [the Standard State Zoning Enabling Act], and other states have consistently agreed that the board of adjustment has the power of de novo review. Third, it appears from prior appellate decisions that boards of adjustment in this state commonly exercise the power of de novo review, and take additional evidence, when reviewing grants and denials of conditional use permits" (¶ 2).

    Accordingly, since the board of adjustment proceeded on an incorrect theory of law (that is, that it could do nothing but review procedural errors committed by the zoning committee), the supreme court reversed the decision of the court of appeals and remanded the case to the circuit court, so that the circuit court may in turn remand the matter to the board of adjustment for reconsideration in accord with the principles expressed in this opinion (see ¶ 43).

    Zoning - Estoppel - Ordinance Enforcement

    Village of Hobart v. Brown County, 2005 WI 78 (filed 15 June 2005)

    The village of Hobart sought to enjoin Brown County from constructing and operating a transfer station at a county landfill because, among other things, doing so violated the village's zoning ordinance. Brown County attempted to have the village's claim dismissed on a theory of equitable estoppel. The circuit court granted summary judgment in favor of the county. The court of appeals reversed the summary judgment order and remanded the case, holding that a circuit court can apply equitable estoppel to bar a municipality from enforcing a zoning ordinance but that the requirements for estoppel had not been established in this case. See 2004 WI App 66. In a majority opinion authored by Justice Crooks, the supreme court affirmed the court of appeals.

    The supreme court concluded that summary judgment should not have been granted because several genuine issues of material fact exist. The court indicated that, on remand, the circuit court must address whether the construction and operation of the transfer station violated a zoning ordinance, or any related ordinance, of the village (see ¶ 22). If the circuit court determines that the county violated a village ordinance, the next issue will be whether the village can be estopped from asserting such a violation. The court concluded that "a municipality cannot be estopped from asserting a violation and seeking to enforce its ordinances, but that a circuit court has authority to exercise its discretion in deciding whether to grant enforcement" (¶ 30).

    The last issue considered by the supreme court involved the proper procedure for the circuit court to apply if it finds that there was a violation of the village's zoning ordinance, or any related ordinance, and the municipality asserts such a violation and attempts to enforce it. "This court has established that when a party seeks to enforce an ordinance by pursuing an injunction, or other such relief, the circuit court can exercise its discretion in deciding whether, and in what form, to grant the injunctive relief. Specifically, we have determined that '[i]njunctive relief is not ordered as a matter of course, but instead rests on the sound discretion of the court, to be used in accordance with well-settled equitable principles and in light of all the facts and circumstances of the case.' Thus, in this case, the circuit court must determine if its equitable power to deny an injunction, or any other enforcement mechanisms, is appropriate under the totality of the circumstances presented" (¶ 32) (citations omitted).

    The court cited the guidance it provided in Forest County v. Goode, 219 Wis. 2d 654, 579 N.W.2d 715 (1998) on how to apply equitable considerations: "[T]he circuit court should take evidence and weigh any applicable equitable considerations including the substantial interest of the citizens of Wisconsin ... the extent of the violation, the good faith of other parties, any available equitable defenses such as laches, estoppel or unclean hands, the degree of hardship compliance will create, and the role, if any, the government played in contributing to the violation" (¶ 34, quoting Goode, 219 Wis. 2d at 684). Ultimately, the Goode court concluded that, "upon the determination of an ordinance violation, the proper procedure for a circuit court is to grant the injunction, except when it is presented with compelling equitable reasons to deny it" (id.).

    Justice Prosser filed a concurring opinion that was joined by Justices Wilcox and Butler.

    Zoning - Variances - Board of Zoning Appeals Required to Make Sufficient Record of Its Exercise of Discretion

    Lamar Central Outdoor Inc. v. Board of Zoning Appeals, 2005 WI 117 (filed 12 July 2005)

    In 2001 the Board of Zoning Appeals of the City of Milwaukee denied the plaintiff's application for a dimensional area variance so that it could raise a billboard. In doing so it applied the "no reasonable use" rule articulated in State v. Kenosha County Board of Adjustment, 218 Wis. 2d 396, 577 N.W.2d 813 (1998). Since the time of the board's consideration of the plaintiff's application, the supreme court has issued three major decisions relating to the law of zoning variances. See State v. Waushara County Board of Adjustment, 2004 WI 56, 271 Wis. 2d 547, 679 N.W.2d 514; State ex rel. Ziervogel v. Washington County Board of Adjustment, 2004 WI 23, 269 Wis. 2d 549, 676 N.W.2d 401; State v. Outagamie County Board of Adjustment, 2001 WI 78, 244 Wis. 2d 613, 628 N.W.2d 376. In a majority opinion authored by Justice Prosser, the supreme court concluded that in light of the revised standards articulated in these cases, the board in the present case proceeded on an incorrect theory of law in evaluating the plaintiff's application for a variance, and that on remand, the board should reconsider the matter in conformance with the new legal standards governing area variances.

    The court also addressed the kind of record the board must make to demonstrate its exercise of discretion. The court said that Wis. Stat. section 62.23(7)(e)9. requires that "the grounds of [the board's zoning determinations] shall be stated" (¶ 27). The court concluded that the board may not, as it did here, simply grant or deny an application with conclusory statements that the application does or does not satisfy statutory criteria. "Rather, we expect a board to express, on the record, its reasoning why an application does or does not meet the statutory criteria. Without such statement of reasoning, it is impossible for the circuit court to meaningfully review a board's decision, and the value of certiorari review becomes worthless" (¶ 32).

    The court was sympathetic to the argument that most members of zoning boards are not attorneys and that many boards in Wisconsin operate without issuing written opinions. "We do not expect boards of zoning appeal to produce judicial opinions. We agree, in fact, that a written decision is not required as long as a board's reasoning is clear from the transcript of its proceedings" (¶ 31).

    Chief Justice Abrahamson filed a concurring opinion.

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    Evictions - Notice

    Walters v. National Props. LLC, 2005 WI 87 (filed 23 June 2005)

    The terms of a commercial lease required a tenant to provide the landlord with monthly sales receipts and to pay the rent according to a formula. When the tenant failed to submit the rent payment that was due on Sept. 1, 2002, the landlord sent a "notice" dated Sept. 13, which the tenant received on Sept. 16. On Oct. 15 the tenant mailed a check that covered only the variable portion of the rent, which the landlord received on Oct. 17. The landlord began this eviction action because the tenant failed to cure the default in a timely manner. Although the terms of the notice and the lease differed (see below), the circuit court ruled that the lease terms controlled and granted judgment for the landlord. The court of appeals affirmed.

    The supreme court, in an opinion written by Justice Prosser, affirmed. "This case is unusual because the language in the default notice is not precisely the same as the language in the lease. As a result, we must resolve the threshold question of whether the 'date of service' provision in the notice supersedes the 'date of mailing' provision in the lease, in determining when the thirty-day cure period begins, if we deem the two provisions inconsistent"

    (¶ 8). The landlord's "choice of alternative wording rendered the notice ambiguous" by creating at least four possible dates for cure (¶ 12).

    The supreme court applied the "deeply rooted doctrine of contra proferentem," by which it resolves ambiguous language "most strongly" against the drafter (the landlord) (¶¶ 13-14). It found "sufficient ambiguity" in the lease and notice to have enabled the tenant to rely "on the notice, interpreted to require receipt" (¶ 19). The court had "no doubt that ordinarily, landlords will fully exercise their rights under the lease - indeed, the wisest course would be to copy the lease language in the notice, and we have been presented with no explanation why the landlord did not do that here" (¶ 23). Nonetheless, the tenant achieved a "hollow victory" because it had not complied with the notice or the lease. (The tenant had cured only one of the four parts of its default.)

    Chief Justice Abrahamson dissented on the ground that the majority should have provided more guidance to circuit courts in eviction cases; she "would have had this court state that in an eviction action in which both the lease and the default notice were drafted by the landlord and are ambiguous, the tenant is entitled to rely on the interpretation of the document most favorable to the tenant" (¶ 37).

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    Sexually Violent Persons

    Due Process - Dangerousness

    State v. Bush, 2005 WI 103 (filed 6 July 2005)

    Bush was committed as a sexually violent person under Wis. Stat. chapter 980. His primary argument was that chapter 980 is facially unconstitutional because it does not require evidence of a recent overt act to be offered when the court determines the dangerousness of an offender who has been released from incarceration but is later reincarcerated for nonsexual behavior. Bush was convicted of a sexual assault in 1988, was released on parole in 1992, and violated parole less than a month later. His parole was revoked, and he was reincarcerated. Five years later the state filed this chapter 980 commitment action. Bush argued, in effect, that only his behavior while on parole in 1992 should have been considered in assessing his dangerousness in 1997. The court of appeals affirmed his commitment.

    In an opinion authored by Justice Butler, the supreme court affirmed the court of appeals and, in so doing, refused to follow case law from Washington (see ¶ 23). "Predicting an offender's dangerousness under chapter 980 is a complex evaluation. At trial, the factfinder is obligated to examine the totality of the offender's past actions and make a determination based on the offender's 'relevant character traits and patterns of behavior,' as to whether the offender's mental condition currently predisposes him or her to commit another sexually violent act. Ultimately, the question 'is simply whether it is substantially probable that the person will engage in acts of sexual violence without regard to any specific restrictions, supervision or time frame.' Thus, we agree with the State that due process does not require that an evaluation of dangerousness be limited based on Bush's proposed bright-line rule" (¶ 33).

    The court found that Bush advocated an illogical application of a "recent overt acts" requirement to prove current dangerousness (¶ 34). First, Bush's parole was not close in time to his chapter 980 trial; the two events were five years apart (see ¶ 36). Second, "under Bush's approach, an offender's behavior while incarcerated would be irrelevant to support a determination of current dangerousness. However, the factfinder's analysis of an offender's current dangerousness is not limited to the offender's actions prior to his or her most recent incarceration and can include an offender's actions while incarcerated. Here, Bush has engaged in the following behavior while incarcerated: he was reprimanded for corresponding with a person who was 'grooming a boy for sexual purposes,' and he attempted to obtain pornographic materials. This behavior may bear on Bush's dangerousness, but the weight to be given to this behavior is for the factfinder" (¶ 37). Third, "the sexually violent offense for which Bush is incarcerated may be relevant evidence of current dangerousness" (¶ 38).

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    Jury Fee - Medical Malpractice Standard of Care - Peer Review Privilege - Damage Cap

    Phelps v. Physicians Ins. Co. of Wis., 2005 WI 85 (filed 22 June 2005)

    This medical malpractice action arose out of the death of an infant during childbirth. While the mother was in labor, she was under the care of an unlicensed first-year medical resident, Dr. Lindemann. In a trial to the court, the judge found the doctor 80 percent causally negligent and the hospital 20 percent causally negligent. The court of appeals reversed.

    The supreme court, in an opinion written by Justice Bradley, reversed the court of appeals in a decision that addressed a variety of issues. The first issue was whether one of the defendants, Physicians Insurance Co. (PIC), waived its right to a jury trial by failing to pay the jury fee on time. The statutes provide that a party's failure to pay a jury fee may constitute a waiver (see

    ¶ 30). Under local rules, PIC's payment was late. The next relevant question was whether the circuit court properly exercised its discretion in denying PIC's motion to enlarge the time based on excusable neglect. "[W]e are satisfied that the record supports [the circuit court's] decision to deny PIC's request for a motion to enlarge time. The reason for this largely stems from PIC's actions, or lack thereof, after mailing in its late payment. At that time, PIC had the option to be forthright, notify the circuit court and opposing counsel about the problem, and move for an enlargement of time to pay the jury fee. It chose none of these options. Indeed, 15 months passed by before the issue was raised. Even then, it was not raised by PIC but rather by opposing counsel. We view these facts as fatal to PIC's claim" (¶ 35).

    Second, the supreme court addressed "the unique status of an unlicensed first-year resident" in a medical negligence action (see ¶ 41). "Answering this question now, we determine that physicians like Dr. Lindemann should be held to the standard of care applicable to an unlicensed first-year resident based on the unique restrictions described above. Although we anticipate this new standard of care to be lower than that of an average licensed physician in some cases, we do not expect that it will become a grant of immunity. After all, unlicensed first-year residents are graduates of a medical school who provide sophisticated health care services appropriate to their 'in training' status. Therefore, unlicensed residents could still be found negligent if, for example, they undertook to treat outside the scope of their authority and expertise, or they failed to consult with someone more skilled and experienced when the standard of care required it" (¶ 43). On the facts of this case, the trial judge properly found that Lindemann was negligent under the standard of care applicable to first-year residents as well as under that applicable to an average physician treating an obstetrical patient (see ¶ 44).

    Third, a letter written by one physician to another that criticized Lindemann's actions in the situation that underlay this case was not cloaked by the health care services review privilege under Wis. Stat. section 146.38. Putting aside whether Lindemann was a "health care provider" under Wis. Stat. chapter 655, "the peer review privilege here does not apply because the letter was not part of the peer review evaluation process" (¶ 52). Rather, the letter alerted the supervisor of the residency program in which Lindemann was enrolled - its purpose was "not to improve the quality of health care at the hospital" (¶ 54).

    Fourth, the court held that the cap on noneconomic damages imposed by Wis. Stat. section 893.55(4) does not apply to unlicensed first-year medical residents. The court said that following PIC's arguments that were to the contrary would lead to absurd outcomes or outcomes best left to the legislature (see ¶ 63). "In the end, we view the provisions in Wis. Stat. § 893.55 regulating the award of noneconomic damages and Wis. Stat. ch. 655 as inextricably intertwined. Recognizing this interplay, the court of appeals observed: '[t]he legislature has unambiguously declared that the cap on noneconomic damages in Wis. Stat. § 893.55(4)(b) applies only to those who are health-care providers under Wis. Stat. ch. 655, and to "employees of health care providers" as the phrase is further limited by § 893.55(4)(b).' We agree with this conclusion. Thus, because Dr. Lindemann was not a 'health care provider' as the term is defined by Wis. Stat. ch. 655, we determine that the cap on noneconomic damages imposed by Wis. Stat. § 893.55(4)(b) does not apply" (¶ 64).

    Finally, the court remanded the matter to the circuit court to determine whether Lindemann was a "borrowed employee" of the hospital and therefore entitled to the cap protection as an "employee" of a health care provider within the meaning of Wis. Stat. section 893.55(4)(b) (see ¶ 65).

    Justice Wilcox did not participate. Justice Prosser, joined by Justice Roggensack, concurred in part and dissented in part. Although they agreed with "some parts of the majority opinion" that related to the standard of care and the peer review privilege, their lengthy dissent centered on the jury waiver and damage cap issues.

    Informed Consent - Chiropractors

    Hannemann v. Boyson, 2005 WI 94 (filed 29 June 2005)

    A jury returned a verdict in favor of the plaintiff in a malpractice action. The court of appeals reversed in part, because the special verdict inquired into only the defendant's negligent treatment and did not separately ask whether he had failed to obtain the plaintiff's informed consent for the procedure that injured the plaintiff.

    The supreme court, in an opinion written by Justice Wilcox, affirmed the court of appeals. "The precise issue on appeal is whether the circuit court erred in failing to submit a special verdict on informed consent" (¶ 30). The court found "[n]o reason" that would explain why the principles of informed consent, "while initially developed and applied in the context of medical malpractice, are not equally applicable to chiropractors" (¶ 41). "While the two disciplines are distinct forms of health care, there is no logical reason why a patient of chiropractic should not have the same right as a patient of medical practice to be informed of the risks material to proposed treatments or procedures so as to be able to make an informed decision and consent to the proposed treatments or procedures. In other words, while the specific treatments and procedures utilized in the practice of chiropractic and the practice of medicine may differ, there is no reason why the practitioners of these disciplines should not have the same obligation to disclose the material risks of the procedures and treatments they utilize" (¶ 45). "Although the specifics of the disclosures will undoubtedly vary between the practice of medicine and the practice of chiropractic, the rules governing the scope and limits of the duty to disclose and obtain informed consent should be the same. The scope and limits of the duty to disclose material risks and obtain informed consent are aptly set forth in Wis JI - Civil 1023.1. While this instruction may need to be modified when applied to chiropractors, this can easily be accomplished" (¶ 47).

    In this case, the special verdict was defective because it failed to inquire separately into whether the plaintiff gave informed consent. In particular, "the jury was never asked whether the risk of stroke was information that a reasonable patient would want to know in deciding whether to submit to chiropractic treatment. The jury was never asked whether a reasonable patient in Hannemann's position would have submitted to chiropractic treatment if presented with such information. Finally, the jury was never asked whether the failure to inform Hannemann of the risk of a stroke was the cause of his injuries" (¶ 55). In short, the circuit court erroneously concluded that the failure to provide informed consent constituted negligence in chiropractic treatment (see ¶ 56). Finally, the error was not harmless.

    Justice Prosser did not participate. Justice Butler dissented on the issue of whether the error was harmless.

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