Wisconsin Lawyer
Vol. 80, No. 11, November 2007

Civil Procedure Contempt Criminal Procedure

Evidence Family Law Worker's Compensation

Civil Procedure

Stayart v. Hance, 2007 WI App 204 (filed 1 Aug. 2007) (ordered published 26 Sept. 2007)

An attorney, Stayart, sued a client, Hance, for unpaid legal fees. Hance was a Tennessee resident. Stayart resided and apparently practiced law in Wisconsin but was licensed only in Illinois. The circuit court granted Hance's motion to dismiss for lack of personal jurisdiction.

The court of appeals, in an opinion written by Judge Nettesheim, reversed. The court first addressed Stayart's law license status and held it was relevant only on the issue of whether Hance had sufficient contacts in Wisconsin. Hance's motion did not seek dismissal on the ground either that Stayart lacked standing to enforce the contract or that the contract was invalid because Stayart is unlicensed in Wisconsin.

Turning to the issue of personal jurisdiction, the court concluded that Stayart had sufficiently shown that the long-arm statute, Wis. Stat. section 801.05(5)(b), applied to Hance. "Hance does not dispute that Stayart performed the legal services at issue and that those services were provided on Hance's behalf in Wisconsin. Hance also does not dispute that the contract signals that Stayart's office is in Wisconsin, [and] that the parties exchanged mail and telephone calls to and from Stayart's Wisconsin office, including payments sent by Hance to Stayart at that location. We view Stayart's state licensure as largely irrelevant to the long-arm analysis under these facts. While Hance may have understood, and correctly so, that Stayart is an Illinois-licensed attorney, his own actions over the three years of their relationship show that he also knew that he was engaged in transactions with a Wisconsin-based lawyer on a serious and important legal matter. The focus in a jurisdictional analysis is not on the plaintiff but on the contacts with Wisconsin of the `person served in an action,' here, Hance" (¶ 15).

The contacts also satisfied the due process requirements even though Stayart and Hance never met but instead corresponded only by mail and telephone. "The association here began when Hance contacted Stayart at his Wisconsin office seeking his legal services. The July 2003 written agreement fleshes out further contacts the parties contemplated, and signals that Stayart's office is in Wisconsin. True, the parties never met in person, nor did either travel to the other's state. Nonetheless, Hance purposefully availed himself of the privilege of doing business in Wisconsin by initiating and agreeing in writing to a business relationship with Stayart, a Wisconsin resident, resulting in Stayart performing numerous legal services in Wisconsin on Hance's behalf" (¶ 21).

The court then turned to the fair play inquiry, examining five factors determinative of the reasonableness of personal jurisdiction: "(1) the burden on the defendant, (2) the interest of the forum state, (3) the plaintiff's interest in obtaining relief, (4) the judicial system's interest in efficiency, and (5) the shared interest of the states in furthering substantive social policies" (¶ 28). The first three factors supported the reasonableness of imposing personal jurisdiction over Hance; the last two were not pertinent.

Parsons v. American Family Ins. Co., 2007 WI App 211 (filed 29 Aug. 2007) (ordered published 26 Sept. 2007)

Parsons, then a minor, was seriously injured in a car accident while a passenger in the vehicle. The accident occurred when the driver lost control and a front-seat passenger, Klug, pulled the emergency brake. Parsons sued the Klug family's insurer, General Casualty, and others. When General Casualty decided not to contest Parsons' claim, it delivered to Parsons' guardian ad litem (GAL) an offer of judgment for its $100,000 limits and a request for a Pierringer release. The offer explicitly named General Casualty but not the Klugs. Parsons' GAL accepted the offer of judgment. General Casualty issued a check made out to Parsons and her GAL that included the following language: "Full settlement, claims against General Casualty and the Klug family" (¶ 5). Later, the GAL filed a satisfaction of judgment with the circuit court that indicated that the insurer had fully paid and satisfied its judgment. In the interim, however, Parsons sued Klug's parents. The circuit court granted General Casualty's motion to dismiss the claims against the Klugs on the ground that by cashing the $100,000 check, Parsons had released all claims against the Klugs and General Casualty.

The court of appeals, in a decision authored by Judge Snyder, affirmed. "An accord and satisfaction is an agreement to discharge an existing disputed claim and constitutes a defense to an action to enforce the claim. The rule rests `not only on principles of contract law but on principles of sound public policy, that is, interests of resolving disputes informally without litigation and of fairness.' However, the doctrine of accord and satisfaction has safeguards to protect claimants from overreaching by defendants. First, there must be a good faith dispute about the debt and, second, there must be reasonable notice that the check is intended to be in full satisfaction of the claim" (¶ 9).

First, the claim's value was disputed. Second, the court was "persuaded that although the offer of judgment did not expressly refer to the Klugs, it included them through their privy, General Casualty. Furthermore, fairness dictates that when Parsons cashed the check tendered in full payment of claims against the Klugs, she should be bound by the terms stated. General Casualty's intent was known; therefore, allowing Parsons to keep the money while disregarding the stated conditions would be unfair" (¶ 13).

In the alternative, Parsons argued that the "settlement" reached with General Casualty is unenforceable because no court had approved it pursuant to Wis. Stat. section 807.10(1). Rejecting this argument, too, the court agreed that "Parsons' argument is misplaced because no settlement occurred, rather judgment was taken.… Parsons expressly agreed that judgment would be entered against General Casualty in the amount of $100,000 with costs. The court then entered judgment against General Casualty for $100,458.64. On October 22, 2003, Parsons filed a satisfaction of judgment stating, `the clerk of said court is hereby authorized to satisfy and discharge said judgment of record'" (¶ 15). Finally, the court held that Parsons ratified the results of the claim after she reached the age of majority because for three years she retained the $100,000 and never repudiated it or otherwise moved to set it aside (see ¶ 16).

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Contempt

Carney v. CNH Health & Welfare Plan, 2007 WI App 205 (filed 14 Aug. 2007) (ordered published 26 Sept. 2007)

This case is described as "another chapter in the now more than twenty-five-year saga of Allis-Chalmers retirees' litigation to preserve their retirement life insurance benefits" (¶ 2). Defendant Case New Holland Inc. is the merged entity that includes the former Allis-Chalmers. Defendant CNH Health & Welfare Plan (CNH) administers, on behalf of Case New Holland Inc., the welfare plans for which Allis-Chalmers was originally responsible.

A court order issued in 1975 required Allis-Chalmers to maintain its then existing life insurance program without increasing the cost of optional insurance above a stated amount. The present litigation arose in response to a notification to retirees that CNH would be increasing the cost of the optional insurance. Among other things, the retirees sought in this current action to have CNH found in contempt for violating the 1975 order. The circuit court denied the motion for a finding of contempt, concluding that because the original 1975 court order contained no injunction language, it could only be enforced by breach-of-contract litigation (see ¶ 5).

In a decision authored by Judge Kessler, the court of appeals concluded that "an order or judgment which requires specific conduct (either to do, or to refrain from, specific actions) can be enforced by contempt. Neither the statute (Wis. Stat. § 785.01(1) …) nor case law requires that an order contain the specific term `enjoin' or `injunction' to allow the court to use contempt powers to enforce its orders… The 1975 Order requires Allis-Chalmers to: `(1) maintain the present life insurance program, and (2) not increase the cost of optional insurance above $1 per month per $1,000 of coverage.' Whether one views this order as requiring future conduct (maintain the described life insurance program), or prohibiting future conduct (not increase the cost above the stated amount), the result is the same. The order requires specific, ongoing conduct and may be enforced by the contempt powers of the court" (¶¶ 17-18) (citations omitted).

The court of appeals also confronted the issue of whether the successor corporation to Allis-Chalmers was excused from complying with the life insurance order because the successor's agents were ignorant of the order. Put another way, did the lack of knowledge about the order by an agent of the successor corporation provide a defense against contempt by the corporate entity for an intentional act that violated the order? The court concluded that it did not. "To allow a successor corporation to defend contempt based upon its agent's ignorance of court orders in the possession of the successor corporation and binding on both the predecessor corporation and successor corporations would make a mockery of court orders. Understandable sympathy for an individual agent of a corporation, when the agent acts in good faith, but without knowledge of what is in the files the agent is charged to administer, would permit easy corporate avoidance of responsibility by simply hiring a new employee with no actual knowledge of the order. We do not understand the legislature or prior court decisions to have created such a facile path by which a corporate entity can avoid its responsibility to comply with court orders" (¶ 23) (citation omitted).

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Criminal Procedure

State v. Drew, 2007 WI App 213 (filed 30 Aug. 2007) (ordered published 26 Sept. 2007)

Drew was convicted of battery and of possessing drugs. He contended that police officers used an impermissibly suggestive photo array in identifying him and that the array and a tainted in-court identification should have been suppressed. Specifically, Drew's picture was the only one in the array that featured a person wearing "jail-issued" clothing (¶ 15). The use of the array did not conform to the "model policy" prescribed by the Wisconsin attorney general (see ¶ 7). The circuit court denied Drew's motion to suppress both the out-of-court and the in-court identifications.

The court of appeals, in an opinion written by Judge Vergeront, affirmed. "The premise of both arguments is that State v. Dubose, 2005 WI 126, 285 Wis. 2d 143, 699 N.W.2d 582, which held that identification based on an `unnecessarily suggestive' showup is inadmissible, alters the standard for the admissibility of identification from a photo array" (¶ 1). The court rejected Drew's contention that Dubose governed photo identification procedures as well as showups. "First, while some of the Dubose court's discussion of the unreliability of eyewitness identification would appear to apply to procedures other than showups, the only procedure for which the court expressly adopts a new test is for showups. Second, the new test adopted in Dubose _ based as it is on the necessity of having a showup in the first place _ provides no guidance for what `unnecessarily suggestive' might mean in the context of a photo array. Third, in discussing the necessity of a showup, the Dubose court expressly states that a `lineup or photo array is generally fairer than a show up…,' which raises the question whether that court sees a need to impose a stricter standard for those two types of identification procedures" (¶ 17). And fourth, the supreme court in State v. Hibl, 2006 WI 52, "emphasized the limited nature of the actual holding in Dubose. While a fair reading of Hibl is that the concerns about eyewitness identification discussed in Dubose may require a re-examination of standards for other types of identification procedures, we see nothing in Dubose that suggests that should happen for photo arrays in particular, or that suggests how the new Dubose standard for showups might apply to photo arrays" (¶ 19).

In sum, the court construed Dubose as limited to showup identification procedures. The failure to adhere to the model policy for photo arrays recommended by the attorney general went to the weight, not the admissibility, of the evidence.

State v. St. Germaine, 2007 WI App 214 (filed 14 Aug. 2007) (ordered published 26 Sept. 2007)

The defendant, St. Germaine, pleaded no contest to a charge of "manufacturing" pot plants and was convicted. The circuit court denied his motion to suppress evidence obtained during a warrantless search of his rented room; consent for the search was given by the property owner. Police officers testified that St. Germaine was present when they asked the property owner, Briseno, if they could search the house after she told them that St. Germaine rented a room there. Briseno signed a written consent statement in St. Germaine's presence; neither Briseno nor the defendant limited or objected to the scope of the search. At the suppression hearing, however, Briseno testified that she had no permission to enter the defendant's room and acknowledged that she never identified his particular room to police.

The court of appeals, in a decision authored by Judge Curley, affirmed. On appeal St. Germaine argued that Briseno lacked actual or apparent authority to consent. Yet case law "expanded the third-party consent exception to include situations where a warrantless entry is based upon the consent of a third party reasonably believed by the police, at the time of the entry, to possess apparent common authority over the premises, but who in fact does not. A determination as to whether reliance is reasonable under such circumstances rests on the following objective standard: `[W]ould the facts available to the officer at the moment … warrant a man of reasonable caution in the belief that the consenting party had authority over the premises? If not, then warrantless entry without further inquiry is unlawful unless authority actually exists. But if so, the search is valid'" (¶ 16).

The court observed that "St. Germaine was present in the kitchen and overheard the entire exchange that took place between the officers and Briseno, during which Briseno told the police officers that St. Germaine rented a room (without identifying which room) and consented to a search of the entire premises without limitation" (¶ 19). Nothing in the record indicated that St. Germaine's room had been identified for police (that is, they did not know, it appears, which room was his) (see ¶ 20). "St. Germaine's silence, coupled with Briseno's conduct, bolstered the reasonableness of the police officers' belief. St. Germaine was present in the kitchen, heard the police officer ask Briseno for permission to search the house, and did not object. We conclude that St. Germaine's silence, in the face of Briseno's consent, made it reasonable for the officers to believe they could search everywhere in the house, including his locked room" (¶ 21).

State v. Quarzenski, 2007 WI App 212 (filed 22 Aug. 2007) (ordered published 26 Sept. 2007)

Pursuant to a plea negotiation the defendant agreed to plead guilty to multiple charges, and the state agreed to cap its sentencing recommendation at seven years. At the sentencing hearing, the state recommended seven years of confinement but also asked the circuit court to impose periods of extended supervision and probation on certain of the charges. Defense counsel did not object to the recommendation, which the court followed in imposing sentence. On postconviction motion the defendant argued that the state breached the plea agreement by recommending an overall package (including community supervision) that exceeded the seven-year cap, and that his attorneys were ineffective by failing to object to the breach. His attorneys testified to their understanding that the seven years was a cap on the confinement portion of the sentences only. The circuit court denied the motion.

In a decision authored by Judge Nettesheim, the court of appeals affirmed. Credible evidence from the defendant's trial attorneys supported the conclusion that the defendant was in reality only concerned with the confinement portions of the sentences he would receive (see ¶ 23) "Thus, the plea negotiations were conducted from that perspective and the ultimate agreement spoke only to that concern. Therefore, trial counsel had no basis to object when the State made its sentencing recommendation … The State did not breach the plea agreement, and therefore trial counsel were not ineffective for failing to object to the State's sentencing recommendation" (¶ 23).

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Evidence

State v. Doss, 2007 WI App 208 (filed 7 Aug. 2007) (ordered published 26 Sept. 2007)

Doss was convicted of unlawful retention by a trustee or bailee of more than $10,000. In essence, Doss was a co-personal representative of her father's estate when she learned that her father had not paid state taxes for the eight years before his death. The estate owed back taxes of about $40,000; the estate itself was valued at about $70,000. Although Doss issued a check to the Wisconsin Department of Revenue for the back taxes, she withdrew all the money from the bank account before the check was cashed and deposited it in her own account in Georgia. In further actions to collect the funds, Doss claimed that she no longer had them (see ¶ 7). She was convicted after a jury trial.

The court of appeals, in an opinion written by Judge Wedemeyer, reversed the conviction and remanded for a new trial. The court said that error occurred when the state introduced Doss's certified bank records pursuant to Wis. Stat. section 891.24, which "states that a bank's record books of a particular account need not be produced for a trial if two conditions are fulfilled: (1) a sworn verification is provided attesting to the factual truth of the copied account entries presented, and (2) the original records are open for the inspection of all parties to the action" (¶ 15). First, the state failed to comply with the statute when it gave belated notice (the Friday before the start of trial on Monday) to the defense, thereby limiting the defendant's opportunity to inspect the records.

More importantly, the bank records constituted testimonial hearsay within the meaning of the Crawford v. Washington [541 U.S. 36 (2004)] rule. The bank officers' verifications were intended for use at trial. The state's reliance on testimonial hearsay violated the Crawford rule because there was no showing that the bank officers were unavailable (and the defendant had no prior opportunity to cross-examine them). The error was not harmless in light of the state's critical need for this evidence. Finally, the court rejected the defendant's argument that the evidence was, in any event, insufficient to support the conviction. Thus, Doss may be retried on the charges.

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Family Law

Jalovec v. Jalovec, 2007 WI App 206 (filed 14 Aug. 2007) (ordered published 26 Sept. 2007)

LaVerne and James Jalovec were married in 1983 and subsequently had three children, all of whom were minors when LaVerne filed for divorce in 2001. During the pendency of the case, the circuit court appointed a guardian ad litem (GAL) for the children because of the parties' inability to resolve the custody and physical placement issues. However, on Sept. 9, 2002, the parties entered into a global resolution of the case stipulating to the legal custody and physical placement of the children (joint legal custody with primary placement of the children with their mother) and resolving in a marital settlement agreement all of the support and property issues. The parties agreed that James would pay $100,000 per year in child support. The marital settlement agreement further provided that "Child Support shall not be changed based on the emancipation of the minor child, [P], nor based on a change in respondent's income, that not being considered a change of circumstances for purposes of diminishing child support through August 31, 2006. Further, respondent agrees that child support shall not be reviewed before September 1, 2006, at which time either party may ask the court for a review of said child support" (¶ 4).

In 2004 the parties agreed that one of the children should be primarily placed with his father, and the circuit court modified the marital settlement agreement accordingly. Several months later, the father brought a motion to modify child support, which the circuit court granted.

Among the issues on appeal was LaVerne's argument that the circuit court erroneously exercised its discretion when it modified child support because her ex-husband was equitably estopped from seeking a modification of child support until Sept. 1, 2006, according to a provision of the marital settlement agreement (see ¶ 2). Further, she contended that there was no substantial change in circumstances as required by Wis. Stat. section 767.32(1)(a) (see ¶ 9). (In a footnote the court observed that "Wisconsin Stat. § 767.32(1)(a) has since been reorganized and renumbered and is found in Wis. Stat. § 767.59(1f) (eff. Jan. 1, 2007). See 2005 Wis. Act 443, §§ 148, 267" (¶ 2 n. 1).)

In a decision authored by Judge Curley, the court of appeals disagreed with the mother's position. "Because the recent holding in Frisch v. Henrichs, 2007 WI 102, ¶ 67, ___ Wis. 2d ___, ___ N.W.2d ___, and the holding in Krieman v. Goldberg, 214 Wis. 2d 163, 177 78, 571 N.W.2d 425 (Ct. App. 1997), have declared restrictive child support provisions similar to the one here against public policy, we determine that the provision at issue here is against public policy, and we decline to apply equitable estoppel against James. Further, a substantial change of circumstance occurred when James received placement of one of the children; therefore, the trial court properly entertained the motion to modify child support and the trial court did not erroneously exercise its discretion in setting the amounts for child support" (¶ 3).

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Worker's Compensation

Acuity Ins. Co. v. Whittingham, 2007 WI App 210 (filed 29 Aug. 2007) (ordered published 26 Sept. 2007)

A carpenter, Whittingham, was severely injured while working for a building company. Acuity, the builder's worker's compensation carrier, argued that Whittingham was not the builder's statutory employee because he also ran a small business that rendered him an "employer" under the statute. The Labor and Industry Commission (LIRC) found in Whittingham's favor. Distinguishing between a worker and a side business that a worker runs, LIRC ruled that the builder hired Whittingham as an individual, not as an employer, to do carpentry work (see ¶ 2). The circuit court upheld LIRC's determination.

The court of appeals, in an opinion written by Chief Judge Brown, affirmed. The court said that Acuity's position led to an "unreasonable and absurd result" that defeated the purpose of the Worker's Compensation Act. "Acuity's reading of the statute would bring about a situation in which current small-business owners working second jobs, as well as former small-business owners entering new jobs, would be shut out of coverage for any injuries they might sustain. It would also chill a worker's incentive to start a small side-business of his or her own, additional to and separate from the worker's labor for someone else. Certainly, the twin values of self-reliance and hard work would take a hit" (¶ 14). Both Whittingham and Acuity pointed to facts that supported their respective positions, but the court of appeals was bound by the standard of review to defer to LIRC's factual determination. (The court rebuffed Acuity's contention that the issue was one of law to be decided de novo.)

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