Wisconsin Lawyer
Vol. 81, No. 7, July 2008

Court of Appeals Digest

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

Administrative Law

Rutherford v. Labor & Indus. Review Comm'n, 2008 WI App 66 (filed 18 March 2008) (ordered published 28 May 2008)

The Labor and Industry Review Commission (LIRC) upheld an administrative law judge's (ALJ) decision that denied a disability discrimination claim brought by a pro se petitioner, who had failed to obtain certified copies of her medical records and failed to disclose her intention to use copies of those records at her hearing. The circuit court affirmed LIRC's decision.

The court of appeals, in an opinion authored by Judge Kessler, reversed the circuit court. Contested administrative hearings are governed by Wis. Stat. chapter 227, which features "very relaxed rules of evidence" (¶ 21). ALJs are not bound by the common law or statutory rules of evidence. "The ALJ is directed to admit evidence of `reasonable probative value' and is specifically required to exclude only evidence that is `immaterial, irrelevant or unduly repetitious testimony' or evidence that is inadmissible under a statute relating to HIV testing" (id.).

Here the ALJ demanded that the petitioner use certified copies, a requirement not found in the statutes or rules. "Only the ALJ-imposed requirement resulted in the ALJ refusing to consider the 500 pages of copies of Rutherford's medical records. In excluding the uncertified copies, the ALJ made no analysis of the factors governing admissibility of evidence in these hearings which are provided by statute. Consequently, the ALJ did not exercise the discretion authorized and as such acted beyond the authority given by the legislature" (¶ 24). Although the rules require that the parties give notice to one another of the evidence and testimony, exclusion of evidence is not the inexorable sanction. Moreover, the petitioner appeared pro se, and there was no showing that the respondent was prejudiced by the petitioner's failure "to supply new copies" of her medical records, many of which had been previously disclosed. Again, the ALJ failed to exercise discretion.

Judge Fine filed a concurring opinion.

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Appellate Procedure

Ecker Bros. v. Calumet County, 2008 WI App 81 (filed 16 Apr. 2008) (ordered published 28 May 2008)

An appeal as of right can only be filed from a final judgment or final order; an order is final if it disposes of the entire matter in litigation as to one or more parties. See Wis. Stat.

§ 808.03(1). In Tyler v. RiverBank, 2007 WI 33, 299 Wis. 2d 751, 728 N.W.2d 686, the supreme court stated that "[a] court disposes of the entire matter in litigation in one of two ways: (1) by explicitly dismissing the entire matter in litigation as to one or more parties or (2) by explicitly adjudging the entire matter in litigation as to one or more parties" (¶ 4).

In this case the circuit court's order expressly dismissing the claims of Ecker Brothers "in their entirety with prejudice" and awarding costs was a final order for purposes of appeal, notwithstanding the presence in the order of the following language: "[j]udgment shall hereafter be separately entered in favor of the County consistent with this Order" (¶ 1). Because Ecker's notice of appeal was not timely filed in relation to this order, the court of appeals in a per curiam decision concluded that it lacked jurisdiction, and it accordingly dismissed Ecker's appeal.

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Civil Procedure

Zizzo v. Lakeside Steel & Mfg. Co., 2008 WI App 69 (filed 30 Apr. 2008) (ordered published 28 May 2008)

In 1989 Lakeside Steel & Manufacturing Co. loaned Daniel Zizzo's parents some money and secured the loan with mortgages on the Zizzos' property. Although the loan was to be paid off in monthly installments that were to end in 1993, Zizzo's parents died without having made any payments, and Lakeside never attempted to collect or to foreclose on the mortgages. Daniel inherited the property upon the death of his parents and brought this declaratory judgment action in 2005 asking the court to discharge the mortgages based on laches (and other claims). The circuit court granted summary judgment to Zizzo based on Lakeside's laches.

The court of appeals affirmed in an opinion written by Chief Judge Brown. First, Zizzo could assert laches in his capacity as a plaintiff despite language in Wis. Stat. section 802.02(3) that addresses laches as a defense (see ¶ 8). Second, Zizzo was entitled to laches. The opinion surveys the elements of laches as applied to these facts. Amusing is the court's dispatch of Lakeside's contention that it had not "unreasonably delay[ed]" bringing an action: "Frankly, the argument that Lakeside cannot be unreasonably late in bringing its action because it has not yet brought its action gives us a headache" (¶ 17). Finally, Daniel was undeniably prejudiced by Lakeside's dilatoriness because "Zizzo cannot get any information from his parents about the circumstances that led to them never making a single payment on the notes and yet, for some reason, never getting sued for sixteen years. If Lakeside means to say that Zizzo's prejudice claim is speculative because he does not know exactly what information his parents possessed, then Lakeside misunderstands defense prejudice. Of course he does not know that information - and that is exactly how he is prejudiced" (¶ 20).

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Criminal Law

State v. Lis, 2008 WI App 82 (filed 1 Apr. 2008) (ordered published 28 May 2008)

In 2004 the defendant was charged with multiple counts of unauthorized use of personal identifying materials in violation of Wis. Stat. section 943.201(2) (2003-04). Among other things this statute provides that a violation is committed if the defendant "intentionally uses, attempts to use, or possesses with intent to use any personal identifying information ... of an individual ... (a) To obtain credit, money, goods, services, employment, or any other thing of value or benefit."

The complaint alleged that the defendant opened telephone and credit card accounts using employment information and the Social Security number of his son. The pleading stated that the violations occurred in 2003 and 2004. In 2006 the defendant pleaded guilty to identity theft and received a prison sentence. He subsequently moved to withdraw his guilty plea, arguing that the court gave him incorrect information during the plea colloquy when it told him the maximum penalty he was facing. The defendant contended that the accounts that were the basis for the charges were closed in 1999 and 2000, and that the judge should have advised him about the penalties that were in effect for identity theft then instead of the different penalties for identity theft that were in effect in 2003 (the penalties having been changed as part of Wisconsin's transition to truth-in-sentencing). The state did not dispute the defendant's contention that the accounts were closed by the end of 2000, but it argued the offenses continued into 2004 because of the continued harm to the victim. The circuit court concluded the offenses continued into 2004 because, despite the account closures, interest and fees continued to accrue on the accounts, and creditors continued to look to the victim for payment. The circuit court denied the defendant's motion to withdraw his plea.

In a decision authored by Judge Peterson, the court of appeals reversed the circuit court. It concluded that the statute under which the defendant was convicted codifies a "continuing offense." "A continuing offense is a course of conduct that takes place over time, as opposed to a single incident, and is complete when the defendant performs the last act that, viewed alone, is a crime" (¶ 7). The question before the court was whether the defendant's crimes continued after the fraudulent accounts were closed. The appellate court concluded that they did not (see ¶ 1). Said the court, "In this case, [the defendant's] offense continued into 2003 and 2004 only if he received a `thing of value or benefit' after the accounts were closed in 2000. A `benefit' is `something that guards, aids, or promotes well-being: Advantage' Webster's Third New International Dictionary 204 (unabr. 1993). Similarly, `valuable' means `possessing monetary value in use or exchange' or `characterized by usefulness, worth, or serviceableness.' Id. at 2530. In this case, so long as the Verizon account was open, [the defendant] was using his son's identity to obtain a `thing of value' - phone service. So long as the credit card accounts were open, [he] was using his son's identifying information to obtain credit. Once those accounts were closed, however, the benefits to [the defendant] - the phone and credit - ended" (¶ 8). The state conceded that if the crimes were completed by the end of 2000 (which the appellate court concluded was the case), the defendant was misinformed about the applicable penalty and is entitled to withdraw his plea (see ¶ 16).

Because the defendant was in fact misinformed by the court about the sentence he faced, the court of appeals reversed and remanded the matter to the circuit court with directions to allow the defendant to withdraw his plea.

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Criminal Procedure

State v. Limon, 2008 WI App 77 (filed 8 Apr. 2008) (ordered published 28 May 2008)

Among the issues before the court of appeals in this case was whether a suspect's purse may be inspected as part of a frisk for weapons during an investigative detention conducted pursuant to Terry v. Ohio, 392 U.S. 1 (1968). The defendant and her companions were detained on the porch of a house in connection with suspected drug activity. During that detention the officer searched the purse carried by the defendant and found bagged cocaine sitting on top of the remainder of the purse's contents. The officer testified that he was looking for weapons that could have been concealed in the purse, which was approximately one foot long and six inches high.

After an extended analysis the court concluded that there was reasonable suspicion for the detention of the defendant and that a protective search of the defendant's purse was warranted on reasonable suspicion that the officers were in danger of physical injury. It then turned to the question of whether the search of the purse exceeded the scope of a valid weapons frisk authorized by Terry and by Wis. Stat. section 968.25 (the "search during temporary questioning" statute). Said the court, "Although Terry provides only for an officer `to conduct a carefully limited search of the outer clothing in an attempt to discover weapons which might be used to assault him,' we hold that under these circumstances the search was properly broadened to encompass the opening of [the defendant's] purse. Here, again, we agree with the trial court that [the defendant's] purse was essentially an extension of her person where the purse was accessible by her, and because the officers were concerned for their safety, `they should be able to protect themselves to the extent that if they are concerned, they should be able to find if there are weapons on the person or close enough to the person where that person can cause harm to the officer'" (¶ 36) (citations omitted).

The defendant argued that the officers should have patted down her purse as opposed to "diving into it" (¶ 37). However, "[t]he record is silent ... regarding whether [the defendant's] purse was cloth, leather, vinyl, or some other material, making it unclear whether a pat-down would have been worthwhile ... [W]ithout any evidence in the record that a pat-down of [the] purse would have been effective, it was reasonable for the officer to open [the] purse in order to protect himself and others" (¶¶ 37-38). The court was not persuaded that what the defendant characterized as the "intensely private nature of a purse" and her privacy interest therein should trump the officer's safety concerns under these circumstances (¶ 39).

Lastly, the defendant argued that the officer effectively protected himself by taking possession of her purse, so as to make his subsequent act of opening the purse unreasonable. The appellate court "disagree[d], and instead adopt[ed] the trial court's reasoning that even if the officer temporarily had taken away [the] purse, at some point he would have had to return it to [the defendant], again jeopardizing his safety" (¶ 40).

State v. Cherry, 2008 WI App 80 (filed 8 Apr. 2008) (ordered published 28 May 2008)

The defendant pleaded guilty to delivery of cocaine, and at sentencing the circuit court imposed a $250 DNA surcharge on him. In a postconviction motion and again on appeal the defendant argued that the court failed to properly exercise its discretion when it ordered him to pay the surcharge. In a decision authored by Judge Wedemeyer, the court of appeals agreed with the defendant.

The statutes establish the following principles for imposing the DNA surcharge: "If a trial court sentences a defendant to a felony involving a sex crime contrary to Wis. Stat. §§ 940.225, 948.02(1) or (2), 948.025, or 948.085, the trial court must order the defendant to pay the $250 surcharge for the DNA sample. Wis. Stat. § 973.046(1r). When the felony does not involve a sex crime under one of those statutes, however, the trial court may order the defendant to pay the $250 DNA surcharge. Sec. 973.046(1g). Thus, in the latter situation, the trial court has the discretion to decide whether or not to impose the DNA surcharge" (¶ 5).

In this case, because the defendant was convicted of a drug crime, the imposition of the surcharge was discretionary. The only reasons expressed in the record for the circuit court's decision were that 1) the circuit court's policy is to impose the surcharge whenever possible; and 2) the court has the statutory authority to order the surcharge for the purpose of supporting the DNA database program (see ¶ 6). The court of appeals held that the record did not reflect a sufficient exercise of discretion to support the surcharge (see ¶ 4). Said the court, "We hold that in assessing whether to impose the DNA surcharge, the trial court should consider any and all factors pertinent to the case before it, and that it should set forth in the record the factors it considered and the rationale underlying its decision for imposing the DNA surcharge in that case" (¶ 9).

While declining to provide a definitive list of factors for the circuit court to consider in assessing whether to impose the DNA surcharge, the court of appeals did offer some guidance to circuit courts, as follows: "[W]e conclude that some factors to be considered could include: (1) whether the defendant has provided a DNA sample in connection with the case so as to have caused DNA cost; (2) whether the case involved any evidence that needed DNA analysis so as to have caused DNA cost; (3) financial resources of the defendant; and (4) any other factors the trial court finds pertinent" (¶ 10).

State v. Weiss, 2008 WI App 72 (filed 23 Apr. 2008) (ordered published 28 May 2008)

The court of appeals, in an opinion written by Chief Judge Brown, reversed the defendant's conviction for sexual assault because of the prosecutor's improper closing argument. Venerable case law permits prosecutors to strike "hard blows" but not "foul blows" during closing argument. The point involved the defendant's denial to police that he had committed the crime.

The court was "more than convinced that she [the prosecutor] was asking the jury to disbelieve Weiss's statement that he had verbally denied the crime to the police. In fact, her complete argument on the subject was that, other than a formal plea of not guilty, Weiss had never denied the crime until he got on the witness stand. She knew better. She had the two police reports saying otherwise. … We point out once more, because this is important: the State concedes that the prosecutor's argument, asserting that Weiss never denied the crime, implicitly including verbal denials, was incorrect. The importance of what we are about to say cannot be underscored enough. Prosecutors may not ask jurors to draw inferences that they know or should know are not true. That is what occurred here and it is improper" (¶ 15). The error justified reversal of the conviction.

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Consumer Law

Marquez v. Mercedes-Benz USA LLC, 2008 WI App 70 (filed 9 Apr. 2008) (ordered published 28 May 2008)

The plaintiff's new Mercedes Benz turned out to be a "lemon." By letter he demanded a refund. After efforts to accommodate the plaintiff failed, Mercedes Benz (MB) purportedly agreed to pay the refund within the 30-day period allowed by the lemon law. MB was unable to reach the plaintiff's lawyer on the 30th day to arrange the payment despite multiple efforts on its part. The next day the plaintiff filed this action seeking additional penalties because MB had not refunded the purchase price within the 30-day period. The circuit court ruled that MB had failed to comply with the statute.

The court of appeals, in a decision authored by Chief Judge Brown, reversed the grant of summary judgment in favor of the plaintiff. "This appeal requires us, for the first time, to define a consumer's good faith obligations relating to the Lemon Law. The manufacturer here claims that the consumer intentionally thwarted its attempt to make a refund by failing to provide necessary information about the consumer's auto loan. We hold that, if this is found to be true, the consumer is not entitled to the Lemon Law's statutory remedies. The legislature could not have intended that the consumer be allowed to block a manufacturer from complying with the statute and then reap the rewards of noncompliance. We therefore reverse the circuit court's grant of summary judgment to the consumer" (¶ 3). The lemon law did not demand that MB pay a "lump sum" to the plaintiff. Instead, it required MB to write a separate check to the bank that held a purchase money security interest in the automobile. It was that information that MB allegedly sought from the plaintiff's lawyer on day 30.

This triggered a second issue: "If Marquez intentionally withheld this information and thereby caused MB to miss the thirty-day refund window, is he entitled to the statutory damages for MB's violation of the statute?" (¶ 12) Construing the lemon law cases, the court held that "a consumer fails to act in good faith when he or she intentionally prevents the manufacturer from complying with the statute" (¶ 22). The duty to act in good faith inheres in the lemon law itself; it is not "imported from contract law" (id.). The summary judgment record revealed issues of material fact regarding what occurred between MB, the plaintiff, and plaintiff's counsel on the 30th day. The case was remanded for trial.

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Motor Vehicle Law

State v. Tecza, 2008 WI App 79 (filed 23 Apr. 2008) (ordered published 28 May 2008)

Wisconsin's operating while intoxicated (OWI) law may be enforced "upon all premises held out to the public for use of their motor vehicles." See Wis. Stat. § 346.61. The question before the court was whether the law could be enforced upon roadways of a gated community. The community in question is the Geneva National Community, located in Walworth County. "[It] is a condominium development of 1920 approved units with between 1200 and 1500 units constructed. While most of the units are owner-occupied, there are rental units managed by agencies not connected with the Community. In addition to the residential units, the Community includes a golf course, a clubhouse with a restaurant used for wedding receptions and meetings, and the Hunt Club restaurant, the facilities of which are open to the public" (¶ 4). The development includes 20 miles of roadway and the local police department patrols those roads and enforces traffic regulations (see ¶ 5). The circuit court concluded that the OWI law could be enforced on those roads.

In a decision authored by Judge Anderson, the court of appeals affirmed. Said the court, "[W]e conclude that the roadways of the Community were held out for use of the public as a whole. The undisputed evidence establishes that any person with a driver's license and access to a motor vehicle was permitted to use the Community's roads; on a daily basis postal employees, cable television employees, contractors, food service employees, repairpersons, and newspaper delivery persons were granted access to the Community. In addition, members of the general public were given access to the Community's roadways to show and view houses for sale, watch fireworks, play golf, attend weddings, and to just look around" (¶ 19).

"There is no evidence the Community made any attempt to limit access to residents only … There is no signage, fence or wall restricting entry. It is clear that the Community's residents permitted the public unimpeded access in order that the residents could pursue their leisure activities and depend on other members of the public to fulfill their daily needs. It is equally clear that a purpose of the main security station was to facilitate entry into the Community for those without security passes or security stickers" (¶ 20).

Accordingly, the appellate court concluded that the roadways of Geneva National Community were "held out to the public for use of their motor vehicles," and the OWI laws could be enforced on those roadways.

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Real Property

JP Morgan Chase Bank v. Green Community Action Inc., 2008 WI App 78 (filed 3 Apr. 2008) (ordered published 28 May 2008)

M&I Bank held a first mortgage on the same property on which JP Morgan held a second mortgage. M&I brought a foreclosure action, waived any deficiency judgment, and obtained a default foreclosure judgment in January 2006 when no other served party, including JP Morgan, responded or appeared. At a sheriff's sale held in March 2006, Hare Investments was the high bidder. JP Morgan, however, brought a separate foreclosure action on its second mortgage, also in January 2006, which made no reference to M&I's action. Unaware that the second case involved the same property, the circuit court entered a foreclosure judgment, also in March 2006. When the banks became aware of their dueling foreclosure cases, M&I assigned its interest to JP Morgan, which then moved to set aside the first sale. Hare Investments then intervened, and the circuit court ruled that "JP Morgan's explanation that it did not know about the first sale until after it occurred did not entitle JP Morgan to start its own foreclosure action and have a second sale because JP Morgan was properly served with the summons and complaint in the first action and there was the requisite public notice of the first sale. The court rejected JP Morgan's argument that it should not confirm the first sale because the amount received was grossly inadequate. The court rejected JP Morgan's alternative argument that the price was inadequate and there was a mistake in the process. The court concluded that JP Morgan had established no other equitable basis for not confirming the first sale" (¶ 9).

In an opinion written by Judge Vergeront, the court of appeals affirmed. As a junior lienholder, JP Morgan did not have the right to redeem property under Wis. Stat. section 846.13 (see ¶ 14). The court next turned to Wis. Stat. section 846.15, which, it assumed without deciding, subrogated JP Morgan to M&I's rights "as to the judgment any time before confirmation of the sale" (¶ 20). The court rejected JP Morgan's contention that a purchaser (Hare Investments) could not apply for confirmation of the sale and that under section 846.15, M&I conveyed to JP Morgan its right to either apply for, or withdraw from (as here), the application for confirmation (see ¶ 21). This argument in turn implicated other statutes in chapter 846.

"In summary, neither the language of Wis. Stat. § 846.165 nor JP Morgan's arguments persuade us that the statute precludes a purchaser from obtaining a confirmation hearing, where, as here, the mortgagee's application for confirmation has been withdrawn. Instead, we conclude it is more reasonable to permit the purchaser to apply for confirmation in these circumstances. This construction affords the purchaser an opportunity to have the court decide whether it is entitled to transfer of the property under applicable law, and it does not undermine the rights of the lienholders and mortgagor to object to certification as provided by law" (¶ 31).

The court also held that the value obtained by the first sale was reasonable and thus "fair," especially in light of JP Morgan's failure to participate in the first sale. Finally, the court rejected JP Morgan's alternate contention that "it had the right to bring a separate action to foreclose its own mortgage and obtain its own order for a sale, even if it was named and served in the first action" (¶ 41).

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Torts

Horst v. Deere & Co., 2008 WI App 65 (filed 30 Apr. 2008) (ordered published 28 May 2008)

A father accidentally cut off the feet of his young son while cutting grass with a lawn tractor. The family brought negligence and strict product liability claims against the manufacturer for designing a lawn tractor with an override switch that allowed the operator, as here, to mow in reverse. During the jury trial, the judge read an instruction that inquired whether the lawn tractor was defective and unreasonably dangerous from the perspective of a "user/consumer"; the judge rejected the plaintiffs' request to insert the words "or bystander." The jury decided the question in the manufacturer's favor.

The court of appeals, in an opinion written by Judge Snyder, affirmed. Reviewing the case law, the court held that Wisconsin adopts the consumer contemplation test as set forth in Green v. Smith & Nephew, AHP, Inc., 2001 WI 109, ¶ 46, in which "the court declined to `abandon or qualify this state's exclusive reliance on the consumer-contemplation test,' and pronounced that `Wisconsin is committed to the consumer-contemplation test in all strict products liability cases.' With this mandate from the supreme court, we hold that the circuit court properly submitted WIS JI - CIVIL 3260, which reflects the consumer contemplation test, to the jury. We further hold that the court's supplement to the instruction accurately stated that bystanders are protected by the doctrine of strict liability if the bystander is injured by a defective product that is unreasonably dangerous to the ordinary user or consumer" (¶ 20).

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