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    Supreme Court Digest

    In this column, Prof. Daniel D. Blinka and Prof. Thomas J. Hammer summarize all decisions of the Wisconsin Supreme Court (except those involving lawyer or judicial discipline).

    Daniel D. Blinka & Thomas J. Hammer

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    Attorneys

    Legal Malpractice – Nonclients – Negligent Administration of Estates

    MacLeish v. Boardman & Clark LLP, 2019 WI 31 (filed 26 March 2019)

    HOLDING: The court upheld the general rule of nonliability of a lawyer to a nonclient, except in narrow instances involving the drafting and execution of a will as well as the administration of an estate.

    SUMMARY: In 1967, counsel drafted a will for Charles MacLeish. When MacLeish died in 1984, another lawyer handled the administration of the estate, advising Mr. MacLeish’s widow to make full use of the federal estate tax marital deduction. After Mrs. MacLeish died in 2008, the estate incurred a federal estate tax of more than $250,000. The MacLeish children sued the law firm for malpractice, asserting that the estate should have been administered differently and that a trust should have been established.

    The circuit court ruled that as nonclients, the children could not bring a legal malpractice claim against the lawyer unless they could show that the lawyer’s actions “thwarted” the decedent’s wishes – the so-called Auric exception. The circuit court granted summary judgment to the lawyer. In an unpublished decision, the court of appeals affirmed.

    The supreme court affirmed the court of appeals in an opinion authored by Justice A.W. Bradley. First, the supreme court declined to displace the narrow Auric exception (Auric v. Continental Cas. Co., 111 Wis. 2d 507, 509, 331 N.W.2d 325 (1983)) with a broader rule set forth in the Restatement (Third) of the Law Governing Lawyers § 51 (see ¶ 33).

    “Adopting the Restatement would unmoor the exception to nonliability from its constitutional foundation and potentially open liability of attorneys to third parties in a variety of contexts beyond the facts of this case” (¶ 38). The Auric standard is “consistent with the ethical duties of estate planning attorneys” (¶ 41).

    The supreme court, however, extended Auric to claims of negligent administration of an estate (see ¶¶ 44, 48). Applying the rule to the facts, the court further held that Mr. MacLeish’s “clear testamentary intent” had not been “thwarted” by the absence of a trust (see ¶ 52).

    Business Law

    Limited Liability Companies – Standing – Members – Common-law Claims

    Marx v. Morris, 2019 WI 34 (filed 2 April 2019)

    HOLDINGS: 1) Members of a limited liability company (LLC) have standing to assert individual claims against other members and managers. 2) Principles of derivative standing do not apply to “the distinct business form of an LLC.” 3) The plaintiffs’ common-law claims survive. 4) Genuine issues of material fact remain for trial.

    Daniel D. Blinkaedu daniel.blinka marquette Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.

    Thomas J. Hammeredu thomas.hammer marquette Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.

    SUMMARY: Members of an LLC sued another LLC member, alleging he had sold valuable assets to another company in which he was interested. The plaintiffs said this was a conflict of interest that violated Wis. Stat. section 183.0402(1). They also alleged common-law claims relating to fair dealing. The circuit court denied the defendant’s motion for summary judgment, and the court of appeals certified the matter to the supreme court.

    The supreme court affirmed in an opinion authored by Chief Justice Roggensack. First, “the members of an LLC have standing to assert individual claims against other members and managers of the LLC based on harm to the members or harm to the LLC. Corporate principles of derivative standing do not apply to the distinct business form of an LLC” (¶ 4). The court rejected the contention that Wis. Stat. section 183.1101 requires that claims against LLC members be brought in the name of the LLC and also held that the statute does not limit a member’s ability to sue other members (see ¶ 39).

    Second, Wisconsin’s LLC laws, Wis. Stat. ch. 183, did not eliminate the members’ common-law claims (see ¶ 47). No provision of Wis. Stat. chapter 183 “displaces” their common-law claims; chapter 183 does not state or imply that Wis. Stat. section 183.0402 “constitutes the entirety of an LLC member’s or manager’s obligations to other members and to the LLC” (¶ 53).

    Third, genuine issues of material fact precluded summary judgment (a necessarily fact-intensive analysis) (see ¶ 55).

    Concurring in part and dissenting in part, Justice Kelly was joined by Justice Abrahamson and Justice R.G. Bradley in an opinion that addressed “six erroneous propositions” advanced by the majority. These justices said, for example, that most of the errors arose from the majority’s failure to recognize that “the distinction between an LLC and its members necessarily affects who may bring what types of actions against which defendants” (¶ 70).

    Criminal Procedure

    Plea of Not Guilty by Reason of Mental Disease or Defect – Erroneous Information About Maximum Period of Civil Commitment

    State v. Fugere, 2019 WI 33 (filed 28 March 2019)

    HOLDINGS: 1) A circuit court is not required to inform a defendant who enters a plea of not guilty by reason of mental disease or defect (NGI) about the maximum possible term of civil commitment. 2) The circuit court’s provision of erroneous information about the maximum period of civil commitment the defendant faced on his NGI plea was harmless error.

    SUMMARY: Fugere was charged with four counts of first-degree sexual assault of a child under the age of 12. Pursuant to the plea agreement, the defendant pleaded NGI to one of the four counts, waived his right to trial regarding guilt, and admitted that there was a factual basis that he committed the sexual assault. In addition, the state and the defendant agreed to stipulate that the defendant, as a result of a mental disease or defect, lacked substantial capacity to appreciate the wrongfulness of his conduct or conform his conduct to the requirements of the law. Finally, the parties agreed to recommend that the defendant be civilly committed for 30 years as a result of being found not guilty by reason of mental disease or defect.

    At the plea hearing, the circuit court judge correctly advised the defendant that the maximum penalty for first-degree sexual assault is 60 years. However, the judge inaccurately informed him that the potential maximum period of civil commitment on a finding of not guilty by reason of mental disease or defect is 30 years when in fact the maximum is 40 years. After finding the defendant not guilty of sexual assault by reason of mental disease or defect, the court ordered that he be committed for 30 years.

    The defendant later moved to withdraw his NGI plea because of the erroneous information the court provided about the potential length of the civil commitment he faced. The circuit court denied the motion. In a published decision, the court of appeals affirmed. See 2018 WI App 24. In a majority opinion authored by Justice Ziegler, the supreme court affirmed the court of appeals.

    The supreme court concluded that “a circuit court is not required to inform an NGI defendant of the maximum possible term of civil commitment at the guilt phase (1) because a defendant who prevails at the responsibility phase of the NGI proceeding has proven an affirmative defense in a civil proceeding, avoiding incarceration, and is not waiving any constitutional rights by so proceeding in that defense; and (2) because an NGI commitment is not punishment but rather, is a collateral consequence to one who successfully mounts an NGI defense to criminal charges. We therefore decline to exercise our superintending and administrative authority to require circuit courts to advise NGI defendants of the maximum period of civil commitment” (¶ 55).

    The majority further concluded that “the circuit court’s error was harmless because it was unrelated to the guilt phase of the NGI defense, and instead, the inaccurate information pertained to the potential civil commitment at the responsibility phase. Additionally, Fugere received the benefit of his plea agreement with the State and otherwise understood the consequences of prevailing on an NGI defense as he was already civilly committed for an unrelated charge. Thus, there was no manifest injustice and we affirm the court of appeals” (¶ 56).

    Justice A.W. Bradley filed a dissenting opinion that was joined in by Justice Abrahamson and Justice Dallet.

    Sentence Credit – Time Spent “in Custody”

    State v. Friedlander, 2019 WI 22 (filed 12 March 2019)

    HOLDING: The defendant was not entitled to sentence credit for time when he was at liberty and not subject to an escape charge.

    SUMMARY: Friedlander, the defendant, was serving time in a state prison. He was concurrently serving eight months of jail time that had been imposed as a condition of probation in an unrelated case from Jefferson County. When the defendant was released from prison, 75 days remained to be served as a condition of probation. However, instead of turning over the defendant to the Jefferson County authorities to serve that time, the prison authorities released him outright.

    Sixty-five days after Friedlander was released and while he was still at liberty, the Jefferson County Circuit Court held a hearing to determine how much of the conditional jail time the defendant still needed to serve. The defendant argued that he was entitled to sentence credit for the 65 days he was at liberty. Citing State v. Riske, 152 Wis. 2d 260, 448 N.W.2d 260 (Ct. App. 1989), and State v. Dentici, 2002 WI App 77, 251 Wis. 2d 436, 643 N.W.2d 180, he claimed that he should receive the 65-days’ credit because he was at liberty through no fault of his own.

    The circuit court determined that Friedlander had to serve the full 75 days still remaining on his conditional jail time. In an unpublished, per curiam opinion, the court of appeals reversed, relying on Riske and Dentici.

    In a majority opinion authored by Justice Ziegler, the supreme court reversed the court of appeals. It held “for the purpose of receiving sentence credit under § 973.155 [for time spent in custody], a defendant is ‘in custody’ whenever the defendant is subject to an escape charge under Wis. Stat. § 946.42, or another statute which expressly provides for an escape charge, as this court held in [State v.] Magnuson, [2000 WI 19, 233 Wis. 2d 40, 606 N.W.2d 536]. In doing so, we overrule the court of appeals’ decisions in Riske and Dentici” (¶ 48).

    The court then analyzed whether the defendant was entitled to sentence credit for the time he was at liberty after being mistakenly released from prison without being transferred to Jefferson County to serve his remaining conditional jail time. “We conclude that Friedlander is not entitled to sentence credit because Friedlander, who was at liberty, could not have been subject to conviction for escape under Wis. Stat. § 946.42” (¶ 49).

    Justice Abrahamson and Justice A.W. Bradley filed separate dissenting opinions.

    Treatment Courts – Expulsion – Substantive and Procedural Due Process

    State v. Keister, 2019 WI 26 (filed 19 March 2019)

    HOLDINGS: 1) A defendant does not have a fundamental liberty interest in continued participation in a treatment court program funded by Wis. Stat. section 165.95. 2) As a funding statute, section 165.95 need not provide expulsion procedures to survive a procedural due process challenge.

    SUMMARY: This case concerns drug treatment court programs and the expulsion of participants therefrom. Wisconsin Statutes section 165.95(2) provides, in relevant part, that the Wisconsin Department of Justice shall make grants to counties and tribes “to enable them to establish and operate programs … that provide alternatives to prosecution and incarceration for criminal offenders who abuse alcohol or other drugs.”

    The statute sets forth rules and guidelines for programs receiving grant funds. Section 165.95(3)(c) requires that programs created pursuant to the grant program establish criteria for a person’s participation, including criteria that specify that a “violent offender” is not eligible to participate in the program. Section 165.95(1)(a) (later renumbered as 165.95(1)(bg)1.) defines a violent offender as a person who “has been charged with or convicted of an offense in a pending case and, during the course of the offense, the person carried, possessed, or used a dangerous weapon, the person used force against another person, or a person died or suffered serious bodily harm” (¶ 7).

    Facing expulsion from a treatment program, the defendant challenged the constitutionality of Wis. Stat. section 165.95(1)(a) and (3)(c). He asserted that the statutes violated his substantive and procedural due process rights because they require mandatory expulsion of a “violent offender” from drug treatment court with no requirement that the allegations be proven and no meaningful opportunity to be heard before expulsion. The circuit court issued a declaratory judgment, ruling that section 165.95(1)(a) and (3)(c) violated the defendant’s substantive and procedural due process rights.

    At the supreme court, the defendant conceded that the circuit court erred in declaring the statute unconstitutional. In a per curiam opinion, the supreme court agreed with this concession and concluded that the defendant “does not have a fundamental liberty interest in continued participation in a treatment court funded by Wis. Stat. § 165.95 and that as a funding statute, § 165.95 need not provide expulsion procedures to survive a procedural due process challenge” (¶ 12). Accordingly, the supreme court summarily reversed the circuit court’s declaratory-judgment order.

    Confrontation – Other Acts – Ineffective Assistance of counsel

    State v. Reinwand, 2019 WI 25 (filed 19 March 2019)

    HOLDINGS: 1) The victim’s statements were not testimonial hearsay for confrontation purposes. 2) Other-act evidence was properly admitted. 3) Defense counsel was not ineffective at trial.

    SUMMARY: The defendant was convicted of first-degree intentional homicide for the shooting death of the father of the defendant’s granddaughter. The supreme court took the case on certification from the court of appeals and, in an opinion authored by Chief Justice Roggensack, affirmed the circuit court.

    First, the state’s use of various statements by the victim about the defendant did not offend the confrontation clause. Considering the host of factors set forth in Ohio v. Clark, 135 S. Ct. 2173 (2015), the court held that the hearsay was not testimonial; that is, the statements were made to family and friends and not for the “primary purpose” of providing evidence against the defendant.

    Second, other-act evidence involving a “prior non-violent burglary” was properly admitted to undercut the defendant’s assertion of a memory loss. The evidence took the form of a letter by the defendant to his granddaughter (see ¶ 33). The defendant had told police officers he could recall neither the homicide nor the burglary (see ¶ 35).

    Third, defense counsel was not ineffective during the trial or at sentencing (a necessarily fact-intensive analysis).

    Justice Dallet concurred, joined by Justice Abrahamson and Justice A.W. Bradley. Although “almost all” of the victim’s statements to family and friends were nontestimonial, the victim’s instructions to his pastor to have the police “dig deeper” if he were found dead was testimonial (¶ 59). The victim’s purpose was to provide evidence. But although the testimonial hearsay did not fall within the forfeiture-by-wrongdoing exception, any error was harmless.

    Employment Law

    Compensation – Commute Time

    Kieninger v. Crown Equipment Corp., 2019 WI 27 (filed 20 March 2019)

    HOLDING: Statutes and regulations did not require an employer to pay employees for the time the employees spent commuting between their homes and a job site in a company-owned vehicle.

    SUMMARY: The plaintiffs are technicians who worked for a company that manufactures industrial equipment, including forklifts. They drive to job sites to repair and service machinery in vans, stocked with tools and equipment, that the company owns. Technicians are given the option of commuting between work and home in their personal vehicles or in the company’s vans. After the Department of Workforce Development (DWD) denied the plaintiffs’ claim for compensation for driving one of the company’s vans directly from home to a job site, the circuit court ruled in the technicians’ favor.

    The court of appeals disagreed with the circuit court. In an unpublished decision it remanded the matter for further briefing but agreed that the federal Employee Commuting Flexibility Act (ECFA) did not “guide” Wisconsin law.

    In a decision authored by Justice Kelly, the supreme court reversed the court of appeals, concluding there was no need for further briefing and that the plaintiffs are not entitled to compensation for driving between home and the workplace. The opinion construed pertinent statutes and regulations promulgated by the DWD.

    The court said that the plaintiffs’ contention came down to this: “[They] must be paid for [their] commute because the tools in Crown’s vans are integral and indispensable to a principal activity, to wit, repairing forklifts.” Yet this “proves too much.” “A paralegal who goes home in the evening with a company-provided computer and then travels the next day to a witness’s location to conduct an interview is transporting the resources necessary to do his job. So is every office-worker who brings a file home after work, and then returns it the next morning” (¶ 23). Federal law did not undercut this conclusion; “the ECFA plays no part in our analysis of this case” (¶ 31).

    Finally, the court’s “holding is limited, and applies only to circumstances in which an employee drives a company-provided vehicle between home and a jobsite. It does not disturb the compensability of travel between an employer’s location and a jobsite, or between jobsites” (¶ 32).

    Public Employee Pensions – Construction of Amendment to Milwaukee County Ordinances Affecting Retirement Benefits

    Milwaukee Dist. Council 48 v. Milwaukee Cty., 2019 WI 24 (filed 19 March 2019)

    HOLDING: Within the meaning of the county ordinance under review in this case, union members were not “covered by the terms of a collective bargaining agreement” after that agreement had expired.

    SUMMARY: This case concerns an amendment to Milwaukee County ordinances enacted after the passage of 2011 Wis. Act 10. The amendment applied the “rule of 75” (a calculation according to which an employee receives a full pension when his or her age plus years of service total 75) to employees “not covered by the terms of a collective bargaining agreement” on Sept. 29, 2011, and hired before Jan. 1, 2006. For an employee who, on Sept. 29, 2011, was “covered by the terms of a collective bargaining agreement” with District Council 48 (DC-48) or various other unions specified in the ordinance, the rule of 75 applied only if the employee was hired before Jan. 1, 1994.

    When the ordinance was enacted, the last CBA between the county and DC-48 had expired. The union thus argued that its members were not covered by the terms of a CBA on Sept. 29, 2011, and that the later cutoff date of hire (2006) for rule of 75 benefits applied to them. The county argued that employees represented by DC-48 on Sept. 29 were covered by the terms of a CBA despite the last CBA expiring in 2009 and therefore only those employees hired before Jan. 1, 1994, were eligible for the rule of 75 benefits.

    In this declaratory-judgment action, the circuit court granted DC-48’s motion for summary judgment. In a published decision, the court of appeals affirmed. See 2017 WI App 82.

    In a majority opinion authored by Justice R.G. Bradley, the supreme court affirmed the court of appeals. It concluded that the plain meaning of “covered by the terms” of a CBA includes only those employees bound by a valid CBA. “It is difficult to imagine how an employee could be ‘covered by the terms’ of an expired CBA that no longer binds its parties” (¶ 13). The county’s invocation of the statutory duty to bargain in good faith and to maintain the status quo (see Wis. Stat. § 111.70) did not alter the majority’s interpretation of the plain text of the ordinance (see id.). In short, “[b]ecause no contractual obligations existed on September 29, 2011, the members of DC-48 were not ‘covered by the terms’ of a CBA on that date” (¶ 16).

    Justice Ziegler filed a dissenting opinion that was joined in by Chief Justice Roggensack.

    Taxation

    Property Taxes – Classification of Property as “Agricultural Land”

    State ex rel. Peter Ogden Family Tr. of 2008 v. Board of Review, 2019 WI 23 (filed 14 March 2019)

    HOLDING: For land to be classified as “agricultural land” for property tax purposes, a business purpose is not required.

    SUMMARY: This case concerns two lots owned by the Ogdens in the town of Delafield. They maintain a barn and a one-acre apple orchard on the smaller of the two lots, the remainder of the lot consisting of untillable forest. The apples trees are individually staked out and planted in clean rows. The larger of the two lots contains a four-to-five-acre Christmas tree farm and a three-acre hayfield. The Christmas trees, like the apple trees, are individually staked out and planted in clean rows (see ¶ 43).

    In 2016 the town’s board of review reclassified these two lots from “agricultural land” to “residential.” This resulted in a significant increase in the property tax owed for the two lots. The board’s position was that the land, to qualify for the “agricultural land” classification, had to be farmed for a business purpose. In his testimony before the board, the assessor admitted that the Ogdens had planted things on the lots, but he did not think they did so for business reasons.

    On certiorari review of the board’s decision, the circuit court sustained the board’s classification of the property as “residential.” In a published decision, the court of appeals reversed. See 2018 WI App 26.

    In a majority opinion authored by Justice Abrahamson, the supreme court affirmed. It agreed with the court of appeals that a business purpose is not required for land to be classified as agricultural land for property tax purposes (see ¶ 5). “No statute, administrative rule, or case law supports a business purpose requirement for the ‘agricultural land’ property tax classification” (¶ 32). “As the court of appeals correctly emphasized, it is of great import that the relevant statutes and administrative rules refer to ‘growing’ the relevant crops – here, Christmas trees, apples, and hay – not marketing, selling, or profiting from them” (¶ 31).

    The supreme court further concluded that “under the circumstances of the instant case, the record conclusively demonstrates that the two lots at issue are entitled to be classified as ‘agricultural land’” (¶ 47). Therefore, it remanded the cause to the circuit court “with instructions that the circuit court order the Board: (1) to overturn the Assessor’s assessment and classify the appropriate portions of the two lots as ‘agricultural land’ and ‘agricultural forest land’; and (2) to affix a valuation to the two lots” (id.).

    Justice Dallet filed a concurring opinion that was joined in by Justice A.W. Bradley.




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