Discovery Sanctions – Unjust Enrichment – Punitive Damages
Mohns Inc. v. BMO Harris Bank Nat’l Ass’n, 2021 WI 8 (filed 2 Feb. 2021)
HOLDINGS: 1) The circuit court did not erroneously exercise its discretion when it imposed judgment on liability as a sanction for BMO’s discovery violations. 2) Because the law does not permit recovery of damages for both breach of contract and unjust enrichment arising from the same conduct, the award of damages for unjust enrichment must be set aside. 3) The punitive-damages award must be overturned because it was based on an award of damages for contract claims; punitive damages are recoverable only in tort.
SUMMARY: This case arose from a condominium construction project involving Mohns Inc. as the general contractor and BMO Harris Bank National Association (as successor by merger to M&I Marshall & Ilsley Bank) as the bank financing the project. Mohns filed a complaint against BMO alleging three causes of action: 1) BMO breached its contract to pay Mohns for its work on the condominium project; 2) BMO was unjustly enriched by the construction work Mohns provided on the condominium project, which increased the value of the loan sold by BMO to MIL Acquisition Venture LP (hereinafter MIL); and 3) BMO misrepresented to Mohns that funds were available to pay it for the work it performed on the project, which BMO would pay Mohns if it continued constructing the condominiums (see ¶ 9).
The circuit court granted summary judgment to Mohns on the issue of liability as a sanction for BMO’s discovery violations. The case proceeded to a jury trial on the issue of damages. The jury awarded compensatory damages to Mohns for breach of contract and unjust enrichment as well as punitive damages. BMO appealed and the court of appeals, in an unpublished decision, affirmed. In an opinion authored by Justice R.G. Bradley, the supreme court affirmed in part and reversed in part.
With regard to the imposition of summary judgment on liability as a sanction for BMO’s discovery violations, the court indicated that the law allows for this sanction. See Wis. Stat. § 804.12(2). As a prerequisite to imposing this sanction, a circuit court must find that the sanctioned party engaged in egregious or bad-faith conduct, without a clear and justifiable excuse. However, the circuit court need not determine that the opposing party was prejudiced thereby (see ¶ 37).
The supreme court concluded that the trial judge did not erroneously exercise discretion when imposing the sanction of judgment on liability against BMO (see ¶ 38).
Said the court: “BMO engaged in a persistent pattern of avoidance, delay, and disregard of the circuit court’s discovery order. The record demonstrates that BMO initially refused to produce any documents at all, instead claiming that all relevant documents had already been turned over in [earlier litigation against MIL] in 2014. BMO’s responses to interrogatories and requests to admit were evasive at best and contained outright lies at worst. BMO produced for deposition two corporate representatives who had little-to-no relevant knowledge of the topics identified for discovery, despite the circuit court’s direct order to produce an individual with the requisite knowledge” (¶ 40).
“After insisting that all relevant documents had been turned over in 2014, BMO ‘discovered’ thousands of documents – over 4,000 pages – at the last hour, days before the second corporate deposition. BMO delayed further in making those documents available to Mohns’s lawyer by giving him a password that did not work. Within that batch of thousands of documents was the ‘smoking gun’ email” (¶ 41).
The supreme court quoted the circuit judge’s description of BMO “thumb[ing] its nose at the rules of discovery” from the beginning to the very end (¶ 42).
The supreme court also concluded that the jury’s award of damages for unjust enrichment must be set aside. “Wisconsin law does not permit a plaintiff to recover simultaneously for breach of contract and unjust enrichment based on the same conduct or subject matter. Because the circuit court determined that BMO breached an agreement to pay Mohns for its labor and materials, for which the jury awarded Mohns damages, the jury’s award of damages for unjust enrichment based upon the labor and materials supplied by Mohns must be set aside” (¶ 62).
Additionally, Wisconsin law only permits a punitive-damages award to be based on a tort, not a contract. Because the special-verdict form based the punitive damages on contract, not tort – for which no compensatory damages were sought or awarded – the court also set aside the punitive-damages award (see ¶ 62).
Justice Ziegler and Justice Hagedorn did not participate in this case.
Sex Offenders – Registration – Homelessness
State v. Savage, 2020 WI 93 (filed 23 Dec. 2020)
HOLDING: Homelessness is not a defense to a failure to comply with the sex offender registry requirements.
SUMMARY: The defendant pleaded guilty to violating the sex offender registration statute by failing to provide an updated address. A year later, he filed a postconviction motion to withdraw his guilty plea on grounds that trial counsel provided ineffective assistance of counsel by failing to inform him that case law recognizes an “exemption” (of sorts) for homeless sex offenders. The circuit court denied his motion, but in an unpublished decision the court of appeals reversed.
The supreme court reversed the court of appeals in a unanimous opinion authored by Justice Ziegler. State v. Dinkins, 2012 WI 24, 339 Wis. 2d 78, 810 N.W.2d 787, did not create any exemption to the sex offender registration requirements for homeless sex offenders. Because there was no such exemption, no manifest injustice affected the defendant’s guilty plea. Ineffective assistance of counsel requires a finding that counsel’s performance fell below an objective standard of reasonableness (see ¶ 31). Prejudice (a reasonable probability of a different result) must also be demonstrated.
The supreme court revisited its opinion in Dinkins when explaining the error made by the court of appeals in this case. The defendant in this case was subject to a different statutory subsection than the one that applied in Dinkins. “[K]ey factual differences” also distinguished the two cases (¶ 41). In sum, “Dinkins does not conclude that homeless sex offenders are ‘exempt’ from registration requirements” (¶ 46).
Miranda – “Custody” – Incarceration
State v. Halverson, 2021 WI 7 (filed 29 Jan. 2021)
HOLDING: When the defendant, who was in jail, spoke on the telephone with a law enforcement officer in another jurisdiction, he was not in “custody” for Miranda purposes and thus no Miranda waiver was necessary.
Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.
Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.
SUMMARY: The defendant was an inmate in a jail when he received a telephone call from a law enforcement officer who was investigating a claim of theft and destruction of property that occurred at a correctional institution at which the defendant previously had been incarcerated. During the short conversation, the defendant admitted destroying the property of another inmate.
In defending against new charges, the defendant moved to suppress his statements made over the telephone because the officer with whom he spoke never advised him of his Miranda rights and thus never obtained a valid waiver. The trial judge suppressed the statement based on Wisconsin case law holding that incarcerated persons are in “custody” for Miranda purposes.
In a published decision, the court of appeals reversed, relying on later federal case law that flatly contradicted an earlier Wisconsin case, State v. Armstrong, 223 Wis. 2d 331, 588 N.W.2d 606 (1999). See 2019 WI App 66. In a unanimous opinion, authored by Justice Hagedorn, the supreme court affirmed the court of appeals and overruled Armstrong (see ¶ 21).
Current case law from the U.S. Supreme Court rejects a per se approach to “custody.” Thus, a person in prison or jail is not necessarily in custody for Miranda purposes. See Maryland v. Shatzer, 559 U.S. 112 (2010).
In overruling the Wisconsin precedent, the supreme court declined to depart from federal law based on the Wisconsin Constitution’s self-incrimination clause (see ¶ 26). “In short, nothing in Article I, Section 8(1) of the Wisconsin Constitution suggests this court should deem all incarcerated individuals ‘in custody’ for purposes of Miranda. Neither the purposes of Miranda warnings nor the text and history of the Wisconsin Constitution support Halverson’s invitation to adopt his proposed per se rule” (¶ 28).
Applying the current federal approach, the court held that the defendant was not in interrogative custody when speaking on the phone with the officer; hence, no Miranda waiver was required.
Justice R.G. Bradley concurred “in full” but wrote separately to criticize a different Wisconsin confession case, State v. Knapp, 2005 WI 127, 285 Wis. 2d 86, 700 N.W.2d 899, on which the defendant relied. (Knapp held that physical evidence obtained pursuant to a Miranda violation must be suppressed along with any statements by the defendant, an approach also at odds with prevailing federal case law.)
Justice Dallet, joined by Justice A.W. Bradley and Justice Karofsky, also concurred but emphasized “that the Wisconsin Constitution was never intended to be interpreted in lockstep with the United States Constitution. Indeed, when it comes to certain individual liberties, particularly the right against self-incrimination, this court has long held that the Wisconsin Constitution provides greater protection than its federal counterpart” (¶ 50).
Sex Assault – Child Witnesses – Recorded Statements – Wis. Stat. Section 908.08
State v. Mercado, 2021 WI 2 (filed 20 Jan. 2021)
HOLDINGS: The defendant forfeited several grounds of objection to the use of a prerecorded statement by a child victim, and the statement itself was admissible under Wis. Stat. section 908.08(7) and the residual-hearsay exception, Wis. Stat. section 908.03(24).
SUMMARY: The defendant was charged with multiple felonies for sexually assaulting three young children. The victims and their mother lived with the defendant. The children initially reported the assaults to their mother and repeated the allegations to nurses and police investigators. The victims were again interviewed in a prerecorded statement made under the authority of Wis. Stat. section 908.08 (Audiovisual Recordings of Statements of Children). Although the victims struggled with the distinction between the “truth” and a lie in these interviews, the trial judge admitted the recorded statements. A jury convicted the defendant.
In a published decision, the court of appeals reversed, finding that the trial judge erred in admitting the recorded statements under Wis. Stat. section 908.08. See 2020 WI App 14.The supreme court reversed the court of appeals in a unanimous opinion authored by Chief Justice Roggensack.
First, the defendant forfeited some objections on appeal by failing to make a timely objection at trial or raise the issue earlier in the appeal (see ¶ 34). None of the three exceptions to the forfeiture doctrine (plain error, interests of justice, or ineffective assistance) applied here (see ¶ 38).
Second, the court of appeals misconstrued Wis. Stat. section 908.08 in several respects. A trial judge is not obligated to view the entire recording; rather, “a circuit court is to review … those portions necessary to make the requisite findings under Wis. Stat. § 908.08(3).” This is a discretionary determination (¶ 47).
Moreover, it is permissible to have a child testify before the recording is played for the jury, as occurred here. The statute only addresses what happens after it is played for the jury (see ¶ 50). The supreme court reaffirmed prior case law that required the child to be produced for testimony after the recording is played;
“[h]owever, it does not follow that a child is not permitted to testify before his or her video-recording simply because a child witness is not required to do so” (¶ 52).
Last, the trial judge properly admitted the recorded statements under Wis. Stat. sections 908.08 and 908.03(24) (the residual-hearsay exception). Here the supreme court applied the multifactor test as set forth in State v. Sorenson, 143 Wis. 2d 226, 421 N.W.2d 77 (1988). It reiterated that “no single factor is dispositive.” “Even if some portions of some of the factors were missing, there was other evidence that overwhelmingly supports admitting the video-recording” (¶ 67).
Shorelands – Zoning – Subdivision Authority
State ex rel. Anderson v. Town of Newbold, 2021 WI 6 (filed 27 Jan. 2021)
HOLDING: The town of Newbold ordinance establishing minimum shoreland frontage is not a zoning ordinance; rather, it is a permissible exercise of the town’s subdivision authority.
SUMMARY: The town of Newbold denied Anderson’s attempt to subdivide his property because the two resulting lots would not meet the town’s applicable minimum-shoreland-frontage requirement as set by town ordinance. Anderson argued that the town’s minimum-shoreland-frontage requirement is unenforceable because it is a shoreland-zoning regulation that the town does not have the authority to enact. He characterized the ordinance as a zoning ordinance in disguise that regulates shorelands in a manner contrary to Wis. Stat. section 59.692. The town, on the other hand, contended that the shoreland-frontage requirement is a permissible exercise of its subdivision authority.
On certiorari review, the circuit court affirmed the town’s decision. In a published opinion, the court of appeals affirmed the decision of the circuit court, concluding that the town had authority to enforce the shoreland ordinance, which the appellate court believed was enacted as a lawful exercise of the town’s subdivision authority under Wis. Stat. section 236.45. See 2019 WI App 59.
In a majority opinion authored by Justice A.W. Bradley, the supreme court affirmed the court of appeals. It commenced its analysis by noting that, although general zoning authority is granted to both counties and towns, the authority to enact zoning ordinances specific to shorelands lies with counties alone (see ¶ 24; Wis. Stat. § 59.692).
But zoning ordinances are not the only means by which governmental entities can engage in community planning. The Wisconsin Legislature has additionally given subdivision authority to certain entities in Wis. Stat. section 236.45, which the supreme court has recognized reserves to towns a broad area of discretion in implementing subdivision control (see ¶¶ 26-27, 43).
“Although they often work together, zoning and subdivision regulations provide separate and distinct means of regulating the development of land” (¶ 28). While zoning is aimed at controlling the uses of land and existing resources, subdivision regulations are designed to control the division of land and to ensure that such developments on it are designed to accommodate the needs of subdivision residents. See Town of Sun Prairie v. Storms, 110 Wis. 2d 58, 327 N.W.2d 642 (1983).
The essential question before the supreme court was whether the town ordinance is a zoning ordinance or a subdivision ordinance. The court concluded that the ordinance is not a zoning ordinance. It does not concern land use and it does not separate compatible and incompatible land uses, which is a key purpose of a zoning ordinance (see ¶ 47). Accordingly, the restrictions on enactment of zoning ordinances set forth in Wis. Stat. section 59.692 do not apply (see ¶ 48).
Instead, the court concluded that the ordinance is a subdivision ordinance enacted under Wis. Stat. section 236.45 (see ¶ 49). It stems from the town’s subdivision authority – not zoning authority (see id.).
Justice Hagedorn filed a dissenting opinion that was joined in by Justice R.G. Bradley.
Future Dangerousness – Extensions – Proof “Alternatives”
Waupaca Cnty. v. K.E.K. (In re Mental Commitment of K.E.K.), 2021 WI 9 (filed 9 Feb. 2021)
HOLDING: Extension of a petitioner’s mental commitment comported with the statutes and met due-process and equal-protection requirements.
SUMMARY: The circuit court extended the petitioner’s involuntary commitment pursuant to Wis. Stat. chapter 51. To prove the petitioner’s current dangerousness, the county relied on Wis. Stat. section 51.20(1)(am). In this case, the petitioner challenged the statute’s constitutionality as well as its application. In an unpublished decision, the court of appeals rejected these challenges.
The supreme court affirmed in a majority opinion authored by Justice Ziegler. A recommitment, as in this case, requires a showing that a person is mentally ill and currently dangerous, the same elements that govern an initial commitment. “Section 51.20(1)(am) provides an alternative path to prove current dangerousness provided the evidence demonstrates ‘a substantial likelihood, based on the subject individual’s treatment record, that the individual would be a proper subject for commitment if treatment were withdrawn’” (¶ 3).
The “alternative path” is necessary absent proof of recent acts evincing dangerousness. The Wis. Stat. section 51.20(1)(am) alternative “works in combination with the five standards” of dangerousness found in Wis. Stat. section 51.20(1)(a)2.a.-e., which are applied in the initial commitment (¶ 19). The supreme court discussed the statute in detail in light of prior case law, finding that it comported with due process (see ¶ 29) and equal protection (see ¶ 31). The court also rejected an “as applied” challenge, which amounted to “an evidentiary sufficiency challenge” (¶ 38).
Justice Dallet, joined by Justice Karofsky, dissented on the ground that Wis. Stat. section 51.20(1)(am) “is facially unconstitutional because it eliminates the constitutionally required showing of current dangerousness in favor of ‘alternative’ evidence that shows only that a person was or might become dangerous” (¶ 46). The alternative effectively equates past dangerousness with present dangerousness (see ¶ 52).