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Vol. 72, No. 4, April 1999 |
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Court of Appeals Digest
By Prof. Daniel D. Blinka &
Prof. Thomas J. Hammer
| Civil Procedure
| Criminal Procedure |
| Family Law | Insurance
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| Sex Predator Law | Torts
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Insurance
Auto Coverage - Notice of Policy Changes - Stacking
Hanson v. Prudential
Property & Casualty Ins. Co., No. 98-0692 (filed
12 Jan. 1999) (ordered published 23 Feb. 1999)
Hanson was involved in a serious car accident. He settled
with the tortfeasor for $150,000 and then filed claims with his
own insurer, Prudential, for uncompensated injuries. Prudential
denied coverage. Prudential filed this appeal from a judge's
determination that Hanson was an "underinsured motorist"
according to a "'damages basis' definition"
set forth in a "prior coverage period automobile liability
policy" and that Hanson could "stack" his underinsured
(UIM) coverage. The court of appeals, in an opinion written by
Judge Myse, affirmed in part and reversed in part.
As to the first issue, Prudential argued that Hanson failed
to meet the "limits basis" definition of "underinsured
motorist" contained in a renewal policy. The court held,
however, that Prudential failed to comply with the statutory
notification procedures required by section
631.36(5), of the Wisconsin Statutes and thus could not assert
the new definition. The statute "requires that when an insurer
offers to renew a policy on new, less favorable terms within
sixty days of the renewal date, the insurer must inform the insured
that the new terms do not become effective until sixty days after
the renewal is sent or delivered and that the insured has a corresponding
sixty days within which to elect to renew or cancel the policy.
Because Prudential's right to cancel notice did not provide
this information, it is insufficient under the statute."
On the second issue, the trial judge erred by ruling that
Prudential failed to notify Hanson of statutory changes that
affected the anti-stacking clause in the policy. Case law requires
statutory notification of only those changes initiated by the
insurer.
Sexual Predator Law
Discovery - Court-appointed Experts - Reports
State v. Rachel,
No. 98-2074 (filed 27 Jan. 1999) (ordered published 23 Feb. 1999)
Rachel was committed as a sexually violent person under chapter
980 of the Wisconsin Statutes. Because of his indigency, Rachel
asked the court to appoint an expert to examine him under section
980.03(4). The issue is whether chapter 980 commitment proceedings
are subject to the discovery mechanisms in the rules of civil
procedure. In particular, Rachel opposed the state's efforts
to depose his expert and discover the expert's notes, recordings,
or reports. Although chapter 980 specifically provides that the
so-called "rules of criminal evidence" govern sexual
predator commitment trials, the court held that the "rules
of civil procedure" govern discovery and related matters
(emphasis added). On the record, however, it was not clear that
Rachel intended to call this expert as a witness. Absent such
a showing, Rachel could shield the expert's opinions through
the work product doctrine.
Torts
Economic Loss Doctrine - Used Equipment -
Damage to "Other Property"
Cincinnati Insurance
Co. v. AM International Inc., No. 98-0006 (filed 13 Jan.
1999) (ordered published 23 Feb. 1999)
Harris-Intertype Corporation was a manufacturer of printing
presses. In 1975 Harris ceased manufacturing presses but continued
to manufacture and sell replacement parts for those presses.
Harris later was purchased by another company which in turn was
purchased by defendant AM International in 1986. AM continued
to operate the replacement parts business until 1995.
Burton & Meyer Inc. is a commercial printing company in
Milwaukee. In 1991 it purchased a 1973 Harris printing press
in an "as is/where is" condition. Sometime between
1986 when AM International acquired Harris's replacement
parts business and 1991 when the press was purchased by Burton
& Meyer, a gear in the press was removed and replaced by
a gear manufactured and sold by AM International. In 1994 one
or more of the teeth on the gear broke off and caused damage
to the press, bringing production to a halt. Burton & Meyer
suffered more than $130,000 in property damage, repair costs,
and loss of business income. It was compensated for its loss
by its insurer, Cincinnati Insurance Company. Cincinnati then
brought this subrogation action against AM International for
negligence and strict liability. AM filed a motion for summary
judgment, arguing that Cincinnati's claims were barred by
the economic loss doctrine. The circuit court denied the motion.
The sole issue on appeal was whether the economic loss doctrine
applies where a commercial purchaser buys used equipment containing
a defective replacement part that later causes damage to the
equipment and results in repair costs and loss of business income.
According to the economic loss doctrine, a commercial purchaser
of a product cannot recover from a manufacturer under tort theories
of negligence or strict products liability damages that are solely
"economic" in nature. Generally, economic loss refers
to a decrease in the value of a product because it is inferior
in quality and does not work for the general purposes for which
it was manufactured and sold. The economic loss doctrine does
not bar a commercial purchaser's claims based upon personal
injury or damage to property other than the product, or economic
loss claims that are alleged in combination with noneconomic
losses. "In short, economic loss is damage to a product
itself or monetary loss caused by the defective product, which
does not cause personal injury or damage to other property."
See Daanen & Janssen Inc. v. Cedarapids Inc.,
216 Wis. 2d 394, 573 N.W.2d 842 (1998).
In a decision authored by Judge Snyder, the court of appeals
was persuaded that AM International's gear was a component
part of the Harris press and that the rest of the press that
was damaged cannot be considered "other property" for
purposes of the economic loss doctrine. The replacement gear
was specifically designed by AM to replace gears in the press.
As such, it has no function apart from the machine for which
it was manufactured. The court's conclusion was not altered
by the fact that the replacement gear was manufactured at a different
time and by a different company than the press itself. Considering
the age of the press, it should have been no surprise to Burton
& Meyer that the press contained replacement parts. The court
concluded that it was immaterial that defective parts of a machine
are replacements for purposes of the economic loss doctrine.
The court noted that contract law and warranty law are better
suited than tort law for dealing with purely economic loss in
the commercial arena. In this case Burton & Meyer's
losses were solely economic. Because Cincinnati's claims
were for negligence and strict liability, it was attempting to
recover in tort what are essentially contract damages. For these
reasons, the court of appeals reversed the trial court's
judgment and remanded with directions that the trial court enter
summary judgment in favor of AM International.
Superseding Causes - Arson
Giebel v. Richards,
No. 97-2085 (filed 19 Jan. 1999) (ordered published 23 Feb. 1999)
An arsonist started a fire at an apartment building which
spread and destroyed an adjacent garage and attached building
owned by the Giebelses. The Giebelses sued the apartment building
owners under a variety of theories. A jury allocated causal negligence
at 55 percent for the apartment owners, 30 percent for the tenants
who placed the garbage that the arsonist ignited, and 15 percent
to the Giebelses.
The court of appeals, in an opinion written by Judge Schudson,
reversed. The court agreed that the doctrine of "superseding
cause" relieved the apartment owners of liability. Even
assuming that the owners bore some responsibility for the garbage
that accumulated behind the apartment building, it was "highly
unlikely" that an arsonist would ignite it.
Medical Malpractice - Chiropractors - Statute of
Limitations
Arenz v. Bronston,
No. 98-1357 (filed 21 Jan. 1999) (ordered published 23 Feb. 1999)
The sole issue in this case concerned whether the plaintiff's
malpractice action against a chiropractor was governed by the
general personal injury statute of limitations, section
893.54 of the Wisconsin Statutes, or the medical malpractice
statute of limitations, section 893.55 of the Wisconsin Statutes.
The former permits actions to be filed within three years of
the discovery of an injury while the latter restricts such actions
to within one year of the discovery. The court held that a chiropractor
is a "health care provider" within the meaning of section
893.55; thus, the one-year statute applies. Chiropractors diagnose,
treat, and care for their patients and are licensed by the state
examining board. The plaintiff's failure to file the action
within one year of the injury's discovery rendered her complaint
time-barred.
Prof. Daniel D. Blinka and Prof. Thomas
J. Hammer invite comments and questions about the digests. They
can be reached at the Marquette University Law School, 1103 W.
Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.
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