Vol. 71, No. 4, April
1998
Court of Appeals Digest
By Prof. Daniel D. Blinka &
Prof. Thomas J. Hammer
| Administrative Law | Civil Procedure
| Commercial Law |
| Contracts | Criminal
Law | Criminal Procedure | Employee
Benefits |
| Insurance | Municipal
Law | Torts |
Administrative
Law
DNR - Navigable Streams - Chapter 227 Administrative Challenges
Turkow v. Wisconsin Dept. of
Natural Resources, No. 97-1149 (filed 13 Jan. 1998) (ordered published
25 Feb. 1998)
In 1994 the Department of Natural Resources (DNR) advised the plaintiff
that two walkways and a fence obstructed a navigable stream on his property
and ordered him to remove all three structures within 45 days or face a
citation. The plaintiff did not pursue any administrative remedy available
under chapter 227 of the Wisconsin Statutes and one of the issues on appeal
was whether the circuit court should have granted DNR's motion to dismiss
a declaratory judgment action brought by the plaintiff. In that declaratory
judgment action the plaintiff was seeking a declaration that DNR lacked
jurisdiction to make orders regarding the stream.
In a decision authored by Judge Cane, the court of appeals concluded
that, based on state sovereign immunity principles and chapter 227 of the
Wisconsin Statutes, the proper method for challenging the DNR's navigability
determination of the stream on the plaintiff's property was to pursue
relief afforded under chapter 227.
The principle of state sovereign immunity is clearly established and
this immunity has been extended to state agencies. Plaintiff must point
to a legislative enactment authorizing suit against the state in order to
maintain his or her action. The consent to sue a state agency is set forth
in chapter 227 and constitutes the exclusive method for judicial review
of administrative agency determinations. The record in this case established
that the plaintiff did not pursue any remedy available under chapter 227
and, accordingly, the DNR's motion to dismiss his declaratory judgment
action should have been granted by the circuit court on that basis.
Civil
Procedure
Issue Preclusion - Nonmutual Offensive Use - Invocation Against
Government Agency Defendant
Gould v. Wisconsin Dept. of
Health and Social Services, No. 97-2602 (filed 29 Jan. 1998) (ordered
published 25 Feb. 1998)
Gould received a lump sum payment for retroactive Social Security Disability
Income (SSDI) benefits while she was receiving Aid to Families with Dependent
Children (AFDC) benefits for herself and her son. A Department of Health
and Social Services (DHSS) hearing officer decided that Gould was overpaid
AFDC benefits as a result of that lump sum payment and was properly terminated
from AFDC; and that her subsequent application for AFDC benefits for her
son was properly denied. Gould appealed the circuit court's order affirming
that decision. Among the issues before the court of appeals was whether
the doctrine of issue preclusion should have prevented DHSS from litigating
the question of the plaintiff's AFDC eligibility under the facts described
above when two prior circuit court decisions involving different plaintiffs
decided the same issue adversely to DHSS.
In an opinion authored by Judge Vergeront, the court of appeals concluded
that issue preclusion did not apply in this case. In Northern States
Power Co. v. Bugher, 189 Wis. 2d 541, 525 N.W.2d 723 (1995), the Wisconsin
Supreme Court adopted the terms "claim preclusion" and "issue
preclusion" to replace the terms "res judicata" and "collateral
estoppel." Issue preclusion refers to the effect of a judgment in foreclosing
relitigation in a subsequent action of an issue of law or fact that actually
has been litigated and decided in a prior action.
Here, Gould recognized that she was not a party in the prior cases as
to which she wished to assert issue preclusion, but contended that issue
preclusion was nevertheless appropriate under Michelle T. v. Crozier,
173 Wis. 2d 681, 495 N.W.2d 327 (1993). Crozier held that trial courts
may apply issue preclusion when invoked by a plaintiff (offensive use) who
was not a party in the prior litigation (nonmutual use) against a defendant
who was, if application of the doctrine is fundamentally fair to the defendant.
The court listed several factors to be considered in the fundamental fairness
analysis.
Gould argued to the court of appeals that under the Crozier factors,
it was fundamentally fair to apply issue preclusion against DHSS in this
case. DHSS responded that the defendant in Crozier was a private
party, not a governmental agency; that there is no authority in Wisconsin
for using offensive nonmutual issue preclusion against governmental agencies;
and that there is persuasive authority from other jurisdictions against
this.
The court of appeals concluded that a state agency's position as
a litigant is sufficiently different from that of a private litigant such
that the economy of interests underlying a broad application of issue preclusion
do not, as a general rule, justify the nonmutual offensive application of
the doctrine against the agency. The court indicated that it did not need
to decide whether there are any circumstances that might justify applying
the doctrine against a state agency and, if so, what they might be. It was
satisfied that the case before it did not present circumstances that would
justify the creation of such an exception.
Summary Judgment - "Four-corners" Rule - Insurance
- Business Exception
Monfils v. Charles,
No. 97-1158 (filed 21 Jan. 1998) (25 Feb. 1998)
Thomas Monfils was killed by coworkers at a Green Bay paper mill. His
widow and children brought a civil action against Marlyn Charles and his
homeowner's insurer. Charles was the paper mill's union representative
who allegedly counseled the disgruntled coworkers to "confront"
Monfils over his behavior. The complaint alleged that Charles was negligent
in the handling of the matter. The circuit court granted the homeowner insurer's
motion for summary judgment and dismissed it from the case.
The court of appeals, in an opinion by Judge Myse, reversed. First, the
trial judge erred by "looking outside the four corners of the complaint"
to determine whether the insurer had a duty to defend its insured. Specifically,
the trial judge examined an affidavit because the pleadings were ambiguous.
A 40-year-old A.L.R. article, cited in the case law, at "first blush"
supported the argument that "a court can review extraneous materials
in considering coverage issues when the complaint is ambiguous or incomplete,"
but a "closer look at the article reveals that, in fact, the opposite
is true." Thus, where a complaint is ambiguous as to coverage, the
court cannot look to materials outside the complaint to determine coverage.
Second, the evidence was insufficient to warrant summary judgment on
the ground that the business exception vitiated coverage. The record clearly
demonstrated that "Charles's primary occupation was as a paper
worker, not a union president." Although observing that the facts must
be more fully developed at trial, the court noted that Charles's union
presidency was an elected post that involved "intermittent duties,"
"nominal compensation and the lack of a profit motive."
Commercial
Law
Lien Priority - Wage Claim Lien
Pfister v. Milwaukee Economic
Development Corp., No. 96-0314 (filed 13 Jan. 1998) (ordered published
25 Feb. 1998)
In June 1994 Pfister filed a wage lien claim against his former employer,
PAL, alleging that PAL owed him more than $200,000 in unpaid commissions
and penalties. Years before, First Bank and the Milwaukee Economic Development
Commission (MEDC) perfected security interests against PAL for about $750,000
in debts. The bankruptcy court established that PAL's assets amounted
to no more than $350,000. A trial judge determined that under the 1993 amendments
to sections 109.03(5) and 109.09(2) of the Wisconsin Statutes, "an
employee's wage claim lien is a 'superpriority lien' taking
precedence over all other security interests (except those excluded by the
statute), including all security interests perfected prior to the date an
employee's wage claim lien is established." The judge also concluded,
however, that the statutes could not be applied retroactively.
The court of appeals, in an opinion written by Judge Schudson, affirmed
in part and reversed in part. First, it agreed that "secs. 109.03(5)
and 109.09(2), Stats., as amended, do establish that an employee's
wage claim lien has priority over all other liens (except those explicitly
excluded by statute), including preexisting ones." The 1993 amendments
effected no substantive changes; rather, they "simply added an enforcement
mechanism to a previously established right, thus producing a procedural
change." Thus, the amended statutes apply retroactively. The court
rejected First Bank's and MEDC's argument that the amended statutes
unconstitutionally impaired preexisting contracts. Their "contracts
with PAL still carry the unaltered right to enforce their security interests.
Their contracts, however, could never include any implied right to somehow
elevate their liens over wage claims liens given priority under sec. 109.09(2),
Stats., both before and after the amendments."
Second, the court addressed First Bank's challenge to the trial
court's finding that "the amended statutes do establish that wage
claim liens have priority over pre-existing liens." The court of appeals
concluded that under section 109.09(2) "'all' means 'all.'"
Thus, the statute gives employee wage claim liens priority "over all
others."
Judge Fine concurred, pointing out several issues that the majority decision
did not, in his opinion, decide.
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