Vol. 77, No. 7, July 2004

Court of Appeals Digest

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

Appeals Contracts Civil Procedure Criminal Law Family Law

Insurance Prisoner Litigation Torts Zoning

Appeals

Final Order - Timeliness

Contardiv. American Fam. Mut. Ins. Co., 2004 WI App 104 (filed 20 April 2004) (ordered published 26 May 2004)

The trial court granted summary judgment in favor of an insurer, American Family. On appeal, the plaintiffs conceded that the court had no jurisdiction because the appeal had not been filed within the permitted time period but argued that the dismissal should be without prejudice because no "final judgment" had yet been ordered. In this per curiam decision, the court of appeals disagreed and dismissed the appeal. An order granting summary judgment may be final depending on the language of the order - "not the events that occurred after the entry of the order" (¶ 4). In this case, the circuit court's comments were ambiguous and did not "clearly indicate that the order granting summary judgment was not intended to be the last document in this litigation" (¶ 6). In sum, the court's summary judgment order was final because: "1) it dispose[d] of the entire matter in litigation under substantive law, and 2) the circuit court considered it to be the last document it would enter in the litigation" (¶ 9).

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Civil Procedure

Claim Preclusion - Counterclaims

Menard Inc. v. Liteway Lighting Prods., 2004 WI App 95 (filed 13 April 2004) (ordered published 26 May 2004)

In October 2000 Liteway Lighting filed suit against Menard Inc. for failing to pay invoices for light fixtures allegedly shipped and sold to Menard on an open-ended credit account. Menard defaulted by failing to file a timely answer. The judge found no excusable neglect and eventually lifted a stay of enforcement in October 2001. Menard did not appeal, and it satisfied the judgment in November 2001.

In August 2001, before the stay was lifted in the earlier suit, Menard filed this action against Liteway involving more than $100,000 worth of defective lighting fixtures. Menard alleged that it had not been properly credited for the returned merchandise and that Liteway was unjustly enriched. The trial court, in this action, denied Liteway's motion for summary judgment and granted Menard judgment after a bench trial.

The court of appeals, in an opinion written by Judge Hoover, reversed. Claim preclusion requires 1) an identity between the parties, 2) an identity between the claims, and 3) a final judgment on the merits in the first case. The court rejected Menard's contention that its claim for credit or repayment for the returned items was a "separate transaction." "A buyer's return of a set of goods for credit or an offset is a component of the transaction that began when the seller shipped those goods" (¶ 14).

Next, the court found that the issues in the second suit could have been raised in the first action (they were "nothing more than affirmative defenses and counterclaims")

(¶ 21). Finally, although "Wisconsin is a permissive counterclaim state," case law adopts "the common law 'compulsory counterclaim rule'" (¶ 25). On this record, Menard's second suit plainly impaired or would have nullified Liteway's judgment in the first suit; for this reason, claim preclusion barred the second suit.

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Contracts

Construction Lien - Unjust Enrichment

Tri-State Mechanical Inc., v. Northland College, 2004 WI App 100 (filed 13 April 2004) (ordered published 26 May 2004)

A college contracted with a general contractor to build a new science building. Although the college paid the general contractor the contract's full value, a subcontractor was not paid for work done and the general contractor went out of business before work was completed. The subcontractor sued the college for about $100,000. The circuit court granted judgment in favor of the college.

The court of appeals, in an opinion authored by Chief Judge Cane, affirmed. First, the subcontractor had signed a construction lien waiver. A provision in the contract between the subcontractor and the general contractor required the subcontractor to waive its right to a lien before it could be paid. Although this contract provision was void under Wis. Stat. section 779.135, the statute nonetheless enabled the subcontractor to either withhold the lien waiver or tender it - the choice is that of the subcontractor ("the legislature has essentially made a policy decision that endorses whatever course of action the subcontractor takes")

(¶ 9). In short, the signed construction lien waiver was valid.

The court also rejected the subcontractor's unjust enrichment claim against the college. The college "fully paid for the benefits it received" through payments to the general contractor. No authority "requires any owner to issue payments to a general contractor designated as payment to a subcontractor for specific work the subcontractor performed" (¶ 16).

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Criminal Law

Obstructing an Officer - Exculpatory Denial Exception

State v. Reed, 2004 WI App 98 (filed 22 April 2004) (ordered published 26 May 2004)

A highway patrol officer passed a car parked next to the highway and saw a person sitting in the driver-side seat. Returning to investigate, the officer found the person (the defendant, Reed) now sitting in the passenger-side seat. The officer detected signs of intoxication and the defendant immediately told the officer that he had not been driving the car because he was drunk. He claimed that a Mr. Triller had pulled the car over to the side of the road and walked away. The officer arrested the defendant while another officer searched for Triller, though that search was unsuccessful. Triller later told the police that he was not with the defendant that night.

The defendant was charged with obstructing an officer and OWI. He moved to dismiss the obstruction charge, relying on State v. Espinoza, 2002 WI App 51, 250 Wis. 2d 804, 641 N.W.2d 484, in which the court of appeals held that a person's denial of guilt when confronted by a police officer cannot be a basis for a charge of obstructing an officer under Wis. Stat. section 946.41. The circuit court denied the motion to dismiss.

In a decision authored by Judge Dykman, the court of appeals affirmed. Using this case to clarify the exculpatory denial exception to section 946.41 set forth in Espinoza, the court concluded that identifying other people as possible suspects goes beyond this exception to the statute. Had the defendant merely denied driving while intoxicated, Espinoza would protect him from an obstruction conviction. However, he made more than a mere denial of his personal involvement in the crime. Rather, he provided the officer with false information relating to the crime, thus frustrating the police function contrary to section 946.41. As a result of the false information, the officers unnecessarily searched the area for Mr. Triller and questioned him about the defendant's alibi later that night. Accordingly, the state sufficiently alleged that the defendant knowingly and intentionally made a false statement to the officer in order to deceive and mislead the police. The circuit court thus correctly denied the motion to dismiss.

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Family Law

Termination of Parental Rights - Commission of Serious Felony Against Child as Ground for Termination When Conviction for that Felony is on Appeal

Reynaldo F. v. Christal M., 2004 WI App 106 (filed 6 April 2004) (ordered published 26 May 2004)

One statutory ground for the termination of a person's parental rights is the commission of a serious felony against one of the person's children. See Wis. Stat. § 48.415 (9m). This ground for termination must be established by proof that a child of the person whose parental rights are sought to be terminated was the victim of a serious felony and that the person whose parental rights are sought to be terminated has been convicted of that serious felony as evidenced by a final judgment of conviction. In Monroe County v. Jennifer V., 200 Wis. 2d 678, 548 N.W.2d 837 (Ct. App. 1996), the court of appeals interpreted the term "conviction" in this context to mean a conviction after the right of direct appeal has been exhausted.

In this case the parent had been convicted of a serious felony against her child, but an appeal was still pending at the time of the termination of parental rights proceedings. The parent argued that this basis for termination had to be dismissed because the judgment of conviction for the serious felony was not yet final due to the appeal. The circuit court agreed and dismissed this termination ground.

The court of appeals, in an opinion authored by Judge Wedemeyer, reversed. In its decision the appellate court clarified that the holding in Jennifer V. prohibits termination based on a conviction when a direct appeal is still pending only if the pending appeal has raised issues challenging the parent's guilt. The appeal in this case raised only a sentencing issue that will in no way affect the determination of guilt. Said the court, "under these circumstances, there is no chance that the judgment of guilt will be reversed. There is no chance that a successful appeal could result in an acquittal of the conviction for the parent. Thus, the pendency of the appeal in this case does not affect the final judgment of guilty rendered by the trial court" (¶ 12).

Accordingly, the court held that when a parent's pending appeal does not raise issues of guilt or innocence, the term "final judgment of conviction" as used in section 48.415(9m) means the judgment of conviction entered by the trial court, either after a verdict of guilty by the jury, a finding of guilty by the court in cases where a jury is waived, or a plea of guilty or no contest.  The trial court in this case erred in dismissing the ground for termination based on the felony conviction. The trial court's order to that effect was therefore reversed.

Interest on Maintenance Arrearages - Standard of Review for Denials of Maintenance Extensions

Cashinv. Cashin, 2004 WI App 92 (filed 29 April 2004) (ordered published 26 May 2004)

This appeal addressed a number of questions relating to maintenance. Among them was the issue of whether a circuit court has authority to order the payment of interest on maintenance arrearages. The defendant argued that there is no statutory authority for such an order.

In a decision authored by Judge Vergeront, the court of appeals concluded that a circuit court has authority under Wis. Stat. section 767.01(1) to order interest on maintenance arrears. This statute provides that circuit courts "have jurisdiction of all actions affecting the family and have authority to do all acts necessary and proper in such actions and to carry their orders and judgments into execution as prescribed in this chapter." The appellate court emphasized that, although circuit courts have the authority to order interest on arrears, the decision to exercise that authority is a matter of discretion. If the court does decide to impose interest, it is also within the court's discretion to determine the amount to impose.

The court of appeals also addressed the question of the proper standard of review of a circuit court order denying an extension of maintenance.  It concluded that such orders, including the decision whether there is a substantial change in circumstances, should be reviewed as discretionary decisions. "Under this standard of review, we affirm the trial court's decision on whether there is a substantial change in circumstances if there is a reasonable basis in the record for the trial court's decision" (¶ 44).

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Insurance

Coverage - Untimely Notice

Phoenix Contractors Inc., v. Affiliated Capital Corp., 2004 WI App 103 (filed 28 April 2004) (ordered published 26 May 2004)

The court of appeals, in a decision authored by Judge Nettesheim, affirmed summary judgment in favor of the insurer on the insurer's claim that it had no duty to defend its insured, which had failed to provide timely notice of the underlying claim. The insured conceded that its notice was untimely under both the policy and Wis. Stat. section 631.81. The court distinguished case law in which insurers had conceded that the defense would have been the same regardless of the tardy notice and in which the discovery deadline had not "long since expired" (¶ 16). Finally, the insured failed to rebut the presumption of prejudice to the insurer triggered by its own untimely notice (see ¶ 21).

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Prisoner Litigation

Costs and Fees Not Recoverable from the Public Treasury - Wis. Stat. section 814.25(2)

State ex rel. Harr v. Berge, 2004 WI App 105 (filed 14 April 2004) (ordered published 26 May 2004)

The petitioner, while an inmate at the Supermax Prison, successfully pursued a common law certiorari action to overturn a disciplinary reprimand. He then filed a request for costs of $209.18 and an additional $400 for "invested hours of legal research and briefing, approximately 8 hours at $50.00 per hour." The state opposed this request, arguing that Wis. Stat. section 814.25(2) (enacted by the Prisoner Litigation Reform Act (PLRA)) precluded the court from granting the request. The circuit court agreed and denied the motion.

On appeal the petitioner contended that the statute violates his constitutional right to equal protection because it prohibits him from recovering costs and fees after he prevailed in a common law certiorari action. The statute provides that "if a prisoner brings an action or special proceeding related to prison or jail conditions, no costs may be allowed against the state, a state agency or a county, city, village or town, or against any individual defendant when sued in an official  capacity."

In a decision authored by Judge Anderson, the court of appeals affirmed. It concluded that the PLRA "represents the Wisconsin legislature's attempt to stem the flood of pestiferous prisoner lawsuits, financed from the public treasury. The PLRA does not restrict a prisoner's access to the courts to challenge the conditions of confinement, it does nothing more than bar the access from being subsidized by the public treasury. The PLRA does not violate [the petitioner's] rights to equal protection of the laws because there is more than one rational basis supporting the legislative creation of different classifications to be considered when costs and fees are awarded" (¶ 16).

Transcript Fees - Payment from Prisoner's Release Account Authorized

State ex rel. Akbar v. Kronzer, 2004 WI App 108 (filed 28 April 2004) (ordered published 26 May 2004)

The petitioner is a prisoner and thus subject to the requirements of the Prisoner Litigation Reform Act (PLRA), 1997 Wisconsin Act 133.  The PLRA addresses the payment of litigation fees and costs by prisoners. It creates a scheme for determining how and from what funds the prisoner will pay the fees and costs, either by payment at the time the action or proceeding is commenced or on an installment basis.

In Spence v. Cooke, 222 Wis. 2d 530, 587 N.W.2d 904 (Ct. App. 1998), the court of appeals held that the court may consider a prisoner's release account when a petitioner asks to be relieved from prepaying fees or costs.  It concluded that release accounts were available to satisfy the filing fee.

In this case the court was presented with the issue of whether a prisoner may use funds in his or her release account to pay for transcript fees. In a per curiam decision the court of appeals concluded that the petitioner could use the funds in his prison release account to pay for the cost of having transcripts prepared.

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Torts

Medical Malpractice - Jury Trial - Peer Review - Damages

Phelps v. Physicians Ins. Co of Wis., 2004 WI App 91 (filed 27 April 2004) (ordered published 26 May 2004)

A woman who was pregnant with twin sons was treated by "an unlicensed first-year resident working" at a hospital. At a bench trial, the judge found that the resident negligently caused the death of one twin. Negligence was apportioned at 80 percent to the resident and 20 percent to the hospital. On appeal the defendants raised a host of issues: 1) they were wrongly denied a jury trial; 2) the wrong standard of care was applied as to the resident; 3) the court erroneously ruled that the resident was not a "health care provider" as statutorily defined; 4) the statutory damage cap should have been applied; 5) the parents should not have received emotional distress damages; and 6) the surviving children should not have received damages for their loss of their mother's society and companionship    (¶ 2).

The court of appeals, in an opinion written by Judge Fine, reversed. First, the trial court abused its discretion when it refused to grant a jury trial because the defense had not timely paid the jury fee. The defense lawyer was seven days late in paying the fee because of severe health problems, which constituted excusable neglect. In the "interest of justice," the court held that this constituted reversible error.

Second, case law establishes that the resident should be held accountable to the standard of care applicable to his "class" of physicians, namely, unlicensed medical-college graduates undergoing the mandatory 12 months of postgraduate training (¶ 25). On remand, the trial court was directed to instruct the jury accordingly. Third, the resident was a "health care provider" under Wis. Stat. section 146.38; thus, a peer review letter that identified his failings in this matter may be confidential, although further fact finding will be necessary on remand (¶ 40).

Fourth, the trial court properly determined that the cap imposed by Wis. Stat. section 893.55(4) on noneconomic damages did not apply to the resident, who was unlicensed. Discussing this statutory "anomaly," the court observed that the legislature "can remove the anomaly if it desires" (¶ 47). Finally, the court rejected the defendant's arguments regarding damages.

Chiropractic Malpractice - Informed Consent - Special Verdict

Hannemannv. Boyson, 2004 WI App 96 (filed 13 April 2004) (ordered published 26 May 2004)

A jury found the defendant chiropractor negligent in his treatment of the plaintiff, who suffered a stroke after a cervical adjustment. The issues on appeal concern the jury instructions and the special verdict.

The court of appeals, in an opinion written by Judge Peterson, affirmed in part and reversed in part. On the record before it, the trial judge properly read pertinent parts of the standard informed consent instruction (the first three paragraphs adequately covered the law and the fourth would have simply repeated the information) and the standard cause instruction (there was no basis upon which to ask the jury to apportion cause). The court also held that Wisconsin Jury Instruction - Civil 1023.1 is "a model for chiropractic negligence as well as medical informed consent" (¶ 21). Chiropractors are now under an obligation to obtain informed consent, as are medical doctors.

Error occurred, however, when the trial court submitted a single verdict question about negligent treatment that did not specifically differentiate between "treatment" and "informed consent." The court's confidence in the verdict was "undermined because we do not know whether the jury . . . found [defendant] guilty of negligent treatment or failure to obtain informed consent" (¶ 24). The matter was remanded for a new trial.

Privacy - Confidential Information

Olson v. Red Cedar Clinic, 2004 WI App 102 (filed 27 April 2004) (ordered published 26 May 2004)

A mother and son received counseling at the same clinic. Because of the son's difficulties at school, a school psychologist wanted to see the son's treatment records. The parents authorized the clinic to release information about the son but not the mother. Nonetheless, the information in the son's records released by the clinic contained information about both the mother and son. The parents sued the clinic on grounds that it had violated both Wis. Stat. section 895.50 by violating the mother's privacy and Wis. Stat. section 51.30 by wrongfully disclosing information about the mother. The trial court granted summary judgment in the clinic's favor on both claims.

The court of appeals, in an opinion written by Judge Peterson, affirmed. As to the alleged violation of the mother's privacy right, the information had been disclosed only to the school psychologist, who was obligated to keep the information confidential.  Thus, the privacy claim failed because there was no "public disclosure" of the information, an essential element of the claim. As for the wrongful disclosure claim, the right to the records' confidentiality belongs to the "subject individual," in this case the son who received the treatment. "[T]he fact that the [parents] had the power to consent to the release of [the son's] records does not give them an expectation of confidentiality as to information about them in [his] records" (¶ 14).

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Zoning

Appeals to County Board of Adjustment - No Right to De Novo Hearing

Osterhues v. Board of Adjustment for Washburn County, 2004 WI App 101 (filed 27 April 2004) (ordered published 26 May 2004)

Washburn County applied to the county zoning committee for a conditional use permit to open a gravel pit. Despite opposition from individuals who owned property near the proposed site (the plaintiffs), the committee granted the county's application.

The plaintiffs appealed to the Washburn County Board of Adjustment. They argued that the board could conduct a de novo review of the zoning committee's decision, including the taking of new testimony from witnesses. The board concluded that its job was only to correct errors and, because the zoning committee had made none, it could not reverse the permit.

The plaintiffs filed a petition for certiorari with the circuit court, which held that the board could conduct a de novo hearing and that its determination that it could only correct errors was premised on an incorrect view of the law.

In a decision authored by Judge Hoover, the court of appeals reversed the circuit court. It concluded that the controlling statute does not require a de novo hearing before the board of adjustment. The plaintiffs conceded that Wis. Stat. section 59.694(7)(a) and (8) does not speak in terms of the qualitative nature of the scope of review by the board of adjustment, that is, there is no explicit grant of authority to review the zoning decision de novo. Thus, said the appellate court, "the question is whether sec. 59.694 works in some other way to convey that power. It does not" (¶ 11).

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