Vol. 78, No. 7, July 2005

Supreme Court Digest

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

Attorneys Business Associations Civil Procedure Commercial Law Consumer Law

Criminal Procedure Family Law Insurance Real Property Torts

Attorneys

Attorney Fees - Collection Costs

Anderson v. MSI Preferred Ins. Co., 2005 WI 62 (filed 2 June 2005)

Anderson was injured in a car accident and sued the other driver, his insurer, and others. Anderson's worker's compensation insurance carrier paid about $8,700 in benefits and medical expenses and later sought to protect its subrogated interest. Eventually, Anderson settled with the third-party tortfeasor for $25,000 and filed a motion to have the court approve the settlement and distribute the settlement proceeds. The circuit court awarded Anderson's attorney one-third of the proceeds pursuant to a contingent fee agreement and also approved attorney fees of about $7,400 on behalf of the worker's compensation insurance carrier. Anderson appealed the court's order that awarded attorney fees to the insurer, and the court of appeals affirmed.

The supreme court, in an opinion authored by Justice Butler, reversed. The supreme court first rejected Anderson's assertions that a carrier must "demonstrate that its attorney's activities substantially contributed to making the third party pay" (¶ 21). "Wisconsin Stat. § 102.29(1) `was enacted to direct the courts in the distribution of proceeds of third-party tort actions.' ... [T]he reasonable costs of collection are first deducted from any recovery. These costs include both the employee's and the worker's compensation carrier's attorneys' fees and costs if both attorneys `join in the pressing' of the claim" (¶ 20). The supreme court expressly adopted the holding and reasoning of published court of appeals' decisions, particularly Zentgraff v. Hanover Insurance Co., 2002 WI App 13.

The court also held, however, that "costs of collection" must be reasonable. Although an award of attorney fees is discretionary, the record here was wholly inadequate to support either the contingency fee award or the $7,400 claimed by the lawyers for the worker's compensation insurance carrier. Moreover, different considerations govern review of a contingency fee and of a claim for attorney fees predicated on hourly billing. The court first laid out the factors relating to contingency fees, carefully noting that "... we do not question the propriety of a contingency fee in a third-party tort claim. We recognize that contingency fees play a vital role in ensuring that certain claimants get access to the courts by providing attorneys with a sufficient incentive that outweighs the risks of litigating uncertain claims. We further recognize that contingent fees also counterbalance prior gambles the attorney took that returned little or nothing in terms of compensation. Nevertheless, assessing the reasonableness of Anderson's contingency fee is necessary here as it is the first step in determining the reasonable costs of collection under Wis. Stat. § 102.29(1)" (¶ 38).

As for the insurer's attorney fees, prior case law "adopted the lodestar approach for determining reasonable attorney fees in fee-shifting statutes. Under this analysis, the circuit court must first multiply the reasonable hours expended by a reasonable rate" and then adjust according to factors set out in SCR 20:1.5(a) (¶ 39). Finally, "Wisconsin Stat. § 102.29(1) requires deducting the reasonable cost of collection from third-party claim proceeds. The sum of the attorneys' reasonable fees and costs may, but need not, equal a reasonable cost of collection. [On remand t]he circuit court must evaluate the total cost of collection and determine whether that sum is reasonable, in light of, among other things, the recovery. SCR 20:1.5(a)(4)" (¶ 40).

Finally, the court held that the worker's compensation insurance carrier's costs of collection did not include time and money expended during the arbitration of a UIM claim (see ¶ 43). The supreme court underscored that a UIM claim is a first-party contract claim, not a third-party claim permitted by section 102.29(1).

Justice Bradley concurred but wrote separately to provide additional insight into the role and value of contingent fee agreements in the civil litigation system.

Top of page

Business Associations

Limited Liability Companies - Voting - Members with Material Conflicts of Interest

Gottsacker v. Monnier, 2005 WI 69 (filed 8 June 2005)

This case presented what the supreme court described as its "first opportunity to examine limited liability companies in Wisconsin" (¶ 13). Wisconsin enacted its limited liability company (LLC) law in 1993 with the passage of the Wisconsin Limited Liability Company Law (WLLCL). See Wis. Stat. ch. 183. "The overriding goal of the WLLCL was `to create a business entity providing limited liability, flow-through taxation, and simplicity.' The drafters believed it critical that a Wisconsin LLC readily be treated as a partnership for tax purposes. Additionally, they emphasized the importance of flexibility and freedom of contract, which is reflected throughout the provisions of the WLLCL. Finally, they hoped that the LLC would provide an inexpensive vehicle that did not require legal counsel at every step" (¶ 19) (citations omitted).

This case concerned a three-member LLC. Among the issues in this case was the claim that two of the members (the petitioners), who possessed a majority of the voting rights in the company, were prohibited from voting to transfer certain real estate owned by the LLC because of a material conflict of interest. In a majority decision authored by Justice Bradley, the supreme court concluded that they were not.

Wis. Stat. section 183.0404 governs voting in LLCs and contemplates situations that would prevent members from exercising their voting power. Subsection (3) of the statute explicitly states that members can be "precluded from voting." However, that subsection does not address how or when that preclusion would occur. Reading section 183.0404 together with section 183.0402 (the statute which defines the duties of LLC managers and members), the court concluded that "the WLLCL does not preclude members with a material conflict of interest from voting their ownership interest with respect to a given matter. Rather, it prohibits members with a material conflict of interest from acting in a manner that constitutes a willful failure to deal fairly with the LLC or its other members. We interpret this requirement to mean that members with a material conflict of interest may not willfully act or fail to act in a manner that will have the effect of injuring the LLC or its other members. This inquiry contemplates both the conduct along with the end result, which we view as intertwined. The inquiry also contemplates a determination of the purpose of the LLC and the justified expectations of the parties" (¶ 31).

In this case, because there was no express determination by the circuit court as to whether the petitioners willfully failed to deal fairly with the LLC or its third member, the supreme court reversed the decision of the court of appeals (see 2004 WI App 25) and remanded the cause for further proceedings.

Justice Roggensack filed a concurring opinion that was joined by Justice Wilcox. Justice Butler filed a dissenting opinion.

Top of page

Civil Procedure

Issue and Claim Preclusion - Guilty Plea - Legal Malpractice

Mrozek v. Intra Fin. Corp., 2005 WI 73 (filed 9 June 2005)

Plover Motel Inc. (PMI) was liquidated in bankruptcy and one of its principals, Mrozek, pleaded guilty to securities-related offenses. Mrozek and PMI sued the law firm that had represented them in the formation of a corporation that was to construct and operate a motel. The suit alleged negligent representation and breach of fiduciary duties. On summary judgment motion, the circuit court dismissed the legal malpractice claims on the grounds that Mrozek's guilty plea precluded her own claim and that PMI's claim was barred by claim preclusion in light of the bankruptcy court proceedings. The court of appeals affirmed.

The supreme court, in an opinion written by Justice Roggensack, affirmed in part and reversed in part. The court first addressed Mrozek's claims and the effect of her guilty plea to a fraud charge. "Issue preclusion addresses the effect of a prior judgment on the ability to re-litigate an identical issue of law or fact in a subsequent action. In order for issue preclusion to be a potential limit on subsequent litigation, the question of fact or law that is sought to be precluded actually must have been litigated in a previous action and be necessary to the judgment. If the issue actually has been litigated and is necessary to the judgment, the circuit court must then conduct a fairness analysis to determine whether it is fundamentally fair to employ issue preclusion given the circumstances of the particular case at hand" (¶ 17).

The "fairness analysis" generally considers five factors, some of which are discretionary and others of which are questions of law. Although jurisdictions are split over the issue-preclusive effect of a guilty plea, the supreme court held that Wisconsin law will follow the approach that gives no such effect to guilty pleas because they fail to meet the "actual litigation" requirement for issue preclusion (see ¶ 21). The court also declined to apply doctrines of judicial estoppel or public policy to preclude Mrozek's malpractice claim.

The court next turned to PMI's legal malpractice claims, which the law firm contended were barred by claim preclusion. "Claim preclusion prevents relitigation of the same claim when: (1) there is an identity of parties or their privies in the prior lawsuit; (2) there is an identity of claims for relief that were brought, or should have been brought; and (3) a final judgment on the merits in a court of competent jurisdiction resolved the first lawsuit. Claim preclusion is `designed to draw a line between the meritorious claim on the one hand and the vexatious, repetitious and needless claim on the other hand'" (¶ 28). After closely examining bankruptcy case law and the bankruptcy judge's rulings in this case, the court held that "the order closing the bankruptcy proceeding did not operate as a final judgment on PMI's claim" (¶ 37). Thus, claim preclusion was inapplicable.

Finally, the court took up the joint claims for lost profits and affirmed the finding that Mrozek and PMI failed to present evidence "sufficient for a fact finder to reasonably ascertain lost profits" (¶ 38). This holding is fact intensive and relates to the plaintiffs' failure of proof; no novel questions of law were raised.

Justice Roggensack filed a concurring opinion in which she concluded that "issue preclusion cannot be applied in the first instance by an appellate court because it cannot be applied as a matter of law, but only as a discretionary determination made after a fairness analysis" (¶ 46).

Top of page

Commercial Law

Contract - Shippers - Consignee Liability

Marine Bank v. Taz's Trucking Inc., 2005 WI 65 (filed 2 June 2005)

Modern Building Materials Inc. (MBM) and Taz's Trucking entered into a business relationship in which Taz's agreed to ship MBM's precast concrete building products to MBM's customers. The parties made a written agreement concerning shipping rates, but that agreement did not cover whether the consignor (MBM) or the consignees (MBM's customers) would be liable for the charges (see ¶3). Taz's at first billed MBM weekly and then sold the accounts receivable to a factor (a finance company that bought the accounts receivable at a discount). MBM later became insolvent and was forced into receivership. Taz's demanded that the consignees pay the shipping fees, but Marine Bank, one of MBM's major creditors, sought to block Taz's. The circuit court granted the bank's summary judgment motion and enjoined Taz's from collecting from the consignees. "The court acknowledged the presumption of consignee liability upon receipt of the goods, but held that the presumption was overcome here with evidence that MBM and Taz's had impliedly agreed that MBM would be liable for all freight charges" (¶ 8). The court of appeals affirmed.

The supreme court, in an opinion authored by Justice Crooks, reversed. First, the record revealed disputed material facts and reasonable inferences that precluded summary judgment. "The primary issue in this case is whether there was an agreement between MBM and Taz's regarding the assignment of liability for freight charges, so that Taz's could not seek payment from a consignee. Although there is no evidence of an express written agreement on this question, the circuit court and court of appeals held that the parties' course of conduct established an agreement that MBM would be exclusively liable for the freight charges. It must be noted that while the course of dealing between MBM and Taz's supports the conclusion that Taz's or its factor generally received payment from MBM, there is nothing in the record that leads us to the conclusion directly, or by implication, that there was an agreement that MBM would be liable, exclusively, for such charges, and that Taz's could not seek payment from a consignee-customer of MBM. Under these circumstances, summary judgment should not have been granted" (¶ 13).

Second, the court addressed the legal principles regarding the issue of when shippers may collect from consignees. "While we agree with the court of appeals that the holdings in [prior cases] provide a helpful framework for the analysis of this case, we conclude that the genuine issues of material fact here, as well as the conflicting and inconsistent presumptions, do not, without a more complete record, lead to a clear answer concerning whether there is exclusive liability for either the consignor or the consignee. Liability for payment of freight charges is ultimately a matter of contract, and, therefore, the presumptions concerning consignor and consignee liability for freight charges may be rebutted by evidence that the parties agreed to something else"

(¶ 27). The supreme court then provided direction on the application of presumptions and remanded the matter for further proceedings.

Top of page

Consumer Law

Warranty - Leases - Magnuson-Moss Warranty Act

Peterson v. Volkswagen of Am. Inc., 2005 WI 61 (filed 27 May 2005)

Peterson leased a new Volkswagen (VW) Beetle from a bank that had purchased the car "for purposes other than resale" from a VW dealer. As part of the transaction, VW issued to the bank a written two-year warranty, which the bank transferred to Peterson. The car had numerous mechanical problems, and Peterson "justifiably lost confidence in the vehicle" (¶ 8). Peterson filed this action seeking relief under the federal Magnuson-Moss Warranty Act (MMWA), but the circuit court granted VW's motion to dismiss. The court of appeals reversed.

In a decision authored by Justice Wilcox, the supreme court affirmed the court of appeals. "The federal MMWA `allows a consumer to bring suit against a warrantor in any state for failure to comply with its obligations under a written warranty or implied warranty'" (¶ 17). To bring the suit under the MMWA, Peterson had to fall within one or more of the act's definitions of "consumer." Although there is a "split of authority" as to whether an automobile lessee qualifies as an MMWA-protected consumer, the supreme court resolved this issue of first impression in favor of Peterson (see ¶ 20). The court held that Peterson qualified as a "category two" consumer, namely, "any person to whom such product is transferred during the duration of an implied or written warranty (or service contract) applicable to the product" (¶ 23). "[T]he `sale' referred to in the definition of `written warranty' need not be between the manufacturer and ultimate consumer" (¶ 31).

Moreover, Peterson "specifically alleged that Volkswagen's issuance of a warranty to the Bank was part of the consideration for the purchase of the vehicle and that the Bank would not have purchased the vehicle but for the issuance of the warranty. Thus, Peterson has alleged sufficient facts to satisfy the part of the definition of `written warranty' that requires that the `written affirmation, promise, or undertaking becomes part of the basis of the bargain between a supplier and a buyer[.]'" (¶ 32). The court conceded that leasing companies invariably sell the vehicle after the lease expires, but nevertheless the court said that "the purpose of the transaction between [the leasing company] and defendant was not for resale, but for the lease of the vehicle to plaintiff[]" (¶ 35).

The court then turned to the remaining criteria to be met for a person to be considered a protected "consumer." Peterson qualified as a category two consumer because she is alleged to be a "person to whom such product is transferred during the duration of a ... written warranty" (¶ 40). Moreover, she also qualified as a category three consumer, because her factual allegations establish that she is a "person who is entitled by the terms of such warranty ... to enforce against the warrantor ... the obligations of the warranty[.]" 15 U.S.C. § 2301(3).

"Peterson alleged that the Bank assigned her its rights in Volkswagen's warranty. She also alleged that she furnished the vehicle to authorized Volkswagen dealers for repairs on numerous occasions for several different problems and that Volkswagen `allowed [her] to enforce its written warranty' and said repairs were `covered by [the] written warranty.' Thus, even though we do not have the warranty before us, Volkswagen cannot seriously argue (at this stage in the proceedings) that Peterson was not entitled to enforce its warranty" (¶ 41).

Top of page

Criminal Procedure

Truth-in-Sentencing - Sentence Adjustment - Veto Power of Prosecutor Held Unconstitutional

State v. Stenklyft, 2005 WI 71 (filed 9 June 2005)

This case concerns the sentence adjustment statute, Wis. Stat. section 973.195. Under the law, a person serving a bifurcated sentence under Wisconsin's truth-in-sentencing laws can in certain instances and after serving a statutorily-prescribed percentage of his or her sentence petition the sentencing court for a sentence adjustment. The "adjustment" is early release from the confinement portion of the sentence with the amount of time remaining on that portion added to the extended supervision component of the sentence. Section 973.195 was enacted as part of the second phase of truth-in-sentencing legislation (TIS-II), but the supreme court has held that the statute applies as well to inmates sentenced under the original truth-in-sentencing legislation (TIS-I). See State v. Tucker, 2005 WI 46.

Section 973.195(1r)(c) establishes a procedure for the handling of inmate sentence adjustment petitions: "Upon receipt of a petition filed under par. (a), the sentencing court may deny the petition or hold the petition for further consideration. If the court holds the petition for further consideration, the court shall notify the district attorney of the inmate's petition. If the district attorney objects to adjustment of the inmate's sentence within 45 days of receiving notification under this paragraph, the court shall deny the inmate's petition" (emphasis added). If the district attorney does not object to the proposed adjustment, the sentencing court may "adjust" the sentence as described above if it determines that adjustment is "in the public interest." See Wis. Stat. § 973.195(1r)(f).

The critical questions before the supreme court in this case were whether the prosecutorial veto of sentence adjustment is constitutional and, if not, whether the statute can be saved through interpretation. The answers to these questions are in the concurrence/dissent of Chief Justice Abrahamson and in the concurrence/dissent of Justice Crooks, both of which commanded votes of a majority of the court's members.

Justices Bradley, Crooks, and Butler joined the Chief Justice to conclude that section 973.195(1r)(c) is unconstitutional if it is read to grant a district attorney veto power over a petition for sentence adjustment. (This was the interpretation proffered in the court's lead opinion, authored by Justice Wilcox, that was joined in by only two justices.) Said the Chief Justice, "[a] district attorney's veto power invades the exclusive core constitutional power of the judiciary to impose a criminal penalty. It empowers an executive branch officer to direct a court decision on the merits of a case, thereby violating the doctrine of separation of powers under the state constitution" (¶ 85).

To save the statute's constitutionality, the majority declared that "Wis. Stat. § 973.195 should be interpreted ... so that a circuit court has discretion to consider (but is not bound by) a district attorney's objection to a petition for sentence adjustment" (¶ 82). "The net effect of the two concurring/dissenting opinions is that read together, [the word] `shall' [as used in the phrase "the court shall deny the inmate's petition"] is interpreted as directory, thereby giving a circuit court discretion to accept or reject an objection from a district attorney on a petition for sentence adjustment under Wis. Stat. § 973.195" (¶ 83).

Justice Crooks' opinion, which was joined by the Chief Justice and Justices Bradley and Butler to form a majority, describes the kind of record that a circuit judge should make when deciding a sentence adjustment motion. "[T]he record of the proceedings must clearly demonstrate that the circuit court exercised its discretion and weighed the appropriate factors when the court reached its decision on sentence adjustment. An example of such balancing would be a record that showed that the circuit court considered the nature of the crime, character of the defendant, protection of the public, positions of the State and of the victim, and other relevant factors such as `[t]he inmate's conduct, efforts at and progress in rehabilitation, or participation and progress in education, treatment, or other correctional programs....' Wis. Stat. § 973.195(1r)(b)(1)" (¶ 126).

John Doe Investigations - Attorney Not Required to Take Secrecy Oath When Secrecy Order Already in Effect

State ex rel. Individual Subpoenaed to Appear at Waukesha County John Doe Case No. 2003 JD 001 v. Honorable J. Mac Davis, 2005 WI 70 (filed 9 June 2005)

In this John Doe investigation commenced pursuant to Wis. Stat. section 968.26, the judge issued a secrecy order. When a particular witness was called to testify at the proceeding, the judge admonished the witness about the secrecy order and required the witness to swear to and sign an oath of secrecy. The judge likewise admonished the witness's attorneys about the secrecy order and both counsel agreed that they were bound by and would abide by the order. The judge then requested them to take the same secrecy oath previously administered to their client; both attorneys refused to do so. Because the attorneys refused to take the secrecy oath, the judge disqualified them from representing the witness.

The witness then sought a supervisory writ of prohibition from the court of appeals to prohibit the John Doe judge from requiring the attorneys to take the secrecy oath. The court of appeals certified the matter to the supreme court, which granted certification.

The question before the supreme court was whether the John Doe judge had either statutory or inherent authority to require counsel for a John Doe witness to take a secrecy oath when the John Doe proceedings were already subject to a secrecy order, and whether an attorney's refusal to take such an oath can be the basis for disqualifying the attorney from representing a witness at the John Doe proceeding.

In a unanimous decision authored by Chief Justice Abrahamson, the supreme court held that a John Doe judge does not have either statutory or inherent authority to require a witness's counsel to take an oath of secrecy when the John Doe proceedings are already subject to a secrecy order. "Accordingly, we hold that the John Doe judge's decision in the instant case to disqualify counsel for declining to take a redundant secrecy oath was unwarranted. We grant the writ of prohibition and remand the cause for further proceedings" (¶ 2).

Jury Trials - Procedures for Handling Juror Dissent Revealed During Polling of Jury

State v. Raye, 2005 WI 68 (filed 7 June 2005)

This criminal case involved the procedures to be used when a juror dissents to the verdict during a jury poll. In State v. Wiese, 162 Wis. 2d 507, 469 N.W.2d 908 (Ct. App. 1991), the court of appeals articulated two options for a circuit court to pursue if a juror dissents during jury polling or indicates that the assent is merely an accommodation and is against the juror's conscience. First, the court can send the jury back for continued deliberations. Second, the court may determine that further deliberations would be fruitless and grant a mistrial. In State v. Cartegena, 140 Wis. 2d 59, 409 N.W.2d 386 (Ct. App. 1987), the court of appeals recognized that there also is a third option for situations in which a juror gives an ambiguous or ambivalent assent: question the juror. The Cartegena court held that "circuit courts should interrogate jurors who, during the poll, create some doubt as to their vote. Doubt may result from the juror's demeanor, tone of voice, or language used. However, the circuit court should first make a determination that the answer was ambiguous or ambivalent before it questions the juror further" (¶ 35).

In this case the jury returned from deliberations with a purported guilty verdict. During the ensuing poll each of the first six jurors individually assented to the verdict. When asked by the circuit judge, "Is this your verdict?" the seventh juror, Clark, replied, "Can I ask a question?" The judge directed Clark to first answer the poll question. Clark then responded "no." The judge continued polling the five remaining jurors. With the exception of Clark, every juror assented to the verdict. The judge then excused the remaining 11 jurors and individually questioned Clark, who expressed concerns about the evidence. When asked by the judge whether there was something the court could do to assist him and whether the transcript was an important issue, Clark responded in the affirmative. The judge instructed Clark to return to the jury room to draft a written request for the transcript. Ultimately, the jury requested and was given a transcript of the testimony of one of the state's expert witnesses. Thereafter, it returned a guilty verdict, this time without dissent.

The court of appeals affirmed the conviction. In a unanimous decision authored by Justice Bradley, the supreme court reversed. Analyzing the events as described above, the supreme court noted that "when initially asked by the circuit court, `Is this your verdict?' Clark replied, `Can I ask a question?' This response was clearly ambiguous. However, when pressed by the circuit court to first answer the poll, Clark replied with an unambiguous `No.' The record does not reflect any equivocation in this answer. There was no caveat, and there was no indication that Clark did not understand the question. With Clark's unambiguous `No,' the circuit court had two options from which to proceed: grant a mistrial or return the jury back for further deliberations. Ultimately, it chose neither. Instead, it continued polling the jury and interrogated Clark individually. Because these actions were not available options upon a juror's dissent, the circuit court's decision to pursue them constituted an erroneous exercise of discretion" (¶¶ 36-37).

The supreme court was "troubled" by the nature and breadth of the circuit judge's questions after Clark's initial dissent. "In continuing the questioning and polling after Clark dissented to the verdict, the circuit court unduly tainted the jury's deliberations" (¶ 42). Among other things the judge should not have asked whether there was something he could do to "assist" Clark. "It is not a question ... that a circuit court should be asking of a lone juror who dissents from the verdict. The potential for undue influence, even by a well-intentioned court, is simply too great" (¶ 44). "We are also troubled by the circuit court's decision to continue the poll after Clark's dissent. Not only is this action not contemplated by the three available options, but also it unnecessarily revealed the numerical division of jurors, a practice disavowed by courts as immaterial and potentially coercive" (¶ 45).

Double Jeopardy - Mistrials

State v. Moeck, 2005 WI 57 (filed 6 May 2005)

A jury convicted the defendant of various charges of sexual misconduct, in what was the fourth trial for the same conduct. The court of appeals reversed the conviction, because the trial court had granted the state's motion for a mistrial during the third trial although the record failed to reflect a "manifest necessity" for granting the motion.

The supreme court, in an opinion written by Chief Justice Abrahamson, affirmed the reversal of the conviction. The case presented two issues. "First, did the court of appeals err as a matter of law in rejecting the State's argument that the `law of the case' doctrine applied because on two prior occasions the court of appeals rejected the defendant's challenge to the circuit court's order for a mistrial in the third trial?" (¶ 3) According to the supreme court, "[t]he law of the case doctrine is a `longstanding rule that a decision on a legal issue by an appellate court establishes the law of the case, which must be followed in all subsequent proceedings in the trial court or on later appeal'" (¶ 18). It is not, however, an "absolute rule that must be inexorably followed in every case" (¶ 25). Although on two prior occasions the court of appeals had determined that the trial court had properly exercised its discretion in granting the mistrial, the third occasion was different: "The difference warranting the court of appeals' reversing itself is that in the instant case the court of appeals examined all the facts, not just an incomplete version of the facts as it had before" (¶ 26).

The second issue was whether double jeopardy precluded the fourth trial following the mistrial in the third trial. The court held that a mistrial could be granted on the state's motion only if granting of the motion was "manifestly necessary" (¶37). The state's motion here was predicated on defense counsel's opening statement in the third trial, in which counsel declared that the defendant's own testimony would contradict key testimony by prosecution witnesses. Although the defendant had testified in the first two trials, he apparently changed his mind, and he did not testify in the third trial. Because of defense counsel's opening statement, as well as the likelihood that a curative instruction might be unavailing and the fact that the defendant exercised his privilege not to testify (free of any adverse comment), the prosecutor moved for the mistrial, which the trial court granted.

The supreme court expressed concern about "gamesmanship" in opening statements. "We agree with the State that defense counsel `should not allude to any evidence unless there is good faith and reasonable basis for believing such evidence will be tendered and admitted in evidence.' The Rules of Professional Conduct for Attorneys also address this issue, providing that a lawyer shall not `in trial, allude to any matter that ... will not be supported by admissible evidence.' We also agree with the State that it is unfair to an opposing party to allow an attorney to present to the jury statements not susceptible to proof but that are intended to influence the jury in reaching a verdict" (¶ 65).

The record here, however, revealed no calculated gaming or bad faith by defense counsel. Nor did the record reveal the requisite manifest necessity. For example, "[t]he circuit court erred as a matter of law in its assessment of the State's inability in closing argument to rebut the defense counsel's opening statement. The circuit court overstated the difficulty the prosecuting attorney would have in both commenting on the weakness of the opening statement and avoiding error by referring to the defendant's failure to testify" (¶ 73).

Justice Roggensack did not participate. Justice Wilcox dissented on the ground that the record did show a manifest necessity for terminating the trial and stated that "[r]egardless of whether defense counsel's opening statement was made in good faith, the fact remains that the defendant was able to present his entire theory of the case without actually introducing any evidence" (¶ 84). Justice Prosser filed a separate dissent that took issue with both the double jeopardy and the law of the case analyses.

Secret Videotaping - Impeachment

State v. Maloney, 2005 WI 74 (filed 10 June 2005)

Maloney was convicted of murdering his wife. On review, the supreme court, in an opinion written by Justice Bradley, retained jurisdiction and ordered further briefs on two issues: the supreme court's authority to remand to the circuit court for a motion for postconviction relief based on the interest of justice; and, assuming the court has such authority, whether the court should remand for such a hearing. The court resolved three other issues that related to effective assistance of counsel.

Two of the issues concerned trial counsel's failure to challenge the admissibility of videotape evidence. The defendant argued that the admissibility could have been challenged on the ground that the special prosecutor violated a rule of professional conduct or on the ground that the videotaping violated state law. First, the court held that trial counsel was not constitutionally ineffective by failing to challenge the admissibility of videotape evidence based on an alleged violation of SCR 20:4.2. This allegation concerned a special prosecutor's decision to surreptitiously videotape an "encounter" between the defendant and a government informant, who consented to the taping. The alleged violation of SCR 20:4.2 involved the special prosecutor's authorization of the surveillance despite knowing that the defendant had retained counsel (although he had not yet been charged). Observing that jurisdictions are split on this issue (regarding precharge investigations) and expressly declining to elect which path Wisconsin will follow, the court nonetheless held that trial counsel was not ineffective for not raising this challenge (see ¶¶ 24, 30).

Second, the court held that trial counsel was not ineffective for failing to challenge the videotape evidence under the state's electronic surveillance law. The court held that the informant's consent to the surveillance rendered the tapes admissible under the statutes (see ¶¶ 31-37).

On the third issue, the court held that trial counsel acted reasonably when he cross-examined the state's lead investigator about his possible bias against the defendant. The tenor of the questioning required the investigator to make negative comments about the defendant's own credibility (see ¶ 40). The court found that this line of attack was a "commonly used tactic" (¶ 42) and did not contravene the laws of evidence. "Here, the purpose and effect of the cross-examination was not to impermissibly comment on the credibility of Maloney. Rather, it was to impeach Agent Skorlinski by portraying him as a good but closed-minded investigator who failed to consider other suspects. As such, the questioning was not violative of the Haseltine rule," which precludes one witness from commenting on the credibility of another witness (¶ 44).

Top of page

Family Law

Divorce - Child Support - "Shirking"

Chen v. Warner, 2005 WI 55 (filed 6 May 2005)

The mother and father, both physicians, divorced in 1999. At the time of the divorce, both parents were working full time at the Marshfield Clinic and earned very substantial incomes. The divorce judgment provided for joint custody and equal physical placement of the minor children and also provided that neither party would pay child support to the other.

After the divorce, the mother sought to reduce her employment to be more available for the children, who were of or nearing school age. Both parents apparently agreed that it is in the children's best interest to have child care provided by a parent. The mother voluntarily left her full-time position at the Marshfield Clinic in May 2000 when she was unable to reduce her schedule there to part time. She did not seek child support at the time because she expected that income from her investments would exceed her expenses. However, the stock market decline in 2001 took a significant toll on the mother's investment income. She began to look for employment but was not able to find any suitable part-time opportunities within commuting distance from her home.

In 2002 the mother filed a motion to amend the divorce judgment to require the father to pay child support. She asserted a substantial change in circumstances to justify a child support award. Her income had diminished substantially, and the father's income had increased substantially. The circuit court ordered the father to pay child support of $4,000 per month. The court of appeals affirmed. See Chen v. Warner, 2004 WI App 112. In a majority decision authored by Chief Justice Abrahamson, the supreme court affirmed the court of appeals.

The father argued that the mother's termination of employment in 2000 and her refusal to seek part-time work outside the Marshfield area were unreasonable and amounted to shirking her obligation to support their children. "To conclude that a parent is shirking, a circuit court is not required to find that a former spouse deliberately reduced earnings to avoid support obligations or to gain some advantage over the other party. A circuit court need find only that a party's employment decision to reduce or forgo income is voluntary and unreasonable under the circumstances"

(¶ 20). In this case there was no dispute about the voluntariness of the mother's decision to reduce her income from employment outside the home. Rather, the focus of the parties' dispute was whether the mother's decision to forgo employment outside the home to become an at-home full-time child care provider was reasonable under the circumstances.

In addressing the question of reasonableness, the supreme court stated that "the rule derived from the cases is that `[a] parent remains obligated to make reasonable choices that will not deprive his or her children of the support to which they are entitled.' The cases uniformly state, in one way or another, that in considering a spouse's conduct in voluntarily reducing his or her income, a court applies a test of reasonableness under the circumstances. The case law recognizes that the words `subject to reasonableness commensurate with a spouse's obligations to the children' mean that a court balances the needs of the parents and the needs of the child (both financial and otherwise, like child care) and the ability of both parents to pay child support" (¶ 25). The supreme court held that when an appellate court reviews a circuit court's determination of reasonableness, "[the] appellate court should independently determine the issue of reasonableness, giving appropriate deference to the circuit court" (¶ 3).

The supreme court concluded that in this case, "the circuit court correctly concluded that the mother's decision to remain unemployed to be an at-home full-time child care provider was reasonable under the circumstances, given the parents' agreement that, if feasible, it was better for the children to have a parent at home full time than to have both parents working full time or part time outside the home; the benefit to the children in the instant case of having an at-home full-time child care provider; the mother's inability to find part-time employment within commuting distance of the home; and the father's ability to make the additional expenditures for the children without an impact on his standard of living or his short-term or long-term financial health. We do not set forth a general rule that it is always reasonable for a parent to terminate employment to become an at-home full-time child care provider when the other parent has the ability to support the children. We merely conclude that, under the facts of this case, as a matter of law, and giving deference to the circuit court's ruling, the mother's decision to forgo employment outside the home to become an at-home full-time child care provider was reasonable and that the circuit court correctly concluded that the mother was not shirking her obligation to support the children" (¶¶ 77-78).

Justices Wilcox and Butler filed separate dissents.

Top of page

Insurance

UM Coverage - "Hit-and-Run"

Progressive N. Ins. Co. v. Romanshek, 2005 WI 67 (filed 7 June 2005)

Romanshek had a motorcycle liability policy that provided uninsured motorist (UM) coverage. Romanshek was injured when an unidentified vehicle turned left in front of his motorcycle, causing Romanshek to lose control and fall. There was no physical contact between Romanshek's motorcycle and the vehicle. The insurer denied Romanshek's UM claim because there had been no "hit-and-run" involving the other vehicle. The circuit court granted declaratory/summary judgment in favor of the insurer.

On bypass from the court of appeals, the supreme court, in an opinion written by Justice Wilcox, affirmed. "The sole question presented on this appeal is whether ... the phrase `hit-and-run' within the definition of `uninsured motor vehicle' in § 632.32(4)(a)2.b. requires an insurer to provide UM coverage when its insured is the victim of a `miss-and-run' accident" (¶ 8). Romanshek argued that Wisconsin case law had steadily "eroded" the physical contact requirement set forth in precedent, and that the requirement also contravenes public policy. After carefully reviewing case law, the court rejected Romanshek's assertion that the physical contact rule had been "eroded" by cases dealing with chain reaction collisions or cases in which a "detached piece" of a car struck an insured's vehicle (see ¶ 35).

"Thus, for over 20 years this court has consistently adhered to the plain, unambiguous meaning of § 632.32(4)(a)2.b., as set forth in [Hayne v. Progressive Northern Insurance Co., 115 Wis. 2d 68 (1983)]. We have consistently ruled that UM coverage was not mandated under § 632.32(4)(a)2.b. in miss-and-run accidents. The cases in which we found that UM coverage was mandated by § 632.32(4)(a)2.b. all involved circumstances where an unidentified vehicle, or part thereof, made contact with the insured's vehicle or where an unidentified vehicle was `involved' in an accident in which there was physical contact. In short, `[o]ur court and the court of appeals have `drawn a line' on uninsured motorist claims[,]' by requiring physical contact in order to fall within the mandated UM coverage in § 632.32(4)(a) 2.b. We simply have not deviated from that line when it comes to miss-and-run cases" (¶ 39).

Nor was the court persuaded that it, as opposed to the legislature, should revisit the public policy issue or that case law in other states compelled a dramatic departure from stare decisis, especially a departure that would affect contractual relationships. "While this court may mold and develop common-law doctrines to best effectuate the purpose for which they were designed, when applying statutes we do not carve out exceptions to a clear, unambiguous provision anytime a party argues that a particular result does not comport with what they assert to be the subjective intentions of the legislators in enacting the overall statutory scheme" (¶ 63).

Chief Justice Abrahamson dissented. She stated that the grounds for her dissent were the reasons set forth in her dissent in Hayne, case law developments in other states, and the "erosion" of the physical contact rule in Wisconsin case law.

Top of page

Real Property

Land Contracts - Title - Redemption

Steiner v. Wisconsin Am. Mut. Ins. Co., 2005 WI 72 (filed 9 June 2005)

Patricia Steiner was injured when she fell into a dry well on a resort's property on Oct. 15, 1999. Patricia and other family members had owned the property since 1954 and had sold it on a land contract to the Steiner Corp. in 1995. By 1998 the Steiner Corp. had stopped making payments and various third parties held liens on the resort. The land contract vendors began a foreclosure action. On Oct. 19, 1999, the circuit court entered a "strict foreclosure judgment," which also set forth a redemption period that began on Sept. 7 and ended on Oct. 7. The court entered a final judgment on Dec. 1, 1999. In 2001 the plaintiffs, including Patricia, sued the Steiner Corp. and its insurer for her injuries. The circuit court granted summary judgment in favor of the insurer and the Steiner Corp., finding that the latter was no longer an owner as of Oct. 7, 1999, and thus was not an owner when Patricia was injured. The court of appeals affirmed.

The supreme court, in an opinion authored by Chief Justice Abrahamson, reversed and remanded the case. "The issue presented in this case is when, under Wis. Stat. § 846.30, does equitable title to the property in a land contract revert from a land contract vendee to the land contract vendor. That is, does equitable title remain with a land contract vendee until a circuit court, following expiration of the redemption period for strict foreclosure, enters an order confirming the land contract vendee's default? Or does equitable title to the property automatically revert to the land contract vendor at the expiration of the redemption period for strict foreclosure without a circuit court entering an order?" (¶ 3)

The court held that "[o]n the basis of the text of Wis. Stat. § 846.30, the case law, Wisconsin practice, and legislative history, we are persuaded that § 846.30 requires that in strict foreclosure a circuit court must issue a final order to confirm a land contract vendee's failure to redeem prior to the expiration of the redemption period, and that only upon entry of the final order does a land contract vendee's

equitable title revert to the land contract vendor" (¶ 55). "[I]n the present case equitable title did not pass from the Steiner Corporation (the land contract vendee) to the land contract vendors until December 1, 1999, when an order confirming the nonredemption was entered. Accordingly, the Corporation had equitable title to the property under the land contract on October 15, 1999, the date of the plaintiffs' personal injuries, and the Corporation and WAMIC, its insurer, may be subject to liability for plaintiffs' injuries" (¶ 4).

Justice Wilcox, joined by Justice Roggensack, dissented, on the ground "that under § 846.30, equitable title on a land contract passes as a matter of law following the vendee's nonpayment at the end of the redemption period, as established by the land contract or a previously issued court order for strict foreclosure" (¶ 78).

Top of page

Torts

Savings Statutes - Time-barred Claims

Walberg v. St. Francis Home Inc., 2005 WI 64 (filed 2 June 2005)

Yox suffered from dementia and was a resident of the St. Francis nursing home from March 1994 until December 1996. She died in August 2000. Two years after Yox's death, Yox's estate sued the nursing home for negligence and breach of contract. The parties agreed that the claims accrued in December 1996. The circuit court dismissed the claims as time barred by Wis. Stat. section 893.22. The court of appeals reversed, ruling that "Wis. Stat. § 893.22 applied only to cases where a person dies with an existing claim that has less than one year remaining on the period of limitation" (¶ 5). Thus, under the court of appeals' decision, Yox's claim could be brought within two years of her death, as provided by Wis. Stat. section 893.16.

The supreme court, in an opinion written by Justice Bradley, affirmed. Relying on an 1887 decision, the court held that "Wis. Stat. § 893.22 applies only when a person dies with an existing claim that has less than one year remaining on the period of limitation. We therefore determine that Wis. Stat. § 893.22 acts as a saving statute, not a statute of limitations. It provides an opportunity for the representatives of any deceased person to evaluate the potential claims and complete the procedures necessary to commence an action within a period of one year following the death of the potential claimant" (¶ 18). The court held that the statute does not apply to situations in which more than one year remains on a statute of limitation when a potential claimant dies.

The court next addressed Wis. Stat. section 893.16, the language of which "makes evident that the statute operates differently based upon whether the person's mental disability does or does not cease. If a person's mental disability ceases, the action must be commenced within two years. Wis. Stat. § 893.16(1). However, if a person's mental disability does not cease, the period is extended for up to five years. In either event, the underlying period of limitation is not shortened" (¶ 20). It "belie[d] common sense" to argue that Yox's disability somehow survived her death for purposes of section 893.16. Since death terminated Yox's mental disability, Yox's estate had two years from that date to commence this action pursuant to section 893.16(1), although a statute of limitation cannot be extended by more than five years. "The parties agree that both causes of action accrued on December 3, 1996. Under Wis. Stat. § 893.54, she had three years to bring her negligence action. Pursuant to Wis. Stat. [§] 893.43, she had six years to bring her contract action. Had Yox not died, her underlying periods of limitation would have extended for up to five years pursuant to Wis. Stat. § 893.16(1). She therefore would have had until December 3, 2004, to bring the negligence action and until December 3, 2007, to bring the contract action. Under either calculation Wis. Stat. § 893.22 cannot apply, for the claims were not in the final year of their limitation period as of August 15, 2000, the date of Yox's death" (¶ 24). Therefore, the court held, both claims were timely commenced.

Top of page

Wisconsin Lawyer