Supreme Court accepts 18 new cases
Madison, Wisconsin - October 13, 2010
The Wisconsin Supreme Court has voted to accept 18 new cases. The Court also acted to deny review in a number of cases. The case numbers and counties of origin are listed below. The Court of Appeals’ opinions and certification memo available online for the newly accepted cases are hyperlinked.
2007AP35 Rasmussen v. General Motors Corp.
The issue raised in the petition is whether the Court of Appeals erred in holding that Wisconsin’s long-arm statute, Wis. Stat. § 801.05(1)(d), does not subject Nissan Japan to personal jurisdiction in Wisconsin.
Some background: In 2003, David Rasmussen and Lisa A. Lindsay (Rasmussen) filed a class action antitrust suit against various automobile companies, including Nissan Japan and its wholly owned subsidiary Nissan North America. The suit alleged that the auto companies conspired to maintain new car prices in the United States at significantly higher levels than prices in Canada for the same vehicles.
The suit alleged that as part of the conspiracy the defendants arranged for U.S. car dealers to not honor warranties on cars imported from Canada, to prevent the lower priced Canadian Nissans from being exported to this country. The plaintiffs alleged that the circuit court had personal jurisdiction over all defendants because they all had “directly or through their subsidiaries, affiliates or agents” conducted business in Wisconsin, based on Nissan dealerships throughout the state.
Nissan Japan moved to dismiss for lack of personal jurisdiction. It argued it had no contacts with Wisconsin and therefore was not subject to personal jurisdiction here. Following a hearing, the circuit court denied Nissan’s motion to dismiss without prejudice, pending jurisdictional discovery.
A jurisdictional hearing was held in August 2006. At the conclusion of the hearing, the circuit court found that Wisconsin did not have personal jurisdiction over Nissan Japan and that exercising jurisdiction over Nissan Japan would violate due process. Rasmussen appealed, and the Court of Appeals affirmed. The Court of Appeals agreed with Nissan Japan that Insolia v. Philip Morris Inc., 31 F. Supp. 2d 660, 668 (W.D. Wis. 1998) was persuasive on the question of the circumstances under which a parent corporation is subject to general jurisdiction based on acts of its subsidiary.
The Court of Appeals agreed with Nissan Japan that the circuit court’s unchallenged factual findings precluded Wisconsin’s exercise of specific jurisdiction under § 801.05(4). It noted the threshold inquiry under the statute is whether there was an out-of-state act by the defendant that caused injury to person or property within the state.
Rasmussen asks the Supreme Court to determine to what extent Wisconsin citizens can obtain recourse for wrongs committed by corporations that do business in the state through authorized agents. They argue that Nissan Japan is subject to personal jurisdiction in Wisconsin under § 801.05, and that exercising jurisdiction over Nissan Japan did not violate due process. In the alternative, the plaintiffs argued that the circuit court erroneously exercised its discretion in limiting the plaintiffs’ access to discovery materials.
Rasmussen says in determining whether there is general personal jurisdiction over a person, the court will attribute to a defendant any person’s acts for which the defendant is legally responsible. They argue that a corporation is a legal fiction that can act only through its agents. The agents may be other corporations, including subsidiaries. Rasmussen reasoned since corporations cannot act other than through agents, § 801.05(1)(d) necessarily provides that general personal jurisdiction may be exercised over a non-resident corporation where its agents engage in substantial and not isolated activities on its behalf in Wisconsin.
Nissan Japan says the circuit court did not find that Nissan North America’s activities were undertaken on behalf of Nissan Japan. Instead, the circuit court specifically found the absence of any such evidence, and it rejected the plaintiffs’ claim that Nissan North America was merely the alter-ego of Nissan Japan operating in Wisconsin such that Nissan Japan could be subject to general jurisdiction under § 801.05(1)(d). From Milwaukee County.
2008AP3182 Ottman v. Town of Primrose
In this case, the owners of a farm in the Town of Primrose ask the Supreme Court to review the denial by the town board of permits required to build a home and driveway on agricultural property.
Steve and Sue Ottman ask the Supreme Court to review several issues:
- Does the current judicial rule on deference to land use decisions by smaller units of government overly insulate the balancing of community interests and individual property rights from judicial review?
- Is the town engaged in regulation of the use of land such that statutory certiorari applies and the judicial rule limiting the scope of statutory certiorari should be overruled?
- Does the decision by the town fail to withstand conscientious judicial scrutiny of the basis for deference and the customary standard of judicial review?
Some background: In 2004, the Ottmans filed a preliminary permit application with the Town of Primrose planning commission and board. The Ottmans asked for approval to build a residence and driveway on their farm, which they were developing into a Christmas tree farm. The proposed site for the residence was the highest point on the property, about 75 feet north of their agricultural accessory building and adjacent to a field road running from the town road, through the center of the farm, to the top of the hill. The Ottmans asked for permission to convert the current field road into a driveway to access the proposed residence.
Following extensive proceedings, the town denied the Ottmans’ request. The town concluded the Ottmans failed to meet the requirements of the town’s land-use plan or the town’s ordinances because they failed to meet the minimum requirements for income from land production and minimal impact on their agricultural land.
The Ottmans filed a petition for certiorari review. The circuit court affirmed. The Ottmans appealed, and the Court of Appeals affirmed.
The Court of Appeals noted that in an appeal from a circuit court order entered upon a petition for certiorari review, review is limited to whether the board kept within its jurisdiction; whether it proceeded on a correct theory of law; whether its action was arbitrary, oppressive or unreasonable and represented its will and not its judgment; and whether the evidence was such that it might reasonably make the order or determination in question. Klinger v. Oneida County, 149 Wis. 2d 838, 845, 440 N.W.2d 348 (1989).
The Court of Appeals said it presumes a board’s decision is correct and valid, and that the town’s building ordinance provides that the town clerk shall issue or re-issue building or driveway permits once the town board determines certain conditions are met.
The Ottmans asked the Court of Appeals to reexamine the law according deference to decisions made by local governments on certiorari review.
The Court of Appeals said this request was misplaced since the Court of Appeals may not overrule, modify or withdraw language from a published opinion of the Court of Appeals or the Supreme Court. Cook v. Cook, 208 Wis. 2d 166, 189-90, 560 N.W.2d 246 (1997).
In their petition for review, the Ottmans contend the town erred in denying their application for building and driveway permits. As an initial matter, they urge this court to grant review in order to revise the historic rule of judicial deference to land use decisions. They argue that it is inappropriate to give great deference to land use decisions made by smaller units of government.
The Ottmans say land use decisions by larger units of government typically have the benefit of input from staff having professional experience in planning or zoning administration. They argue as smaller units of government assume a larger role in land use decision-making, the challenges not only to provide an impartial tribunal but also to provide one having the skill and sensitivity needed to adjudicate the competing legal rights and interests of the community and the applicant. From Dane County.
2009AP538 Kilian v. Mercedes-Benz
This case examines provisions of Wisconsin’s “Lemon Law” as it relates to a lease agreement.
Some background: Plaintiff Steven Kilian had sought damages for alleged violations of the law after Daimler Chrysler Financial Services Americas (Financial) notified him that he was delinquent on lease payments for a vehicle that he had returned.
In March of 2006, Kilian had entered a 39-month lease agreement with Financial for a 2007 Mercedes-Benz S550V LWB. He experienced numerous problems with the vehicle, which led him to seek a refund under Wisconsin’s Lemon Law. On May 20, 2007, the plaintiff returned the vehicle to the dealer and received a refund check from Mercedes-Benz. He then began receiving phone calls from Financial indicating that he was in default on his lease payments. He also received a payment notice in the mail and a “federal legal notice” dated July 1, 2007, indicating that Financial would report negative information about his lease account to credit bureaus. Kilian responded by explaining that the vehicle had been returned and the lease should be considered terminated. When his efforts to resolve the matter failed, the plaintiff filed suit on July 10, 2007. On Aug. 29, 2007, Mercedes-Benz paid off the lease by making a $95,252.37 payment to Financial.
The plaintiff argued Mercedes-Benz violated the statute by not automatically refunding to Financial the current value of the lease within 30 days of the plaintiff’s demand for a refund. Mercedes-Benz argued that its obligation to pay off the lease is only triggered when the lessor, Financial, offers to transfer title of the vehicle to Mercedes-Benz.
The circuit court granted summary judgment in favor of Mercedes-Benz and Financial. The plaintiff appealed, and Mercedes-Benz and Financial cross-appealed. The Court of Appeals affirmed in all respects.
The Court of Appeals noted that summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The Court of Appeals noted that under § 218.0171(2)(cm)1, a consumer lessee receives a refund by offering to return the lemon to the manufacturer and when the refund is provided the consumer returns the vehicle to the manufacturer. The Court of Appeals noted that although § 218.0171(2)(b)3.a., requires the manufacturer to refund to the lessor the current value of the written lease, the statute does not address how the refund is made.
In his petition for review, Kilian says the availability of attorney fees under the Lemon Law is an important issue with statewide impact. He says if he does not recover attorney fees from Financial, he will bear the burden of enforcing his Lemon Law rights. He says even after he hired an attorney to convince Financial that its lease was unenforceable, Financial continued to seek enforcement of the lease, including threatening to defame the plaintiff by reporting his unpaid lease debt to the credit reporting agencies.
Kilian says if the lower courts' holdings are allowed to stand, consumers will be faced with collection efforts and potential reporting to credit agencies by lessors who know that they can ignore the Lemon Law. The plaintiff argues that defamation damages should be recoverable under the Lemon Law where the defamatory actions were taken as a step to specifically enforce a lease in violation of the Lemon Law.
Specifically, Kilian’s petition asks the Supreme Court to review several issues:
1. Is a consumer entitled to an award of attorney fees pursuant to § 218.0171(7), Wis. Stats., where the consumer sues for rescission of a motor vehicle lease to stop the lessor's enforcement of the lease but the consumer did not suffer a separate pecuniary loss?
2. Does a consumer suffer damages under § 218.0171(7) where attorney fees are incurred to block the enforcement of a motor vehicle lease in violation of § 218.0171(2)(cm)3., Wis. Stats.?
3. Can a consumer recover damages pursuant to § 218.0171(7) for defamation that is a direct result of enforcement of a motor vehicle lease in violation of § 218.0171(2)(cm)3.?
Mercedes-Benz and Financial contend that the plaintiff misstates the Court of Appeals’ holding, and they say that the unpublished Court of Appeals’ decision is narrowly limited to the unique facts of this case. Justice Annette Kingsland Ziegler did not participate. From Waukesha County.
2009AP564 DeBoer Transp. v. Swenson
In this case, the Supreme Court examines when an administrative agency’s interpretation of a statute and its application of facts have a rational basis, and when it does not.
Some background: Charles Swensen had been working for Wausau Carriers but when DeBoer took over that company in August 2005, Swenson became a DeBoer employee. Swenson injured his knee at work on Aug. 23, 2005. In February 2006, Swenson was released to return to work without any restrictions other than wearing a knee brace.
Swenson contacted DeBoer and began a reorientation program that DeBoer uses for drivers who have been off work for more than 60 days. Swenson cooperated with various requirements, including a physical examination, drug screening, a review of company policies, and a short road test required by the Department of Transportation. The final thing Swenson needed to do before being placed back on the job was to go on a check-ride to have his driving skills evaluated by another driver. The check-ride required a returning driver to be away from home for a few days or more.
Prior to his injury, Swenson drove a daily route for DeBoer that allowed him to be home during part of each day to provide care for his terminally ill father. If Swenson participated in the overnight check-ride, he would have needed to locate and personally pay for a care provider for his father for part of each day that he was gone. Swenson asked DeBoer if he could complete his check-ride locally so it would not interfere with his daily routine of caring for his father. In the alternative, Swenson told DeBoer that he would complete the check-ride if DeBoer would pay the additional cost of caring for his father during the time he was away. DeBoer refused to consider making alternate check-ride arrangements. Swenson refused to cooperate with the overnight truck ride and was not rehired.
Swenson brought an unreasonable refusal to rehire claim against DeBoer.
The administrative law judge (ALJ) found that DeBoer unreasonably refused to rehire Swenson. The ALJ said that Swenson had no reason to believe DeBoer intended to give him anything but the same daily route once he was recovered from his work injury. The ALJ noted this was not a case where Swenson had restrictions and DeBoer could not provide work to accommodate the restrictions.
The circuit court likewise affirmed. DeBoer appealed, and the Court of Appeals, with Judge Dykman dissenting, reversed and remanded.
The Court of Appeals said although it might be true that DeBoer could have met its safety concerns by requiring a less demanding check-ride specially tailored for Swenson, that did not mean that requiring Swenson to cooperate with the normal check-ride process was unreasonable. The court of appeals concluded that reasonable cause was shown “by deBoer’s uniform application of its longstanding safety testing procedure to Swenson, combined with the absence of evidence supporting an inference that deBoer refused to rehire Swenson because of his injury.”
In his petition for review, Swenson argues that review is needed in order for this court to clarify when an administrative agency’s interpretation of a statute and its application of facts have a rational basis and when it does not. Swenson says Judge Dykman properly concluded that the portion of the ALJ decision pertaining to DeBoer’s failure to accommodate Swenson’s personal needs was unnecessary to the analysis.
Specifically, Swensen asks the Supreme Court to review:
1. Does Wis. Stat. § 102.35(3) require employers to provide injured workers special accommodations for personal obligations not provided to uninjured workers?
2. If § 102.35(3) requires employers to provide injured workers special accommodations for personal obligations, what standard should the Commission apply when determining which special accommodations should be granted?
DeBoer says the level of deference to be given administrative agency decisions is well established and does not require further clarification. From Wood County.
2009AP1559 Boerst v. Henn
The issue raised in the petition is whether “the doctrine of acquiescence” allows mistaken boundaries to become legal boundaries after 20 years of mistaken belief has been passed.
Some background: The plaintiffs in this case, Daniel R. Northrop and Kay and Peter S. Boerst, own a parcel of land adjoining a parcel of land owned by the defendants, Betty Opperamn, Connie Henn, Floyd Opperman, Keith Opperman, Mark Henn and Pamela Opperman.
Until 2005, the parties believed that Henn Road was on the boundary line between their properties. That year, a surveyor found a concrete monument northwest of the intersection which the parties believed formed the boundary between their properties and so informed the county surveyor. The county surveyor believed the monument had been placed after a 1912 survey and marked the true corner common to the sections. The county surveyor recorded a United States Public Land Monument Record Tie Sheet establishing the monument’s location as the section corner.
Because this action shifted the boundary line, the plaintiffs filed suit, seeking a declaration that they owned the land between the new section line and Henn Road, land which the parties had all previously believed belonged to the defendants. The defendants responded that the 1912 survey was inaccurate and that Henn Road actually does lie on the section line. In the alternative, the defendants argued that even if Henn Road was not on the true section line, all relevant property owners had treated the road as the boundary line since at least 1917 when the parties to a lawsuit had stipulated that the road was the boundary line.
The circuit court concluded that for nearly a century the property owners adjacent to the road had believed it was the boundary line and had acquiesced to the road being the boundary. Consequently, the circuit court declared the road was the boundary line between the properties.
After that decision, Daniel Northrop, another party seeking to recover land affected the county surveyor’s section corner restoration, asked the court to determine whether the corner lot was lost or obliterated. If a corner is lost, the surveyor should relocate it using mathematical models. If a corner is obliterated, surveyors look to secondary evidence, such as fences or roads, of its location. The plaintiffs argued this issue was irrelevant to whether the parties acquiesced to the road as the boundary. The circuit court ruled on the matter and concluded that the corner was obliterated. The plaintiffs appealed, and the Court of Appeals affirmed in part, reversed in part, and remanded.
The Court of Appeals concluded that the circuit court properly determined that Henn Road was the boundary between the two parcels. The Court of Appeals agreed with the plaintiffs that the circuit court erred when it concluded that the section corner was obliterated.
In their petition for review, the plaintiffs argue that the lower courts erroneously held that the doctrine of acquiescence applied here and that the doctrine of acquiescence requires uncertainty about the true boundary line that causes a controversy which the neighbors choose to resolve by agreeing to a different boundary.
The plaintiffs argue that short of proving adverse possession or acquiescence, owners like the defendants, who are mistaken about their true boundary must rely exclusively on their deed to find it. And, unless they can prove adverse possession, can produce a boundary agreement, or their ownership rests on an ambiguous deed, extrinsic evidence of roads and fences is inadmissible to fix their boundary lines. From Ashland County.
2008AP1139 State v. Ninham
In this case, the Supreme Court is asked to review if the life sentence of a boy convicted of committing first-degree intentional homicide at the age of 14 years constitutes cruel and unusual punishment. The case was held in abeyance pending Sullivan v. Florida, No. 08-7621, 560 U.S. ___ (2010).
Some background: The petitioner, Omer Ninham, now represented by the Equal Justice Initiative, seeks review of lower court decisions that denied his Wis. Stat. § 974.06 post-conviction motion to modify his life sentence.
On March 24, 2000, a jury found Ninham guilty of first-degree intentional homicide in the death of 13-year-old Zong Vang. Ninham was 16 when he was convicted and sentenced to life without the possibility of parole on June 29, 2000.
Ninham and four accomplices knocked Vang off his bicycle without provocation, beat him, chased him to the fifth story of a parking ramp and threw or pushed him over the side to his death.
Before rendering sentence, the sentencing court considered several read-in offenses: Ninham threatened a judge and intimidated three witnesses after his arrest. One of these threats was to rape a woman and “make sure it’s a slow death.” While awaiting trial, Ninham’s conduct reports include sharpening a weapon and attempting to escape. The presentence investigation report noted that Ninham experienced chronic instability, violence and alcoholism in his home.
Both the trial court and the Court of Appeals rejected the arguments made on behalf of Ninham. The trial court focused on the brutality of the killing and other evidence of Ninham’s character to sustain the sentence. The Court of Appeals ruled that “[a] sentence to life without the possibility of parole for a crime committed by a 14-year-old does not per se violate the constitutional prohibition against cruel and unusual punishment.”
On direct appeal counsel alleged ineffective assistance of trial counsel. State v. Ninham, 2001AP716–CR (Wis. Ct. App., Dec. 4, 2001). Ninham sought to argue that the trial court erred when it struck two members of the jury panel who indicated that they had felony convictions, and that his trial counsel was ineffective for failing to object. The Supreme Court denied the no-merit petition for review filed on his behalf.
Now represented by the Equal Justice Initiative, Ninham argues that the United States Supreme Court’s decision in Roper v. Simmons, 543 U.S. 551 (2005) established a new constitutional inquiry for sentencing children. Ninham contends his case warrants review and possibly a revised sentence. In Roper, the court upheld the Missouri Supreme Court’s conclusion that the Eighth Amendment prohibits execution of juveniles. Simmons’ sentence was reduced to life without parole for a crime he committed as a 17-year-old.
Ninham asserts that he is the only person in the State of Wisconsin “who has been sentenced to die in prison” for an offense committed at the age of 14. He asks the Supreme Court to examine several issues:
1. Does United States Supreme Court precedent establishing that age has constitutional meaning in the sentencing of children and Wisconsin law establishing heightened protections for 14-year-old children now require a specialized inquiry into the constitutionality of sentencing a 14-year-old to life without possibility of parole?
2. Whether, in light of the United States Supreme Court precedent and Wisconsin law, the inquiry into whether a sentence is unduly harsh and excessive should include specialized consideration of the offender’s age and level of development at the time of the offense.
3. Whether new scientific evidence regarding adolescent brain development that bears on distinctly diminished culpability and heightened rehabilitative potential of children is, in light of the United States Supreme Court decision in Roper a new factor that is highly relevant to and changes the original sentencing considerations so as to require modification of Omer Ninham’s sentence.
The Court of Appeals’ decision comments that, “[t]he Eighth Amendment does not compel lenity based on a killer’s chaotic childhood.” The Court of Appeals rejected the argument that recent scientific evidence of adolescent brain development constitutes a “new factor” noting that the sentencing court was well aware of the differences between juveniles and adults when it rendered sentence in this case.
The state opposes review, asserting that the death penalty cases cited by Ninham “do not in any way render his sentence unconstitutional.”
A decision by the Supreme Court could clarify if the life sentence handed down under the circumstances presented here is constitutional in light of recent U.S. Supreme Court decisions. From Brown County.
2009AP806-CR State v. Beauchamp
In this case, the Supreme Court examines whether “dying declarations” made under the circumstances presented here constitute a permissible exception to the confrontation clause of the Sixth Amendment to the U.S. Constitution. The confrontation clause generally guarantees a criminal defendant’s right to confront an accusing witness in court.
Some background: Marvin L. Beauchamp was convicted of shooting Bryon Somerville to death outside a Milwaukee apartment. Somerville made comments at the crime scene, on the way to the hospital and at the hospital that implicated Beauchamp. Sommerville died shortly after his arrival at the hospital.
There is really no dispute that the victim’s statements were dying declarations. The question is whether those statements were properly admitted at trial. Other eyewitness testimony was inconsistent, so the dying statements were material evidence.
The trial court held that Somerville’s assertions that Beauchamp shot him were admissible under Wis. Stat. Rule 908.045(3) as Somerville’s dying declarations, and were not barred by Beauchamp’s right to confront witnesses testifying against him.
Beauchamp appealed. He claimed that the trial court erroneously admitted as dying declarations the victim’s assertions that Beauchamp shot him, and that his due-process rights were violated because the trial court received as substantive evidence prior inconsistent statements by two of the state’s witnesses. The Court of Appeals affirmed.
Whether an assertion in a dying declaration is within an exception to the rule against hearsay is a matter within the trial court’s discretion. Typically, out-of-court assertions may not be used for their truth at a trial by virtue of the rule against hearsay. Wis. Stat. §§ 908.01 & 908.02. The “dying declaration” is an exception to this rule and is explicitly codified at Wis. Stat. § 908.045(3).
The Court of Appeals first observed that the traditional rationale for receipt of the dying declaration as an exception to the hearsay rule was the assumption that no person will “leave life with a lie on the lips.” See Idaho v. Wright, 497 U.S. 805, 820 (1990). Beauchamp argues that whatever validity that assumption might have had in the era when the dying-declaration rule was first adopted, it has lost much of its vitality today.
Beauchamp contends that the “rationale ignores other motivations that might be just as powerful, such as bias or the desire for revenge, and the organic changes attendant to traumatic injuries that can affect the brain and the victim’s abilities to accurately perceive, recall, and recount what has occurred.”
Beauchamp also presents an ineffective assistance of counsel claim because his attorney failed to challenge inconsistent statements made by two witnesses who said they saw Beauchamp in a dispute with Somerville before the shooting. They both acknowledged that they had signed statements but later claimed they were pressured to do so by police. The witnesses’ testimony at trial tended to favor Beauchamp.
A decision by the Supreme Court could clarify whether “dying declarations” made under the circumstances presented here constitute a permissible exception to the confrontation clause of the Sixth Amendment to the U.S. Constitution. From Milwaukee County.
2010AP321 Brown County DHS v. Brenda B.
In this termination of parental rights case, the Supreme Court examines a trial court’s discretion in denying a motion to withdraw a no contest plea without an evidentiary hearing.
Some background: Brown County filed a petition to terminate Brenda B.’s parental rights, alleging she failed to assume parental responsibility and that her child was in continuing need of protection or services. Brenda entered a no-contest plea to the continuing need ground and the county dismissed the other ground. The court ultimately concluded Brenda’s plea was knowingly and intelligently made. After a contested dispositional hearing, the court terminated Brenda’s parental rights.
Brenda filed a post-disposition motion arguing the plea colloquy was deficient because the court failed to adequately inform her of all the potential dispositions and failed to inform her she was waiving her constitutional right to parent. The motion alleged Brenda was unaware of this information. The court denied Brenda’s motion without conducting an evidentiary hearing. Brenda appealed and the Court of Appeals affirmed.
Brenda now asks the Supreme Court to review, continuing to argue the trial court inadequately informed her of all the potential dispositions set forth in Wis. Stat. § 48.427, which lays out the details and requirements of the termination process.
Brenda argues that it was insufficient for the court to simply confirm that she understood only the two primary dispositions set forth at Wis. Stat. §§ 48.427(2) and (3) (providing that either the termination petition would be dismissed or her parental rights would be terminated). She asserts the court was required to confirm her understanding of “the full range of options” specified under the statute.
The Court of Appeals observed that it “would be not merely burdensome, but practically impossible, to convey a full understanding of the court’s disposition options upon termination.” Thus, the court concluded that “parents must understand they may lose their child as a result of their no contest plea, but need not have a complete understanding of every possible alternative available to the court should it determine termination is in the child’s best interest.” From Brown County.
2007AP203 Polsky v. Virnich
The Supreme Court previously granted certification of this case and vacated the certification on a split vote, remanding to the Court of Appeals.
Some background: The Court of Appeals distilled the pertinent facts as follows: Daniel E. Virnich and Jack M. Moores, the officers of Communications Products, indirectly but fully owned the corporation, with Virnich making all major financial decisions.
In June 2003, after Communications Products Corporation defaulted on a loan, its largest creditor, American Trust and Savings Bank (“the Bank”) alleged the corporation was insolvent and petitioned for a receivership. The court appointed a receiver for the corporation, Michael S. Polsky, who brought this action in May 2004 on the corporation’s behalf. He alleged that for years, Virnich and Moores breached their fiduciary duties to the corporation by taking excessive compensation and engaging in transactions benefitting themselves personally at the corporation’s expense.
Virnich and Moores moved to dismiss the receiver’s complaint arguing, among other things, that the receiver’s claims were barred by Beloit Liquidating Trust v. Grade, 2004 WI 39, 270 Wis. 2d 356, 677 N.W.2d 298. Polsky objected, contending that while Beloit Liquidating may bar creditors’ claims on their own behalf, it does not apply to a receiver’s claims on behalf of the corporation itself. The circuit court agreed with the receiver and denied the motion.
At trial, the jury heard evidence that from 1990-2003, Virnich and Moores used a combination of salaries, management fees, “loans,” dividends, and excessive lease rates to extract more than $10 million from the corporation. Beginning in 2001, Communications Products experienced cash flow problems, then a period of acute financial distress, culminating in the loan default and the receivership. The jury awarded judgment in favor of the corporation totaling $6.5 million, including $3.8 million on breach of fiduciary duty claims and $2.7 million on a conspiracy claim.
Virnich and Moores appealed. The Court of Appeals certified, and the Supreme Court accepted certification. On July 7, 2009, however, this court vacated the certification, noting a three/three split, and remanded to the Court of Appeals.
On remand following the vacated certification, the Court of Appeals reversed. It said Beloit Liquidating ruled that corporate officers did not owe fiduciary duties to creditors until: (1) the corporation became insolvent and (2) was not longer a “going concern.”
The Court of Appeals said Beloit Liquidating ruled that corporate officers did not owe fiduciary duties to creditors until: (1) the corporation became insolvent and (2) was not longer a “going concern.” Here, there was no dispute that at the time of Virnich and Moores’ alleged misconduct, Communications Products was a going concern. Therefore, the Court of Appeals concluded, “under Beloit Liquidating, any claim for a breach of fiduciary duty to creditors is barred.”
Polsky raises four issues in his petition for review by the Supreme Court:
From Grant County.
1. Whether the holding of Beloit Liquidating prohibits receivers from asserting claims, on the corporation’s behalf, of breach of fiduciary duty to the corporation;
2. Whether officers and directors, who self-deal against the corporation’s interests “enjoy a unity of interest” with the corporation, mandating application of the intracorporate conspiracy doctrine;
3. Without an underlying actionable violation of an independent right, is a conspiracy claim actionable?
4. Whether a corporation’s tort claim accrues before the claim is capable of enforcement when the tortfeasors are the only individuals who can enable the corporation to assert the claim.
2008AP2929 Day v. Allstate Indemnity
This insurance case, arising from the tragic death of a child who drowned in a bathtub during an epileptic seizure, examines the interpretation of the family member policy exclusion.
Some background: Emma Day drowned in a bath tub during an epileptic seizure while temporarily unattended by her step-mother, Holly Day. Emma's mother, Wendy Day, brought a wrongful death and survivorship action against Holly, claiming Holly’s negligent supervision caused Emma's death. Holly tendered defense to Allstate Indemnity Company and, by stipulation, Holly was dismissed from the action. Allstate joined Clinton Day, Emma’s father, as a third-party defendant.
After Holly tendered the defense to Allstate, Allstate intervened to determine whether its policy provided coverage for Holly. Allstate then joined Clinton Day as a necessary party. Clinton, as Emma’s father, would be entitled to one-half the proceeds of Emma’s estate as one of the persons “to whom the amount recovered belongs” under the wrongful death statute, Wis. Stat. § 895.03. The matter proceeded on summary judgment motions to determine insurance coverage.
The circuit court determined the family exclusion clause in Clinton Day’s homeowner’s policy was ambiguous and construed the policy to require coverage. The Court of Appeals disagreed.
The Court of Appeals said the identity of the person pursuing the claim against the insured is irrelevant to the determination of whether an exclusion precluding coverage for injuries to relatives or other household members applies. It said Wendy's status as an uninsured person under the policy is therefore inconsequential. Because Clinton, an insured person, would benefit from coverage by virtue of his entitlement to half of any recovery on Wendy's claims, the Court of Appeals reversed. It remanded with directions to grant summary judgment in favor of Allstate.
Wendy Day seeks review of the court of appeals’ decision, reversing the summary judgment granting coverage. She presents two issues:
1. In the context of a wrongful death claim brought by someone other than an insured person, whether the subject Allstate family exclusion provision unambiguously precludes coverage?
2. In the context of a wrongful death claim brought by a plaintiff who is not a family member, is not an insured person, and who does not have any family ties with the insured tortfeasor, against a tortfeasor who is not partial to the plaintiff based on family ties, under circumstances where the insured tortfeasor will certainly cooperate and assist the insurer in defending the claim, does public policy preclude application of a family exclusion provision?
The petition argues ambiguities in policies must be construed in favor of coverage and exclusions narrowly construed against the insurer. The petition argues that here, the unique circumstances render the exclusion ambiguous.
Allstate contends the only issue is whether the plain language of the exclusion applies. From St. Croix County.
2009AP191 Stupar River v. Town of Linwood Board of Review
In this case, the Supreme Court examines whether a property assessment was proper, and whether Stupar River, LLC is entitled to reimbursement and interest due to an over-assessment pursuant to Wis. Stat. § 74.37(5).
Some background: Stupar River, LLC, owns the Wisconsin River Country Club in the town of Linwood in Portage County. It objected to its tax assessments for 2003, 2004, and 2005. It did not object to its assessment in 2006, however, because the town had reduced the assessment to an amount consistent with the amounts Stupar River had proposed in 2005. The circuit court issued an order directing the town to reassess the property for 2003-2005 or, in the alternative, provide a rationale explanation as to why the property had decreased in value in 2006.
In response to the order, the town submitted the assessor’s letter explaining he reduced the assessment in 2006 because the Department of Revenue’s major class comparison report issued in 2005 showed that commercial class was not in line with other classes of property during the year. The assessor said because the difference was greater than 10 percent, he felt an adjustment to the overall class was needed to bring it back in line with other classes of properties.
The circuit court concluded that the town had provided a satisfactory reason for reducing the assessment for 2006 and, therefore, did not need to reassess the property for the years 2003-2005. The court affirmed the town board of review’s decision, and the Court of Appeals affirmed.
The Court of Appeals concluded it was incorrect to assume that the town assessor had reduced the property's 2006 assessment to reflect its true market value. The Court of Appeals explained that the reduction in the 2006 assessment was not based on a change in the fair market value but rather based on an attempt to equalize market value in response to a Wisconsin Department of Revenue report.
Stupar River requests the Supreme Court review three issues: (1) whether the assessor can value real property at something other than fair market value; (2) whether Stupar River, LLC, is entitled to be assessed in 2003-2005 at the same value as in 2006; and (3) whether Stupar River is entitled to reimbursement in interest for an over-assessment pursuant to Wis. Stat. § 74.37(5). From Portage County.2009AP1252 State v. Harbor
In this case, the Supreme Court examines the circumstances under which a court may modify a sentence because of a “new factor,” and whether a defendant was denied effective assistance of counsel because her lawyer failed to present or investigate pertinent sentencing factors.
Some background: Shantell Harbor seeks review of a decision affirming an order denying her motion for sentence modification. Harbor was convicted of one count of attempted robbery, one count of attempted armed robbery, and one count of armed robbery, all with threat of force.
Without having a pre-sentence investigation report conducted, Harbor was sentenced to 12 years initial confinement and 12 years extended supervision. At sentencing, defense counsel addressed Harbor's age, her status as a mother, her graduation from high school and brief employment history. Counsel informed the court that beginning in late 2006 and early 2007, Harbor was suffering from bipolar disorder and a fairly severe depression.
The circuit court stated the purpose of its sentence was to protect the public and to punish Harbor. The court noted that it was not aware of the exact nature of Harbor's mental health problems. The court also considered guidelines and concluded the offense was aggravated because it was not motivated by basic necessities, but by greed.
Harbor filed a post-conviction motion, requesting her sentence to be modified based upon information post-conviction counsel had obtained as a result of a post-sentence investigation. Harbor also requested new sentencing based upon ineffective assistance of counsel for failing to investigate and present mitigating factors at sentencing.
The post-sentencing report included information about Harbor’s background, indicating she was sexually assaulted as a child and was born “the child of a child” to a 16-year-old mother who had addiction issues and had been the victim of physical abuse.
The court said given Harbor's past criminal history, the nature and seriousness of the current offense while committed on supervision, and the risk of harm presented to the community, the sentence was warranted. Therefore, the circuit court did not conclude that counsel had been ineffective, because it was not persuaded Harbor was prejudiced due to the absence of a presentence report.
The Court of Appeals affirmed, observing that the information in the post-sentencing investigation shed light on difficulties Harbor faced in the past, as well as currently, but did not address the circuit court's overriding concern of protection of the public. The Court of Appeals concluded that because the circuit court's primary concern was protection of the public, the report received after sentencing failed to show information highly relevant to the imposition of the original sentence. Accordingly, the Court of Appeals concluded Harbor was not entitled to sentence modification based on a new factor.
Harbor asks the Supreme Court to review whether the post-sentencing report presents a new factor justifying sentence modification, and whether she was denied effective assistance of counsel at sentencing. From Milwaukee County.
2009AP956-CR State v. Burris
In this criminal case stemming from a shooting in Milwaukee, the Supreme Court examines the deference to be given to a circuit court’s discretionary use of jury instructions, based on Supreme Court opinions.
Some background: A jury convicted Donovan M. Burris of first-degree recklessly causing bodily injury and of being a felon in possession of a firearm for shooting Kamal Rashada on Sept. 5, 2007. Kamal is the brother of Khadijah Rashada, Burris’s ex-girlfriend, and the mother of Burris’s two children.
Burris was at the Rashada home when an argument erupted between Khadijah and Burris that stemmed, in part, from a disagreement about who was going to provide diapers for the children and about Khadijah’s new boyfriend.
According to Khadijah, her mother, Cathy Rashada, came into the room where the argument was occurring and led her daughter and grandchildren to the living room. Burris followed them to the living room, and the argument continued. Khadijah testified that, at one point, Burris pulled out a handgun from the waistband of his pants, pointed the gun at her, and said, “Bitch, I kill you.” According to Khadijah, at that time her brother Kamal intervened, opened the front door and told Burris to leave. Khadijah stated that Burris refused, placed the muzzle of the gun close to Kamal's neck, and fired the gun, hitting Kamal in the neck. She further testified that after the shooting, Burris said that he had not meant to do it, implored Kamal not to die, aimed the gun at his own head, and told Cathy Rashada to kill him. Cathy and Kamal also testified that after the shooting Burris tried to determine if Kamal would be okay and said that he had not meant to do it.
Burris testified that he walked toward the front door with the gun pointed down at his side. He stated that Kamal came up to him quickly and reached for his wrist. Burris asserted that as he pulled his arm away from Kamal’s grasp, the pressure from his hand hit the trigger and it discharged. He also testified that after the shooting he had checked on Kamal’s gunshot wound to determine that it was not life-threatening.
The dispute at trial centered on whether Burris had exhibited “utter disregard for human life” (first-degree recklessly causing bodily injury), whether he had simply recklessly caused bodily injury (second-degree recklessly causing bodily injury), or whether the shooting had been accidental (not guilty).
After deliberating a while, the jury sent a written question to the judge asking whether it could consider facts and circumstances after the shooting. The state agreed that the court should give a supplemental instruction proposed by the judge. Defense counsel, however, objected, arguing that the court should simply instruct the jurors to go over the original instructions again. The judge provided a supplemental instruction that quoted language from State v. Jensen, 2000 WI 84, ¶32, 236 Wis. 2d 521, 613 N.W.2d 170.
The Court of Appeals’ decision addressed Burris’s argument that the circuit court had erred in giving an instruction that had misled the jury. The Court of Appeals noted the distinction between a claim that a challenged jury instruction was an inaccurate statement of the law and a claim that an instruction, while legally accurate, misled the jury.
Over a dissent by Judge Ralph Adam Fine, the Court of Appeals agreed with Burris that in the present case the correct answer to the jury's question was simply “yes,” that it could consider facts and circumstances after the shooting. It concluded that the circuit court’s supplemental instruction had misled the jury. It therefore reversed Burris’s conviction and remanded the case to the trial court for additional proceedings.
The state asks the Supreme Court to review two issues: whether the jury instruction quoting a Supreme Court decision was erroneous and if the Court of Appeals applied the proper standard of review given the circumstances of this case. From Milwaukee County.
2008AP2765-CR State v. Funk
This criminal case, stemming from the sexual assault of a child, examines the method by which a court determines potential juror bias.
Some background: A jury convicted David D. Funk on two counts of sexual assault of a 10-year-old girl. Three days before his scheduled sentencing, the defense filed a motion to vacate the judgment and for a new trial, based on the discovery that a 20-year-old female juror and her sisters had been sexually assaulted by a school bus driver when they were children and that she had failed to disclose this information during voir dire.
After the motion was filed, the trial court disclosed to the prosecutor and defense counsel that the juror had also been the victim of a sexual assault in in 2005 when she was 17 years old. During that prosecution, the now-juror had testified against her assailant at a preliminary hearing. The man accused in that case eventually pleaded no contest to a charge of third-degree sexual assault.
During voir dire, the trial court told prospective jurors that they could expect to be asked by attorneys if they had been victims of sexual assault or if their friends, neighbors or relatives had been sexually assaulted. However, neither the trial court nor either of the attorneys ever followed up and directly asked whether any prospective juror had been the victim of a sexual assault.
At other points during voir dire, the prosecutor asked whether anyone “ever had contact in any way, shape or form” with the Juneau County district attorney's office, including as a victim or a witness. Defense counsel asked if anyone had ever gone to court to testify in either a criminal or civil case. In response to these questions, several jurors relayed various experiences they had had with the justice system.
Defense counsel also asked whether any of the prospective jurors believed they would have a difficult time being fair and impartial both to the state and to the defendant. In response to that question, two prospective jurors said they would like to discuss the matter in chambers. One revealed that she had been molested as a child, and the other revealed that she had a granddaughter who had been sexually assaulted.
An evidentiary hearing on the defense motion focused on whether the juror had erroneously or incompletely responded to a material question posed by the trial court during voir dire. Under questioning by the court, she testified of he assaults that consisted of the school bus driver touching the girls' vaginal area through their clothes. These incidents gave rise to both the criminal case in Juneau County and a civil case against the school district. The juror also testified that she had been the victim of date rape at a party when she was 17.
The trial court found that the juror had incorrectly responded to a material question by defense counsel and ultimately concluded that she was biased. The question the court identified as being incorrectly answered was if anyone had testified in a criminal case as a witness, which she had.
The state appealed. The Court of Appeals affirmed, noting that in order to obtain a new trial based on a juror’s lack of candor, a litigant must show that the juror incorrectly or incompletely responded to a material question on voir dire and that it is more probable than not that under the facts and circumstances of the particular case the juror was biased against the moving party. State v. Wyss, 124 Wis. 2d 681, 726, 370 N.W.2d 745 (1985), overruled on other grounds by State v. Poellinger, 153 Wis. 2d 493, 504-05, 451 N.W.2d 752 (1990).
The Court of Appeals said once it has been established that a juror gave an incorrect or incomplete response to any material question, the moving party must be afforded the opportunity to establish bias.
The state argued on appeal that it was improper for the trial court to make a finding that the juror failed to answer a material question about giving prior testimony in a criminal matter because the defendant’s motion had focused on whether she had failed to answer a question about whether she had ever been the victim of a sexual assault, and no one asked her at the motion hearing why she had not raised her hand in response to the question about prior testimony.
The state argued that the trial court erred in determining that the juror was objectively biased because the court put too much emphasis on similarities between the prior assaults of the juror and the assaults at issue in this case, while ignoring differences between the cases.
The Court of Appeals said it need not address this argument since the lower court’s factual findings that the juror had failed to correctly answer a material question on voir dire and that she was subjectively biased were sufficient, in and of themselves, to support the trial court’s exercise of discretion in granting the defendant a new trial.
A decision by the Supreme Court could help resolve possible conflict between prior decisions on the proper test to be used to determine if a juror is biased. From Juneau County.
2009AP25-CR State v. Rhodes
In this homicide case, the Supreme Court is asked to examine the constitutional principles governing confrontation and compulsory process in limiting cross-examination of witnesses.
Some background: The defendant Olu A. Rhodes and his brother, Jelani Saleem, were tried together for the shooting death of Robert Davis and the shooting injury of Jonte Watt. The state's theory of the case was that the brothers had killed Davis because they thought he was responsible for arranging to have their sister, Nari Rhodes, beaten, and that Watt was simply an unlucky bystander. Watt and his girlfriend were with Davis at the time of the shooting and both identified the brothers as the shooters.
During Nari’s cross examination by defense counsel, counsel began to ask about previous occasions when Davis had beat her. After a sidebar, the circuit court refused to allow defense counsel to ask Nari any more questions about earlier beatings by Davis.
Defense counsel had told the court he was not going to ask about every time Davis had hurt Nari but wanted to focus on one serious incident where Davis broke Nari’s orbital bone. Counsel explained the purpose of the questioning would be to try to rebut the state’s motive argument. Counsel said he would have asked Nari if she had made her brothers aware of the earlier injury and who inflicted it and she would have said yes. Counsel said he would then have asked Nari if her brothers retaliated after the incident and she would have replied that there was no response from her brothers.
The jury acquitted Saleem of both charges. Rhodes appealed, and the Court of Appeals reversed and remanded.
The Court of Appeals noted that a circuit court’s decision to admit or exclude evidence is discretionary and will not be reversed provided the decision was made in accordance with accepted legal standards and the facts of record. State v. Pharr, 115 Wis. 2d 334, 342, 340 N.W.2d 498 (1983). The court also noted that a defendant’s right to confront the witnesses against him is central to the truthfinding function of a criminal trial, and a defendant’s right to cross examine is an essential and fundamental requirement.
The state now asks the Supreme Court to review the following issues:
From Milwaukee County.
1. Did the court of appeals correctly apply the constitutional principles of law governing confrontation and compulsory process when it concluded that the circuit court impermissibly limited Olu A. Rhodes' cross-examination of a state witness, Nari Rhodes?
2. If the answer to the foregoing question is “yes,” was the circuit court's error harmless?
2009AP775 E-Z Roll Off v. County of Oneida
This case involves allegations that Oneida County helped a waste-hauling company engage in monopolistic behavior by selectively charging reduced dumping fees at a county-run landfill. The Supreme Court is asked to examine the notice requirements of Wis. Stat. § 893.80(1) for filing claims against a county.
Some background: E-Z Roll Off was in the solid waste hauling business, providing dumpsters to its customers. In June of 2003, Oneida County executed an agreement with another waste hauling company, Waste Management, Wisconsin, Inc. As part of that agreement, Waste Management was charged a preferential $5.25 per ton rate for waste it delivered to the county’s transfer station. Other waste haulers, including E-Z Roll Off, were charged $44.00 or $54.00 per ton, depending on whether the hauler delivered enough waste to the county annually to earn a rebate.
E-Z Roll Off’s owners were unaware of the Waste Management contract until February of 2004 when one of their employees inadvertently saw a scale ticket showing Waste Management’s rate. E-Z Roll Off’s owners requested a meeting with the county’s solid waste director. At the meeting, the owners expressed concern with the Waste Management contract, saying it created a monopoly and that they would take their waste elsewhere unless the county reduced E-Z Roll Off's disposal rate. The county's solid waste director refused to reduce the rate.
E-Z Roll Off's owners then filed complaints with various governmental entities, including the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). E-Z Roll Off requested reimbursement of the amount paid over $5.25 per ton, which was about $98,000, and asked that the monopoly be broken and criminal charges be filed against the parties involved. DATCP forwarded a copy of the complaint to the Oneida County landfill but took no further action. DATCP’s cover letter indicated the county had the option to provide a response, which DATCP would place in its file. The county’s solid waste director replied to the complaint in a letter sent to DATCP and E-Z Roll Off. The solid waste director asserted that E-Z Roll Off's owners were always aware of the contract terms and stressed that the contract had resulted from an open bidding process.
On Sept. 28, 2005, E-Z Roll Off filed with the county a notice of injury alleging violations of ch. 133, Stats., and a statement of claim indicating a loss of over $1 million in past and future lost earnings. The claim was disallowed. E-Z Roll Off filed suit in April of 2006.
The circuit court ultimately granted the county’s motion for summary judgment, dismissing the case. The circuit court concluded that the notice requirements of § 893.80(1) applied. The circuit court held that E-Z Roll Off did not allege a continuing violation but rather alleged that the agreement between the county and Waste Management signed in June of 2003 was illegal. The circuit court said the action began to accrue in June of 2003 and that E-Z Roll Off was required to file a notice of claim within 120 days. The circuit court said E-Z Roll Off filed its notice of claim in September of 2005, over two years later. Accordingly, the circuit court concluded the claim was not filed timely.
E-Z Roll Off appealed, and the Court of Appeals reversed and remanded. The Court of Appeals said whether the notice provision of § 893.80(1) applies to specific statutory actions is a question of statutory interpretation. The Court of Appeals noted that E-Z Roll Off argued for an exception to the notice requirements for its ch. 133 antitrust claim. The Court of Appeals said the primary focus in that regard was on § 133.16, injunction, pleading, and practice. The Court of Appeals went on to note that the notice of claim is not subject to any filing deadline.
Oneida County asks the Supreme Court to review the following issues:
1. Do the notice requirements mandated by Wis. Stat. §893.80(1) and §59.07 apply to Plaintiff-Respondent E-Z Roll Off LLC’s action for declaratory relief under Wis. Stat. §133.03 and damages alleged under Wis. Stat. §133.18?
2. Was the Notice of Injury timely?
3. Did Oneida County have actual notice of the injury and was it prejudiced because it was not timely served with the Notice of Injury?
4. Does the continuing violations doctrine apply to Wis. Stat. §893.80(1)?
From Oneida County.
2009AP1714 Emjay Inv. Co. v. Village of Germantown
In this case, the Supreme Court examines the special assessment process and the application of the statute of limitations on appeals under § 66.0703(12)(a).
Some background: Emjay owns land in the village of Germantown on the corner of Appleton Avenue and County Line Road, where it operates a restaurant that has been in business for 60 years. Menards sought to build a retail development nearby, and Emjay contends the scope of the improvements proposed by Menards became the outline of the properties to be specially assessed, and was based on a mistaken proposed site plan prepared by Menards’ planning and development department.
On May 17, 2004, the village held a properly noticed hearing on the special assessments and adopted a resolution levying those assessments on June 21, 2004. The resolution was published on June 30, 2004. A notice of the adoption of the resolution was sent to all interested parties, including Emjay, on July 12, 2004. The notice said the special assessments would be deferred until the property was commercially developed or redeveloped before 2012. Emjay does not dispute that it received this notice. In September 2007, Emjay contracted to sell its property to a developer. Prior to the closing, it was determined that Emjay owed the special assessments.
On May 30, 2008, Emjay filed a notice of appeal and complaint under Wis. Stat. § 66.0703(12) (2007-08), challenging the legality of the notice/resolution and special assessment, and seeking various forms of relief. Emjay argued the confusion generated by the village’s notice rendered the statute of limitation in § 66.0703(12)(a) inapplicable.
The village moved to dismiss the appeal and complaint, and the circuit court granted the motion. Emjay filed this suit in circuit court, which concluded the action was barred by the statute of limitations. Emjay appealed and the Court of Appeals affirmed, agreeing with the circuit court that the action was time barred.
Emjay presents three issues for Supreme Court review: (1) Wis. Stat. Ch. 66 does not permit a “contingent” special assessment, rendering the 90-day limitation inapplicable; (2) the Village never adopted a final resolution in compliance with § 66.0703(8)(c), so the 90-day limitation does not apply; and (3) Emjay may challenge the special assessment by means not barred by the 90-day limitation.
Emjay asserts that because of the contingent nature of the special assessment, the village’s notice and resolution failed to apprise him the assessment adversely affected its property, thereby failing to trigger § 66.0703(12)’s 90-day limitation. Emjay claims the lack of reasonable notice and the deprivation of the full proceeds of the sale his property raise issues of due process.
A decision by the Supreme Court could clarify the law and potentially affect property owners statewide. From Washington County.
2009AP1669 Fischer v. Steffen
In this insurance case resulting from an automobile accident, the Supreme Court examines the interaction of law involving arbitration and subrogation claims for medical expenses.
Some background: Roger Fischer and Pamela Steffen were involved in an automobile accident. Fischer was insured by American Family Mutual Insurance Co. (American Family). Steffen was insured by Wilson Mutual Insurance Company (Wilson Mutual). As a result of the accident, Fischer incurred $12,157.14 in medical expenses. Fischer’s policy with American Family had a policy limit of $10,000 for medical expenses. Accordingly, American Family paid $10,000 to Fischer for his medical expenses, which created a potential subrogation interest in that amount for American Family.
Prior to Fischer pursuing a claim against Steffen and Wilson Mutual, American Family agreed with Wilson Mutual that it would arbitrate its $10,000 subrogation claim against Steffen and Wilson Mutual. In the arbitration, Steffen's defense was that she had “suffered a sudden and incapacitating illness which came upon her without forewarning, which illness [an epileptic seizure] caused her to be . . . unable to operate her vehicle.”
Steffen argued that her sudden seizure operated as a legal excuse for her conduct, and the arbitration panel accepted Steffen’s defense and concluded that she was not liable. Thus, it ruled that Steffen and Wilson Mutual did not have to pay anything to American Family for its subrogation claim.
Fischer subsequently filed a civil action in the Sheboygan County circuit court. In addition to naming Steffen and Wilson Mutual as defendants, Fischer also named American Family as a defendant in order to resolve its subrogation claim. American Family asserted that it had paid $10,000 to Fischer under its medical expense coverage and claimed a subrogation interest in any recovery Fischer might obtain. American Family also filed cross-claims against Steffen and Wilson Mutual to obtain reimbursement under its subrogation interest for the $10,000 in medical expenses it had paid to Fischer. After Wilson Mutual reminded American Family of the arbitration result, American Family voluntarily dismissed its subrogation claims.
Fischer took his claims against Steffen and Wilson Mutual to trial and obtained a favorable jury verdict. During the trial, Fischer, Steffen and Wilson Mutual stipulated that the medical expenses portion of Fischer’s damages was $12,157.14.
After the trial, Steffen and Wilson Mutual moved for a partial judgment notwithstanding the verdict on the medical expense issue. They argued that the verdict should be reduced by the $10,000 that American Family had paid for Fischer’s medical expenses because Steffen and Wilson had won the arbitration proceeding that involved the $10,000 claim for medical expense payments. The circuit court agreed with Steffen and Wilson Mutual that the verdict should be reduced under the rule set forth in Paulson v. Allstate Ins. Co., 2003 WI 99, 263 Wis. 2d 520, 665 N.W.2d 744. Thus, it changed the medical expense portion of the verdict from $12,157.14 to $2,157.14.
Fischer appealed the portion of the judgment that reduced his claim for medical expenses by $10,000. The Court of Appeals rejected Fischer's argument that American Family had waived its subrogation interest for medical expenses by agreeing to arbitration and then voluntarily dismissing its subrogation claim in the circuit court action. It characterized the subrogation interest of the insurer as “trumping” the collateral source rule, which provides that a legally responsible tortfeasor may not reduce his/her liability because the victim obtained reimbursement for his/her damages from a collateral source, such as an insurer.
The Court of Appeals concluded, in part, “…that once the plaintiff has been paid in full by the subrogated insurer, that insurer stands in the shoes of the plaintiff.” The insurer is then free to determine how it wishes to go about seeking reimbursement from the other party to the accident and that party’s insurer.
Fischer asks the Supreme Court to rule that an insurer cannot settle or arbitrate a subrogation claim for medical expenses until there has been a determination that the plaintiff insured has been made whole. He contends that the Court of Appeals' decision “seems to obfuscate” established settlement procedure in tort cases involving subrogation claims.
The Supreme Court’s decision is expected to address the effect of a subrogated insurer’s agreement to arbitrate its subrogation claims against the opposing party and that party’s insurer prior to a lawsuit being filed by the insured and without the insured's consent. From Sheboygan County.
Review denied: The Supreme Court denied review in the following cases. Supreme Court review is a matter of judicial discretion, not of right, and will be granted only when special and important reasons are presented. As the state’s law-developing court, the Supreme Court exercises its discretion to consider for review only those cases that fit certain criteria, but these criteria neither control nor fully measure the Court’s discretion (see Wis. Stat. (rule) § 809.62).
2008AP2161 Yellow Thunder Corp. v. Star Pipe Products - Chief Justice Shirley S. Abrahamson and Justice David T. Prosser, Jr. dissent.
2008AP3234 State v. Whitehead - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.
2010AP2137-W Russo v. Smith
2009AP449-CR State v. Newell - Justice David T. Prosser, Jr. and Justice Michael J. Gableman dissent.
2010AP1770-71-W Erbs v. Cameron
2008AP2750 McCormack v. Raemisch - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.
2009AP390 State v. Joiner-El
2009AP598 Weissenberger v. Van Hollen - Chief Justice Shirley S. Abrahamson dissents.
2010AP205-W Beasley v. McCaughtry
2010AP804-W Oliver v. McCulloch
2010AP1641-W Grissom v. Thurmer
2010AP1651-W Hagberg v. Cir. Ct. Dane Co.
2009AP795 Constance N. v. Anna Mae Z. - Chief Justice Shirley S. Abrahamson dissents.
2009AP1315-CR State v. Allen
2009AP1686 State v. Brown
2009AP838 Rivera v. Perez
2009AP2737-CR State v. Sporle
2009AP32 State v. Stokes
2009AP936-CR State v. Williams
2009AP1602-CR State v. Pavin
2009AP2079 State v. Lee
2009AP3089-CRNM State v. Marshall
2009AP460-CR State v. Onheiber
2008AP2031 State v. Townsend
2008AP2205 Goldman Sachs v. Yancey
2008AP2954-CR State v. Kurtz
2008AP3184/85-CR State v. Crowder - Chief Justice Shirley S. Abrahamson dissents.
2009AP205-CR State v. Williams - Chief Justice Shirley S. Abrahamson and Justice David T. Prosser, Jr. dissent.
2009AP496-CR State v. Daniels - Chief Justice Shirley S. Abrahamson dissents.
2009AP702/932/1416/1561 Lee v. LIRC
2009AP851-CR State v. Jackson
2009AP888-CR State v. Connors - Chief Justice Shirley S. Abrahamson dissents.
2009AP1225-CRNM State v. Hopkins
2009AP1332-CR State v. Henry
2009AP1407/08-CR State v. Wiley - Chief Justice Shirley S. Abrahamson dissents.
2009AP1438-CR State v. Castaneda
2009AP1573-CR State v. Casey - Justice Ann Walsh Bradley dissents.
2009AP1924 Milw. Deputy Sheriff’s Assn. v. City of Wauwatosa
2009AP2102 Vasquez v. Milw. City Bd. of Fire & Police
2009AP2118-CR State v. Grabowski
2009AP2249-CR State v. Harris
2010AP38-W Schmitt v. Pugh
2010AP1296-W Bloodworth v. Cir. Ct. Milw. Co.
2010AP1928-W Olson v. Grams
2009AP2205-CR State v. Gaede
2009AP2689 Nelesen v. Michilig - Justice Patience Drake Roggensack dissents.
2009AP2166 St. Croix Valley Home v. Township of Oak Grove
2009AP2286 State v. Young-Cooper
2010AP1503-W Davis v. COA
2008AP1523 Rock-Koshkonong Lake Dist. v. DNR - Chief Justice Shirley S. Abrahamson concurs.
2009AP310-CR State v. Brooks - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.
2009AP1210-CR State of Parmley - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.
2009AP669/1878 First Bank of Highland Park v. Summer Haven
2010AP1495-W Gieron v. COA
2009AP240-AC Est. of Sheppard v. Reg. in Probate - Justice Patience Drake Roggensack dissents.
2010AP1933/34-W Howard v. Hepp - Justice Annette Kingsland Ziegler did not participate.
2008AP3156-CR State v. Wopport - Chief Justice Shirley S. Abrahamson dissents.
2009AP2777-CR State v. Able - Justice Annette Kingsland Ziegler dissents.
2009AP2840-FT Village of Butler v. Fricano Winnebago
2009AP1514 State v. Weidner
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