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2010

Supreme Court accepts six new cases

Madison, Wisconsin - December 14, 2010

The Wisconsin Supreme Court has voted to accept six new cases. The Court also acted to deny review in a number of cases. The case numbers, issues, and counties of origin are listed below. Court of Appeals opinions available online for the newly accepted cases are hyperlinked.

2009AP639 McReath v. McReath
In this divorce case, the Supreme Court is asked to review whether a circuit court may double count the value of a divorcing professional's “professional goodwill” by first valuing the professional's business practice for property division purposes, and then awarding maintenance based upon the professional's earning capacity.

Some background: Timothy and Tracy McReath were married in 1988 and divorced in 2008. Timothy has an orthodontics practice.  Tracy is a homemaker who is currently pursuing a degree.

At the divorce trial, the parties disputed the value of the orthodontics business.  Tracy's primary valuation expert relied on an income approach to valuing the practice.  Using this method, Tracy's expert estimated that Timothy could sell his practice for $1,058,000.  Timothy's expert used the “income approach” to value the practice at $415,000.  Of this amount, Timothy's expert attributed $247,000 to the net value of the practice's assets and the remaining $168,000 to goodwill, which he opined was 95 percent “professional” goodwill and 5 percent “corporate” goodwill.  Based on this breakdown, Timothy's expert concluded that the net value of the practice, exclusive of Timothy's professional goodwill, was $255,379.  The circuit court accepted Tracy's expert's valuation, including the full $1,058,000 as divisible property and awarded Tracy half that amount. 

In setting maintenance and child support, the circuit court examined the income available to the parties and calculated Timothy's earnings from his orthodontic practice by looking at his average net cash flow over the five preceding years and making some adjustments to that average.  The court ordered Timothy to pay maintenance to Tracy at the rate of $16,000 per month for twenty years.  Timothy appealed, arguing that the circuit court erred as a matter of law when it treated the professional goodwill portion of the valuation of his practice as divisible property.  The Court of Appeals affirmed.

The Court of Appeals noted that the circuit court found that Timothy could sell his orthodontic practice for $1,058,000 and this amount was comprised of three separate components: the value of tangible assets, the value of corporate goodwill, and the value of professional goodwill.  The Court of Appeals said there was no dispute that the professional goodwill was saleable and what was in dispute was whether the circuit court erred by treating the value of Timothy's saleable professional goodwill as divisible property.

Timothy argued that professional goodwill is not a divisible asset, even if it is saleable because it is inextricably linked to earnings.  He argued it is unfair to divide the value of his professional goodwill as part of a property division and then also base maintenance payments, in part, on the earnings that flow from the same professional goodwill, something that is referred to as “double counting.”

The Court of Appeals said neither party provided a clear definition of either “corporate goodwill” or “professional goodwill.”  The court said this was in part because there is a lack of clarity in prior Wisconsin law. 

In his petition for review, Timothy argues that review is appropriate because every time a practicing professional in this state gets divorced, he or she, along with his or her spouse, the parties' counsel, and the presiding judge, all wade into a “quagmire.”  He says Wisconsin law expressly disfavors double counting marital assets, and published case law instructs circuit courts to take great care to avoid double counting.  He says unfortunately, current law provides circuit courts with no clear framework for achieving that objective in cases involving a professional practice.  He says practicing professionals, their spouses and divorce courts across the state will all benefit from the increased predictability, consistency, and fairness that clear guidelines governing property division and maintenance awards will promote. From Sauk County.

2009AP694-CR State v. Densen
This case examines whether the circuit court is required to conduct a colloquy with a defendant who chooses to waive his right not to testify.

Some background: Following a jury trial, Rickey R. Denson was convicted of false imprisonment and first-degree reckless endangerment.  He was acquitted of sexual assault of a child, negligent handling of a weapon, and first-degree intentional homicide.

At the jury trial, Denson testified in his own defense.  The court did not engage him in a colloquy regarding his right not to testify.  Following his conviction, a no-merit notice of appeal was filed.  The Court of Appeals issued an order directing counsel to confer with Denson regarding his desire to pursue post-conviction relief on the colloquy issue. Denson wanted to appeal on this issue.  The Court of Appeals dismissed the no-merit appeal and reinstated the deadline for filing a motion for post-conviction relief. 

Denson then filed a motion claiming he was not advised of his right not to testify by the trial judge. Denson contends the right not to testify is fundamental, and the right must be waived personally. He claimed the trial court's failure to conduct such a colloquy violated his due process rights and the right against compulsory self-incrimination. 

Following an evidentiary hearing, during which Denson and his trial counsel testified, the circuit court denied the motion.  He appealed, and in a summary decision, the Court of Appeals affirmed.

Denson contends that had he not testified in his own defense, there is a reasonable probability that the jury would have discredited the victim's testimony with respect to two counts and entered a judgment of acquittal on those as well.

Denson asks the Supreme Court to review the following issues:

  1. Should the constitutional right of a criminal defendant not to testify on his behalf and remain silent at trial be recognized as a fundamental right that can only be waived personally by the defendant with an on the record colloquy?
  2. Should the only appropriate remedy, for failure to engage in an on-the-record colloquy regarding the right not to testify at trial, be a new trial?
  3. Should the failure to engage in an on-the-record colloquy regarding the right not to testify be subject to a harmless error analysis?

From Rock County.

2009AP438 Bushard, v. Reisman and PressEnter, LLP
In this case, the Supreme Court is asked to examine business partnership law as it relates to a dispute between two estranged business partners who were ordered to “wind-up” their partnership. The petitioners, Steven Reisman and PressEnter, LLP, seek review of a Court of Appeals' order that directed Reisman and the plaintiff, David Bushard, to complete the wind-up of PressEnter. The order also required Reisman to reimburse PressEnter for funds he took as a salary, and dismissed Reisman's counterclaims against Bushard for breach of fiduciary duty and unjust enrichment.

Some background: Bushard and Reisman formed PressEnter, an internet service provider, as a partnership in 1995.  They registered PressEnter as a limited liability partnership, but did not enter into a written partnership agreement. Bushard and Reisman contributed an equal amount of capital to the partnership's formation and initially were both involved in the business's day-to-day operations.  Eventually they disagreed about how they should run the business.

In August 1999, Bushard notified Reisman by letter from his attorney that “Mr. Bushard has chosen to exercise his right to dissolve the partnership, PressEnter, L.L.P., effective Aug. 31, 1999.” Around the same time, the men unsuccessfully tried selling PressEnter and Bushard essentially ceased his involvement in the business's management. 

Reisman continued to operate the business for the next nine years. During this time, PressEnter paid Bushard and Reisman equal partnership draws out of the business's profits, as it had before Bushard's dissolution notice.  In addition, Reisman began taking a “guaranteed draw”--or salary--in 2004.  When Bushard learned of this practice two years later, he notified Reisman he objected to Reisman taking a salary.  Reisman nevertheless continued taking guaranteed draws on the theory that he was running the company.   

Bushard sought an order dissolving the partnership and requiring Reisman to repay money he had taken as a salary.  Reisman filed a counterclaim alleging that Bushard breached his fiduciary duty to Reisman and was unjustly enriched by PressEnter's post-August 1999 profits.  Reisman moved for summary judgment on the claim that he was not entitled to take a salary. 

The circuit court concluded that Reisman was prohibited, as a matter of law, from taking a salary from the partnership without Bushard's agreement based on its interpretation of the governing statutes.  The circuit court then directed the parties “to complete the winding up of the affairs of PressEnter ... and to report to the court in 60 days regarding the progress.”  It ordered Reisman to “account to and reimburse PressEnter ... for the amounts which he took as guaranteed draws or salary,” and dismissed his counterclaims for unjust enrichment and breach of fiduciary duty.       

Reisman appealed.  He claimed that the circuit court erred when it (1) ordered the parties to complete the winding up of their partnership, (2) directed Reisman to reimburse money he took as a salary, and (3) dismissed Reisman's counterclaims.  The Court of Appeals affirmed, and this petition followed.

In part, Reisman presents the following issues for review:

  1. Where the trial and appellate courts have considered equitable principles as required in Estate of Matteson [Estate of Matteson v. Matteson, 2008 WI 48, ¶25, 309 Wis. 2d 311, 749 N.W.2d 557], does this unpublished opinion conflict with that precedent from Estate of Matteson?
  2. Whether the real controversy was assessed in this hybrid dissolution…
  3. Whether unjust enrichment applies to the withdrawing partner where he benefited enormously from the skill and labor of the remaining partner, received all appropriate partner payments and by dint of the inability to sell the business and wind-up, the continuing partner is disadvantaged and not compensated for his efforts?
  4. Truly applying equity, has the withdrawing partner Bushard been more than compensated under either a value based on a wind-up or continuation?

From Pierce County.

2009AP1469/2009AP1470 Covenant Healthcare System, Inc. v. City of Wauwatosa
In this case, Covenant Healthcare Systems, Inc. (Covenant) asks the Supreme Court to review a Court of Appeals' decision reversing a circuit court order and judgment finding St. Joseph Outpatient Center to be a tax exempt property under § 70.11(4m)(a)(2007-08). 

Some background: St. Joseph Outpatient Center (the clinic) is a freestanding outpatient medical facility located in the City of Wauwatosa.  From 2003 through 2006, the clinic was owned and operated by St. Joseph Hospital Regional Medical Center, Inc., a Wisconsin non-profit corporation.  St. Joseph's sole member was Covenant, an Illinois non-profit corporation. 

The building in which the clinic is located was originally owned by Covenant.  Covenant built a five-story building for the clinic and transferred the building to St. Joseph by accounting entries.  Covenant continued to own the land and leased it to St. Joseph.  The clinic was located on the first, third, and fourth floors of the building.  St. Joseph leased the space on the second floor to an affiliated corporation and leased the space on the fifth floor to unrelated physicians and healthcare professionals.  Covenant did not seek tax exemptions for the second or fifth floors of the building.  The building contained public space on each of the five floors and the lower level and the property included a separate parking structure and surface parking areas. 

In 2003 through 2006, Covenant filed timely property tax exemption requests with the City of Wauwatosa assessor, seeking property tax exemptions for the clinic and the land on which it is located.  The assessor denied all requests.  Covenant paid the taxes assessed on the property for each year.  It then filed suit against the city in an effort to recover the taxes it paid.  A nine-day bench trial was held.  On March 30, 2009, the trial court issued a lengthy written order concluding that the clinic was property tax exempt. 

Wauwatosa appealed.  This court denied a petition to bypass in December 2009.  The Court of Appeals, with Judge Fine dissenting, reversed and remanded, holding that the clinic is a doctor's office and thus not qualified for a tax exemption under the statute.

The petition raises the following issues:

In construing Wis. Stat. § 70.11(4m)(a) and controlling precedent, did the Court of Appeals err when it concluded that the hospital outpatient facility known as the St. Joseph Outpatient Center (“SJOC”) was “used ... as a doctor's office” and, is, therefore, ineligible for a property tax exemption?

Was the SJOC reasonably necessary to the efficient functioning of Wheaton Franciscan Healthcare St. Joseph, Inc. n/k/a Wheaton Franciscan, Inc. (“St. Joseph Hospital”), thereby satisfying the requirement that the SJOC be used for the purposes of a hospital?

Was the SJOC ineligible for the exemption under Section 70.11(4m)(a) because the “net earnings” of St. Joseph Hospital “inure[d] to the benefit” of its sole member, Covenant Healthcare System, Inc. (“Covenant”)?

Was the SJOC ineligible for the exemption under Section 70.11(4m)(a) because it was used for “commercial purposes”?

A decision by the Supreme Court, which previously denied bypass in this case, could clarify law in this area and resolve a possible conflict in prior court decisions. From Milwaukee County.

2009AP1337/1338 Capital One Bank v. Summers 
In this case, the Supreme Court is asked to interpret Wis. Stat. §§ 425.109(1) and 425.109(2), involving the creditor's obligations in a consumer credit transaction. Eugene Summers asks the Court to consider whether these sections require a creditor to produce upon request by the debtor evidence of the credit agreement contract, as part of a prima facie case for summary judgment.

Some background: Summers seeks review of a summary order affirming a judgment awarding his credit card company, Capital One Bank, USA NA, $3,154.86 in a small claims action and $7,754.62 in large claims action.

In both cases, Capital One sued Summers for amounts due on his credit card account alleging default on the account by failing to pay amounts due.  Attached to the complaints in both cases were documents, including monthly statements, showing unpaid charges and other amounts due on the account.  Summers filed an answer requesting copies of the “writings evidencing any transaction” pursuant to § 425.109(1)(h) and (2).

He stated that over the past ten years, he lived in six places in four different cities in Wisconsin.  He explained his credit card account records were either lost or misplaced through these moves.  He said because of the number of credit card accounts he could not be sure what the terms or interest rates of each of the credit card accounts were or whether his payments were properly applied.  Based on his recollection, he stated that each one of the Capital One credit cards he had provided different terms, credit terms, and interest charges. 

In response to Summers' request for the “writings” other than the monthly statements back to a zero balance, Capital One provided a Mastercard application for one account and a check for the small claims action. No additional “writings” relating to the account in the large claim action were filed. Capital One moved for summary judgment in both actions relying on its affidavit stating that Capital One's books and records show that Summers was indebted on the accounts in the amount sought plus interest currently at 25.9 percent.

Summers claimed in the small claims action that the documents provided by Capital One were incomplete as demonstrated by the face of each document providing different account numbers.  He argued that if he didn't know what the terms and conditions of his obligation to Capital One were, he could not know whether Capital One's claim was accurate.  He said he did not sign up for a 25-percent interest rate as alleged in the lawsuit.

The circuit court ruled that Capital One needed to provide only a monthly account statement going back to a zero balance, and it was unreasonable to require a credit card issuer to provide Summers with the documents requested.  It ordered summary judgment in Capital One's favor.   

In an unpublished summary order, the Court of Appeals affirmed.

The Court of Appeals said that the account statements incorporated in Capital One's affidavits constituted writings evidencing the transactions on Summers' accounts and these statements established Capital One's compliance with § 425.109(2).  It rejected Summers' arguments as an attempt to expand the definition of “writings” in § 425.109(2) to include all documents relating to the creation of the account, including its terms and conditions.

Summers presents two issues:

Did [trial] court err as matter of law in holding that the term “writings evidencing any transaction” requested by the consumer pursuant to 425.109(2) Stats., only requires the creditor to produce evidence of monthly charges which form basis of money judgment sought and not credit agreement contract, interest rate and State and Federal disclosures?

When a customer under an opened credit plan timely requests copies of “writings evidencing any [transaction]” under 425.109(2) Stats., can judgment be entered against a consumer where lender fails to provide complete copies of credit agreement plan?

From Green Lake County.

2009AP2868 Wilkinson v. Arbuckle
This certification asks the Supreme Court to review whether Estate of Sustache v. American Family Mutual Insurance Co., 2008 WI 87, ¶24, 311 Wis. 2d 548, 751 N.W.2d 845, leaves open the possibility that the “four-corners rule” does not apply when the insured's policy provides coverage for injuries sustained by acts of self defense.

Specifically, the certification poses the issue as follows: Does the four-corners rule govern an insurer's duty to defend when, in response to a lawsuit, an insured alleges that he acted in self-defense and the insured's policy expressly provides coverage for injuries sustained by acts of self-defense?

Some background: This appeal arises from a civil complaint filed by Jeffrey Wilkinson alleging James Arbuckle assaulted and battered Wilkinson causing injuries.  Arbuckle affirmatively defended on the ground that he was protecting his father from an attack by Wilkinson using only such force as necessary.  Arbuckle counterclaimed against Wilkinson for intentional battery.

The circuit court entered summary judgment in favor of the intervening defendant, Acuity.  Acuity argued it had no duty to defend or provide coverage for Arbuckle.  The circuit court found that the complaint alleged an intentional act by Arbuckle, which is not an “occurrence” under the initial grant of coverage.  The circuit court did not consider language in the exclusion section of the policy stating that while intentionally harmful acts committed by the insured are not covered, acts “committed to protect persons or property” are not excluded.

The circuit court concluded that Sustache I stands for the proposition that there are no exceptions to the four-corners rule in Wisconsin.  The circuit court ruled that because Wilkinson's complaint alleged intentional acts, there was no occurrence and hence no coverage.  It said it may only look at the exclusion section of the insurance policy after determining that coverage exists. 

The court of appeals says that the Acuity policy “clearly and unambiguously provides coverage for self-defense.” 

The Court of Appeals says although Arbuckle claims the alleged injury was caused when he was acting in self-defense, the four-corners rule serves to deny him the defense that he and Acuity agreed upon.  Therefore, the Court of Appeals contends the four-corners rule is in direct conflict with the clear and unambiguous language of the policy and the parties' intentions.  From Sheboygan County.

Review denied: The Supreme Court denied review in the following cases. As the state's law-developing court, the Supreme Court exercises its discretion to select for review only those cases that fit certain statutory criteria (see Wis. Stat. § 809.62). Except where indicated, these cases came to the Court via petition for review by the party who lost in the lower court:

Bayfield
2010AP495-CR State v. Gordon

Brown
2009AP74-CR State v. Morgan - Chief Justice Shirley S. Abrahamson dissents.
2009AP670 Dan Samp Agency v. Amer. Fam. - Chief Justice Shirley S. Abrahamson did not participate.Justice Patience Drake Roggensack dissents.
2009AP1687 Anderson v. Hinton - Justice N. Patrick Crooks did not participate.
2009AP1854-CRNM  State v. Romero-Georgana
2009AP2333 Franciscan Friars v. J.J. Hof Land Co.
2009AP2528-CR State v. Franklin
2010AP1717/18 Jeffrey J. v. David D.
2010AP2487-W Casteel v. Cir. Ct. Brown Co.

Dane
2008AP2305 State v. Murray
2009AP492-CRNM State v. Aguila
2009AP1168 Jones v. Schwarz
2009AP1710 Est. of Zimmermann v. Dane Co.
2009AP1711 Gonnering v. Endres
2009AP1746 Field v. DOR
2009AP1823-CR State v. Bruckbauer
2009AP2070 State v. Melendrez
2009AP2268 State v. Klausen
2010AP152 State v. Obriecht
2010AP312 Glowacki-Dudka v. Dudka
2010AP576 Compton v. Jenkins - Justice N. Patrick Crooks did not participate.
2010AP1136-FT Hebel v. DOC 

Douglas
2009AP1319 Turner v. Sanoski

Fond du Lac
2009AP1203 Merrill Iron & Steel v. Cullen-Smith
2010AP1528 State v. Powers

Forest
2009AP1454-CR/2009AP2277-CR State v. Schmaling

Grant
2009AP319 Progressive Northern v. Schroeder
2009AP2032 al Ghashiyah v. Huibregtse - Justice N. Patrick Crooks did not participate.
2010AP1678 Grant Co. DSS v. Stacy K.S. - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.

Kenosha
2009AP469-CR State v. Salgado
2009AP2726-CR State v. Henry 

Langlade
2010AP1915-W  Maus v. Pollard

Manitowoc
2008AP1595-CR State v. Jones

Marathon
2009AP1695 Vang v. Grams - Justice Ann Walsh Bradley did not participate.
2010AP1416-W Thompson v. Boatwright

Milwaukee
2008AP2863 State v. Duckworth
2009AP976-CR State v. Habersat
2009AP1232  State v. Allison
2009AP1302 State v. Parker
2009AP1314-CR State v. Veloz
2009AP1524 SEIU v. WERC
2009AP1775-77-CR State v. Cooper
2009AP1893-CR State v. Daniels
2009AP2204 Bratcher v. Housing Authority - Chief Justice Shirley S. Abrahamson dissents.
2009AP2252-CRNM State v. Weid
2009AP2256-57-CR State v. Linton
2009AP2306-CR  State v. Mulder
2009AP2345 Ottmann v. Cincinnati Ins. Co.
2009AP2761-CR State v. Jones
2009AP3020-CR State v. Yunck
2010AP614-CRNM State v. Riser
2010AP1929-W Johnson v. COA
2010AP2725-W Mikulovsky v. Pollard
2010AP2742-W Atkins v. Grams

Racine
2008AP1796 Legacy DC v. Actkins
2009AP1274-CR State v. Earl
2009AP2018-CR State v. Willingham
2010AP1284-W East v. Thurmer

Rock
2009AP3030 Ulrich v. Scharine's Agri-Systems - Chief Justice Shirley S. Abrahamson and Justice Ann Walsh Bradley dissent.

St. Croix
2009AP2481 Slocum v. DOR 

Sheboygan
2009AP1065-CR State v. Gonzalez-Ricardo

Walworth
2009AP1727-29-CR State v. Watling
2010AP606-CR State v. Elkins 

Washburn
2009AP1548-CR State v. Cochran

Waupaca
2008AP2126 Longtine v. LIRC

Washington
2009AP2426-CR State v. Watkins - Justice Annette Kingsland Ziegler did not participate.

Winnebago
2009AP1717-CR State v. Salzer
2010AP1885-OA Maday v. Cir. Ct. for Winnebago Co.

Wood
2009AP2739 Olsen v. Olsen

Contact:
Tom Sheehan
Court Information Officer
(608) 261-6640

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