Criminal Procedure
Breach of Plea Agreement by Defendant – Remedy
State v. Reed, 2013 WI App 132 (filed 23 Oct. 2013) (ordered published 20 Nov. 2013)
HOLDING: The circuit court did not err by finding the defendant had breached the terms of a plea agreement or by choosing the remedy of allowing the state to make a specific sentencing recommendation, even though the terms of the original plea agreement required the state to make no specific sentencing recommendation.
Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.
Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.
SUMMARY: Defendant Reed pleaded no contest to substantial battery in exchange for the dismissal of three other counts and the state’s promise to make no recommendation at sentencing. Under the agreement, the state reserved the right to withdraw from the agreement if Reed “commits any new or additional crime(s).” Before sentencing, Reed was charged with new crimes and was bound over in the new case following his waiver of a preliminary hearing. The circuit court found that these newly charged crimes constituted a breach of the plea agreement. The circuit court went ahead with sentencing, allowing the state to argue for a specific sentence and denying Reed’s request to withdraw his plea.
In a decision authored by Judge Neubauer, the court of appeals affirmed. It agreed with the circuit court that Reed breached the plea agreement and that “it would be unreasonable to conclude that the promise to commit no new crimes requires a conviction to be enforceable” (¶ 9). The court of appeals rejected the defendant’s contention that the state should not be allowed to withdraw from the plea agreement because the newly charged offenses had not yet been proved.
The appellate court further concluded that the circuit court’s choice of remedy, to hold Reed to his plea and allow the state to recommend a sentence, was an appropriate exercise of discretion (see ¶ 1). It noted that the nonbreaching party – the state – did not seek to vacate the entire plea agreement (see ¶ 14).
Employee Benefits
Retirement Benefits – Elimination of Benefit Before Benefit Becomes an Entitlement
Wisconsin Federation of Nurses & Health Professionals v. Milwaukee Cnty., 2013 WI App 134 (filed 1 Oct. 2013) (ordered published 20 Nov. 2013)
HOLDING: Employees are not eligible for a retirement benefit that is eliminated before it has matured into an entitlement for them.
SUMMARY: Milwaukee County appealed a grant of summary judgment, to various unions and two of their members, in which the circuit court ruled that the plaintiffs had “a vested benefit contract requiring the County to reimburse [their] Medicare Part B premiums” when they retire from county employment even though they were not yet retired when the county eliminated that benefit (see ¶ 1).
The parties’ contentions were based on their interpretation of various Milwaukee County General Ordinances, including ordinances providing that the county’s liability for Medicare Part B premiums would end for affected employees who retired after dates specified in the ordinances. The parties did not point to any collective bargaining agreement that affected the merits of this case.
In a majority decision authored by Judge Fine, the court of appeals reversed. Applying the decision of the supreme court in Loth v. City of Milwaukee, 2008 WI 129, 315 Wis. 2d 35, 758 N.W.2d 766, it concluded that “the union members’ inchoate eligibility for County payment of their Medicare Part B premiums did not mature into an entitlement because they did not retire before the deadlines [established in the Ordinances], even though they could have” (¶ 16). The court recognized that “[i]t is true, of course, that once eligibility matures into entitlement, a benefit may not be retroactively modified or eliminated” (¶ 14).
Judge Kessler filed a dissenting opinion.
Employment Law
Collective Bargaining Agreements – Arbitration Awards – Effect of Act 10
School Dist. of Kewaskum v. Kewaskum Educ. Ass’n, 2013 WI App 136 (filed 23 Oct. 2013) (ordered published 20 Nov. 2013)
HOLDING: Act 10 had no effect on an existing collective bargaining agreement or its provision for the submission of disputes to arbitration.
SUMMARY: The School District of Kewaskum and the Kewaskum Education Association had a collective bargaining agreement (CBA) for the 2009-10 and 2010-11 school years providing that any disputes arising under the agreement would be submitted to an arbitrator for a final, binding decision. During the 2010-11 school year, the school district discharged a teacher. The association challenged the discharge, and the dispute was submitted to an arbitrator in accordance with the CBA. In a decision rendered on May 3, 2012, the arbitrator found that the school district did not have grounds under the agreement to discharge the teacher and ordered the district to reinstate her and pay her lost wages and benefits.
The school district appealed, arguing among other things that the arbitrator was without jurisdiction to order reinstatement and back pay after the expiration of the parties’ CBA when a new state law (2011 Wis. Act 10) was in effect that barred collective bargaining by school districts over employee disciplinary matters. The circuit court concluded that the arbitrator had jurisdiction to rule on the underlying dispute and to fashion related remedies.
In a decision authored by Judge Reilly, the court of appeals affirmed. It held that “[t]he change in state law [Act 10] had no effect on the existing collective bargaining agreement or the arbitrator’s ability to order a remedy for a violation committed during the agreement’s term“ (¶ 2). “The new law went into effect for employees covered by existing collective bargaining agreements on the day that those agreements expired” (¶ 10). See 2011 Wis. Act 10, § 9332.
Said the court, “Relieving school districts of the burdens of arbitration in employee disciplinary matters may have been the desire of the legislature in passing Act 10. But the plain language of the new law delays its effectiveness with respect to individual school employees and school districts until after the expiration of their existing collective bargaining agreements, and our constitution prohibits state laws that substantially impair existing contracts” (¶ 11) (citations omitted).
Insurance
Rehabilitation Plans – Discretion
Nickel v. Assured Guaranty, 2013 WI App 129 (filed 24 Oct. 2013) (filed 20 Nov. 2013)
HOLDING: The circuit court properly approved a detailed plan for rehabilitating an insurance company that improvidently covered various financial guarantees.
SUMMARY: This is a lengthy opinion (88 pages) that raises dozens of diverse issues involving the narrow, complex subject of rehabilitating insurance companies. Space limitations permit only a bare-bones summary of its reach. Ambac is one of the world’s largest insurers of financial guarantees. When Ambac’s financial condition worsened by 2010, the Wisconsin Office of the Commissioner of Insurance (OCI) took formal regulatory action. Crafting a “targeted partial rehabilitation,” the OCI created a segregated account for Ambac’s “greatest liabilities,” namely, 1,000 policies that threatened Ambac’s financial stability.
The circuit court adopted the rehabilitation plan while also enjoining other persons and entities from actions that might threaten the plan. Essentially, the plan paid policy holders in the segregated accounts 25 percent of their claims in cash and the remainder in surplus notes, payable over decades. The segregated account “has access to approximately 98% of Ambac’s assets” in the general account (¶ 8).
The court of appeals affirmed. Writing for the court, Judge Higginbotham opened by providing a background on insurance rehabilitation. Noting the “unique” issue and that this was not an administrative agency determination, the court nonetheless held that “the commissioner’s determinations regarding the interpretation and application of statutes it is charged with administering are entitled to great weight deference” (¶ 20). It then turned to a plethora of issues raised in the “consolidated brief” by interested parties.
First, the circuit court properly exercised its discretion in adopting the OCI’s proposed findings, as shown by the judge’s reasoning and judgment (see ¶ 30). Second, the circuit court properly found that the segregated account was sufficiently capitalized (see ¶ 45). Third, the circuit court was not required to prioritize claims because Wis. Stat. section 645.68 applies only to liquidations, not rehabilitation proceedings (see ¶ 58).
Fourth, the law did not require the plan to provide policyholders with the liquidation value of their claims or an “opt out” contingency (see ¶ 70). Fifth, the plan was not a “de facto liquidation” (¶ 71). Any intent to “run-off the liabilities” in the segregated account must be understood in terms of the payouts (25 percent cash, the balance in surplus notes) made to policyholders, and the plan’s intent was to preserve Ambac’s business (see ¶¶ 76-77).
Sixth, the plan did not constitute an unlawful transfer of assets (see ¶ 85). Seventh, the “made-whole” doctrine was not applicable to these proceedings (see ¶ 90). The parties’ equity arguments were only a reworking of their attack on the capitalization of the segregated account.
Eighth, the court’s grants of immunity and indemnification in the injunction accorded with the law and were not limited to persons specifically listed in Wis. Stat. section 645.08(2) (see ¶ 103). Ninth, the circuit court’s orders precluding discovery (the interested parties lacked standing under chapter 804) as well as its scheduling order and its decision to admit various evidence constituted a proper exercise of discretion (see ¶¶ 104-22).
The court then turned to a wide range of issues raised in sundry individual briefs. It rejected arguments relating to the allocation of select policies to the segregated account (see ¶ 124), the balancing of interests among short-term and long-term policy holders (see ¶ 127), the denial of setoffs for premium payments (see ¶ 137), the curbing of “control rights“ by trustee banks, and the imposition of “administrative burdens” (see ¶ 152). Finally, it considered and rejected an array of fact-intensive contentions involving an earlier appeal by assorted policyholders (see ¶ 153).
Exclusions – Fungi
Heinecke v. Aurora Healthcare Inc., 2013 WI App 133 (filed 8 Oct. 2013) (filed 20 Nov. 2013)
HOLDING: An exclusion of coverage for “fungi and bacteria” was not subject to an exception for “consumption” (thereby triggering coverage) in a situation in which the alleged source was a fountain in a lobby.
SUMMARY: A hospital owned by Aurora Healthcare Inc. contracted with Creative Business Interiors (CBI) to remodel its lobby, a project that included the installation of a fountain. Plaintiffs claimed that they acquired Legionnaire’s disease from the fountain. They sued Aurora, which in turn filed a third-party complaint against CBI, which in turn impleaded its commercial general liability (CGL) and umbrella insurance carriers. Both policies contained exclusions for fungi and bacteria. The issue here turned on whether an exception to the exclusion for “a good or product intended for consumption,” the so-called Consumption Exception, allowed coverage nonetheless. The circuit court said no, and CBI appealed.
The court of appeals affirmed in an opinion authored by Judge Brennan. The court agreed that the contracting parties did not contemplate the lobby fountain as a good or product intended for consumption. The court relied on various dictionary definitions of “consumption” from the standpoint of a reasonable person.
“Here, the Consumption Exception’s reference to ‘a good or product intended for consumption’ clearly did not mean to encompass the observation and enjoyment of art. A reasonable insured reading the policy would understand the word ‘consumption’ to reference a good or product that was intended to be eaten or drank, or otherwise used up. It makes little sense that a reference to consumption, when discussing exposure to fungi and bacteria, would be referring to the observation and enjoyment of art” (¶ 16). CBI’s contrary reading led to what the court called “an absurd result” (¶ 17).
Indemnity – Exhaustion – Joint and Several Liability
Cleaver-Brooks Inc. v. AIU Ins. Co., 2013 WI App 135 (filed 29 Oct. 2013) (filed 20 Nov. 2013)
HOLDING: Joint and several liability was properly imposed on multiple insurers in an asbestos coverage case.
SUMMARY: Cleaver-Brooks, a manufacturer, was sued in more than 200,000 lawsuits involving asbestos contamination and expects to be named in future lawsuits. The insurers in this case insured Cleaver-Brooks through six excess-liability policies sold as two “substantively identical $35 [million] packaged blocks, each consisting of three excess liability policies, one policy sold by each of the [i]nsurers,” each block covering a single calendar year (1979 and 1980) (¶ 3).
In the 2004 Coverage Action, the court decided a partial summary judgment motion that allocated the insurers’ obligations, which the parties knew would not come due for several years. A final order was issued in 2007. By 2010 or so, Cleaver-Brooks notified the insurers that it was close to exhausting coverage from other policies and would soon be drawing on their coverage. This case, the 2011 Coverage Action, involved a dispute among the insurers and Cleaver-Brooks about the scope of those obligations. In 2012, the circuit court ruled that the phrase “joint and several liability” in the 2007 judgment “is one that imposes simultaneous [as opposed to sequential] indemnity obligations on the [insurers]” (¶ 13).
The court of appeals affirmed in an opinion authored by Judge Brennan. The imposition of joint and several liability “gives to Cleaver-Brooks the option of choosing more than one of the [i]nsurers at a time to indemnify it for a given claim, such that the [i]nsurers’ payments are proportional to their liability and will exhaust at the same time” (¶ 15). This followed from the unambiguous language of the 2007 judgment as well as the consistency between the policies and the simultaneous indemnity obligation. Moreover, this obligation was not precluded by case law, claim preclusion, or estoppel.
Municipal Law
Road Improvement – Eminent Domain
Village of Brown Deer v. Balisterri, 2013 WI App 137 (filed 29 Oct. 2013) (filed 20 Nov. 2013)
HOLDING: Local road improvements did not require eminent-domain compensation.
SUMMARY: A village planned to improve streets without paying eminent-domain compensation on the ground that the projected improvements were on public highways, as provided by Wis. Stat. section 82.31(2)(a). Affected property owners brought this action. The circuit court decided in favor of the village.
The court of appeals affirmed in an opinion authored by Judge Fine. The court rejected the residents’ arguments that the trial judge had misapplied the statute and that the statute was unconstitutional. A key issue concerned the statutory rebuttable presumption that the village and the public used a 66-foot swath. The circuit court correctly applied the presumption to the entire roadway except for three encroaching properties. Case law did not dictate that these encroachments rebutted the presumption for the entire street, as the residents contended. The circuit court also properly included sidewalks in its definition of “highway” (¶ 14).
Finally, the statute was constitutional. The statute imposes a rebuttable presumption, unlike the conclusive presumption found unconstitutional under Minnesota case law, which the Wisconsin appellate court deemed “not helpful” (¶ 20).
Taxation
Property Taxes – Evidentiary Burdens When Assessments Challenged
Bonstores Realty One LLC v. City of Wauwatosa, 2013 WI App 131 (filed 8 Oct. 2013) (ordered published 20 Nov. 2013)
HOLDING: The circuit court did not err when it concluded that the taxpayer failed to overcome the presumption that the property tax assessment on the taxpayer’s property was correct.
SUMMARY: Bonstores Realty One LLC appealed an order in which the circuit court dismissed its complaint against the city of Wauwatosa (the city). Bonstores alleged that the city’s property tax assessment on Bonstores’s real property was incorrect. The circuit court concluded that Bonstores failed to overcome the statutory presumption that the city correctly assessed Bonstores’s property for the years in question.
In a majority decision authored by Judge Kessler, the court of appeals affirmed. Much of the court’s decision focused on the evidentiary burdens associated with a challenge to a property tax assessment. Wisconsin Statutes section 70.49(1) requires a municipal assessor to attach a particular affidavit to the completed assessment roll when the assessor reports his or her conclusions as to assessed values. Thereafter, each assessment “shall, in all actions and proceedings involving such values, be presumptive evidence that all such properties have been justly and equitably assessed.”
Applying Wis. Stat. section 903.01, which describes how presumptions are handled in civil cases, the appellate court concluded that once the presumed fact (the assessed value) is established, “§ 903.01 shifts the burden of producing evidence to the opponent of the presumed fact – here to Bonstores – to produce evidence that it is more probable than not that the assessed value is not correct. The presumption (that the City assessed value is correct) does not disappear simply because contrary evidence exists. Although the burden of producing evidence shifts, the burden of persuasion never leaves the proponent of the presumption” (¶ 9).
After reviewing the extensive expert evidence presented by the city and Bonstores during the trial of this case, the appellate court concluded that the circuit court did not err when it concluded that Bonstores failed to overcome the presumption that the city’s assessment was correct.
Judge Fine filed a concurring opinion.
