Criminal Procedure

Probation – Revocation After Defendant Erroneously Discharged from Probation

State ex rel. Greer v. Wiedenhoeft, 2014 WI 19 (filed 17 April 2014)

HOLDING: The Department of Corrections had jurisdiction to revoke the petitioner’s probation even though it had erroneously issued a certificate discharging him from probation before the institution of revocation proceedings.

SUMMARY: Petitioner Greer was placed on probation in 2005 after being convicted of several felony charges. His probationary term had an expiration date of Sept. 28, 2010. However, in 2007, the Department of Corrections (DOC) erroneously issued a certificate absolutely discharging him from probation. Greer later was convicted of another crime, and the DOC then discovered that it had erroneously issued the discharge certificate. On Sept. 16, 2010, the DOC initiated probation revocation proceedings. Greer objected to the DOC’s jurisdiction, arguing that the issuance of the discharge certificate deprived the DOC of jurisdiction to revoke his probation. Nonetheless, the DOC revoked his probation.

Greer filed a petition for a writ of certiorari in the circuit court seeking review of the probation revocation. The circuit court concluded that, although the DOC had jurisdiction over Greer even after the erroneous issuance of the discharge certificate, the DOC was equitably estopped from revoking Greer’s probation. In a published decision, the court of appeals reversed. See 2012 WI App 122. In a majority decision authored by Justice Ziegler, the supreme court affirmed the court of appeals.

The supreme court held that, pursuant to statute and administrative regulation, the DOC “possesses jurisdiction over a probationer until the end of the court-imposed term of probation” (¶ 41), and “the discharge certificate issued to Greer could not have the effect of discharging him from his court-ordered probation because his court-ordered probation was not complete” (¶ 51). Accordingly, the DOC possessed jurisdiction to revoke Greer’s probation (see ¶ 53).

The court further concluded that Greer’s substantive and procedural due process rights were not violated when his probation was revoked after he was issued a discharge certificate. It also held that “a circuit court sitting in certiorari cannot properly entertain equitable arguments. As a result, the DOC cannot be equitably estopped from revoking Greer’s probation” (¶ 89).

Justice Bradley filed a dissenting opinion that was joined by Chief Justice Abrahamson.

Insurance

Exclusions – Business “Use”

Casey v. Smith, 2014 WI 20 (filed 18 April 2014)

HOLDING: In a coverage dispute between insurers regarding a semi-tractor, exclusions related to business “use” did not preclude coverage under a “bobtail” policy.

SUMMARY: The owner of a semi-tractor leased his truck to a trucking company. The lease required him to provide a driver, use the truck exclusively for the company, maintain the vehicle, and obtain all insurance required by federal law. The lease also compelled him to carry “bobtail liability insurance,” which covers the truck when it is not used in performance of the lease. While driving the truck to a service center for minor repairs, the owner was involved in a multivehicle accident. The owner considered himself “off duty” at the time, and the company had not required the repairs. The bobtail policy, issued by Acceptance Casualty (Acceptance), covered “non-trucking use,” but Acceptance denied coverage under two exclusions related to business use. In a summary judgment proceeding, the circuit court ruled that Acceptance’s policy covered the accident and the exclusions did not apply. In a published decision, the court of appeals affirmed. See 2013 WI App 24.

The supreme court affirmed in an opinion written by Justice Bradley. The opinion focused on the exclusions in the Acceptance policy, because it was undisputed that the policy otherwise covered the damages (see ¶ 27). First, the business-use exclusion did not apply based on Seventh Circuit and Wisconsin case law that determines when a vehicle is being used to “further commercial interests of the lessee” (¶ 32).

“In sum, because the repairs were not required by the lease agreement, were not done pursuant to orders by Taylor Truck Line, and were not necessary for the semi-tractor to continue its service, we conclude that Zeverino was not acting in furtherance of Taylor Truck Line’s commercial interest at the time of the accident. Accordingly, the accident does not fall within the exclusion in section 14(b) of Acceptance’s policy” (¶ 49).

Also inapplicable was a second exclusion pertaining to events that occur when the truck is being operated or maintained “in any business or en route to or from such business purpose” (¶ 50). Acceptance’s interpretation of the policy essentially would result in denial of coverage anytime the truck was driven.

“Here, Zeverino was on his way to have the grille and oil filler tube on the semi-tractor replaced when the accident occurred. It is undisputed that the semi-tractor could still carry loads without the repairs. Thus, the repairs were not necessary to allow the semi-tractor to carry property and the exclusion in section 14(a) of Acceptance’s policy does not apply” (¶ 55).

Torts

Punitive Damages – Excessive Award

Kimble v. Land Concepts Inc., 2014 WI 21 (filed 22 April 2014)

HOLDING: A jury award of $1 million in punitive damages on an insurance bad-faith claim was excessive.

SUMMARY: A jury found that First American Title Co. breached its contract and exercised bad faith in refusing to defend a title with respect to an easement granting access to the plaintiffs’ property. It awarded $50,000 in compensatory damages for the breach of contract and $1 million in punitive damages to punish First American’s bad faith. In motions after verdict, the circuit court reduced the compensatory damages award to $29,738.49 but allowed the bad-faith finding and the punitive damages award to stand. In an unpublished opinion, the court of appeals affirmed the circuit court.      

In a majority opinion authored by Justice Ziegler, the supreme court reversed the court of appeals. The court granted review in this case solely on the issue of whether the punitive damages award was excessive; it assumed without deciding that there was coverage under the insurance policy and that the jury’s finding of bad faith was supported by the evidence (see ¶ 35 n.13).

With respect to the standard of review, the court noted that “once the issue of punitive damages is properly before the jury, its decision to award punitive damages is accorded deference. The size of the award, however, is subject to de novo review to ensure it accords with the constitutional limits of due process” (¶ 38). “A punitive damages award is excessive, and therefore violates due process, if it is more than necessary to serve the purposes of punitive damages, or inflicts a penalty or burden on the defendant that is disproportionate to the wrongdoing” (¶ 45) (internal quotations omitted).

The U.S. Supreme Court has applied a three-part test to determine whether a punitive damages award is excessive. This test asks the reviewing court to weigh 1) the degree of egregiousness or reprehensibility of the conduct, 2) the disparity between the harm or the potential harm suffered and the punitive damages awarded, and 3) the difference between the punitive damages and the possible civil or criminal penalties imposed for the conduct. See BMW of N. Am. Inc. v. Gore, 517 U.S. 559 (1996).

Wisconsin case law calls on courts to apply a substantively identical test applying six factors, listed at paragraph 47 of the opinion, which should be analyzed in conjunction with the three constitutional “guideposts” described in BMW (see ¶ 47 n.18).

Applying the three-part test in this case, the court first concluded that, although First American’s conduct in refusing to defend title and with respect to withholding certain information was reprehensible, the degree of reprehensibility “falls short of that found in prior Wisconsin cases supporting substantial punitive damages awards” (¶ 52). Second, the court concluded that there was no especially egregious conduct that would support a high-ratio punitive damages award (see ¶ 70). Finally, it held that the existence of a $10,000 criminal penalty for violating an insurance statute has limited utility in determining the reasonableness of the punitive damages award (see ¶¶ 68-70).

Ultimately, the majority concluded that “the appropriate amount of punitive damages in this case is $210,000” (¶ 71).    When comparing the amount of this revised award to $69,738.49 (the compensatory damages for legal expenses as found by the circuit court plus $40,000 the plaintiffs spent to purchase access to their property that their title policy was supposed to insure), the resulting ratio is approximately 3:1. This would put the ratio “just below the constitutional ‘line’ mentioned by the Supreme Court in BMW” (¶ 71).

The court concluded that a punitive damages award of $210,000 “effectively punishes First American’s misconduct, while acknowledging that its conduct did not rise to [the] level of egregiousness found in prior punitive damages cases” (see id.).

In a footnote, the court observed that “the Wisconsin Legislature recently enacted a law limiting punitive damages awards.See2011 Wis. Act 2§ 23m. The new statute caps punitive damage awards at a 2:1 ratio of compensatory damages or $200,000, whichever is greater. Wis. Stat.§ 895.043(6) (2011-12)” (¶ 65 n.24). The new statute was not applicable to this case.

Chief Justice Abrahamson filed a dissenting opinion that was joined by Justice Bradley. Justice Prosser did not participate in this decision.