Wisconsin Lawyer
Vol. 80, No. 8, August 2007

Attorneys Consumer Law Criminal Law Criminal Procedure Estates

Housing Insurance Motor Vehicle Law Torts

Attorneys

Gatzke & Ruppelt S.C. v. Feerick, 2007 WI App 143 (filed 10 April 2007) (ordered published 27 July 2007)

A law firm, Gatzke & Ruppelt S.C. (G&R), represented a moving company (Matrix) in its dispute with a customer. An arbitrator later awarded the customer about $15,000 in damages and $6,600 in attorney fees. An attorney with G&R represented that Matrix had paid the amounts due into the firm's trust account, a fact that subsequently was disputed. The customer filed this action to confirm the arbitrator's award. After further proceedings, the circuit court confirmed the award and ordered G&R to release the funds. Having withdrawn as counsel, G&R informed Matrix's new lawyers that it did not have the funds and had never received them from Matrix. The representation contained in its earlier letter, G&R claimed, was a factual mistake made by an associate. The circuit court ruled that G&R was judicially estopped from denying it had the funds and also held the firm in contempt for failing to turn over the money.

The court of appeals, in an opinion written by Judge Curley, reversed the circuit court. First, judicial estoppel was not appropriate. "Judicial estoppel is an equitable doctrine intended `to prevent a litigant from playing fast and loose with the courts by asserting inconsistent positions.' The doctrine `is not directed to the relationship between the parties, but is intended to protect the judiciary as an institution from the perversion of judicial machinery.' Thus, `[b]ecause the rule looks toward cold manipulation and not unthinking or confused blunder, it has never been applied where [the] assertions were based on fraud, inadvertence, or mistake'"(¶ 16). Judicial estoppel was inappropriate because "[h]ere, there were no earlier and later `positions'" (¶ 20). "The statements by Gatzke Ruppelt that Matrix had transferred the money into its trust account were not a legal strategy or argument that was later contradicted, but merely factual representations: the reference in the April 29, 2005 letter was included `as a measure of good faith'; the reference in the December 6, 2005 brief was a sentence in the background section and completely unrelated to the argument" (id.). "Similarly, judicial estoppel was improperly applied also because the third element, that a party to be estopped must have `convinced the court to adopt its position,' cannot be present here" (¶ 21).

"In addition, based on its determination that judicial estoppel prevented Gatzke Ruppelt from stating that it did not have the money in its trust account, the trial court found Gatzke Ruppelt in contempt of court. The contempt finding was in turn the basis for harsh sanctions that the trial court levied against Gatzke Ruppelt. Because we reverse the determination that Gatzke Ruppelt was judicially estopped from stating that Matrix had failed to transfer the money into its trust account, we also reverse the finding of contempt and the sanctions ordered against Gatzke Ruppelt"(¶ 25).

The court of appeals remanded the case for an evidentiary hearing to determine whether Matrix ever transferred the money in question to G&R. "If Matrix never paid the money to Gatzke Ruppelt, then the issue here is, as Gatzke Ruppelt contends, nothing more than an unfortunate, yet honest and simple mistake. If this is the case, the mistake can easily be corrected and the trial court should order Matrix to do what it should have done long ago: pay Feerick the arbitration award and attorney's fees. Clearly, if the money is collectible from Matrix, there was no detriment to Feerick and equitable estoppel does not apply. If, however, Matrix did pay the money to Gatzke Ruppelt and it was lost, misplaced, or, as the trial court appeared to imply, converted by Gatzke Ruppelt, then of course Gatzke Ruppelt is to blame and Matrix is not responsible for paying the money a second time" (¶ 29).

Judge Kessler dissented but did agree that the trial court's assessment of a $1,000-per-day penalty until the law firm paid the money should be reversed.

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Consumer Law

Estate of Newgard v. Bank of America, 2007 WI App 161 (filed 15 May 2007) (ordered published 27 July 2007)

Newgard died testate. Two credit card companies (the banks) filed three claims against the estate for consumer debt totaling nearly $40,000. When the estate objected to all claims, the banks provided a limited number of account statements that left about $30,000 in dispute. The estate argued that the Wisconsin Consumer Act, Wis. Stat. section 425.109(2), required the banks to produce writings for every transaction claimed. The circuit court ruled in favor of the banks.

The court of appeals, in an opinion written by Judge Peterson, reversed. The banks conceded that the credit card transactions were "consumer credit transactions," the decedent a "customer," the banks a "creditor," and the credit card agreements an "open-end credit plan," and that the estate could enforce the decedent's rights under the Consumer Act. The sole issue was whether the banks had provided "writings evidencing any transaction ... upon which [their] claim is made," as required by section 425.109(2) (¶ 8). The court held that the banks had failed to meet this requirement.

The court rejected the banks' contention that they need only show written evidence of "any" transaction, not "all" of them. "One purpose of the Consumer Act is to allow consumers to evaluate claims against them without the need to conduct expensive and time-consuming discovery. Consistent with this purpose, Wis. Stat. § 425.109(1)(h) requires most creditors to attach `the writings, if any, evidencing the transaction' to their complaint. However, creditors on open-end credit plans may submit the required documentation if and when the customer requests it in writing" (¶ 10). The court also rejected the banks' argument that they had a valid "account stated" that obviated the writing requirement. The Consumer Act's protections "apply regardless of the legal theory of the underlying claim" (¶ 13).

"Finally, the Banks argue the Estate's interpretation is absurd because it allows the Banks' customers - especially longstanding customers with higher balances - to escape their obligations when the Banks purge old records. However, this interpretation is no less absurd than the Banks' proposition that they must retain almost no records at all. We also note that the length of time the Banks retain records is within the Banks' control, as is the Banks' method of payment allocation" (¶ 15).

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Criminal Law

State v. Jacobs, 2007 WI App 155 (filed 1 May 2007) (ordered published 27 June 2007)

The defendant was charged with being a felon in possession of a firearm, contrary to Wis. Stat. section 941.29. The offense occurred while he was hunting with a firearm on the reservation of the Stockbridge-Munsee tribe, to which he belongs. The defendant moved to dismiss the case for lack of jurisdiction. He asserted that he was exercising his tribal hunting rights, protected by treaty and exempt from state regulation. Specifically, he argued that section 941.29 contradicts 18 U.S.C. § 1162(b), which prohibits the state from "depriv[ing] any Indian … of any right, privilege, or immunity afforded under Federal treaty…." He claimed the right to hunt is protected by an 1856 treaty between the United States and his tribe. The circuit court concluded that the state was enforcing its criminal laws, not regulating hunting, and denied the motion. The defendant then pleaded no contest to the charge.

In a decision authored by Judge Hoover, the court of appeals affirmed. It concluded that "§ 941.29 is not specifically a hunting restriction or regulation but, rather, a generally applicable, neutral criminal statute. Thus, application of § 941.29 does not, in and of itself, make [the defendant's] exercise of treaty hunting rights illegal. Rather, [the defendant's] own actions in committing a felony have limited him from fully enjoying those rights. The effect that § 941.29 has on [the defendant's] ability to possess a weapon is an incidental result of his own conduct. The circuit court had jurisdiction" (¶ 4) (citations omitted).

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Criminal Procedure

State v. Sloan, 2007 WI App 146 (filed 15 May 2007) (ordered published 27 June 2007)

The defendant appealed from a judgment of conviction entered on his guilty plea to a drug charge. The defendant had made a motion to suppress marijuana seized from a box he deposited at a United Parcel Service (UPS) facility because no warrant was obtained, but the circuit court had denied the motion. With respect to this issue the court of appeals, in a decision authored by Judge Kessler, affirmed. (The court reversed on another issue, not digested here, regarding the sufficiency of an affidavit in support of a warrant to search the defendant's residence.)

A UPS counter clerk suspected that the defendant was attempting to ship contraband based on her observation of the defendant's conduct, including the fact that he made a next-day shipment to himself from Wisconsin to Florida and his unwillingness to allow her to look into the box he wanted to ship. The counter clerk took the package to her supervisor. Pursuant to the posted notice of UPS's right to inspect any package left with it for delivery, UPS employees opened the box and a duct-taped canister in the box. After the employees found what they thought was marijuana, the UPS supervisor took the package to the security supervisor, who looked into the box and called the police. A police officer looked at the package, smelled the odor of marijuana, and conducted a field test, which confirmed that the substance in the canister was marijuana. The officer then confiscated the package as contraband.

The appellate court began its analysis by observing that "[a] private party's discovery, and subsequent disclosure to law enforcement, of contraband is not prohibited by the Fourth Amendment where there is not a reasonable expectation of privacy in dealings with the private party. See United States v. Jacobsen, 466 U.S. 109, 113, 115 (1984). One does not generally have a reasonable expectation of privacy when delivering property to a private shipping company, particularly when the shipping company posts a sign reserving its right to inspect parcels left with it for shipping" (¶ 10).

"[A] warrantless search conducted by a governmental agent that goes beyond the search conducted by the private party providing the package to law enforcement may be unconstitutional. Here, however, the only thing [the officer] did, which UPS employees had not done, was to perform the field test to confirm that the material was marijuana. As we know from Jacobsen, that is permissible conduct by law enforcement. Under the facts of Jacobsen, and the nearly identical facts here, the Fourth Amendment was not violated by [the officer's] conducting the field test to determine whether the material was, or was not, marijuana. We conclude that [the officer] properly replicated the search already conducted by UPS employees and, under Jacobsen, did not move into an unreasonable search when he did the field test" (¶ 15) (citations omitted).

State v. Jackson, 2007 WI App 145 (filed 8 May 2007) (ordered published 27 July 2007)

A jury convicted the defendant of being a felon in possession of a firearm. He was among a group of people in a gun store who were accompanying a woman, Natisha, who wanted to buy a gun. According to the evidence, the defendant briefly handled a gun in the store.

The court of appeals, in an opinion authored by Judge Fine, reversed because the trial judge excluded evidence that Carlos, another member of the defendant's group, was also a convicted felon. Carlos's felony conviction was relevant to the defendant's (convoluted) contention that it was Carlos, not him, who handled the gun. The error was not harmless (see ¶¶ 12-18).

The trial court correctly excluded a hearsay statement by Natisha that Carlos, not the defendant, handled the gun. Although she was unavailable to testify based on her assertion of the right against self-incrimination, the statement was not against her penal interest, as required by the pertinent hearsay rule and case law. Wis. Stat. § 908.045(4) (see ¶¶ 19-20). Finally, the court of appeals duly noted the prosecutor's ethical lapse in arguing to the jury that she believed the defendant was guilty (see ¶¶ 21-22).

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Estates

Fohr v. Fohr, 2007 WI App 149 (filed 1 May 2007) (ordered published 27 June 2007)

In his 1984 will the testator bequeathed his family vacation property to his four children "in equal shares, to share and share alike" (¶ 2). The will provided that "[i]n the event that either Sally, Gerald, David or Sue [the testator's four children] desire to sell their share in the property up north, it must be sold to one of the four and for the amount of the appraisal in 1973, namely $8,000.00 total" (id.).

The testator died on Aug. 31, 1988. His will was appropriately probated. In January 2001, David purchased Sue's share of the property for $8,500. In 2003, David had the property appraised and found it was valued at $175,000, or $43,750 per share. David attempted to convince Gerald and Sally to sell their shares. Sally refused outright, and Gerald refused when David presented a partition plan reserving a cabin and most of the property's dry land for himself. Gerald offered to buy David's shares for the purchase price in the will, but David refused. In October 2004, David brought this action for partition.

The circuit court concluded that David was not entitled to partition because it ran contrary to the provision in the will under which David claimed ownership of the real estate. The court also concluded that partition would be inequitable because David had essentially used the terms of the will to purchase Sue's share for a below-market price but then sought to invalidate the same document. The court granted summary judgment to Gerald and Sally, and David appealed.

In a decision authored by Judge Hoover, the court of appeals affirmed. It concluded that the will restricts partition, which is the act of dividing jointly-held real property into individual interests. Partition is an equitable remedy. "Equity dictates that a party claiming ownership under a will should be bound by reasonable restrictions in that will, including reasonable restraints on alienation. Thus, we adopt the following excerpt from 85 A.L.R. 1321, 1324 (1933): `[T]he general rule is that effect will be given to the intention of the testator as expressed in the will, and that no partition suit will lie before the date so fixed or the happening of the event named.' See also 59A Am. Jur. 2d Partition § 54 (2003) (`Testamentary provisions that prohibit or postpone partition for a reasonable time, or until the occurrence of a designated event, are upheld because they do not involve a restraint on alienation, or limitation repugnant to the fee.'). If an heir disagrees with a restriction in a will, he or she is free to decline the bequest"(¶ 17).

The appellate court noted that even if it were to conclude that David should be allowed to seek partition and alienate the property, the mere fact that a person can sue for partition does not mean the court will grant it. "The circuit court in this case was disinclined to grant David that remedy. It noted that David expressed no reservations about the restraints when they allowed him to acquire Sue's property for $8,500. The court concluded it would be inequitable to allow David to renounce the will's terms now"(¶ 18).

(With regard to David's additional arguments regarding unlawful restraint on alienation, see paragraphs 9-16 of the court's opinion.)

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Housing

Williams v. Integrated Community Servs. Inc., 2007 WI App 159 (filed 24 May 2007) (ordered published 27 June 2007)

The Section 8 Tenant-Based Assistance Housing Choice Voucher Program (Section 8) was created by Congress for the purpose of aiding low-income families in obtaining a "decent place to live." 42 U.S.C. § 1437f(a). The U.S. Department of Housing and Urban Development (HUD) is authorized to enter into contracts with state public housing authorities and to fund such agencies for the purpose of providing rent subsidies for eligible recipients. 42 U.S.C. § 1437f(b). HUD has a contract with the Brown County Housing Authority, which in turn contracts with Integrated Community Services Inc. (ICS) to administer the program in the Green Bay area.

The plaintiff applied to ICS for assistance under the Section 8 program. However, ICS and ultimately a hearing officer denied her application because a guest had engaged in illegal drug activity while at her residence. (There was no evidence that the plaintiff was a participant in the activity or was aware of it.) Federal regulations identify drug-related activity by a "household member" as a basis for denying admission to the program. See 24 C.F.R. § 982.553(a)(2)(ii)(A). The plaintiff sought certiorari review in the circuit court, but the court dismissed her petition.

On appeal the plaintiff argued that ICS and the circuit court erred in their construction of 24 C.F.R. § 982.553(a)(2)(ii)(A), because the regulation plainly does not authorize denial of eligibility because of the conduct of a guest. In a decision authored by Judge Vergeront, the court of appeals agreed. It concluded that "the conduct that may form a basis for denial of admission to the program under § 982.553(a)(2)(ii)(A) is only that of a household member and not that of a guest. We therefore reverse the circuit court's order and remand with instructions to reverse ICS's decision denying [plaintiff's] application" (¶ 1).

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Insurance

Bruchert v. Tokio Marine & Nichido Fire Ins. Co., 2007 WI App 156 (filed 22 May 2007) (ordered published 27 July 2007)

This appeal presented the issue "whether cancellation of an automobile insurance policy for the non-payment of premiums ends personal-liability coverage for a leased car when proper notice of cancellation is given to the designated insured but not to the leasing company" (¶ 1). The court of appeals, in an opinion written by Judge Fine, said that cancellation does end coverage.

"The pertinent aspect of the Acuity policy is clear: the policy will be cancelled if the insured does not pay the premiums. The policy and its notice-of-cancellation provisions are thus consistent with Wis. Stat. § 631.36, which permits midterm cancellation `for failure to pay a premium when due,' § 631.36(2)(a), and only requires `written notice to the policyholder' ten days before the proposed cancellation, § 631.36(2)(b)" (¶ 13). Here the policyholder "did not pay the premiums when they were due, and he received the requisite ten-day notice before the policy was cancelled on February 7, 2002. There is nothing in the statute or the Acuity policy that requires notice to anyone else, other than to the `loss payee' in connection with the `Car Damage Coverage' only" (¶ 14).

Estate of Sustache v. American Family Ins. Co., 2007 WI App 144 (filed 30 May 2007) (ordered published 27 July 2007)

Sustache died after Jeffrey punched him at a party. Sustache's estate and his parents sued Jeffrey and his insurer for battery and punitive damages; Jeffrey alleged self-defense. The insurer, American Family, moved for summary judgment on the ground that it had no duty to defend based on the intentional acts alleged in the complaint. The circuit court granted the insurer's motion.

The court of appeals, in an opinion written by Judge Nettesheim, affirmed. The four-corners rule "holds that an insurer's duty to defend is measured solely from the allegations contained in the complaint, not extrinsic facts" (¶ 4). The issue was whether the four-corners rule is absolute or whether it is subject to any case law exceptions, which have been brought into question by later case law. The court's opinion carefully sets forth the conflicts among the cases. Succinctly stated, the court of appeals held "that the most recent decisions from our supreme court have tacitly overruled court of appeals and supreme court opinions which recognized exceptions to the four-corners rule. Because the complaint in this case alleges an intentional act by the insured and because the insurance policy excludes such intentional acts from coverage, we hold that the trial court properly ruled at summary judgment that the insurer owed no duty to defend" (¶ 2).

The court of appeals closed with this observation: "We think this issue warrants supreme court comment at some point in the future. While the four-corners rule probably produces the correct result in most cases, it is not beyond the pale to imagine a situation where the true facts of the event under inquiry call for coverage but the third party's complaint fails to reveal those facts. In that setting, it would seem that the insured should be entitled to a defense for which the insurer has been paid a premium. The four-corners rule shuts down that entitlement. On the other hand, there may be cases where the rule works to the detriment of the insurer. If the true facts known to the insured and insurer, but not alleged in the complaint, reveal no basis for coverage, the insurer is nonetheless required to provide a defense" (¶ 20).

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Motor Vehicle Law

State v. Wuteska, 2007 WI App 157 (filed 17 May 2007) (ordered published 27 June 2007)

The defendant was allegedly the driver of a truck that was involved in a fatal collision with a motorcyclist. She was charged with felony hit-and-run contrary to Wis. Stat. section 346.67(1). This statute requires the "operator" of any vehicle involved in an accident resulting in injury to or death of any person or in damage to an occupied vehicle to remain at the scene and, among other things, to "give his or her name, address, and the registration number of the vehicle he or she is driving to the person struck or to the operator or occupant of or person attending any vehicle collided with."

At the conclusion of the preliminary hearing in this case the judge refused to bind the defendant over for trial, because after the accident the defendant told someone in a nearby tavern to call 911 and she remained at the scene and gave her name. It was immaterial to the court that the defendant had told an investigating deputy that she was a passenger in, not the driver of, the truck. The circuit court concluded that the statute does not require the operator of the vehicle to identify himself or herself as the operator of the vehicle, but only to give his or her name, address, and registration number of the vehicle. The circuit court thought that there was probable cause for a misdemeanor obstruction charge.

In a decision authored by Judge Vergeront, the court of appeals reversed. Said the court, "we conclude the only reasonable meaning of Wis. Stat. § 346.67(1)(a) is that it requires the operator of the vehicle to identify himself or herself as the operator. The introductory language of § 346.67(1) imposes a number of obligations on `the operator of any vehicle involved in an accident resulting in injury to or death of any person or in damage to a vehicle….' (Emphasis added.) Section 346.67(1)(a) requires `[t]he operator [to] … give his or her name or address and the registration number of the vehicle he or she is driving… to the person struck or to the operator or occupant of or person attending any vehicle collided with.' (Emphasis added.) Implicit in giving the registration number `of the vehicle he or she is driving' is giving the information that he or she is driving the vehicle whose registration number is being provided" (¶ 13).

One of the principal purposes of the hit-and-run statute is to require the disclosure of information so that responsibility for the accident may be placed. See State v. Swatek, 178 Wis. 2d 1, 7, 502 N.W.2d 909 (Ct. App. 1993). "In order to determine responsibility for the accident, it is necessary to know who was operating the vehicles involved in the accident. It is not logical that the legislature would choose to permit persons operating vehicles involved in accidents to conceal or fail to disclose that they were the operators; the only logical reason for requiring that the operator provide his or her name, address, and vehicle registration number is so that others involved in the accident or law enforcement have information about the operator that will assist in gathering information about the accident. The construction advocated by [the defendant] and adopted by the circuit court thwarts this purpose because it permits the operator to conceal the fact that he or she was driving and also permits the operator to falsely identify someone else as the operator. This construction not only does not assist in assigning responsibility for the accident, but it affirmatively makes it more difficult" (¶ 15).

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Torts

Pierce v. American Family Ins. Co., 2007 WI App 152 (filed 31 May 2007) (ordered published 27 July 2007)

These appeals arose from a wrongful death action. Christina claimed that the circuit court erred when it dismissed her claim for wrongful death on the ground that Wis. Stat. section 895.04(4) "only allows a child to recover for loss of society and companionship for the death of a parent if the child is a minor at the time of the parent's death" (¶ 1). The insurer appealed the admissibility of expert testimony by an economist regarding pecuniary damages.

The court of appeals, in an opinion written by Judge Dykman, affirmed in part and reversed in part. First, the court held that Christina was entitled to her claim for loss of society and companionship. The term "children" as used in section 895.04(4) was ambiguous. The court rejected the insurer's construction, which equated children with minors. "The context in which the word `children' is used in Wis. Stat. § 895.04(4) and the surrounding statutes make clear that `children' encompasses both minor and adult offspring. First, the statute specifically states that siblings may only recover for loss of society and companionship if the siblings were minors at the time of the wrongful death, while providing no such limitation for children. Further, the legislature used the term `minor children' five times in § 895.04(2).... Because the legislature modified the word `children' with the word `minor' in a different subsection of the same section of the statute, we conclude that the only reasonable interpretation of the legislature's unmodified use of the word `children' in § 895.04(4) is that the term includes both adult and minor children" (¶ 11).

Turning to the cross-appeals, the court held that the trial court properly admitted the economist's testimony on pecuniary damages, which includes both loss of support and loss of inheritance. The court's analysis is necessarily fact-intensive. The court rejected objections that the testimony was irrelevant, highly prejudicial, and incredible as a matter of law because it purportedly failed to follow Wisconsin "methodology."

Forbes v. Stoeckl, 2007 WI App 151 (filed 9 May 2007) (ordered published 27 July 2007)

The plaintiff sued her former dentist for negligent treatment over a period spanning 1989 to September 2001. She filed suit in July 2004. The circuit court granted summary judgment to the dentist based on the five-year statute of repose in Wis. Stat. section 893.55(1)(b).

The court of appeals, in an opinion written by Judge Brown, reversed. Applying the continuum-of-care doctrine found in prior cases, the court held that both "continuous care" and "continuous negligent care" were shown for summary judgment purposes (¶ 7). The dentist's treatment also related to a "single condition," the third element of the continuum test. ("Those procedures were all clearly aimed at treating the TMJ [the dentist] had diagnosed"(¶ 9).)

"The final element of the test is that the precipitating factor for the continuum of negligence must be the original negligent act. Forbes' expert opines that Stoeckl was incorrect and negligent in his diagnosis of TMJ and that Forbes has likely never had that condition. Clearly, without this claimed misdiagnosis, the treatment regimen of crowns and root canals would not have occurred. Further, even if the diagnosis was correct, Forbes' expert also opined that the chosen treatment, the crowning of Forbes' teeth, was `unnecessary and wholly disproportionate to the problem.' If Forbes' expert is correct, the decision to use this treatment regimen would also qualify as a negligent, precipitating factor for the treatments that allegedly followed" (¶ 10).

The court next turned to the issue of the proper statute of limitation or repose. It rejected the dentist's argument that Wis. Stat. section 893.55(1)(b) "unconditionally cuts off liability for any malpractice committed more than five years before Forbes filed suit" (¶ 13). "By its plain meaning, then, the five-year limit in § 893.55(1)(b) comes into play only when a plaintiff attempts to file an action under that paragraph's `discovery rule'; that is, only when a plaintiff claims that, because of a delayed discovery of an injury, he or she is entitled to file an action beyond the three-year time limit in paragraph (a). Since Forbes is claiming to be within the three-year time limit in paragraph (a) (as extended by the continuum of negligent treatment rule), the five-year limit has no application whatsoever. Put another way, Wis. Stat. § 893.55(1) sets two time limits and allows the plaintiff to file so long as one of them is unexpired. Forbes filed within the three-year limit, as modified by the continuum of negligent treatment doctrine; it is therefore irrelevant whether the same doctrine `changes' the five-year limit" (¶ 14).

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