Wisconsin Lawyer
Vol. 80, No. 7, July 2007
Appellate Procedure
Final Orders - Refile Option
Dyer v. Law, 2007 WI App 137 (filed 11 April 2007) (ordered published 31 May 2007)
Dyer filed five claims against Law relating to a real estate transaction. The court granted summary judgment in Law's favor and dismissed all but one claim. The parties stipulated that this cause of action be dismissed without prejudice and with the option of refiling it within 60 days of the conclusion of this appeal.
In this per curium decision, the court of appeals held that the order appealed from was not a final order within the meaning of either Wis. Stat. section 808.03(1) or Cascade Mountain Inc. v. Capitol Indemnity Corp., 212 Wis. 2d 265 (Ct. App. 1997). "The stipulation in this case does exactly what Cascade Mountain proscribes; it converts a nonfinal, nonappealable order into a final, appealable order" (¶ 6). The fact that the stipulation carried no conditions was immaterial. The vice here was that the order appealed from did not bring finality to the action.
"Here Dyer retains the right to refile his cause of action for declaratory relief on the right of first refusal regardless of the outcome of the appeal. The statute of limitations on the claim is tolled for that purpose. By an amended pleading filed within sixty days of the completion of the appeal, Dyer can compel further litigation in this case. In Lassa v. Rongstad, 2006 WI 105, ¶ 35 n.12, 294 Wis. 2d 187, 718 N.W.2d 673 [petition for cert. filed, No. 06-1084 (Feb. 1, 2007)], the court recognized that finality is achieved where the settlement agreement and judgment are structured such that regardless of who prevails on appeal, no further litigation will ensue between the parties in the case. That is not true here where Dyer has the opportunity to revive a cause of action after the appeal. The possibility that the case will generate a second appeal runs afoul of the requirement that an appeal be taken only from a final order or judgment that terminates the entire matter in litigation between the parties" (¶ 8).
Although Dyer requested the action be remanded for lack of jurisdiction (to avoid the argument that he waived his right to appeal under the stipulation), the court of appeals declared that it lacked authority to remand for any particular proceeding.
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Civil Procedure
Default Judgments - Rescission
Larry v. Harris, 2007 WI App 132 (filed 20 March 2007) (ordered published 31 May 2007)
Larry sued two police officers, Harris and Rutherford, for allegedly unlawfully searching her home. When she moved for default judgments against both officers, Harris belatedly appeared and was permitted to file an answer, but a default judgment was entered against Rutherford. In later motions for summary judgment, the judge ruled that Harris had qualified immunity and dismissed the claim against him. Sua sponte, the court also vacated the default judgment against Rutherford because the claim against him was identical to that against Harris. On appeal, Larry challenged only that portion of the order that rescinded the default judgment. She did not challenge the circuit court's finding that no illegal search occurred or that her constitutional rights had not been violated.
The court of appeals, in an opinion written by Judge Kessler, affirmed. Case law establishes that circuit courts have discretion in granting relief from default judgments. "The judgment here was a default judgment as to which no consideration of the merits of the claim took place before the default was entered; thus reopening tends to support the goal of justice. By reopening the judgment and deciding a serious claim of constitutional violation in the same manner for all who the facts indicate engaged in the same conduct, justice is advanced at the expense of finality. That a meritorious defense exists for all officers described in the complaint was established as a finding of fact and legal conclusion which has not been appealed. Reopening a default judgment under those circumstances advances the interests of justice. Significant circumstances have intervened since the default judgment was granted; undisputed facts found in the summary judgment decision now establish a defense to the constitutional violations claimed against all officers present at the incident described in the complaint. Therefore, justice weighs heavily in favor of rescinding the default judgment which was granted without consideration of the existence of this defense. We conclude that the above considerations, applied to the facts of this case, amply support the trial court's exercise of discretion" (¶ 25).
Judge Fine dissented. "The question, therefore, is not the propriety of the circuit court's entry of default judgment against Rutherford, but, rather, the circuit court's sua sponte vacatur of that default judgment even though Rutherford never asked for that relief, and, indeed, as noted, thumbed his nose at both the law and the circuit court by not appearing at all before the circuit court" (¶ 27).
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Family Law
Uniform Child Custody Jurisdiction and Enforcement Act - Home State of the Child
Hatch v. Hatch, 2007 WI App 136 (filed 24 April 2007) (ordered published 31 May 2007)
Tanya and Michael Hatch were married in Idaho on May 28, 2005, and lived in Idaho during the course of their brief marriage. They separated in early December 2005. Tanya left Idaho and moved to Wisconsin on Dec. 9, 2005. Tanya was pregnant when she moved, and she gave birth to a daughter, K, on April 14, 2006.
Michael filed for divorce in Idaho on Dec. 20, 2005. Tanya was served with the summons and complaint in the Idaho action on Feb. 2, 2006, and made a general appearance on Feb. 22. On April 26, 2006, Tanya filed this action in Wisconsin seeking custody of K. On May 8, 2006, Michael moved in the Idaho divorce proceeding for custody of K.
Michael's Idaho motion was heard on June 1, 2006. The Idaho court determined it had jurisdiction over the custody issue and ordered Tanya to return to Idaho with K by June 15. Michael also made a limited appearance in the Wisconsin custody action and asked the court to either dismiss the action or order Tanya to comply with the Idaho court order.
The Wisconsin circuit court held a hearing on Tanya's Wisconsin custody action on July 13, 2006. At the hearing, the judge concluded the Idaho court had jurisdiction over the case because of the pending divorce proceeding, and he dismissed the Wisconsin action. In a decision authored by Judge Peterson, the Wisconsin Court of Appeals reversed.
At issue was whether Idaho or Wisconsin has jurisdiction over this custody dispute under the Uniform Child Custody Jurisdiction and Enforcement Act (the Uniform Act), Wis. Stat. chapter 822. Wis. Stat. section 822.21(1)(a) provides that a Wisconsin court "has jurisdiction to make an initial determination" if Wisconsin "is the home state of the child on the date of the commencement of the proceeding…." The Wisconsin appellate court agreed with Tanya that Wisconsin is K's "home state" under the Uniform Act and therefore Wisconsin has initial jurisdiction under section 822.21(1).
Said the court, "[K] was born April 14, 2006. Tanya initiated the Wisconsin custody proceeding on April 26, when [K] was less than two weeks old. The `home state' of a child less than six months old is `the state in which the child lived from birth with' a parent or person acting as a parent. Wis. Stat. § 822.02(7). [K] was born in Wisconsin and lived from birth with Tanya in Wisconsin. Wisconsin therefore was [K]'s `home state,' and the Wisconsin court had jurisdiction over the custody proceeding under Wis. Stat. § 822.21(1)" (¶ 10).
The court rejected Michael's argument that the Wisconsin circuit court properly declined jurisdiction under Wis. Stat. section 822.28, which requires a Wisconsin court to decline jurisdiction when jurisdiction exists because "a person seeking to invoke its jurisdiction has engaged in unjustifiable conduct...." Michael argued that Tanya's move to Wisconsin was "unjustifiable conduct" because it was for all practical purposes an abduction of [K] before she was born. The court of appeals said in reply that "[t]he problem with Michael's argument is that there are no facts in the record indicating the reason for Tanya's move. Without any facts giving her reason, Michael is in effect requesting a blanket rule that whenever a pregnant woman crosses state lines for any reason, she engages in `unjustifiable conduct' for purposes of Wis. Stat. § 822.28(1). We decline to create any such rule" (¶ 22). In a footnote the court continued that "[w]e hold merely that crossing state lines while pregnant, without more, is not `unjustifiable conduct' under Wis. Stat. § 822.28" (id.n.8).
The court of appeals acknowledged that its holding means that both Wisconsin and Idaho now claim jurisdiction over the custody dispute, a result the Uniform Act was designed to avoid. "However, under the Uniform Act, Wisconsin is [K]'s `home state,' has initial jurisdiction, and has not declined jurisdiction under Wis. Stat. §§ 822.27 or 822.28. Under Wisconsin law, then, the Wisconsin proceeding must continue" (¶ 23).
Child Support - Stipulation That Change in Placement Would Not Affect Child Support - Validity of Agreement Between Parties to Waive Child Support Arrearage
Motte v. Motte, 2007 WI App 111 (filed 7 March 2007) (ordered published 26 April 2007)
David and Paula Motte were divorced in 1995. In 1998 they entered into two stipulations that were adopted as orders of the circuit court. One stipulation waived any child support arrearage that David had accumulated before that time. The other stipulation included a provision that made future support unmodifiable in the event of a change in placement involving the couple's minor children. The validity of these two stipulations was the subject of this appeal.
In a decision authored by Judge Brown, the court of appeals concluded that the parties' stipulation to make future support unmodifiable in the event of a placement change is against public policy and is therefore void. "The stipulation was void in 1998 because it purported to deprive the court of the power to modify support in response to unpredictable future events" (¶ 20). Regardless of the good intentions of the parents (here the mother testified that the purpose of the stipulation was to insulate placement decisions from the influence of money by taking away any financial incentive for either parent to seek greater placement time), the best interests of the children may change over time. "This is why the courts must retain the power to adapt child support to changing circumstances. The legislature provided courts with that power in Wis. Stat. § 767.32(1), and parties may not abrogate it, even by court-approved stipulation" (¶ 20).
As to the parties' stipulation forgiving David's child support arrearage, the appellate court concluded that the agreement is not contrary to public policy and that Wis. Stat. section 767.32(1m) (2003-04) (now recodified as section 767.59(1m)) is no bar to its enforcement. "[T]he parties and amici in this case have convincingly argued that the statute, while prohibiting the court from reducing arrearages, does not prevent the parties from compromising or waiving them subject to court approval" (¶ 23).
The court of appeals remanded this case to the circuit court "to determine whether the arrearage waiver was Paula's quid pro quo for David's agreement to the nonmodification stipulation; if it was, we direct that the circuit court invalidate the waiver and calculate David's old arrearages. Paula having been deprived of the benefit of her bargain, David must not be allowed to retain the benefit of his, especially in view of his frequent and long-term underpayment of support" (¶ 3).
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Insurance
Liability - Intellectual Property Infringement
Acuity v. Bagadia, 2007 WI App 133 (filed 25 April 2007) (ordered published ___)
Acuity filed a declaratory judgment action seeking to establish that its policy did not cover trademark and copyright infringement by its insured, UNIK, which sold computer software to resellers. In an underlying lawsuit in Oregon, the federal court had determined that UNIK had pirated software owned by Symantec Corporation (and others), and the court awarded damages. The Wisconsin circuit court granted summary judgment to Symantec, ruling that Acuity's policy did cover the damages.
The court of appeals, in an opinion authored by Judge Brown, affirmed. First, the court addressed coverage for the copyright infringement. To determine whether the policy provided coverage, the court had to be able to answer "yes" to three questions: "(1) Did the damages arise from an enumerated offense in the policy? (2) Did UNIK engage in advertising? (3) Is there a causal connection between UNIK's advertising and the damages?" (¶ 6)
The answer to the first question was undisputed. As for the second, the court embraced a "broad" understanding of "advertising," because ambiguity in insurance policies must be construed in favor of coverage. "In the context of this case, we conclude that both the broad and narrow meanings of `advertising' are reasonable. In particular, because UNIK was in the business of selling to resellers, a limited market, it does not make sense to say that it could only `advertise' by addressing its communications to the public at large. We therefore apply the broad definition of `advertising' and find that UNIK advertised its product by sending samples to potential customers" (¶ 9).
The cause element also was met. Although the ultimate harm to Symantec was UNIK's unauthorized sale of the software, "UNIK's practice of offering (also unauthorized) samples to potential customers contributed to that harm by convincing the customers that the software was the product that they wanted. This is thus not a case where the advertising only exposed the infringer's wrongdoing" (¶ 13).
The court then asked the same three questions about the trademark claims. As to the first question, courts nationwide are split over whether trademark infringement is an enumerated offense under a commercial general liability policy, particularly whether it falls under broad language pertaining to "infringement of copyright, title or slogan" (¶ 14). The court adopted the reasoning of a line of cases that hold that labels such as "NORTON SYSTEMWORKS, NORTON ANTIVIRUS, etc., are reasonably described as the `titles' of the programs they describe, and that trademark infringement is therefore an enumerated offense under the policy" (¶ 17). The record also showed no factual dispute over whether UNIK "advertised" the Symantec software.
Finally, UNIK's infringement of Symantec's trademarks in its advertising contributed to Symantec's damages. "[T]he question is whether the infringements in the advertising contributed to the harm Symantec suffered. UNIK's use of Symantec's trademarks in its advertising plainly did contribute to Symantec's harm: it communicated that UNIK was selling Symantec products, when it was not. The advertising served to convince potential buyers to purchase infringing disks from UNIK, rather than legitimate ones from authorized sellers. This consumer confusion directly harmed Symantec, whether that harm is measured by disks sold or by trademarks infringed" (¶ 22).
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Real Property
Easements - Unused
Spencer v. Kosir, 2007 WI App 135 (filed 27 March 2007) (ordered published ___)
Kosir and Spencer owned adjacent lots. Spencer's property had no access to the town road, but the deed reflected an easement across Kosir's property that had been recorded in the 1930s. No effort was made to use the easement until the 1990s, when Spencer's mother unsuccessfully attempted to contact Kosir's predecessor to reach an accommodation needed to comply with a Department of Natural Resources managed-forest-lands agreement. Later, Kosir denied Spencer's request to establish a logging road on Kosir's property. In 2004 Spencer filed this declaratory judgment action. The circuit court granted summary judgment in Spencer's favor and permitted a logging road to be cut into Kosir's property.
The court of appeals, in an opinion written by Chief Judge Cane, affirmed. The court rejected Kosir's contentions that 1) nonuse of the easement for nearly 70 years constituted intentional abandonment or, alternatively, 2) the circuit court incorrectly expanded the scope and purpose of the easement by creating the road. The court readily distinguished case law that involved "easements that were established and used to some extent before they were abandoned. Here … the easement's location was never established in the first place, let alone used" (¶ 8). Nonuse for 70 years did not constitute abandonment.
Spencer's "mere acquiescence" in Kosir's construction of a home and other structures as well as allowing trees to grow on the easement was not an affirmative act evidencing an intent to abandon. "The actions of the servient owner alone cannot establish the easement holder's intent to abandon" (¶ 10). Nor was there evidence "that Kosir's improvements are so extensive as to render Spencer's use of a roadway impossible" (id.).
As for the alternate contention, the easement was described as a "right of way for road purposes." "When the location of an easement is not defined, the court has the inherent power to affirmatively and specifically determine its location, after considering the rights and interests of both parties" (¶ 13). The record demonstrated that the circuit court exercised appropriate discretion in locating the logging road along the easement.
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Taxation
Personal Property - Property Held for Rental for Periods of One Month or Less
United Rentals Inc. v. City of Madison, 2007 WI App 131 (filed 26 April 2007) (ordered published 31 May 2007)
United Rentals Inc. is an equipment rental company with a subsidiary branch location in the city of Madison. The rental property it offers includes construction equipment, tools, and other similar equipment. This case concerns the company's liability to the city of Madison for personal property tax on the rental property it owns. United Rentals contended that the property is exempt from taxation under Wis. Stat. section 70.111(22).
"In Wisconsin, personal property is presumed taxable. Exemption from payment of taxes is an act of legislative grace; therefore the party seeking the exemption bears the burden of proving entitlement. Tax exemptions are to be `strictly construed in every instance ….' The presumption of taxability is motivated by `the public interest to stem the erosion of municipal tax bases'" (¶ 13).
Section 70.111(22) exempts from general property taxes "personal property held for rental for periods of one month or less...." "Wisconsin Stat. § 70.111(22), properly read, unambiguously expresses the legislature's clear intent to exempt certain rental property from taxation, which is property that is held for rental for one month or less. Put another way, the legislature expressly intended for property available for rental for more than one month to be taxed. We see no ambiguity in the statutory language such that it might possibly apply to property that is held for rental for one month or less and is also available for rental for more than one month" (¶ 17).
In sum, Judge Higginbotham's decision for the court of appeals concluded that "the plain language of Wis. Stat. § 70.111(22) unambiguously exempts property held for rental for one month or less. Because United Rentals concedes that its property was available for rental for periods longer than one month, its rental property is not exempt from taxes under § 70.111(22)" (¶ 25).
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