Wisconsin Lawyer
Vol. 83, No. 2, February 2010

• Attorney Fees
• Civil Procedure
• Commercial Law
• Contracts
• Criminal Law
• Criminal Procedure
• Family Law
• Insurance
• Sexually Violent Persons
• Taxation
• Torts

Attorney Fees

Wolf v. Estate of Wolf, 2009 WI App 183 (filed 17 Nov. 2009) (ordered published 16 Dec. 2009)

This case involved a will contest between Frances and Shirley in which undue influence was alleged. The two eventually settled the dispute. Although the stipulation called for a new personal representative and distributed money and various property, it was silent with respect to attorney fees. Shirley, the original personal representative, sought to recover her attorney fees from the estate. The circuit court denied the petition, observing that no statute permitted Shirley to recover attorney fees based on a settlement.

The court of appeals affirmed in an opinion authored by Judge Curley. In light of the settlement, the “clear and unambiguous language” of Wis. Stat section 879.37 precluded the award of attorney fees, as there was “neither a prevailing party nor an appealable contested matter” (¶¶ 16, 17). The court further observed that the settlement agreement could have addressed attorney fees but the parties did not so elect (see ¶ 16).

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Civil Procedure

Shadley v. Stys, 2009 WI App 165 (filed 27 Oct. 2009) (ordered published 24 Nov. 2009)

Tim Stys House Moving (the Styses) contracted to move Shadley’s flood-damaged home to a different location. After the move, Shadley sued to recover damages for harm to the structure that allegedly occurred during the move. Shadley rejected a settlement offer of $25,000 and sought about $100,000 in damages at trial. The jury awarded her about $15,000. The house-moving contract stated that the “successful” party in an action would be awarded attorney fees. Ruling that Shadley was the successful party, the judge awarded her nearly $43,000 in attorney fees.

The court of appeals reversed in an opinion authored by Judge Brennan. The court said that the contractual provision awarding attorney fees to the successful party was ambiguous, especially because the contract left the term undefined. “In construing an ambiguous contract provision, we must avoid unreasonable and unjust results. Awarding Shadley her attorney fees in their entirety, when her damages award was only nominal in comparison to what she sought, is neither reasonable nor just. Such a result is ‘contrary to fundamental concepts of justice and fair play,’ and it seems highly unlikely to us that the parties intended such a result. We agree with the Stys[es] that interpreting the contract provision to entitle a plaintiff to the entirety of her attorney fees, even when the plaintiff is only nominally successful, would encourage a plaintiff to bring excessive and unsubstantiated claims, so long as at least one claim is legitimate. The parties could not have intended such an unjust and irrational provision” (¶ 21). Rather, a “more rational reading of the provision would grant Shadley that proportion of her attorney fees that equate to her success at trial. On remand, the trial court is directed to determine the total amount of damages Shadley sought to recover and calculate the percentage of that total on which she was successful, i.e., the amount Shadley actually recovered divided by the total amount of damages she sought to recover” (¶ 23).

Shadley also claimed on appeal that the circuit court erred in misconstruing or not defining two contract provisions regarding damages for “expected or ordinary stress” and “risks of moving.” The court of appeals held, however, that Shadley waived these claims of error by failing to raise them during trial, in motions after verdict, or in later motions for reconsideration (see ¶ 26).

Cirilli v. Country Ins. & Fin. Servs., 2009 WI App 167 (filed 28 Oct. 2009) (ordered published 24 Nov. 2009)

Former agents of Country Insurance and Financial Services (Country) alleged that it breached their agent’s agreements by not paying them termination commissions. The agreements contained a mandatory arbitration clause, which Country invoked. The circuit court, however, ruled that the arbitration provision was inapplicable because of Country’s participation in a separate settlement agreement and release. Since that release did not contain an arbitration clause, the court ruled that it effectively superseded the provision in the agent’s agreements.

The court of appeals reversed in an opinion written by Judge Neubauer. “There is a strong presumption of arbitrability where the contract in question contains an arbitration clause…. Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Thus, when a court is called upon to ascertain the arbitrability of a dispute, the court’s function is limited to a determination of whether: (1) there is a construction of the arbitration clause that would cover the grievance on its face and (2) whether any other provision of the contract specifically excludes it” (¶ 14). The court held that the complaint by the former agents fell “squarely within the plain language of the mandatory arbitration clause of the Agent’s Agreement. The Cirilli Plaintiffs’ claim for the disputed termination commissions relate to and arise out of the relationship between the Cirilli Plaintiffs and Country, the Agent’s Agreement and the termination of the Agent’s Agreement. Further, a review of the Agent’s Agreement reveals no other contract provision that specifically excludes arbitration of a dispute over termination commissions. The dispute is therefore arbitrable” (¶ 16).

The release did not compel a different outcome. Said the court, “Any determination that the Settlement Agreement and Release releases Country’s claims or defenses is a determination on the merits. As noted above, it is well established that when determining arbitrability the court must not rule on the potential merits of the underlying claim” (¶ 17).

Lee v. GEICO Indemnity Co., 2009 WI App 168 (filed 29 Sept. 2009) (ordered published 24 Nov. 2009)

In this personal injury action, Lee sued GEICO Indemnity Co. and its insured. The circuit court’s scheduling order required mediation and further demanded that a corporate party be represented by a person other than the attorney with full authority to settle. GEICO’s lawyer appeared in person at the mediation, but the GEICO claims adjuster was available only by telephone at its Georgia office. Lee’s lawyer did not object to this arrangement. The mediation failed to settle the case. Before trial, Lee’s lawyer moved for sanctions against GEICO for violating the scheduling order. The circuit court imposed a sanction on GEICO that reflected the travel costs ostensibly saved by GEICO’s not appearing in person. A jury found in favor of the plaintiff for an amount far closer to GEICO’s offer than the plaintiff’s. After trial, GEICO moved the court to overturn the sanctions order. The court deemed this motion to be a motion to reconsider and held it did not have proper grounds; accordingly, it sanctioned GEICO again for bringing this motion.

The court of appeals affirmed in part and reversed in part in an opinion written by Judge Brennan. The court said that the circuit court properly sanctioned GEICO for its violation of the scheduling order, especially because it never sought the court’s permission to allow the claims adjuster to participate by telephone. The court of appeals found support for the sanctions in Wis. Stat. section 802.10(7) and case law. The circuit court properly exercised its discretion, and its sanctions were “just” under the circumstances (see ¶ 27). “The trial court here reasonably considered the reasons GEICO gave for its corporate representative’s nonappearance (travel cost saving) but noted that the proper course would have been for GEICO to seek court approval or stipulation from opposing counsel and the mediator before the mediation, which GEICO failed to do. The trial court registered its concern at GEICO’s statement that it ‘is pretty standard practice’ to have its representative in Macon, Georgia appear by phone at mediations. The court reasoned that GEICO undermined the court’s authority by disregarding the personal appearance order and exacerbated that problem by making it a ‘standard practice’ to violate a circuit court order” (¶ 30).

The court of appeals reversed the sanction against GEICO for its motion after verdict. No statute authorizes sanctions for motions to reconsider, and the record revealed no misconduct (see ¶ 37). “Here, GEICO’s conduct was simply filing a motion to reconsider. Although the trial court said it found GEICO’s motion ‘offensive,’ the trial court made no finding that GEICO acted in bad faith, practiced a fraud on the court or hampered the court’s enforcement of its orders. What GEICO did was to bring a motion asking the court to reconsider its earlier order. Even though the court found that the motion lacked support, GEICO’s conduct, without a finding of bad faith, fraud or purposeful delay, does not justify imposition of an attorney fee sanction” (¶ 39).

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Commercial Law

Town Bank v. City Real Estate Dev. LLC, 2009 WI App 160 (filed 28 Oct. 2009) (ordered published 24 Nov. 2009)

Town Bank financed a real estate project developed by City Real Estate Development LLC (CRED). As the development unraveled, Town Bank filed a declaratory judgment action in which it sought a finding that the parties had entered into a stand-alone $2.5 million loan that the bank had fully performed. The court denied Town Bank’s motion for summary judgment. At trial a jury found that the bank was obligated to lend CRED an additional $6.5 million, and that its failure to do so caused CRED more than $600,000 in damages and expenses.

The court of appeals reversed in an opinion authored by Judge Anderson. The court held that the term credit agreement (TCA) was “an unambiguous stand-alone agreement between the parties and the only agreement under which Town Bank had loan obligations to CRED” (¶ 2). Town Bank had fully performed under the TCA. “[I]t is important to note that the TCA has an integration clause, which states in relevant part that ‘[t]his Agreement … [is] intended by Customer and Lender as a final expression of their agreement and as a complete and exclusive statement of its terms….’ Neither party challenged the integration clause as ambiguous. It is a well-established rule that an integration clause, in conjunction with the parol evidence rule, bars the introduction of extrinsic evidence to vary or contradict the terms of a writing” (¶ 11). “[The] integration clause in the TCA represents that the agreement encompasses the entire agreement of the parties and, thus, it bars the introduction of any prior agreement to vary the terms of the TCA. Therefore, we conclude that the doctrine of partial integration cannot be applied in the present case to overcome the parol evidence rule because the TCA contains an integration clause, which expressly excludes understandings or agreements that are not contained in the TCA” (¶ 12).

The court next construed the TCA itself, holding that it did not commit Town Bank to provide an additional $6.5 million loan. Specifically, CRED failed to fulfill several conditions, including one that obligated CRED to pay $900,000 in “up-front equity” (see ¶ 16).

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Contracts

Vohs v. Donovan, 2009 WI App 181 (filed 25 Nov. 2009) (ordered published 16 Dec. 2009)

On Feb. 18, 2007, the Donovans signed an offer to purchase the Vohses’ home for $550,000. The offer included a contingency providing that the “offer is subject to sellers obtaining home of their choice on or before February 20, 2007” – a gap of just two days. The Vohses accepted the Donovans’ offer. Unrebutted evidence showed that the Vohses had a pending offer to purchase another home, which was accepted by the sellers of that home on Feb. 19. Nonetheless, the Donovans did not purchase the Vohses’ home. The Vohses sold the house for less money and sued the Donovans for breach of contract. The circuit court granted summary judgment in favor of the Donovans, ruling that the contingency rendered the contract indefinite and illusory.

The court of appeals reversed in an opinion written by Judge Vergeront. “[W]hile both indefiniteness and illusoriness affect the enforceability of a contract, they are distinct concepts. If an essential term is indefinite, thereby rendering the contract unenforceable, the analysis ends there. If, on the other hand, the challenged contract term is determined to be definite and the party attacking the contract also asserts the term constitutes an illusory promise, the issue of illusoriness must then be resolved using a distinct analysis. In other words, a contract term may be definite but nonetheless constitute an illusory promise” (¶ 10). For purposes of summary judgment, reasonable inferences supported a finding that the contract was definite. The record showed that the Donovans were aware of the Vohses’ pending offer to buy another home. “That transaction provides definiteness to the meaning of the condition that the Vohses ‘obtain[] [a] home of their choice by February 20, 2007.’ Accordingly, the Donovans are not entitled to summary judgment on their defense that this clause is indefinite and makes the contract unenforceable” (¶ 18).

Nor did the summary judgment record support a finding that the contract was illusory. The Donovans’ argument ignored “the February 20, 2007, date and the extrinsic evidence of the pending transaction with an acceptance date of February 19, 2007. When the extrinsic evidence is considered, there is a reasonable inference that whether the Vohses’ counteroffer will be accepted by the deadline is not ‘wholly under [their] control’ or ‘left wholly to [their] own will and discretion.’ The Donovans do not provide an argument to the contrary” (¶ 20).

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Criminal Law

State v. Haywood, 2009 WI App 178 (filed 24 Nov. 2009) (ordered published 16 Dec. 2009)

A jury convicted the defendant of battery to a law enforcement officer (Wis. Stat. § 940.20(2)). An element of this crime is that the defendant must intentionally cause bodily harm to a law enforcement officer who is “acting in an official capacity.” On appeal the defendant argued that the trial judge failed to instruct the jury that it could not find that the victim officer was acting in his “official capacity” if the officer was unlawfully within the residential premises at the time of the battery. (The alleged battery here occurred while the officer was conducting an on-duty investigation but was within the residential premises without a warrant and after having been told to leave.)

In a decision authored by Judge Fine, the court of appeals affirmed the conviction. “The flaw in [the defendant’s] contention, however, is that a law-enforcement officer need not be acting ‘lawfully’ for what he or she does to be done in the officer’s ‘official capacity.’ Rather, the officer need only be acting within his or her jurisdiction as an officer… and not on some ‘personal frolic’ unrelated to the officer’s law-enforcement responsibilities” (¶ 11) (citations omitted). The court noted that, while the existence of a peace officer’s lawful authority is an element of the crime of resisting or obstructing an officer under Wis. Stat. section 946.41, “there is no requirement that the officer/victim be acting lawfully when he or she is hit by a defendant” for a violation of section 940.20(2) to occur (¶ 12).

In this case the officer was not on a “personal frolic” when the defendant hit him but rather was doing something within the scope of what he is employed to do. Accordingly, the court held that the defendant’s contention that the lawfulness of the officer’s presence in the house was material to his violation of section 940.20(2) was without merit (see ¶ 14).

State v. Patterson, 2009 WI App 161 (filed 1 Oct. 2009) (ordered published 24 Nov. 2009)

The defendant, Patterson, allegedly gave a controlled substance (Oxycodone) to a 17-year-old girl, and she died as a result. Among other crimes, Patterson was convicted of first-degree reckless homicide by delivery of a controlled substance (Wis. Stat. § 940.02(2)(a)) and contributing to the delinquency of a child with death as a consequence (Wis. Stat. § 948.40(4)(a)). On appeal the defendant argued that these two charges are multiplicitous and that the evidence was insufficient to convict him for contributing to the delinquency of the girl because it is legally impossible to contribute to the delinquency of someone who is 17 years old or older. In a decision authored by Judge Lundsten, the court of appeals affirmed.

The appellate court first concluded that the convictions for the two crimes referenced above are not multiplicitous. Because each requires proof of elements not required by the other, the crimes are not identical in law and, under standard multiplicity analysis, a court must presume that the legislature intended cumulative punishments unless the defendant shows a clear legislative intent to the contrary. In this context the court determines legislative intent using four factors: 1) statutory language, 2) legislative history and context, 3) the nature of the conduct involved, and 4) the appropriateness of multiple punishments (see ¶ 8). Applying these factors to the crimes at issue, the court concluded that the defendant failed to meet his burden of demonstrating that the legislature did not intend cumulative punishments (see ¶¶ 9-21).

The court further concluded that Patterson could be convicted of contributing to the delinquency of a child with death as a result even though the victim was 17 years old when he delivered the Oxycodone to her. The defendant argued that the crime of contributing to the delinquency of a child requires proof that a defendant encouraged or contributed to the “delinquency” of a named person; section 938.02 defines “delinquent” as a “juvenile who is 10 years of age or older” and “less than 18 years of age,” but there is an exception for 17 year olds; the exception provides that the term “juvenile” does not include a person who has attained 17 years of age if that person is alleged to have violated a law; and therefore it is impossible to contribute to the delinquency of a person who is 17 years old or older because such a person is too old to be categorized as a delinquent (see ¶ 28).

The appellate court rejected this interpretation of the statute. “We will assume, for purposes of Patterson’s argument, that the definition of ‘juvenile’ in Wis. Stat. § 938.02 applies for purposes of defining ‘delinquency’ in Wis. Stat. § 948.40. Nonetheless, Patterson’s statutory analysis ignores the fact that a seventeen-year-old is only excepted from the definition of ‘juvenile’ for a single purpose, the ‘purpose[] of investigating or prosecuting’ the ‘person who is less than 18 years of age.’ See § 938.02(10m). Here, the question is not whether [the girl] is a ‘juvenile’ for purposes of prosecuting her, but instead for purposes of prosecuting Patterson. Thus, [the girl] was a ‘juvenile’ for purposes of Patterson’s prosecution for contributing to the delinquency of a child with death as a consequence” (¶ 29).

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Criminal Procedure

State v. Schladweiler, 2009 WI App 177 (filed 11 Nov. 2009) (ordered published 16 Dec. 2009)

The defendant was convicted of armed robbery. The circuit court imposed a sentence of 13 years of initial confinement followed by seven years of extended supervision. The court further determined that the defendant was eligible for the challenge incarceration (“boot camp”) program (CIP). See Wis. Stat. § 302.045. On successful completion of this program, an inmate serving a bifurcated sentence may have his or her remaining initial confinement time converted to extended-supervision time. The total length of the sentence remains unchanged. 

The defendant appealed from a postconviction order denying his motion for sentence modification. He contended that he is entitled to resentencing based on a new factor, namely that the Department of Corrections (DOC) denied him placement in the CIP despite the circuit court’s determination at sentencing that he was eligible for the program. A new factor for sentence-modification purposes is a fact or set of facts highly relevant to the imposition of sentence but not known to the trial judge at the time of original sentencing, either because it was not then in existence or it was in existence but was unknowingly overlooked by all the parties. In addition, the information or development must frustrate the purpose of the original sentencing (see ¶ 7).

In a decision authored by Judge Neubauer, the court of appeals affirmed the order of the circuit court denying sentence modification. Under Wisconsin’s truth-in-sentencing laws, the court determines at the time of sentencing whether a defendant is eligible for the CIP. “Once the trial court has made an eligibility determination, the final placement determination is made by the DOC – the statute provides that, if an inmate meets all of the program eligibility criteria, the DOC ‘may’ place that inmate in the program. Contrary to [the defendant’s] contention, it is not the sentencing court’s function to classify an inmate to a particular institution or program; this authority lies solely with the DOC…. Thus, even when a sentencing court decides that a defendant is eligible for the CIP, the final placement decision is vested with the DOC” (¶ 10) (citations omitted).

The appellate court further concluded that the DOC’s decision to deny the defendant placement in the CIP was not a new factor warranting sentencing modification. The record was clear that the sentencing judge understood that, despite the court’s determination that the defendant was eligible for the CIP, there was the potential that the DOC would deny the defendant placement in the program (see ¶ 11). The record also demonstrated that the circuit court’s sentence was not predicated on any expectation that the defendant would be permitted to participate in the CIP. “In sum, there is nothing in the court’s explanation that in any way indicates that its sentencing decision was premised upon [the defendant’s] acceptance into the CIP. We therefore conclude that [the defendant] has failed to demonstrate that his inability to meet the CIP placement criteria frustrated the purpose of the trial court’s sentence” (¶ 14).

State v. Phillips, 2009 WI App 179 (filed 3 Nov. 2009) (ordered published 16 Dec. 2009)

The defendant was convicted of drug-related offenses. He appealed the denial of his motion to suppress evidence, which contended that police officers had “manufactured” the exigency on which they relied to support their warrantless search of the defendant’s home.

The court of appeals affirmed in an opinion written by Judge Curley. “We need not delve into the appropriateness of the officers’ determination to conduct a knock and talk or whether a knock and talk creates an exigency because in this case, a knock and talk was never actually accomplished. Instead, we conclude that Phillips, not the police, created the exigency that resulted in the warrantless search when, after seeing the police outside the residence, Phillips retreated into the residence and shut the door after the police ordered him to stop. Those actions created the exigency in this matter – namely, the risk that evidence would be destroyed” (¶ 11). Furthermore, the circuit court properly denied the defendant’s postconviction motion alleging ineffective assistance of counsel without conducting a Machner hearing, because the record conclusively showed that he was not entitled to relief (see ¶19).

Judge Kessler concurred in part and dissented in part. She dissented because “the officers’ decision to approach the home to conduct a knock and talk is relevant [¶ 11] and created the exigent circumstances upon which justification for the warrantless entry into Phillips’ home was based” (¶ 20).

State v. Brown, 2009 WI App 169 (filed 14 Oct. 2009) (ordered published 24 Nov. 2009)

The defendant, who was charged with two felonies, hired counsel, and entered pleas of guilty to the felonies. He then requested that the Wisconsin State Public Defender (SPD) appoint counsel for him for the purpose of pursuing postconviction relief. The SPD found that the defendant was financially ineligible for appointed counsel. The defendant then filed a motion asking the circuit court to appoint postconviction and appellate counsel at county expense. The circuit court granted the motion. The appointed attorney pursued sentence modification on the defendant’s behalf, which motion was denied by the circuit court. Thereafter, counsel concluded that the case presented no arguably meritorious appellate issues and sought leave to file a no-merit report in the court of appeals.

Wis. Stat. section 809.32(1)(a) establishes a procedural mechanism for safeguarding a defendant’s right to appellate counsel while resolving frivolous appeals. It provides as follows: “If an attorney appointed under s. 809.30(2)(e) or ch. 977 concludes that a direct appeal on behalf of the person would be frivolous and without any arguable merit within the meaning of Anders v. California, 386 U.S. 738 (1967), and the person requests that a no-merit report be filed or declines to consent to have the attorney close the file without further representation by the attorney, the attorney shall file with the court of appeals ... a no-merit report.” The statutes referenced in section 809.32(1)(a) relate to the appointment of counsel by the SPD. Thus, pursuant to section 809.32(1)(a), an attorney appointed by the SPD may file a no-merit report using the statutory scheme set out in section 809.32. The question in the present case was whether the defendant’s appellate counsel may use this statutory scheme even though counsel was appointed by the circuit court and not by the SPD.

In a per curiam opinion the court of appeals held that “[the defendant] and other indigent criminal defendants with court-appointed appellate lawyers may pursue appellate review in the court of appeals using the procedures in Wis. Stat. Rule 809.32 when appellate counsel concludes that an appeal would lack arguable merit” (¶ 10). Among other things the court noted that “nothing in Wis. Stat. Rule 809.32 bars its use to protect the appellate rights of indigent defendants who are represented by court-appointed appellate counsel” (¶ 8).

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Family Law

Cynthia H. v. Joshua O., 2009 WI App 176 (filed 4 Nov. 2009) (ordered published 16 Dec. 2009)

Cynthia H. sought a permanent guardianship of her grandson, Clive. The circuit court denied the guardianship petition. On appeal Cynthia argued, among other things, that “the trial court applied ‘an incomplete and incorrect legal standard under [Wis. Stat.] chapter 54 … and/or Barstad v. Frazier [118 Wis. 2d 549, 348 N.W.2d 479 (1984)]’” (¶ 1).

In a decision authored by Judge Anderson, the court of appeals affirmed. It began its analysis by noting that the legal standard for guardianship of a minor is articulated in Barstad. “In reaffirming that the relationship between a parent and child is a constitutionally protected right, [the Barstad court] concluded that the ‘best interests of the child’ is not the proper standard in custody disputes between a natural parent and a third party, even if the third party is a grandparent” (¶ 37) (citations omitted). “In short, our supreme court in Barstad resolved two issues. It rejected the ‘best interests’ standard in custody disputes between parents and third parties, and it established a bifurcated procedure similar to a termination of parental rights case in such disputes. As in a termination case, the court in a custody dispute must first find unfitness or inability to care for the child or ‘compelling reasons’ similar to the grounds portion of a termination case. After a finding of unfitness, inability or compelling reasons, the focus of the case then turns to whether or not the ‘best interests’ of the child would be promoted by a transfer of custody from the parent to a third party” (¶ 40) (citations omitted).

The appellate court rejected the grandmother’s argument that Wis. Stat. chapter 54 (enacted in 2006) altered the law as established in Barstad and that the best-interests standard is now the test for guardianship disputes between a parent and third party (see ¶ 41). “Under Cynthia’s interpretation, the trial court must always engage in a ‘best interests’ test even if a parent is found to be fit, able and no other compelling reason exists. To read the statute this way would force the very absurdity that our supreme court rejected in Barstad, i.e., it would oblige the trial court to measure such things as the relativity of the third party and the parent’s affluence and parenting experience. More often than not, on these types of measures, a fit and able parent would lose custody of his or her child. Surely this is not what the legislature intended” (¶ 42). Further, acceptance of Cynthia’s interpretation of chapter 54 “would call into doubt the statute’s constitutionality” (¶ 48). “Upon examination of the Wis. Stat. ch. 54 language, alongside the constitutional protections delineated by our supreme court in Barstad and followed in case law since, we reject Cynthia’s argument that ch. 54 changed the legal standard that is to be applied to petitions for guardianship of a minor to the ‘best interests’ of the child test” (¶ 50). 

Pluemer v. Pluemer, 2009 WI App 170 (filed 8 Oct. 2009) (ordered published 24 Nov. 2009)

The terms of Gerald Pluemer’s marital-settlement agreement with his first wife required that he name his daughter, Jessica, as the beneficiary on his life insurance policy. After Gerald was diagnosed with cancer, he changed the beneficiary designation to his second wife, Patricia, who had taken out a second mortgage on her home to pay Gerald’s debts. After Gerald’s death, the insurer paid the proceeds to Patricia, who used the money to pay off the second mortgage and Gerald’s other debts. Jessica brought this action to recover the proceeds. The circuit court granted summary judgment and imposed a constructive trust over the proceeds in Jessica’s favor (see ¶ 7).

The court of appeals reversed in an opinion written by Judge Dykman. “A constructive trust is an equitable remedy imposed to prevent unjust enrichment” (¶ 9). Patricia asserted she was the bona fide purchaser of the insurance proceeds while Jessica asserted that the court properly imposed the trust for her benefit. The court rejected Patricia’s contention that case law precluded the imposition of a constructive trust on insurance proceeds except when they are “support-related” (see ¶ 13).

Turning to whether summary judgment was properly supported, the court observed that “because Gerald named Patricia as the beneficiary of his insurance policy in violation of his duty to name Jessica as the beneficiary, Jessica may reach those proceeds through a constructive trust unless Patricia was a bona fide purchaser of the proceeds” (¶ 19). The record revealed that disputed issues of fact existed as to whether Patricia was a bona fide purchaser; thus, summary judgment was improper. The court rejected “Jessica’s argument that Gerald’s agreement to name Jessica as the beneficiary on his life insurance policy means there was nothing for Patricia to purchase, and that she therefore cannot be a ‘purchaser’ of any kind. Despite Gerald’s agreement to name Jessica as the beneficiary on his insurance policy, it is undisputed that he did, albeit wrongfully, name Patricia instead. Indeed, a claim to bona fide purchaser status arises only when one holding property transfers it to another despite having no right to do so. Thus, the question is not whether Gerald had the ‘right’ to name Patricia as the beneficiary; the question is whether Patricia was a bona fide purchaser of that status” (¶ 20). Moreover, if on remand the court determines that Patricia is not a bona fide purchaser in whole or in part of the proceeds, Patricia may also argue that a constructive trust is inequitable, taking into account debts incurred during the marriage and Patricia’s own contributions toward Jessica’s support.

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Insurance

Piper v. Nitschke’s N. Resort, 2009 WI App 182 (filed 3 Nov. 2009) (ordered published 16 Dec. 2009)

Members of a condominium association sued the real estate developer, Ernest/Cherie LLC, and a unit owner, Falls, over allegedly improper amendments to the condominium declaration. Ernest/Cherie and Falls tendered their defense to Chicago Title, which contended that there was no coverage under the policies. In essence, Chicago Title acknowledged that while the policies initially granted coverage for defective title claims, a policy exclusion removed coverage based on later amendments to the condominium declaration (see ¶ 5). The circuit court granted summary judgment in favor of Chicago Title.

The court of appeals reversed in an opinion written by Judge Peterson that features a helpful discussion of the proper use of semicolons in insurance policies (see ¶¶ 10, 11). In the policies here the semicolons in question did not separate independent clauses but instead separated items in a series that were otherwise long or internally punctuated. “The exclusion first excepts from coverage certain limitations on condominium ownership rights – covenants, conditions, restrictions, etc. – and then lists the various documents in which these excluded limitations may appear: the declaration, the bylaws, the budget, and the amendments. This is the only sensible reading of Chicago Title’s awkwardly worded exclusion. While far from a model of good draftsmanship, the exclusion plainly uses semicolons to list the documents in which the excepted ownership limitations appear, including both the declaration and its amendments” (¶ 12).

Any other construction rendered the policies illusory. “Here, Chicago Title purported to provide title insurance to units 19 and 21. But title to these units depends on the amendments because the amendments partially created unit 19 and completely created unit 21. Coverage for title insurance would not pay benefits under any reasonably expected set of circumstances when the policy fully excludes from coverage the documents on which title depends” (¶ 13). The court further rejected Chicago Title’s argument that the exclusion was “standard,” a contention contradicted by Chicago Title’s “own standard condominium documents” (¶ 15).

The only remaining argument was whether the policy language, applicable to the amendment as well as the declaration, covered the claims brought here. “Chicago Title’s sole argument is that the claims here are precluded because the limitations apply only to the declaration. It does not refute Ernest/Cherie’s argument that there is coverage if the limitations also apply to the amendments. It therefore concedes this issue. Accordingly, we conclude the policy provides coverage for the members’ claims” (¶ 18).

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Sexually Violent Persons

State v. Kaminski, 2009 WI App 175 (filed 17 Nov. 2009) (ordered published 16 Dec. 2009)

A jury found that Kaminski was a sexually violent person within the meaning of Wis. Stat. chapter 980. The circuit court denied his motion for a new trial.

In an opinion authored by Judge Brunner, the court of appeals affirmed, refusing to grant a new trial in the interest of justice under Wis. Stat. section 752.35. First, the court carefully explained that despite some criminal overtones, a chapter 980 trial is fundamentally a civil proceeding, governed by procedures that protect the petitioner’s due process rights. The court thus rebuffed Kaminski’s contention that case law applicable to criminal trials also imposed a “preliminary relevance requirement” in chapter 980 proceedings. Second, the court held that Kaminski was not entitled to a new trial although the jury had heard testimony that persons committed under chapter 980 were subject to annual reevaluations (see ¶ 20). This “isolated misstep” did not deny him a fair trial: “it was obvious to the jury that, if committed, Kaminski would undergo treatment for his mental disorder, which necessarily suggests periodic re-evaluation” (¶ 24). Finally, Kaminski was not entitled to a new trial on the ground that the state’s expert’s testimony suggested that commitment served both Kaminski’s and the community’s best interest based on Kaminski’s psychopathy and the limited treatment alternatives. Such considerations ran to the heart of a determination whether Kaminski was sexually violent (see ¶¶ 25–27).

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Taxation

Wauwatosa Ave. United Methodist Church v. City of Wauwatosa, 2009 WI App 171 (filed 6 Oct. 2009) (ordered published 24 Nov. 2009)

The Wauwatosa Avenue United Methodist Church (United Methodist) owns a building that is adjacent to the church and used by the church custodian as his residence. As a condition of his employment, the custodian must be available to United Methodist on short notice, 24 hours a day, for maintenance, security, and opening and closing the church. United Methodist did not claim that the custodian is a pastor or other religious leader.

At issue in this appeal was whether the residence is exempt from property taxes under Wis. Stat. section 70.11(4), which establishes an exemption for “[p]roperty owned and used exclusively by churches or religious or benevolent associations and also including property owned and used for housing for pastors and their ordained assistants, members of religious orders and communities, and ordained teachers.” The circuit court found that section 70.11(4) does not provide a tax exemption for the church-owned residence of a church custodian.

On appeal, United Methodist argued for extending the tax exemption beyond the present statutory list set forth in section 70.11(4) to include residences of persons who are “integral to the functioning of the church.” The city responded that neither the plain language of the statute nor case law supports that expanded test, and that under the existing test the church custodian’s residence does not qualify for the tax exemption of section 70.11(4).

In a decision authored by Judge Brennan, the court of appeals affirmed the circuit court. It agreed with the city that, “under the plain language of the statute and existing case law, the residence of the church’s custodian is not entitled to the tax exemption” (¶ 9). It was undisputed that the custodian’s duties are maintenance, security, and opening and closing the buildings. He is not a pastor, an ordained assistant, a member of a religious order, or an ordained teacher as specified in the statute. Said the court, “It is not enough … that the custodian’s employment serves the church. It is the church’s burden to show that the custodian fits within ‘the exact terms of the exemption statute,’ and United Methodist has failed to meet that burden here” (¶ 16). The court further concluded that United Methodist failed to meet its burden of showing that the residence of the custodian is “used exclusively” for the purposes of the church (see ¶ 23).

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Torts

Shister v. Patel, 2009 WI App 163 (ordered published 28 Oct. 2009) (ordered published 24 Nov. 2009)

Shister bought a home from the Patels, who used a real estate broker. In this lawsuit Shister contended that the defendant sellers and the broker failed to disclose that the home’s basement had been remodeled without permits and that the house was being reassessed for property-tax purposes. On summary judgment the circuit court dismissed all claims except that for fraudulent misrepresentation under Wis. Stat. section 100.18. It also limited damages to the failure to disclose the permits.

The court of appeals reversed in a decision written by Judge Neubauer. First, the court held that the claims against the real estate broker were not barred by the economic loss doctrine. Case law establishes that the economic loss doctrine is not applicable to the provision of services as opposed to goods (see ¶ 13). Second, there was no contractual relationship between the buyer (Shister) and the sellers’ real estate broker (see ¶ 14). The court rejected the broker’s contention that she stood in the shoes of the contracting sellers. “Under well-established Wisconsin law, ‘an agent who does an act that would be a tort if he [or she] were not then acting as an agent for another is not relieved from liability to an injured third party, simply because he [or she] was acting as an agent when he [or she] caused the injury.’ ... ‘There is no insulation from liability [for an agent] under the law for making untrue factual statements about the condition of the property during the course of a sale’” (¶ 15). Finally, Wis. Stat. chapter 452 “imposes duties on a real estate broker to all parties involved in a real estate transaction. Wis. Stat. § 452.133(1). It provides that a broker who is providing brokerage services to a person in a transaction owes, among other things, the duty to provide brokerage services honestly and fairly and with reasonable skill and care” (¶ 16).

The court also held that, under section 100.18, “Shister is entitled to pursue damages for the amounts paid due to the increased property tax assessment” (¶¶ 19, 22). The court declined to rule on whether Shister was entitled to recover attorney fees (see ¶ 23).  

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