Criminal Law
Administrative Orders – Collateral Attacks
State v. Hershberger, 2014 WI App 86 (filed 17 July 2014) (ordered published 27 Aug. 2014)
HOLDING: The circuit court properly precluded a collateral attack on the underlying administrative order that the defendant was charged with violating.
SUMMARY: The defendant is a dairy farmer who was convicted by a jury for violating an administrative hold order that forbade him from moving or selling specified dairy and meat products. The circuit court restricted the defendant’s attempts to attack the lawfulness of the hold order as the centerpiece of his defense.
Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.
Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.
The court of appeals affirmed in an opinion authored by Judge Kloppenburg. First, the court reviewed the general law on collateral attacks: “To summarize, collateral attacks on prior judicial orders or judgments are generally prohibited, but this rule may not apply where the order or judgment was procured by fraud, the order or judgment was void because the court acted without jurisdiction, or there was no meaningful opportunity for review of the order or judgment” (¶ 13).
These rules, the court held, extend to collateral attacks on underlying administrative orders (see ¶ 16); they are not limited to prior judicial orders or judgments (see ¶ 23). For this reason, the defendant was properly barred from proving that the holding order lacked a factual basis (see ¶ 27). The opinion canvassed the “three regulatory schemes” that would have permitted the defendant to challenge the holding order through administrative procedures (¶ 34). Finally, the court rejected an array of other scattershot challenges to the regulatory scheme’s efficacy (for example, it would be “impractical and futile”).
The circuit court also properly permitted the use at trial of a redacted copy of the holding order. The rule of completeness did not compel the introduction of the unredacted holding order; the excised portions related to the factual basis for the order and were not relevant to any issues before the jury (see ¶ 45). Finally, application of the rule against collateral attacks did not deny the defendant his right to present a defense (see ¶ 47).
Insurance
“Other Insurance” – Duty to Defend
Burgraff v. Menard Inc., 2014 WI App 85 (filed 29 July 2014) (ordered published 27 Aug. 2014)
HOLDING: Self-insurance constituted “insurance” for purposes of an “other insurance clause”; the insurer’s duty to defend extended to the limits of its liability under the policy.
SUMMARY: The plaintiff, Burgraff, was injured by a Menard’s employee who was loading material onto Burgraff’s trailer. Burgraff sued Menard, which tendered its defense to Burgraff’s automobile insurer, Millers First Insurance Co. Menard was self-insured for $500,000 and had a commercial general liability (CGL) policy issued by CNA for liability in excess of that amount. The trial judge ruled that based on the “other insurance” clause in the Millers First policy, Menard and Millers First would pay Burgraff’s damages pro rata. The judge also ruled that Millers First had fulfilled its duty to defend Menard after it settled its pro rata share of Burgraff’s damages.
The court of appeals reversed in part and affirmed in part in an opinion authored by Judge Stark. “Under [Hillegass v. Landwehr, 176 Wis. 2d 76, 499 N.W.2d 652 (1993)] self-insurance constitutes ‘other collectible insurance’ for purposes of an ‘other insurance’ clause. Hillegass therefore supports the circuit court’s conclusion that Menard’s self-insured retention qualifies as ‘other applicable liability insurance’ under the Millers First policy’s ‘other insurance’ clause. The public policy factors cited in Hillegass are equally applicable in this case. Menard chose to retain its own risk for the first $500,000 per occurrence, and it therefore avoided paying premiums to a third-party insurer for that coverage. As in Hillegass, it would be ‘fundamentally unfair’ to permit Menard to ‘escape both the expense of premium payments and the possibility of being held liable as primary insurer’” (¶ 25) (citations omitted).
“In addition, by virtue of its self-insured retention, Menard expected to be the primary insurer for the first $500,000 per occurrence. Allowing Menard to escape its obligation to provide primary coverage would be contrary to Menard’s expectations. Menard should not be able to ‘escape the liabilities that would attach to third-party insurers’ simply because it chose to self-insure” (id.). Dispositive, then, was that “Menard did not pay any premiums for coverage with the self-insured retention amount” (¶ 26).
The circuit court erred, however, when it found that Millers First had satisfied its duty to defend. First, the policy “unambiguously” required the insurer to provide a defense until it had exhausted the limits of liability, which it had not (see ¶ 44). Second, case law also foreclosed this contention.
Real Property
Real Estate Sales – Listing Contract – Right to a Commission
Ash Park LLC v. Alexander & Bishop Ltd., 2014 WI App 87 (filed 22 July 2014) (ordered published 27 Aug. 2014)
HOLDING: Under the terms of the listing contract, the broker was entitled to a commission even though a sale of the property was not completed.
SUMMARY: Ash Park entered into a one-party listing contract with Re/Max for the sale of property to Alexander & Bishop. The parties used the standard WB-3 vacant land listing contract form approved by the Wisconsin Department of Regulation and Licensing. The contract stated Re/Max would list the property for $6.2 million. It also provided for a six percent commission. Alexander & Bishop contracted to purchase the property from Ash Park for $6.3 million to develop as a commercial property.
After Alexander & Bishop failed to close on the property, Ash Park brought suit against Alexander & Bishop, asking the court to enforce the sales contract and order specific performance. Ultimately, the circuit court granted summary judgment in favor of Ash Park and ordered specific performance – a decision upheld on appeal by both the court of appeals and the supreme court.
Ash Park continued, unsuccessfully, to try to enforce the judgment for specific performance and compel Alexander & Bishop to purchase the property. Ultimately, on Dec. 31, 2010, Ash Park agreed to settle and accepted $1.5 million from Alexander & Bishop in lieu of its purchase of the property. Two weeks later, Re/Max moved to intervene, seeking a judgment against Ash Park for its broker commission, prejudgment interest, costs, and attorney fees. It also moved to enforce a broker lien it had recorded on the property. The circuit court granted summary judgment to Ash Park, denied Re/Max its commission, and ordered Re/Max’s broker lien discharged.
In a decision authored by Reserve Judge Cane, the court of appeals reversed. The principal issue before the appellate court was whether Re/Max was entitled to a commission under the listing contract. That document provides that a commission is earned when “Seller sells or accepts an offer which creates an enforceable contract for the sale of all or part of the Property” (¶ 11) (emphasis added). An enforceable contract is one for which “an individual can compel observance of the contract by seeking a remedy for a breach. In this case, the contract between Ash Park and Alexander & Bishop was enforceable – the contract recognized Ash Park’s rights under the contract and provided various remedies for Ash Park based on Alexander & Bishop’s breach” (¶ 15).
Although the original order for specific performance could not be enforced because Alexander & Bishop could not afford to purchase the property, there were other remedies available to Ash Park for Alexander & Bishop’s breach of contract. “Nothing in the listing contract requires that a sale must occur before the broker earns a commission” (¶ 23). “If Ash Park wanted a commission to be earned only on a completed sale, Ash Park could have negotiated for that provision in the listing contract. It did not” (id.).
Accordingly, the court of appeals reversed the circuit court’s judgment denying Re/Max its commission. It remanded the matter to the circuit court to determine whether Re/Max’s broker lien should remain discharged (see ¶ 2).
Right of First Refusal to Purchase or Lease Property – Temporal Limitations
MS Real Estate Holdings LLC v. Donald P. Fox Family Trust, 2014 WI App 84 (filed 29 July 2014) (ordered published 27 Aug. 2014)
HOLDING: The circuit court erred when it concluded that a right of first refusal to purchase or lease certain property was indefinite as to duration and terminable after a reasonable period of time.
SUMMARY: In 1998, Tidy-View purchased a right of first refusal (ROFR) both to purchase and to lease certain property owned by Fox. The ROFR does not include a definite temporal limitation. Fifteen years later, Fox notified Tidy-View that Fox was terminating the ROFR in its entirety, claiming it was unenforceable for vagueness as to its term.
The circuit court concluded that the ROFR was indefinite as to duration and terminable after a reasonable time. (“As a general rule, when a contract is of indefinite duration, we will imply a reasonable time for performance.” Schneider v. Schneider, 132 Wis. 2d 171, 175, 389 N.W.2d 835 (Ct. App. 1986)). The court granted summary judgment in favor of Fox, concluding that 15 years clearly meets a standard for the passage of a reasonable time.
In a decision authored by Judge Mangerson, the court of appeals reversed. Addressing the ROFR to purchase the property, the court concluded that it “is not amenable to the general rule of indefiniteness applied by the circuit court. The right, by its very nature, is intended to lie dormant until a specified triggering event occurs” (¶ 13). Although the ROFR to purchase in the present case is not temporally limited, it may be “activated” at any time by an offer to purchase the property (see ¶ 16). Fox may sell the property at any time, and “[t]he agreement is sufficiently definite because it specifies an event – sale of the property – upon which the contract ends” (¶ 17).
Fox also argued that the ROFR’s purchase provision creates an impermissible restraint on alienation because its terms are unreasonable. The appellate court concluded that Fox misconstrued the nature of the reasonableness inquiry.
“With rights of first refusal to purchase, two contracts are in play. The first, often for modest consideration, purchases the right to buy property before anyone else at a designated price. The second contract is the ultimate purchase agreement between buyer and seller. In assessing reasonableness, we do not look to the duration of the right of first refusal or the consideration paid for it. Reasonableness as to time and price refers to the price the person holding the right of first refusal must pay to purchase the property, and the time allowed for the exercise of the right” (¶ 21). Accordingly, the court concluded that the ROFR to purchase in this case was sufficiently definite and reasonable, and terminates on sale of the property, either to Tidy-View or a third party (see ¶ 23).
As for the ROFR’s lease provisions, the appellate court stated that “[w]hile a lease provision that runs indefinitely with the land and is binding on successive purchasers arguably implicates the circuit court’s concerns about indefiniteness and burdening the land in perpetuity, we conclude those are not the effects of the lease provision here” (¶ 29). According to the terms of the ROFR, the contract terminates in its entirety on sale or transfer of the property to a third party (see ¶ 32).
In sum, the court concluded that “the circuit court erred when it concluded the ROFR was indefinite and therefore terminable after a reasonable time. For different reasons, both the ROFR’s purchase and lease provisions extinguish upon sale or transfer of the property to a third party” (¶ 33).
Eminent Domain – Relocation Expenses – Declaratory Judgment Action – Sovereign Immunity
Aesthetic & Cosmetic Plastic Surgery Ctr. LLC v. Wisconsin DOT, 2014 WI App 88 (filed 15 July 2014) (ordered published 27 Aug. 2014)
HOLDING: The state enjoyed the protection of sovereign immunity in this declaratory judgment action arising out of its exercise of eminent domain to acquire the plaintiff’s property.
SUMMARY: This case involves relocation expenses sought by a business (Aesthetic) whose property was taken by the Department of Transportation (DOT) for a road improvement project. Although Aesthetic accepted the DOT’s jurisdictional offer ($940,000) for the property, it did not vacate the property by the established date, and so the DOT obtained a writ of assistance from the circuit court to remove Aesthetic from the property. The jurisdictional offer also provided that Aesthetic could file claims for various items of damage listed in Wis. Stat. section 32.19; among those items are relocation expenses.
After a series of discussions with the DOT during which, Aesthetic alleged, it was first told the DOT had approved a two-move relocation plan, only to be told later that a two-move relocation plan was not approved, Aesthetic filed this action under Wis. Stat. section 806.04 seeking a declaratory judgment that it was entitled to a two-move relocation plan. The circuit court entered a declaratory judgment in favor of Aesthetic, despite the DOT’s assertion that the declaratory judgment action was barred by sovereign immunity.
In a decision authored by Judge Fine, the court of appeals reversed. It agreed with the DOT that Aesthetic’s declaratory judgment action is barred by sovereign immunity (see ¶ 11). “[T]he legislature has determined the ‘manner’ by which someone displaced by an agency taking property for a public purpose may recover the expenses encompassed by Wis. Stat. § 32.19: Wis. Stat. § 32.20 directs the displaced party to file its claims with the agency but not until ‘after the damages upon which they are based have fully materialized.’ (Emphasis added.) Aesthetic did not do that; rather, as we have seen, it sought to circumvent the ‘after … fully materialized’ condition via this declaratory judgment action” (¶ 14).
The appellate court further concluded that the DOT did not forfeit its sovereign immunity defense by seeking and receiving a writ of assistance from the circuit court to remove Aesthetic from the property. Said the appellate court, “the Department of Transportation here consistently asserted its sovereign-immunity defense: in its letter transmitting its application for a writ of assistance, in its timely answer, and in its timely motion to dismiss” (¶ 23).
Condemnation – Value – Postjudgment Interest
Geise v. American Transmission Co., 2014 WI App 72 (filed 12 June 2014) (ordered published 30 July 2014)
HOLDINGS: The jury’s finding of value was supported by the evidence even though it fell outside the range of values testified to by experts on both sides; the court also held that the circuit court erred by not ordering statutory postjudgment interest for the time when the appeal was pending.
SUMMARY: American Transmission Co. (ATC) condemned approximately three acres of Geise’s farm land for construction of an electric transmission line. During a three-day trial on the issue of the land’s fair market value, the court heard testimony, lay and expert, from both sides. In its special verdict the jury found that the land’s value before the taking was $1.17 million and its value after the taking was $1.069 million. These amounts exceeded those placed on the land by both Geise’s and ATC’s experts, who relied on a comparable-sales approach. The circuit court rejected ATC’s motion to set aside the verdict, finding that it was not “outrageous” and the “ultimate award” was supported by the evidence. The court later denied Geise’s motion for postjudgment interest under Wis. Stat. section 32.06(10)(d).
The court of appeals affirmed one order and reversed the other in an opinion written by Judge Higginbotham. The court rejected ATC’s contention that the jury ignored all credible evidence when it found values that exceeded those testified to by the parties’ experts. The jury heard conflicting testimony. Case law does “not hold that a jury verdict setting the value of property may be sustained only where the values found by the jury are within the range of values offered by experts. Indeed, case law demonstrates there is no such limitation” (¶ 14).
On this record, the jury properly considered the comparable-sales bases used by the experts (see ¶¶ 15, 21-22). For much the same reasons, the court rejected ATC’s argument that the jury must have ignored the judge’s instructions and “speculated” about the land’s value (¶ 26).
Addressing Geise’s cross-appeal, the court reversed the circuit court’s denial of postjudgment interest. It held that Wis. Stat. section 32.06(10) means “that a judgment that is appealed within sixty days after entry of judgment does not have to be paid within that time period; however, the judgment nonetheless bears interest from the date of entry of judgment if it is not paid within that time period, assuming the judgment, or some portion of it, is upheld on appeal. The necessary result of this reading is that interest accrues during the pendency of an appeal and post-judgment interest must be paid” (¶ 34).
The court concluded that this was the only reasonable construction of Wis. Stat. section 32.06(10)(d). “Particularly as to large judgments, our construction avoids providing an incentive to the losing party in the circuit court to appeal a judgment on any non-frivolous ground, no matter how weak, to avoid paying post-judgment interest. Under ATC’s construction, a party obligated to pay a large judgment would have little, if any, reason not to file an appeal, even where the appeal has little merit and thus has the potential to waste judicial time and resources. Indeed, so far as we can tell, under ATC’s construction, a losing party could file an appeal, meritorious or not, thereby avoiding the interest provision, and later voluntarily dismiss the appeal” (¶ 35).
Sexually Violent Persons
Wis. Stat. Chapter 980 – Timely Petition – Discharge Date
State v. Stanley, 2014 WI App 89 (filed 24 July 2014) (ordered published 27 Aug. 2014)
HOLDING: A Wis. Stat. chapter 980 petition was timely filed because the respondent had not yet been “discharged” from Department of Corrections (DOC) custody status.
SUMMARY: Stanley was convicted and sentenced for various sex offenses in the 1990s under the indeterminate sentencing law. He committed another offense in 2005 and was returned to serve the remainder of his sentences. In 2010, the state filed a Wis. Stat. chapter 980 petition to have Stanley committed as a sexually violent person. The circuit court ruled that the state’s petition was untimely.
The court of appeals reversed in an opinion authored by Judge Kloppenburg. Wisconsin Statutes section 980.02(1m) provides that chapter 980 petitions must be filed before the person is “released” or “discharged.” The court gave those terms their “common and accepted legal meanings in the context of a criminal sentence: ‘released’ means to free a person from confinement in prison, and ‘discharged’ means to free a person from DOC custody status upon completion of the criminal sentence” (¶ 22).
The confusion in this case emanated from the DOC’s inaccurate computation of Stanley’s presumptive mandatory release (PMR) date. “Whether or not Stanley was ‘released’ on his PMR date of May 7, 2008, he remained in DOC ‘custody status’ until his maximum discharge date of March 7, 2010, when he would complete his criminal sentence and be ‘discharged.’ Because the State filed the ch. 980 petition before Stanley was discharged, we conclude that the petition was timely filed under § 980.02(1m)” (¶ 24).
Torts
Statutes of Repose – Safe-Place Statute
Garrido-Crisanto v. Heritage Relocation Servs. Inc., 2014 WI App 75 (filed 10 June 2014) (ordered published 30 July 2014)
HOLDING: A statute of repose barred claims by a plaintiff injured by a decades-old freight elevator that had no gate.
SUMMARY: The plaintiff severely injured his foot while working in a freight elevator installed sometime in the 1940s in a building built in the early 1900s. He alleged negligence and safe-place-statute violations based chiefly on the elevator’s lack of any safety gate. Applying the 10-year statute of repose in Wis. Stat. section 893.89, the circuit court dismissed all claims based on the lack of a safety gate. (The court left open the door for potential claims rooted in negligent maintenance.)
The court of appeals affirmed in an opinion, authored by Judge Brennan, that addressed three issues. First, contrary to the plaintiff’s contention, case law applies the statute of repose to claims against subsequent owners “even if the subsequent owners were not involved in the improvement to the property” (here the elevator’s installation in the 1940s) (¶ 14). Under both the statute and case law the “gateless elevator” was a structural defect subject to the 10-year period of repose (see ¶ 18).
Second, Wis. Stat. section 893.89(4)(c) does not exempt a structural defect even if the subsequent owner knew it was unsafe (see ¶ 19). Although “unsafe conditions” fall within the exemption provided the owner has notice, case law foreclosed expansion of the exemption to known structural defects beyond the 10-year period (see ¶ 22). The court also dismissed the related argument that the owner maintained an “ongoing nuisance” because “such a conclusion would create an exception that swallows the rule” (¶ 25).
Third, the court rejected the contention that somehow Wis. Stat. section 893.89(6) and the worker’s compensation statute, Wis. Stat. section 102.29, create an exception to the statute of repose. The plaintiff’s assertion had no support in the cases or the statutory language. Section 102.29(1) “preserves an existing common law right, it does not create a new right to tort claims against a third party and it does not permit a party to bypass the statute of repose” (¶ 29).
