Administrative Law

Licensing – Adjustment Service Company

Payday Loan Resolution LLC v. Wisconsin Dep’t of Fin. Insts., 2019 WI App 28 (filed 16 May 2019) (ordered published 26 June 2019)

HOLDING: The Wisconsin Department of Financial Institutions (DFI) properly exercised its police powers in sanctioning Payday Loan Resolution for operating an unlicensed adjustment service company.

SUMMARY: Based on a consumer complaint, the DFI’s Division of Banking imposed sanctions against Payday Loan Resolution for operating an unlicensed adjustment service company (debt-settlement business) in Wisconsin. Essentially, Payday argued that it was not subject to state licensure requirements because the division lacks “personal jurisdiction” over it. The circuit court affirmed the division’s order.

The court of appeals affirmed in an opinion authored by Judge Kloppenburg. “Payday’s sole argument is that the Order violates Payday’s due process rights because the connection between Payday and Wisconsin is not sufficient to give the Division ‘personal jurisdiction’ over Payday” (¶ 11).

The court held that the contacts were sufficient. Examining the regulatory scheme, it explained that “the broad legislative goals to be served by Wisconsin’s exercise of its police power so as to protect its residents via licensing provisions are particularly pronounced in the regulation of adjustment service companies” (¶ 21).

Case law “establishes that the test for whether Wisconsin can, consistent with due process, exercise its police power to regulate an out-of-state entity is whether the out-of-state entity ‘has incidents and requires activities within the state intimately related to local welfare’” (¶ 24). Payday’s assertion that “more substantial” contacts were required (a “personal jurisdiction plus” analysis) lacked support in the law (¶¶ 26, 28). The court of appeals described Payday’s activities in Wisconsin (see ¶ 31).

Payday did not mount a Commerce Clause challenge (see ¶ 15).

Appellate Procedure

Postconviction Proceedings – Appeal When Postconviction Motion is Granted in Part and Denied in Part

State v. Wolfe, 2019 WI App 32 (filed 1 May 2019) (ordered published 26 June 2019)

HOLDING: When a circuit court denies a Wis. Stat. section 809.30 postconviction motion in part and grants the motion in part such that further proceedings are required, an appeal as of right cannot be taken until those further proceedings are completed.

SUMMARY: A criminal defendant’s first appeal as of right proceeds under Wis. Stat. section 809.30. In Wolfe and its companion case, State v. Ward, the defendants filed section 809.30 postconviction motions seeking plea withdrawal and resentencing. In both cases, the circuit court declined to permit plea withdrawal but granted the requests for resentencing. Each defendant then filed a notice of appeal from the conviction and from the order denying plea withdrawal. Neither defendant had been resentenced when the court of appeals issued its opinion.

The issue before the court of appeals was whether an appeal as a matter of right can be taken from the denial of part of a postconviction motion. In a per curiam decision the court held that “under established principles of finality, when a circuit court denies a Rule 809.30 postconviction motion in part and grants the motion in part such that further proceedings are required, an appeal cannot be taken until those further proceedings are completed. Because the judgments of conviction and the circuit court orders from which these appeals are taken do not dispose of the entire matter in litigation between the parties, we lack jurisdiction” (¶ 1).

The court of appeals also stated that “[u]pon entry of a judgment of conviction after resentencing, [the defendants] will have the opportunity to file a Wis. Stat. Rule 809.30(2) notice of intent to pursue postconviction relief. Each defendant’s right to challenge the judgments of conviction and the nonfinal orders disposing of the prior postconviction motion is preserved. See Wis. Stat. Rule 809.10(4) (appeal from final order or judgment ‘brings before the court all prior nonfinal judgments, orders and rulings’)” (¶ 11).

Civil Procedure

Compulsory Counterclaims – Privity – Claim Preclusion

Hull v. Glewwe, 2019 WI App 27 (filed 14 May 2019) (ordered published 26 June 2019)

HOLDING: The compulsory-counterclaim rule did not preclude the plaintiff’s negligence claim because he was not a party to the prior action and was not in privity with the insurer.

SUMMARY: Hull and Glewwe were injured while working on a roof at Hull’s home. Glewwe sued Hull’s insurer but did not sue Hull, who was not made a party. Glewwe and the insurer later settled, with Glewwe releasing claims against Hull and the insurer. After the settlement, Hull sued Glewwe and his insurer for negligence. The circuit court dismissed Hull’s claim on grounds that he should have asserted it in the earlier action.

The court of appeals reversed in an opinion authored by Judge Hruz. The compulsory-counterclaim rule did not require Hull to join the prior action or to assert his affirmative claim (see ¶ 13). “A counterclaim is compulsory only if claim preclusion would otherwise apply and ‘a favorable judgment in the second action would nullify the judgment in the original action or impair rights established in the initial action’” (¶ 17). The issue of identity of parties to the two actions was “paramount.” The party asserting claim preclusion bears the burden of proof; here there was no showing that Hull, a nonparty, was in “privity” with the insurer (¶ 18).

Indeed, Hull had requested his insurer in the first action to prosecute his claim, but it refused (see ¶ 23). Their goals were “materially different” (¶ 24). Succinctly stated, “Hull was not made a party to the prior action and his interests in advancing his own claim for injuries were not adequately represented by his insurer in that prior action” (¶ 40).

Criminal Procedure

Statute of Limitation – Tolling

State v. Kollross, 2019 WI App 30 (filed 21 May 2019) (ordered published 26 June 2019)

HOLDING: Time during which an operating while intoxicated (OWI) prosecution was pending in the municipal court did not toll the statute of limitation with respect to a criminal OWI charge arising out of the same episode of impaired driving.

SUMMARY: In 2011, the defendant was given a traffic citation for first-offense OWI (a noncriminal charge). While that case was pending, the defendant was arrested again for OWI, which was also prosecuted as a first offense. The second prosecution resulted in a conviction in 2014. At that juncture, the municipal court dismissed the 2011 case (which was still pending) for want of jurisdiction. Following that dismissal, the district attorney charged the defendant with a second-offense OWI (a misdemeanor) for the original 2011 violation; this criminal charge was filed in 2015.

The defendant moved to dismiss the criminal charge, contending that it was barred by the statute of limitation. The circuit court denied the motion. In an opinion authored by Judge Kessler, the court of appeals reversed the decision of the circuit court.

A prosecution for a misdemeanor must be “commenced” within three years after commission of the crime. A prosecution is “commenced” when “a warrant or summons is issued, an indictment is found, or an information is filed.” Wis. Stat. § 939.74(1). “In computing the time limited by this section, the time … during which a prosecution against the actor for the same act was pending shall not be included. A prosecution is pending when a warrant or summons has been issued, an indictment has been found, or an information has been filed.” Wis. Stat. § 939.74(3).

The issue before the court of appeals was whether the time during which the OWI case against the defendant for the 2011 offense was pending in the municipal court tolled the statute of limitation with respect to the criminal case filed against the defendant in 2015 for the same conduct.

The appellate court concluded that it did not. “[C]riminal charges were not commenced against [the defendant] until February 5, 2015, more than three years after the May 28, 2011 offense…. The May 28, 2011 citation was a forfeiture action, which is not a criminal proceeding. No warrant or summons was issued, no indictment was found, and no information was filed” (¶ 10).

Accordingly, the court of appeals reversed the decision of the circuit judge, who had equated the 2011 municipal OWI ticket with a summons and held that statute of limitation was thereby tolled during the pendency of the municipal prosecution.

Search and Seizure – Traffic Stops – Lawful Duration of Stop

State v. Brown, 2019 WI App 34 (filed 5 June 2019) (ordered published 31 July 2019)

HOLDING: A police officer’s request that the defendant exit his vehicle and consent to a search did not unlawfully extend the duration of the traffic stop.

SUMMARY: At 2:44 a.m., a Fond du Lac police officer observed the defendant driving out of a cul-de-sac on which several businesses are located. After the defendant drove through a stop sign, the officer initiated a traffic stop. The officer also noted that the defendant was not wearing a seat belt. When asked, the defendant stated he was coming directly from a “Speedway,” which the officer knew was untrue because he had seen the defendant coming out of the cul-de-sac, which did not contain that gas station. The defendant stated he was from Milwaukee and was in the area to see his girlfriend (though he said he did not know her last name or exact address).

The officer ran a check on the defendant’s record and learned that he had many drug arrests and had convictions for possessing cocaine with the intent to deliver and for armed robbery. The officer wrote a warning ticket, asked the defendant to exit his car, and asked him if he had anything on him that the officer should know about. The defendant said “no.” The officer testified that he made this inquiry to find out if the defendant had “any illegal weapons or drugs on him” (¶ 8).

According to the officer’s testimony, he then obtained consent to search the defendant. During the search, the officer found 13 bags of crack cocaine and $500 in cash on the defendant’s person. The circuit court found that the officer had not yet returned the defendant’s license or handed him the warning ticket when the request to search and the search occurred.

The defendant moved to suppress the evidence recovered during the search, arguing that the request to search unlawfully extended the duration of the traffic stop. He contended that once the officer completed writing the ticket, the stop should have been over and that the officer lacked reasonable suspicion to continue the detention by asking the defendant to exit the car and to consent to a search. The circuit court denied the motion, and the defendant pleaded no contest to one count of possession with intent to deliver cocaine.

In a majority decision authored by Chief Judge Neubauer, the court of appeals affirmed. It agreed with the state that the court need not determine whether reasonable suspicion supported the requests to exit the car and for consent to search during a lawful traffic stop. Recent U.S. Supreme Court and Wisconsin Supreme Court decisions “clearly establish that the requests were part of the mission of the traffic stop, and thus were not an extension of the stop” (¶ 17). “The ‘tolerable duration of police inquiries in the traffic-stop context is determined by the seizure’s “mission” – to address the traffic violation that warranted the stop and attend to related safety concerns.’ The purpose of such a stop includes ‘addressing the traffic violation that warranted the stop,’ ‘conducting the ordinary inquiries incident to the stop,’ and ‘taking negligibly burdensome precautions to ensure officer safety’” (¶ 19) (citations omitted).

In this case the appellate court concluded that the officer’s requests that the defendant exit his vehicle and consent to a search fell within the stop’s mission (see ¶¶ 20-21). “Queries about the possession of weapons and for consent to frisk, if made reasonably and without unnecessary delay, remain within the scope of the original traffic stop mission” (¶ 21) (citation omitted).

Judge Reilly filed a concurring opinion.

Employment Law

Public Pensions – Revocation

Dietscher v. Pension Bd., 2019 WI App 37 (filed 25 June 2019) (ordered published 31 July 2019)

HOLDING: The pension board’s decision to revoke a pension was arbitrary and unreasonable.

SUMMARY: Dietscher, a Milwaukee County employee, was charged in February 2014 with several counts of engaging in official misconduct, including bribery and lying. He chose to retire from the county effective March 1, 2014. In 2016, he pleaded guilty to several counts of misconduct. Later that year, the county’s pension board revoked Dietscher’s pension under a “fault and delinquency” standard. Dietscher appealed, and the circuit court reversed the board, finding its actions unreasonable.

The court of appeals affirmed the circuit court in an opinion authored by Judge Dugan. Essentially, the decision to revoke Dietscher’s pension was a political one for which the board offered varying, unconvincing rationales based on its rules. Said the court: “We conclude that because the Board sought to find a way to comply with the County Executive’s impassioned pleas to find any available avenue to terminate and recover Dietscher’s pension benefits, that the Board’s decision was arbitrary and unreasonable, and represented its will, rather than its judgment” (¶ 19).

The opinion discusses the standards governing revocation of county pensions in light of the board’s ever-shifting rationales. Dietscher was eligible for pension benefits if his employment was terminated for “any cause,” whether voluntary or involuntary. The sole exception was a termination for “fault or delinquency,” which the board unsuccessfully struggled to apply in this case (¶ 30). The court reviewed the standards governing the county’s pension system in light of the board’s shifting arguments. They are summarized at paragraph 59 of the opinion.

But the court of appeals rejected Dietscher’s claim that the board’s appeal was frivolous. Dietscher “fail[ed] to offer any analysis of how each and every argument advanced by the Board was frivolous” (¶ 57). For example, the court rejected the board’s argument that there was a “gap” between his last day of work and his retirement application, but the argument was not a frivolous one (id.).

Evidence

Prior Convictions – Sexual Assaults

State v. Gee, 2019 WI App 31 (filed 14 May 2019) (ordered published 26 June 2019)

HOLDING: The circuit court properly ruled that a defendant’s conviction for sexual assault more than 20 years earlier was admissible in his current sexual assault prosecution; the rule permitting use of such evidence is constitutional on its face and as applied.

SUMMARY: The defendant was charged with first-degree sexual assault of two women in 2015. In a pretrial hearing, the judge ruled that the defendant’s conviction in 1996 for an armed sexual assault in Indiana could be introduced under Wis. Stat. section 904.04(2)(b)2. but only in rebuttal and only if the defendant attacked the victims’ credibility in this case. The first jury could not reach a unanimous verdict, so the defendant was retried and convicted. The defendant said he did not testify at trial because of the court’s ruling regarding the Indiana case.

The court of appeals affirmed the conviction in an opinion, authored by Judge Brash, that found Wis. Stat. section 904.04(2)(b)2. constitutional on its face and as applied. The rule permits the introduction in certain sexual assault cases of a prior criminal conviction of the same crime or an equivalent crime in another jurisdiction. Such evidence may be used to prove the defendant’s conduct (sexual assault) in the current case. The rule is modeled on a broader federal rule, which federal case law has upheld. Moreover, it comports with “Wisconsin’s legal history regarding this issue in sexual assault cases” (¶ 36).

The rule was also constitutional as applied in this case. Finally, the trial judge properly exercised his discretion when ruling on the conditional use of such evidence.

Firearms

Purchase of Handguns in Wisconsin – Wis. Stat. section 175.35 – Prior Out-of-state Felony Convictions – Pardons

Moran v. Wisconsin Dep’t of Justice, 2019 WI App 38 (filed 11 June 2019) (ordered published 31 July 2019)

HOLDING: The restoration of the petitioner’s right to possess a firearm in Virginia following his conviction of a felony in Virginia was not a pardon for that crime, and the petitioner thus was ineligible to later purchase a firearm in Wisconsin.

SUMMARY: Moran was convicted of a felony in Virginia and, after completing his sentence, he petitioned to have his right to possess a firearm restored in that state. A Virginia court granted his petition. Moran then moved to Wisconsin, where he attempted to purchase a firearm. The Wisconsin Department of Justice (DOJ) blocked the purchase based on its conclusion that because Moran was a felon who had not received a pardon for his crime, he was not permitted to possess a firearm in Wisconsin.

Moran’s administrative appeals were unsuccessful as was his attempt through judicial review to have the circuit court reverse the DOJ’s decision. In a unanimous decision authored by Judge Hruz, the court of appeals affirmed the circuit court’s decision.

The purchase of handguns in Wisconsin is regulated by Wis. Stat. section 175.35, which requires that the DOJ determine whether state or federal law prohibits the purchaser from possessing a firearm (see ¶ 13). Approval or nonapproval of a handgun purchase turns on whether the prospective purchaser is prohibited from possessing a firearm under Wis. Stat. section 941.29 (prohibiting possession of firearms by felons).

Moran argued that he was eligible to purchase a firearm because Wis. Stat. section 941.29(5)(a) exempts from its prohibitions the possession of a firearm by an individual who has been pardoned for a prior felony and has been expressly authorized to possess a firearm under 18 U.S.C. app § 1203. [Note: Wis. Stat. section 941.29(5)(a) continues to refer to 18 U.S.C. app § 1203 even though the latter provision has been repealed. See ¶ 15 n.6.]

The court of appeals concluded that Moran was never pardoned for the Virginia felony. “The restoration of Moran’s rights in Virginia is not a pardon for purposes of Wisconsin law, regardless of there being some similarity in their effect” (¶ 42). The court rejected Moran’s argument that Wis. Stat. section 941.29(5) has been preempted by federal legislation and that the restoration of his right to possess a firearm in Virginia is the equivalent of a pardon for purposes of Wisconsin law (see ¶ 2).

The court of appeals also rejected various constitutional arguments Moran advanced. It concluded that its interpretation of Wis. Stat. section 941.29(5) “does not violate the Full Faith and Credit Clause, the Second Amendment of the United States Constitution, or article I, § 25 of the Wisconsin Constitution” (¶ 50).

Municipal Law

Trucks – Seasonal Weight Restrictions – Interstate Commerce

Town of Delafield v. Central Transp. Kriewaldt, 2019 WI App 35 (filed 5 June 2019) (ordered published 31 July 2019)

HOLDING: The town’s seasonal weight restriction on trucks did not deny a trucking company reasonable access between the highway and the trucking company’s customer.

SUMMARY: A sheriff’s deputy issued a citation to a trucking company whose truck exceeded a seasonal weight restriction (six tons) on a town road. Following a bench trial, the circuit court ruled that the seasonal weight restriction did not allow the trucking company reasonable access to its customer in the town and thus was preempted by federal law. The town appealed.

The court of appeals reversed in an opinion authored by Judge Gundrum. It was undisputed that the truck exceeded the town’s seasonal weight limit. The court pointed to several ways in which the trucking company could have complied with the local ordinance, including obtaining a permit. From the record, the town “appears to permit all access, albeit after working with the carrier to ensure it utilizes a route that limits damage to Town roads during the spring thaw” (¶ 18).

Public Records Law

Requests for Electronic Copies of Public Records – Furnishing Paper Printouts of Records

Lueders v. Krug, 2019 WI App 36 (filed 5 June 2019) (ordered published 31 July 2019)

HOLDING: Under the circumstances in this case, the defendant was required to produce “electronic copies” of records the plaintiff sought through a public records request.

SUMMARY: Lueders emailed Krug, a Wisconsin legislator, requesting to review all citizen correspondence relating to certain specified subjects. The request was made under Wisconsin’s public records law. In response to this request and as related to this litigation, Krug’s office made paper printouts of relevant emails and arranged for Lueders to inspect or purchase copies of those printouts. Lueders inspected the printouts and obtained copies of them.

Thereafter, Lueders emailed a request to Krug “to receive the records in electronic form.” Krug declined to provide Lueders with copies of the emails in electronic form. In doing so, he relied on Wis. Stat. section 19.35(1)(b), which provides in part that “[i]f a requester appears personally to request a copy of a record that permits copying, the authority having custody of the record may, at its option, permit the requester to copy the record or provide the requester with a copy substantially as readable as the original” (emphasis added). Krug expressed to Lueders that the paper printouts he had previously provided for Lueders’ inspection and copying satisfied the requirements of the public records law because they were “substantially as readable” as the emails themselves (¶ 3).

Lueders then filed this mandamus action seeking an order directing Krug to provide him with an “electronic, native copy of the requested records” (¶ 4). Both parties moved for summary judgment. The circuit court granted Lueders’ motion and denied Krug’s. In a unanimous decision authored by Judge Gundrum, the court of appeals affirmed the order of the circuit court.

The court of appeals concluded that the statute quoted above did not apply in this case because Lueders made both requests for the records by emailed correspondence; he did not personally appear in either instance to request the records. That left the court to resolve the following question: whether Lueders’ second (enhanced) request entitled him to receive an electronic copy of the emails themselves, or whether the enhanced request had already been satisfied by Krug previously affording him access to the paper printouts of the emails.

The court held that Lueders was entitled to the emails in electronic form (see ¶ 15). Said the court: “[I]t is undisputed that while electronic copies of the e-mails contain the same information as the e-mails themselves, the paper printouts from those e-mails are missing substantive information. It is undisputed, for example, that the electronic copies and the e-mails themselves, as received and stored on Krug’s computer, contain ‘metadata,’ which information was not on the paper printouts from the e-mails” (¶ 11). Metadata can, for example, show when documents were created and who created them (see ¶ 12).

The court rejected Krug’s argument that the paper printouts were “good enough” to satisfy Lueders’ second, enhanced public records request (¶ 20).

Real Property

Wisconsin Statutes section 32.09(6) – Compensable Damages for Taking of Property

James & Judith Nonn Tr. v. Wisconsin Dep’t of Transp., 2019 WI App 29 (filed 9 May 2019) (ordered published 26 June 2019)

HOLDING: Access damages caused by a highway construction project were not compensable under Wis. Stat. section 32.09(6), and the circuit court correctly excluded evidence of those damages.

SUMMARY: The Nonns own and operate a restaurant that was affected by a highway construction project. They sought compensation under Wis. Stat. section 32.09(6) for what they claim is a reduction in the value of their property caused by the installation of a traffic-blocking highway median that reduced access to their property from an adjacent highway. The Nonns argued that, because this single highway project included a “partial taking” of their property for a sidewalk (compensable under section 32.09(6)) as well as the traffic-blocking median, the reduction in value caused by the median is also compensable under section 32.09(6), even though the partial taking of property for the sidewalk did not cause the loss of access.

The circuit court evidently disagreed with the Nonns because it granted the Wisconsin Department of Transportation’s (DOT’s) pretrial motion requesting exclusion of evidence of damages caused by the traffic-blocking median. Following that ruling, the court entered judgment pursuant to a stipulation. This appeal followed.

In an opinion authored by Judge Lundsten, the court of appeals affirmed. It concluded that the supreme court’s decision in 118th Street Kenosha LLC v. DOT, 2014 WI 125, 359 Wis. 2d 30, 856 N.W.2d 486, controls the outcome in this case.

“The 118th Streetcourt held that the damages authorized by Wis. Stat. § 32.09(6) and (6g) must be caused by ‘a partial taking of property’ under sub. (6) or caused by ‘the taking of an easement’ under sub. (6g). Thus, § 32.09(6) does not authorize the loss of access damages the Nonns seek here because the loss of access was not caused by the partial taking of property for a sidewalk. It follows that the circuit court properly granted DOT’s motion to exclude evidence of damages relating to the reduced Highway 14 access. Also, as in 118th Street, we do not hold that access damages of the sort the Nonns seek are not compensable under any theory. Rather, we address the only source of authority the Nonns rely on, § 32.09(6)” (¶ 29).