Vol. 76, No. 2, February 2003

Supreme Court Digest

by Prof. Daniel D. Blinka &
Prof. Thomas J. Hammer

Civil Procedure Criminal Procedure Employment Law Torts

Evidence Insurance Juvenile Law

Civil Procedure

Deceased Party - Service of Suggestion of Death

Schwister v. Schoenecker, 2002 WI 132 (filed 27 Dec. 2002)

Ruth Schwister, the plaintiff, died after she brought this action against her son, Daniel Schoenecker, for the return of funds that he was to manage on her behalf. The circuit court granted the motion of the personal representative of Ruth Schwister's estate to be substituted as the plaintiff in this action. The question before the supreme court was whether the motion for substitution was timely.

Wis. Stat. section 803.10(1)(a) directs dismissal of a motion for substitution of a deceased party that is made more than 90 days after the death is suggested on the record by service of a statement of the facts of the death. The specific question here was whether the defendant's suggestion of death, which was served only on the deceased

plaintiff's attorney prior to the appointment of a personal representative, satisfied the statute and thereby activated the 90-day period in which a motion for substitution was to be filed.

The language of section 803.10(1)(a) provides little guidance for determining who must be served with a suggestion of death in order to trigger the time period for filing a substitution motion. It appears to require that the suggestion of death be served on the parties to the action and on persons who are not parties, but it does not state which nonparties are to be served.

In a unanimous decision authored by Chief Justice Abrahamson, the court looked to cases construing Federal Rule of Civil Procedure 25(a)(1), upon which the Wisconsin statute is modeled. The message of those cases is that courts have wide discretion to look to the facts of each case to decide which nonparties need to be served with the suggestion

of death in order to trigger the 90-day period. "And when making this determination regarding a deceased plaintiff, a court considers such factors as: (1) whether the suggestion of death has been served on nonparties who may have a right or interest in deciding whether a motion for substitution should be filed; (2) how substantial the burden

is on the person serving the suggestion of death to identify nonparties who have the right or interest to move for substitution and to serve them with the suggestion of death; and (3) whether the service of the suggestion of death protects the circuit court's control over the docket and the court's and parties' need for the fair and expeditious resolution of the case" (¶ 28).

Applying these factors, the court concluded that the suggestion of death served only on the deceased plaintiff's attorney, when no personal representative had been appointed, was not sufficient to trigger the 90-day period. Reading section 803.10

to permit service in this case on the deceased plaintiff's attorney alone would fail to satisfy the rule's objectives: to start the 90-day period within which to make a motion for substitution only after notice is given to interested nonparties without unduly burdening the serving party, while allowing the court to move the litigation toward fair and expeditious resolution.

The statute does not require service of the suggestion of death on all potential beneficiaries, heirs, successors, or representatives in every case. "We merely hold that the court rule requires the person serving the suggestion of death and the court to examine the facts of the case in order to determine what interested nonparties should be served in each particular case and how burdensome the task will be in order to protect the interests of all persons and move the litigation toward a fair and expeditious resolution" (¶ 44).

To trigger the 90-day period in the present case, the defendant was obliged to serve his brothers, who are nonparties. Serving the brothers was necessary to reasonably protect their interests and the decedent's interests when no personal representative had yet been appointed. Requiring the defendant to locate and serve his brothers, who were readily known to him to be potential successors or representatives of the decedent, would not unduly burden him as the surviving party or unreasonably delay the litigation.

Criminal Procedure

Probation - Sex Offender Treatment as a Condition of Probation - Revocation of Probation for Failure to Admit Conduct - Fifth Amendment Protection

State ex rel. Tate v. Schwarz, 2002 WI 127 (filed 21 Nov. 2002)

The defendant was convicted of repeated sexual assault of a child following a jury trial in which he testified and denied committing the offense. The court imposed and stayed a sentence, placed the defendant on probation, and ordered him to undergo sex offender treatment. As part of the treatment program, he was required to admit to committing the offense.

The defendant refused to do so, asserting his Fifth Amendment right against self-incrimination. As a result, he was terminated from the treatment program. He then moved to modify the conditions of probation and asked that his treatment be delayed until after his appeal. This motion was denied. In the meantime, the defendant's probation was revoked because of his failure to cooperate with treatment.

On certiorari review of the probation revocation, the circuit court denied relief. The defendant appealed. The court of appeals found a Fifth Amendment violation but concluded that it had been waived because the defendant had not appealed the denial of his motion to modify the probation conditions.

In a unanimous decision authored by Justice Sykes, the supreme court reversed the court of appeals. It concluded that the revocation of the defendant's probation was premised on a legitimate assertion of the defendant's Fifth Amendment privilege against self-incrimination and was therefore unconstitutional. The Department of Corrections itself conceded that compelling a probationer to admit to the crime of conviction before the time for a direct appeal has expired or an appeal has been denied is self-incriminatory within the meaning of the Fifth Amendment.

Consistent with that concession is case law in which the Wisconsin Supreme Court has held that, when the claimed self-incrimination pertains to the crime for which the defendant has already been convicted, the Fifth Amendment privilege against self-incrimination extends beyond sentencing as long as a defendant has a real and appreciable fear of further incrimination. Such would be the case when an appeal is pending, before an appeal as of right or plea withdrawal has expired, or when the defendant intends to or is in the process of moving to modify his or her sentence and can show an appreciable chance of success. See State v. Marks, 194 Wis. 2d 79, 533 N.W.2d 730 (1995).

The supreme court also concluded that the defendant's failure to appeal the denial of his motion to delay sex offender treatment did not constitute a waiver of his right to challenge probation revocation on Fifth Amendment grounds.

Lastly, the court held that a person in the defendant's situation "cannot be subjected to probation revocation for refusing to admit to the crime of conviction, unless he is first offered the protection of use and derivative use immunity for what are otherwise compulsory self-incriminatory statements" (¶ 4).

Employment Law

Trade Restraints - "No-hire" Provisions

Heyde Cos. Inc. v. Dove Healthcare LLC, 2002 WI 131 (filed 27 Dec. 2002)

Dove Healthcare (Dove), which operates nursing homes, made a contract with Greenbriar under which Greenbriar agreed to provide physical therapy services. Greenbriar's physical therapists worked at Dove's facilities but remained Greenbriar's at-will employees. The contract prohibited Dove from hiring Greenbriar's physical therapists during the term of the agreement and for one year thereafter. In October 1999,

Dove terminated the agreement effective Dec. 31, 1999. A short time later Dove hired several of Greenbriar's therapists, who claimed that they did not know about the no-hire provision in the agreement. Greenbriar sued Dove for breaching the no-hire clause and sought contractual damages. The circuit court ruled in Greenbriar's favor and awarded damages of $60,000. The court of appeals reversed, holding that the clause was an unreasonable restraint of trade.

The supreme court, in a decision authored by Justice Bablitch, affirmed. The issue was "whether a no-hire provision contained in a contract between employers, without the knowledge and consent of the affected employees, is unenforceable as an unreasonable restraint of trade" (¶9). First, the court held that the no-hire provision violated Wis. Stat. section 103.465. It rejected Greenbriar's contention that the statute

only applies to restrictive covenants between employers and employees and not to covenants between employers (as here). The statute's "explicit purpose" is to "invalidate covenants that impose unreasonable restraints on employees" (¶13). "The effect of the no-hire provision is to restrict the employment of Greenbriar's employees; it is inconsequential whether the restriction is termed a 'no-hire' provision between Dove and Greenbriar or a 'covenant not to compete' between Greenbriar and its employees. Greenbriar is not allowed to accomplish by indirection that which it cannot accomplish directly" (¶14).

The court then applied the five-factor test that governs restrictive covenants under section 103.465, finding that this clause failed because it was clearly "harsh and oppressive to Greenbriar employees and ... contrary to public policy" (¶20). In particular, employees must be given notice of and then consent to such restrictions. Greenbriar's employees did not have notice or give consent (¶21). Second, notwithstanding whether section 103.465 was facially violated, "the provision nonetheless clearly violates the public policy as expressed through the common law" for the same reasons and thus constitutes "an unreasonable restraint of trade in contravention of Wisconsin's public policy" (¶25).

Chief Justice Abrahamson concurred. Although she agreed with the dissent that the no-hire provision is not governed by section 103.465, she concluded that the provision contravened the common law, particularly in light of the "secret deal" that bound employees without their knowledge or consent.

Justice Sykes, joined by Justice Bradley, dissented, arguing that section 103.465 did not apply to these types of contracts and the majority's public policy analysis was predicated on that same statute.

Evidence

Hearsay - Confrontation

State v. Williams, 2002 WI 118 (filed 24 Oct. 2002)

In this per curiam opinion, the supreme court denied the state's motion to reconsider its earlier decision but did modify paragraph 33 of the opinion, State v. Williams, 2002 WI 58, 253 Wis. 2d 99, 644 N.W.2d 919. The modified paragraph deals with the interrelationship of the hearsay rule and the confrontation right. The lab report in question constituted inadmissible hearsay, but the court did not have to reach the confrontation issue because any error was harmless beyond a reasonable doubt.

Insurance

Exclusions - "Relatives"

Frost v. Whitbeck, 2002 WI 129 (filed 17 Dec. 2002)

Tina Frost and her 6-year-old daughter stayed with Doreen Whitbeck in 1996. Whitbeck's dog allegedly bit the child on two separate occasions. In 1999 Frost sued Whitbeck and her homeowner's insurance company. The insurer moved for summary judgment based on an express exclusion of coverage for bodily injuries of a resident relative. Frost and Whitbeck were "third cousins separated by eight degrees of kinship" (¶8). The circuit court granted summary judgment for the insurer but the court of appeals reversed.

The supreme court, in an opinion authored by Chief Justice Abrahamson, affirmed the court of appeals. The sole issue was whether Frost's and Whitbeck's kinship fell within the policy's resident-relative exclusion (¶13). The court held that the term "relative" was ambiguous. It clearly meant to encompass certain persons related by blood, but this hardly addressed the limits of the term. The court said that no reasonable policyholder would construe "relative" to include all persons related by blood no matter how remote. In particular, a reasonable person in Whitbeck's position would have concluded that Frost, who was separated from Whitbeck by eight degrees of kinship, did not fall within the exclusion (¶39).

The court declined to delineate the outermost reaches of consanguinity that define a "relative" for purposes of an "intra-insured exclusion." It determined only that persons "having a great-great-grandfather as a common ancestor" did not fall within the exclusion.

Justice Wilcox, joined by Justices Crooks and Sykes, dissented on the ground that the term "relative" was unambiguous and applied because Frost and Whitbeck "knew of and acknowledged their blood connection" (¶48).

Juvenile Law

Children in Need of Protection or Services - Individuals with Disabilities Education Act - Child Support Obligation of the Parents

Calumet County Dep't of Human Servs. v. Randall H., 2002 WI 126 (filed 21 Nov. 2002)

Randall H. petitioned the circuit court to have his son Robert adjudicated a child in need of protection or services (CHIPS). Robert had been diagnosed with a variety of mental health problems, and his family could not care for him at home. The circuit court entered a dispositional order finding Robert to be in need of protection or services and ordered him placed in a residential treatment facility. It also ordered his father to contribute toward Robert's support.

Acting pursuant to Wis. Stat. section 115.81, the responsible local education agency convened an individualized education program (IEP) team, which recommended that Robert's educational program be implemented at the residential treatment facility while Robert was residing there pursuant to the CHIPS order. The father then moved the circuit court for relief from the child support obligation, arguing that he was exempt from that obligation because of his son's entitlement under the federal Individuals with Disabilities Education Act (IDEA) to a "free appropriate public education."

The circuit court denied the motion. The court of appeals certified the case to the supreme court on the question of whether the IDEA preempts state statutes requiring parents to contribute to the support of their children who are placed outside the home by a CHIPS order.

The supreme court, in a unanimous decision authored by Justice Sykes, did not see this case as presenting a preemption question, because the federal and state statutory schemes at issue did not conflict with one another, at least not under the circumstances of this case. The son was placed in the residential treatment facility for mental health care pursuant to the circuit court's CHIPS order. The IEP specifying that his educational program be implemented at the facility while he lived there did not constitute a residential placement necessary for educational purposes under the IDEA. (A residential educational placement under the IDEA is required to be at no cost to the child's parents.) Federal courts deciding IDEA parental reimbursement cases have generally held that the test for whether a child's placement in a residential program is educational, and therefore reimbursable, focuses on whether the child's residential placement is necessary for educational purposes. If a residential placement is a response to medical, social, or emotional problems and is necessary quite apart from the learning process, then it is not an educational placement under the IDEA.

On the facts of this case the court concluded that the son's placement was clearly in response to his psychiatric and emotional problems and was necessary apart from his special education needs. Accordingly, the IDEA did not provide grounds for relief from the child support obligation established by the CHIPS order.

The court also concluded that while a circuit court may order child support when a CHIPS child is placed in residential treatment, relevant state statutes preclude the court from assessing any of the facility's education-related costs against the child's parents.

Torts

Wrongful Death - Damage Caps

Schultz v. Natwick, 2002 WI 125 (filed 19 Nov. 2002)

Lindsey Schultz, 13, died of complications arising from an appendectomy, allegedly as a result of medical malpractice. The issue presented by this case was whether the retroactive increase, from $150,000 to $500,000, in the damages cap for loss of society and companionship enacted by 1997 Wis. Act 89 violated the defendants' constitutional right to due process. The circuit court ruled that it did not. The court of appeals reversed based on Neiman v. American National Property & Casualty Co., 2000 WI 83, 236 Wis. 2d 411, 613 N.W.2d 160.

The supreme court, in an opinion authored by Chief Justice Abrahamson, affirmed. The parties agreed that the wrongful death cause of action accrued on Dec. 1, 1995, and that damages for loss of society and companionship exceeded the present $500,000 cap. Following their daughter's death, the Schultzes led the effort to increase the cap amount that culminated in the 1997 act. The Neiman decision "held that the retroactive application of the increase of the cap on damages to a claim that accrued before the effective date of the [1997 act] was unconstitutional" (¶14). Although Neiman had not expressly stated whether it should be limited to its facts or applied broadly to all similar cases, the opinion's "language and logic ... plainly extend to all cases affected by the retroactive increase of the cap enacted by 1997 Wis. Act 89 and are not limited to the facts of the Neiman case" (¶15). In addition, the Neiman case's procedural posture also supported its status as binding precedent; the court accepted the case on bypass with awareness that many similar cases were pending throughout the system. Finally, the court found no compelling reason to overturn Neiman.

Municipalities - Successive Liability - Releases

VanCleve v. City of Marinette, 2003 WI 2 (filed 3 Jan. 2003)

The plaintiff injured her knee when she fell into a trench adjacent to a newly-built cement curb. She sued both the city and the contractor, Keller, alleging negligence in the construction and maintenance of the curb and gutter. The city in turn cross-claimed against Keller. Eventually the plaintiff entered into a Pierringer release with Keller, under which Keller was released from all claims in exchange for paying the plaintiff $7,500. The city then moved to dismiss the remaining claim against it based on Wis. Stat. section 81.17. The trial court denied the motion, and a jury awarded damages of about $50,000 against the city.

The court of appeals reversed. It held under Wis. Stat. section 81.17 that since no judgment was entered against the individual (Keller) who was primarily liable, then the city, which has only secondary liability, cannot be held to pay.

In a decision authored by Justice Crooks, the supreme court affirmed. The court confronted the following issues: "(1) If Wis. Stat. § 81.17 is applicable, what effect does entering into a valid Pierringer release with a settling defendant have for the plaintiff ... in attempting to enforce judgment against the non-settling [city]? (2) Did the [city], by its actions, waive its affirmative defenses?" (¶16).

As to the first issue, section 81.17 "creates primary and secondary liability for injuries caused by highway defects or defects on other public grounds" (¶22). A city's liability is successive: "any liability the municipality may have is only for the portion of the damages and costs the private individual is unable to pay" (¶26). The record clearly established that Keller had primary liability. Moreover, a jury had found Keller 9 percent causally negligent. Yet, since Keller had been dismissed from the lawsuit, "no judgment can be rendered against Keller, and no execution can issue and be returned unsatisfied" as required by section 81.17 (¶27). The court noted that this construction of the statute has remained unchanged since 1898 (¶ 33). "By entering into the Pierringer release, [the plaintiff] was essentially agreeing to accept a lesser amount in damages by releasing the individual that turned out to be primarily liable under the statute" (¶34). Thus, section 81.17 barred any recovery against the city.

On the second issue, the court held that the city had not waived its defenses under the statute. Under case law, "the non-settling tortfeasor has no control over a claimant's decision to settle with another tortfeasor" (¶41). Since the city had no standing to object, it did not waive its rights under section 81.17 by not objecting to the plaintiff's settlement with Keller. Nor did the city waive its assertion under the statute by not objecting to the stipulation and order that dismissed the city's cross claims against Keller (¶47).

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