Vol. 77, No. 12, December 2004

Court of Appeals Digest

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

Administrative Law Civil Procedure Commercial Law Criminal Law

Real Property Torts Worker's Compensation

Administrative Law

Revocation of Motor Vehicle Dealer License - Judicial Review of Revocation Order - Failure to Serve Division of Hearings and Appeals

All Star Rent A Car Inc. v. Wisconsin Dep't of Transp., 2004 WI App 198 (filed 23 Sept. 2004) (ordered published 28 Oct. 2004)

An entity that "sells, leases, exchanges, buys, offers or attempts to negotiate a sale, consumer lease or exchange of an interest in motor vehicles" must obtain a "motor vehicle dealer" license from the Wisconsin Department of Transportation (DOT) (see Wis. Stat. §§ 218.0101(23), .0114(1)). If the DOT seeks to revoke or suspend a license it previously granted to a motor vehicle dealer, it may do so only by persuading the Wisconsin Division of Hearings and Appeals (DHA), after a hearing upon notice to the licensee, that there are proper grounds to do so. A person aggrieved by a DHA decision may obtain judicial review as provided for in Wis. Stat. chapter 227.

In this case the petitioner's motor vehicle dealer license permitted it to sell motor vehicles to retail buyers. The DOT instituted an administrative proceeding with the DHA to revoke the petitioner's license, and the DOT prevailed in that proceeding. The petitioner then sought judicial review in the circuit court, naming the DOT as respondent. The petitioner did not name the DHA as a party nor did it serve the DHA with notice of the court action.

The circuit court dismissed the dealer's petition because the dealer had not served the DHA. In a decision authored by Judge Deininger, the court of appeals reversed. It concluded that the statutes prescribing which administrative entity a petitioner is required to serve in order to comply with section 227.53(1) are ambiguous and that the petitioner's service of its petition on the DOT was sufficient to permit the circuit court to consider the merits of the petition.

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Civil Procedure

Judgment Docket - Duty to Include Address of Judgment Debtor

Commercial Mortgage & Fin. Co. v. Walworth County Clerk of Circuit Court, 2004 WI App 204 (filed 29 Sept. 2004) (ordered published 28 Oct. 2004)

Linda Frykholm pleaded guilty to federal criminal charges. As a result, a preliminary order of property forfeiture in favor of the federal government was filed. Commercial Mortgage & Finance Co. (Commercial) challenged the forfeiture, asserting a priority claim to the property based on a deficiency judgment it had obtained against Frykholm and the docketing of the judgment on the judgment docket. The United States opposed Commercial's challenge, contending that the docketing of the judgment did not create an enforceable lien because the docket entry did not include Frykholm's address. The federal district court ruled against Commercial and forfeited the property to the federal government (subject to another entity's priority interest).

Commercial then served a notice of claim on Walworth County in which the company alleged that the circuit court clerk had failed to perform her statutory duty pursuant to Wis. Stat. section 806.10(1) by failing to include Frykholm's address when entering Commercial's deficiency judgment on the judgment docket. The county denied the claim, and Commercial commenced this case against the clerk. The circuit court dismissed the action, finding that the judgment submitted by Commercial did not provide Frykholm's address and that the clerk did not have the duty to search for the address and add it to the judgment docket.

In a decision authored by Judge Nettesheim, the court of appeals affirmed. Construing section 806.10 as a whole and recognizing the entire statutory scheme as it pertains to the judgment debtor's address, the court of appeals concluded that the judgment creditor has the responsibility to provide the clerk with the judgment debtor's address. The creditor may do this by initially providing such information in the judgment or by later using an affidavit procedure to supply the information.

The court found that its interpretation of section 806.10 conforms to the usual and accepted procedure of preparing and submitting judgments. Typically, the prevailing party prepares the judgment. If the prevailing party fails to include requisite information in the judgment, "the clerk should not be burdened to do that party's work, much less be held liable to that party for failing to do so" (¶ 16).

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Commercial Law

Payment of Debt - Statute of Limitation

Liberty Credit Servs. Inc. v. Quinn, 2004 WI App 202 (filed 29 Sept. 2004) (ordered published 28 Oct. 2004)

A collection agency, Liberty, obtained a judgment against a credit card debtor for approximately $18,000. On appeal the debtor contended that the action was time barred. Liberty had filed its action on Sept. 27, 2001, which was more than six years after what the debtor alleged was her "last payment" to the credit card company on June 21, 1994. Liberty contended, however, that the debtor "made an additional payment on Sept. 28, 1995. Liberty also described a telephone conversation with [the debtor] on April 11, 2000, during which she authorized a $250 payment toward the account," a payment that the debtor later blocked (¶ 3). The trial court held that the June 21, 1994 payment extended the statute of limitation through June 21, 2000. The court also held that the payment authorized by telephone on April 11, 2000, further extended the statute of limitation. Therefore, the trial court held, Liberty's Sept. 27, 2001 complaint was timely.

The court of appeals, in an opinion authored by Judge Snyder, affirmed. The issue was whether the telephone transaction, which was later canceled, "constituted a payment for purposes of extending the statute of limitations" (¶ 5). The court held "that a payment is not conditioned on the actual transfer of funds, but on the recipient's action of negotiating the instrument. Liberty's actions constituted acceptance and negotiation of the amount tendered [but later blocked - "stopped" - by the debtor]" (¶ 8). Specifically, the debtor admitted that she authorized the $250 transaction over the telephone. "Liberty then created a computer-generated check representing the verbally authorized payment," deposited the check with its bank, and entered a provisional credit (¶ 7). The debtor's subsequent cancellation of the payment did not matter: an actual transfer from her bank account to Liberty's account was not necessary for a "payment" to have occurred.

Sale of Business - "Illusory" Contracts

Metropolitan Ventures LLC v. GEA Assocs., 2004 WI App 189 (filed 14 Sept. 2004) (ordered published 28 Oct. 2004)

On March 19, 2002, Metropolitan executed a Limited Partnership Purchase Agreement (LPPA) by which it agreed to purchase GEA Associates (GEA), a business that owned and operated a building and parking garage. Under the LPPA, if Metropolitan did not waive the financing contingency within 30 days after full execution of the agreement, the LPPA would terminate. On April 17, 2002, 29 days after the execution, Metropolitan requested an extension.

The LPPA also contained a provision that required that two-thirds of GEA's limited partners agree to the sale. Although GEA's managing partner recommended the sale to the other partners in a letter dated April 29, an unsolicited and much higher offer for the business was made on May 8. In a subsequent letter, the managing partner in effect urged nonapproval of the purchase by Metropolitan. On May 17, GEA asserted that the LPPA was terminated because two-thirds of the limited partners had not agreed to the sale.

Metropolitan sued GEA. The trial court granted summary judgment in favor of GEA on the ground that "no contract existed due to the lack of sufficient definiteness in the financing contingency provision" (¶ 10).

The court of appeals, in a decision authored by Judge Wedemeyer, reversed and remanded. A question of fact existed regarding whether Metropolitan timely waived the financing contingency, but the central issue was whether the contract itself was "illusory." "The trial court ruled that the financing clause lacked sufficient definiteness for it to determine the terms of financing, and therefore the entire contract was rendered unenforceable" (¶ 14). The court of appeals rejected the trial court's reasoning as well as the authority the trial court relied on.

"A business sale is distinct from a real estate sale. Specifically, when a transaction involves the sale of a business, the contract does not involve a fixed sale price due to the possibility that the buyer may not acquire a 100% ownership interest. The value of the business may also fluctuate between the time the contract is entered into and the actual closing date. As a result, the business sale buyer is unable to specify in the written contract the same terms and conditions as a buyer of real estate. The business sale presents unique characteristics. Accordingly, this court cannot rule that the cases setting forth financing requirements in real estate sales control the outcome of this case" (¶ 15).

The record here indicated that the "parties clearly intended to enter into a contract. Although the financing terms were not set forth with explicit specificity, the parties agreed to the relatively indefinite language because this was customary practice given the distinct characteristics of this type of sale. GEA Associates agreed to give Metropolitan the discretion to select the lending institution and the financing terms. In addition, the financing clause in the instant case ... set forth the percentage of the purchase price to be financed and it set forth a practicable method in which the sale price would be determined" (¶ 18) (footnote omitted).

Nor was it fatal that the financing clause did not specify a particular term or rate of financing. "Because of the fluidity involved in the sale of the business, financing terms could vary greatly over the course of a short period of time and thus, inserting those items into the contract would require speculation. Moreover, the specific mechanism set forth above makes definite what the discretionary financing clause left open. Accordingly, we reject GEA Associates' argument that the financing clause lacks sufficient definiteness. Article II, section 2.1 a. of the LPPA demonstrates that the parties modified the general financing contingency to provide a specific formula with which to calculate the required terms. We cannot find any Wisconsin authority which requires greater exactitude in a financing contingency for a business sale than that which was employed in the LPPA" (¶ 20).

The court observed that "[i]t was not until GEA Associates received a better offer that actions quickly turned to attempting to terminate the contract between Metropolitan and GEA Associates. Prior to that point in time, both parties operated as if the LPPA constituted a valid contract. This is significant. Based on the foregoing, we conclude that any indefiniteness in the financing clause did not render the contract void or illusory" (¶ 22).

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Criminal Law

Conspiracy - Multiple Counts - Multiplicity

State v. Jackson, 2004 WI App 190 (filed 16 Sept. 2004) (ordered published 28 Oct. 2004)

The defendant admitted to his role in a plan to fire bomb a police officer's home. He and two other men conspired to fire bomb the house, enabling two additional men to shoot people fleeing from the building. Though the defendant was part of one conspiracy, he conspired to participate in two acts, arson and intentional homicide, and was charged with two counts of inchoate conspiracy under Wis. Stat. section 939.31. A jury found the defendant guilty of both counts of conspiracy and one count of possession of a fire bomb.

In his motion for postconviction relief, the defendant alleged that his convictions and sentences on two counts of conspiracy violated the double jeopardy clause of the Fifth Amendment. The circuit court denied the motion, concluding that "there is nothing multiplicitous about charging separate conspiracies to commit separate offenses which would have been charged as separate crimes had they been completed" (¶ 3).

In a decision authored by Judge Dykman, the court of appeals affirmed. It held that because the defendant conspired to commit two crimes, he could be charged with two counts of conspiracy, one incorporating the crime of arson and the other incorporating the crime of murder. When the object of a conspiracy is the commission of multiple crimes, separate charges and convictions for each intended crime are permissible. "We conclude that the clear language of Wis. Stat. sec. 939.31 indicates legislative intent to permit multiple punishments when conspirators agree to commit multiple crimes. We agree with the trial court that the charges against [the defendant] were not multiplicitous" (¶ 11).

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Real Property

Eminent Domain - Partial Takings - Measuring Fair Market Value - Comparable Sales Approach

Alsum v. Wisconsin Dep't of Transp., 2004 WI App 196 (filed 15 Sept. 2004) (ordered published 28 Oct. 2004)

The plaintiffs purchased a 128-acre dairy farm in 1989. In 2002 the Wisconsin Department of Transportation (DOT) took title to 36 acres in the center of the farm, leaving the plaintiffs with two separate and unconnected parcels of land. Both the DOT and the plaintiffs hired evaluation experts to appraise the land's value before and after the taking to assist the court in its just compensation determination. The circuit court rejected the plaintiffs' expert's use of the income approach to measuring fair market value before and after the taking because, in the court's view, there was evidence of comparable sales.

In an opinion authored by Judge Anderson, the court of appeals reversed. It concluded that the circuit court failed to provide any reasoning for its discretionary determination that the sales offered by the DOT were sufficiently similar to provide a basis for valuing the property.

Wis. Stat. section 32.09 governs the determination of just compensation. "In a partial takings case, like the one here, the measure of just compensation is the difference between the fair market value of the whole property before the taking and the fair market value of the remaining property after the taking" (¶ 12). There are three recognized methods of measuring fair market value before and after a taking: the comparable sales approach, the cost approach, and the income approach. The general rule is that income evidence is never admissible if there is evidence of comparable sales.

The circuit court stated that it found that there were comparable sales. In the view of the appellate court, however, the circuit court provided no reasoning for its decision. When sales are offered as substantive evidence of property value, the other property must be closely comparable to the property being taken. "That is, the properties must be located near each other and sufficiently similar in relevant market, usability, improvements and other characteristics so as to support a finding of comparability" (¶ 18).

In this case the DOT's appraiser characterized the plaintiffs' property as a "terminal" dairy farm, meaning that once the plaintiffs cease farming, the land will be converted to another use. The properties used for comparison in the DOT expert's report were dairy farms. However, the record did not demonstrate that the farms used for comparison were terminal dairy farms, nor did the record demonstrate that the properties used were severed into two parcels, as the plaintiffs' property had been. "It appears that the properties used were all contiguous operational dairy farms. We, therefore, cannot find any basis for the circuit court's discretionary determination that comparable sales were available" (¶ 20).

In a footnote the appellate court reminded the circuit court that "if [the circuit court] concludes that the [plaintiffs'] property is unique and evidence of comparable sales is unavailable, the rule in Wisconsin is that income evidence is admissible. This is particularly true in cases involving farm land" (¶ 21 n.4).

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Torts

Slander - Pleadings - Reasonable Inquiry

Freer v. M&I Marshall & Ilsley Corp., 2004 WI App 201 (filed 21 Sept. 2004) (ordered published 28 Oct. 2004)

Freer, a former M&I Marshall & Ilsley bank employee, brought a slander action against the bank based on statements that bank officials made to a "potential investor," Sherman, about Freer's investment experience while at the bank. The trial court granted summary judgment in favor of the bank.

The court of appeals, in an opinion written by Judge Fine, affirmed. First, Freer's summary judgment response failed to show that she suffered any special damages. More specifically,

Freer failed to establish "pecuniary losses" resulting from the alleged defamatory statements set forth in the complaint (¶ 10).

Second, the complaint failed to allege slander per se. Slander per se is "`actionable without proof of damages' because damages are `presumed from the character of the defamatory language'" (¶ 11). "It is settled in Wisconsin that words are not slanderous per se if anything other than the words are needed to make them defamatory" (¶ 12). "The following statements, allegedly made by [a bank employee] to Sherman, are not slanderous per se because they need context outside of the words themselves to be perceived as defamatory: that Freer was never `an investment manager'; that Freer `was never anything other than a sales person, although she did some marketing too'; that Freer `had never been a money manager, had never been an investment manager'; and that Freer was never `in any type of management position at M&I'" (¶ 13).

The court of appeals remanded the matter with instructions that the trial court conduct an evidentiary hearing to determine whether Freer's counsel may have violated his or her duty of "reasonable inquiry" under Wis. Stat. section 802.05. The court of appeals was particularly troubled by discrepancies between allegations in the complaint and the summary judgment submissions.

Judge Lundsten concurred in remanding the case for a section 802.05 determination, but he dissented as to the defamation analysis by the court because the analysis lacked "legal support" and conflicted with "common sense" (¶ 28).

Recreational Immunity - "Property"

Kautz v. Ozaukee County Agric. Soc'y, 2004 WI App 203 (filed 29 Sept. 2004) (ordered published 28 Oct. 2004)

Two-year-old Brenna Kautz allegedly contracted an E. coli infection while attending a county fair run by the Ozaukee County Agricultural Society. The Kautzes alleged that the county and the agricultural society had negligently failed to properly dispose of animal waste at the fairground. The trial court granted summary judgment dismissing the claims against both the county and the agricultural society under the recreational immunity statute, Wis. Stat. section 895.52. The plaintiffs appealed only as to the agricultural society.

The court of appeals, in an opinion written by Judge Anderson, affirmed. The plaintiffs argued that the immunity afforded under section 895.52 was inapplicable for two reasons. "First, the Kautzes argue that Brenna was injured when she became infected as a result of climbing on the farm equipment and not as a result of an activity on the land or improvements to the land. The Kautzes maintain that the term `property' as defined in §895.52 does not include moveable equipment" (¶ 11). Yet, "the injuring mechanism is not the farm equipment Brenna was playing on, but rather, it is the bacteria from the animal waste that was tracked onto the equipment from the Agricultural Society's real property. If Brenna had gotten E. coli from a picnic bench or a playhouse, it could not be said that her injury came from the bench or the playhouse. Rather, it would be from the failure of the Agricultural Society to properly handle the animal waste that had accumulated on the ground" (¶ 12). Thus, Brenna's injury was directly related to the condition or maintenance of the agricultural society's real property.

Second, the trial court properly found that there was no disputed issue of fact regarding whether the Kautzes were engaged in recreational activity at the time of the injury. "This court has repeatedly held that attendance at community fairs, like the Ozaukee County Fair, constitutes a recreational activity.... Further, the Kautzes concede that one of their purposes for attending the fair was recreation - for Brenna to have fun and enjoy the experience of a fair.... [E]ven though the Kautzes may have had a purpose for their attendance at the fair besides having fun and enjoying the fair offerings, this does not mean that their attendance at the fair cannot be recreational for purposes of the statute. As long as one of the purposes for engaging in the activity is recreation, as it concededly was here, the statute attaches and bars their claim" (¶ 18).

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Worker's Compensation

Exclusive Remedy - Exceptions

Peterson v. Arlington Hospitality Staffing Inc., 2004 WI App 199 (filed 22 Sept. 2004) (ordered published 28 Oct. 2004)

The plaintiff, a hotel employee, was sexually assaulted by a coworker. She sued her employer, alleging that it knew or should have known about the coworker's previous sexual assaults and had failed to warn her. She later moved to amend the complaint to also allege negligent hiring, training, and supervision. The trial court granted summary judgment in favor of the employer on the basis of the exclusive remedy provision of the Worker's Compensation Act (WCA) (see Wis. Stat. § 102.03(2)).

The court of appeals, in an opinion authored by Judge Anderson, affirmed. The sole issue on appeal was whether the court should create an exception to the WCA's exclusive remedy provision for a claim by an employee against an employer for negligent hiring, training, and supervision when the injury is sexual assault committed by a coworker. The court held that "the WCA's purpose, history and application do not support the judicial fashioning of such an exception" (¶ 1).

Although the plaintiff offered seven policy considerations supporting such an exception, the court concluded it was "not in a position to write an exception into the WCA," which is the work of the legislature (¶ 10). Indeed, every two years the Worker's Compensation Advisory Council proposes amendments to the WCA (¶ 13). "The legislature with its input from the experts on the advisory council and the public is in a far better position than this court to fashion a public policy exception to the exclusivity provision" (¶ 15).

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