Vol. 78, No. 3, March 2005

Supreme Court Digest

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

Civil Procedure Criminal Procedure

Family Law Torts

Civil Procedure

Service - Defendant's Agent - Actual, Explicit Authority

Mared Indus. Inc. v. Mansfield, 2005 WI 5 (filed 20 Jan. 2005)

The plaintiff sued the defendant individually and in his business capacity for breach of contract and related claims. An Illinois process server left the summons and complaint with a man at the defendant's business premises who identified himself as "director of operations" and insisted that he was authorized to accept service on the defendant's behalf. The defendant never responded to the complaint, and the plaintiff obtained a default judgment. The defendant moved to reopen the default judgment on the grounds that he had not been properly served and that the man who actually received the process was not authorized to do so.

The circuit court granted the motion and dismissed the action because the defendant had not been properly served; specifically, the process server neither served the defendant personally nor left the summons and complaint at the defendant's abode. The court of appeals reversed. It held that Wis. Stat. section 801.11(1)(d) permits substituted service on a natural person's authorized agent.

The supreme court, in a decision authored by Justice Butler, reversed the court of appeals and remanded the case. First, for "nearly half a century" the court has "recognized that service on a natural person's agent under Wis. Stat. § 801.11(1)(d) constitutes an altogether independent ground to effectuate service on a natural person" (¶ 20). Put differently, section 801.11(1)(d) provides two grounds for effecting service: "(1) by serving the summons in a manner specified by any other statute upon the defendant; or (2) by serving the summons upon an agent authorized by appointment or by law to accept service of the summons for the defendant" (¶ 12).

Second, addressing the meaning of the term "an agent authorized by appointment," the court held that both case law and the statute's text require that the agent have actual, not apparent, authority. This reading also comports with federal procedural requirements (see ¶ 30).

Finally, such authority must be explicitly granted. "[I]t is clear that Wis. Stat. § 801.11(1)(d) requires the principal to designate the agent to perform the function, job, or duty of accepting service. We conclude that `designating the agent to perform the function of accepting service' is simply another way of saying the principal must establish an explicit agency agreement. While such a designation need not be in writing, it must be set forth in clear and unambiguous terms. In other words, the agent must have actual express authority" (¶ 33) (citation omitted).

The case was remanded for a factual determination of the agent's authority to accept service. The court closed by reminding counsel that service on an agent is "risky" and requires one to "proceed with extreme care, while being mindful that even the utmost care may not reveal the true scope of an agent's authority" (¶ 38).

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Criminal Procedure

Confrontation - Hearsay - Harmless Error

State v. Hale, 2005 WI 7 (filed 25 Jan. 2005)

The supreme court, in an opinion written by Justice Bradley, affirmed the defendant's conviction for murder despite a violation of his right to confrontation. This case provided the court with its first opportunity to apply Crawford v. Washington, 124 S. Ct. 1354 (2004).

Hale and another man were accused of committing a murder during a break-in and robbery. The judge severed their trials, and the accomplice was tried first. During the accomplice's trial, a witness named Sullivan testified about Hale's contact with a gun. The accomplice was convicted. Sullivan then fled the area and was not called as a witness at Hale's trial. Instead, the state introduced the transcript of Sullivan's earlier testimony. The jury convicted Hale, and the court of appeals affirmed the conviction.

The supreme court held that the use of Sullivan's testimony violated Hale's confrontation right. The court said that "a new day dawned" with the U.S. Supreme Court's decision in Crawford v. Washington (¶ 52). Crawford compels courts to first determine whether hearsay is testimonial or non-testimonial in nature. Testimonial hearsay may be used against the defendant only if 1) the declarant is unavailable despite the state's good faith attempt to produce him or her, and 2) the defendant had a prior opportunity to cross-examine the declarant. The Hale court easily concluded that the prior trial testimony was testimonial in nature, especially because, as Crawford explained, the term includes "`at a minimum . . . prior testimony at a preliminary hearing, before a grand jury, or at a former trial; and to police interrogations'" (¶ 53). Although the state contended that Hale confronted Sullivan "by proxy" during the accomplice's trial (i.e., Hale and the accomplice had similar motives to cross-examine Sullivan), the court disagreed. Indeed, Crawford had criticized a Wisconsin case that involved just such a scenario. In short, "prior testimony may be admitted against a criminal defendant only when that defendant has had a prior opportunity to cross-examine the witness giving that testimony. Because Hale did not have the prior opportunity to cross-examine Sullivan, the admission of Sullivan's testimony violated Hale's constitutional right to confrontation"
(¶ 58).

Despite the violation of Hale's confrontation right, the court found that the error was harmless. The evidence was not "crucial" to the state's case. Moreover, Sullivan's testimony was "corroborated and duplicated" by that of another witness (¶ 64). Most important, the defense elected not to even "dispute" Sullivan's version of events in light of Hale's alibi defense (see ¶¶ 65-66).

Concurring, Chief Justice Abrahamson wrote separately about the court's efforts to formulate the harmless error standard. Justice Wilcox, joined by Justices Crooks and Prosser, also concurred but wrote separately to address the various formulations of the harmless error standard. Justice Prosser joined the majority opinion but filed a separate concurrence that set forth the "principle of forfeiture by wrongdoing," whereby defendants are deemed to have waived confrontation by misconduct (¶ 97). Justice Butler also concurred; he agreed with the court's harmless error application but disagreed with "the majority's statement of the harmless error test" (¶ 100).

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Family Law

Maintenance - Modification of Maintenance - Dual Objectives of Maintenance

Kenyon v. Kenyon, 2004 WI 147 (filed 15 Dec. 2004)

The parties were married in 1977 and divorced in 1993. The original divorce decree awarded maintenance to the wife. In 1995 the circuit court ordered that the maintenance award be reduced. In 2002 the ex-wife filed a motion to increase maintenance. The circuit court denied the motion, and the court of appeals affirmed. In a unanimous decision authored by Justice Wilcox, the supreme court reversed.

The ex-wife argued that the circuit court was required, as a matter of law, to reinstate the amount of maintenance established in the original divorce decree. She contended that when parties' financial circumstances at the time of the motion to modify maintenance are essentially the same as they were at the time of the original divorce decree, the original maintenance order controls by virtue of issue preclusion or claim preclusion. Thus, she asserted, the original divorce judgment is the baseline from which all changed circumstances must be evaluated. Because the parties' financial circumstances now were essentially the same as they were at the time of the divorce, the ex-wife argued, she was automatically entitled to the level of maintenance established by the divorce decree.

The supreme court disagreed. It concluded that "for purposes of evaluating a substantial change in the parties' financial circumstances during a maintenance modification proceeding, the appropriate comparison is to the set of facts that existed at the time of the most recent maintenance order, whether that is the original divorce judgment or a previous modification order. At the hearing, the circuit court should adhere to the findings of fact made in the previous proceeding and may not retry the issues decided in that proceeding. It should compare the facts regarding the parties' current financial status with those surrounding the previous order in determining whether the movant has established the requisite substantial change in circumstances, such that modification of the maintenance award is warranted. Further, once a party has demonstrated the requisite substantial change in financial circumstances, the circuit court is not bound by either issue preclusion or claim preclusion to reinstate the amount of maintenance established in the original judgment of divorce, especially when the judgment of divorce has been previously revised by an order modifying maintenance payments" (¶ 38).

The supreme court also held that in this case the circuit court applied the wrong legal standard when it denied the petitioner's motion, "because its decision focused chiefly on [the ex-wife's] need for maintenance at her present standard of living and whether it would be inequitable to force [the ex-husband] to pay additional maintenance for an indefinite period. In Rohde-Giovanni [v. Baumgart, 2004 WI 27, ¶ 31, 269 Wis. 2d 598, 676 N.W.2d 452], we clarified that once a substantial change in the parties' financial circumstances is demonstrated, the circuit court must consider the dual maintenance objectives of support and fairness when modifying a maintenance award. Here, in conformity with the controlling precedent at the time, the circuit court did not consider the fairness objective in relation to both parties" (¶ 39).

Accordingly, the supreme court reversed the decision of the court of appeals and remanded for a new hearing under the appropriate legal standard. The supreme court said that on remand, the circuit court should consider the support of the recipient spouse "in accordance with the needs and earning capacities of both the recipient spouse and the payor spouse" and should consider "[f]airness ... with respect to the situations of both parties" in deciding whether the maintenance award should be modified (¶ 40, quoting Rohde-Giovanni, 2004 WI 27, ¶¶ 29, 31).

Chief Justice Abrahamson did not participate in this decision.

Child Support Arrearages - Retroactive Application of Wis. Stat. Section 767.32(1m) and (1r) Not Due Process Violation

Barbara B. v. Dorian H., 2005 WI 6 (filed 20 Jan. 2005)

In 1982 the parents of a child born in 1979 entered into a stipulation that formed the basis of a paternity judgment and a $30-per-week child support order. The parties apparently agreed in 1983 that the mother would not pursue child support in return for the father not having visitation with the child. This litigation arose out of an order to show cause filed by the mother in 2001 alleging that the father violated the 1982 support order. The county child support agency determined that the father owed more than $24,000 in child support arrearages and more than $42,000 in interest. The family court commissioner found that no child support payments had been made since 1983.

The family court commissioner concluded that the mother was estopped from attempting to obtain past child support. However, the circuit court determined that the application of the doctrine of equitable estoppel was inappropriate under Wis. Stat. section 767.32(1r) and controlling case law. The court of appeals affirmed. In a unanimous decision authored by Justice Roggensack, the supreme court affirmed as well.

Wis. Stat. section 767.32(1r) was created in 1993 to read as follows: "In an action ... to revise a judgment or order with respect to child support or family support, the court may not grant credit to the payer againstsupport due prior to the date on which the action is commenced for payments made by the payer on behalf of the child other than payments made to the clerk of court under s. 767.265 or 767.29 or as otherwise ordered by the court" (emphasis added).

The same legislative act that created section 767.32(1r) amended section 767.32(1m) to read: "In an action ... to revise a judgment or order with respect to child support ... the court may not revise the amount of child support ... due, or an amount of arrearages in child support ... that has accrued, prior to the date that notice of the action is given to the respondent, except to correct previous errors in calculations" (emphasis added).

In 1997 the legislature modified section 767.32(1r) to identify a limited number of circumstances under which the court may grant credit to the payer against support due regardless of when the underlying child support order was entered. In the present case the father did not contest the circuit court's findings that none of the statutory exceptions created in 1997 were met. Rather, he contended that his rights to due process under the state and federal constitutions were violated by retroactive application of Wis. Stat. section 767.32(1m) and (1r) instead of the law that was in place at the time that he and the mother allegedly entered into the extrajudicial agreement. (The court characterized this as a substantive due process claim.) He alleged that in 1983 the circuit court had the discretion to revise a child support arrearage on a showing of cause or justification.

In a decision authored by Justice Roggensack, the supreme court applied the balancing test from Martin v. Richards, 192 Wis. 2d 156, 531 N.W.2d 70 (1995) to determine whether retroactive application of the statutes comports with due process. "The Martin balancing test examines whether the retroactive statute has a rational basis, requiring a reviewing court to `weigh the public interest served by the retroactive statute against the private interests that are overturned by it ... Implicit within this analysis is a consideration of the unfairness created by the retroactive legislation'" (¶ 19) (internal quotes and citations omitted).

With regard to the public interest inquiry, the court concluded that retroactive application of section 767.32(1m), which generally forbids modification of past due child support, serves "(1) the general public purpose of financially providing for children; (2) the more particular and corollary purpose of requiring parents, rather than the State, to provide financial support for their children; and (3) the pragmatic goal of securing federal funds for the State via compliance with federal law" (¶ 26). Regarding section 767.32(1r), which allows a child support payer to be granted credit only under specifically enumerated circumstances, the court concluded that retroactive application was enacted "to maintain the State's eligibility for certain federal funds, but further recognizes the public's interest in having changes to child support arrangements be supervised by a court, so that children's needs are met as fully as possible by their parents" (¶ 27).

Turning to the private interests affected by retroactive application of these statutes, the court concluded that the father's private interest in property (specifically, his economic viability and his ability to contract freely) was weak. Any expectations he may have had regarding his child support obligation were not well-founded in the law, and moreover, throughout these proceedings, he never asserted that he was unable to pay $30 weekly in support or that his son had no need for his financial support (see ¶ 32).

Accordingly, the court concluded that the retroactive application of the statutes is rational and that the father failed to establish beyond a reasonable doubt that such application violates his due process rights under either the state or federal constitution.

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Torts

Nuisance - Elements of Nuisance - Municipal Immunity

Milwaukee Metro. Sewerage Dist. v. City of Milwaukee, 2005 WI 8 (filed 27 Jan. 2005)

The Milwaukee Metropolitan Sewerage District (MMSD) filed suit against the city of Milwaukee to recover sums related to the repair and replacement of one of its interceptor sewers, which allegedly collapsed due to the rupture and collapse of the city's nearby water main. Among other things, the MMSD alleged both negligence and nuisance.

The circuit court granted summary judgment to the city. It concluded that: 1) the city did not have notice regarding the alleged defective condition, and such lack of notice was a viable defense to both the negligence and nuisance claims; 2) the city was entitled to immunity from the negligence and nuisance claims based on Wis. Stat. section 893.80(4) and related case law; and 3) the MMSD's theory of res ipsa loquitur was not supported by the undisputed facts. In a published decision, the court of appeals reversed the circuit court. SeeMilwaukee Metro. Sewerage Dist. v. City of Milwaukee, 2003 WI App 209, 267 Wis. 2d 688, 671 N.W.2d 346. In a majority decision authored by Justice Wilcox, the supreme court affirmed the court of appeals, though it employed an entirely different rationale.

The supreme court began its analysis with a helpful survey of the law of nuisance. Nuisance generally refers to the invasion of either an interest in the use and enjoyment of land (private nuisance) or a condition or activity that substantially or unduly interferes with the use of a public place or with the activities of an entire community (public nuisance). In this case the alleged nuisance was the city's interference with the MMSD's property interest in its sewer.

The court cautioned that "it is imperative to distinguish between a nuisance and liability for a nuisance, as it is possible to have a nuisance and yet no liability. A nuisance is nothing more than a particular type of harm suffered; liability depends upon the existence of underlying tortious acts that cause the harm" (¶ 25). The court held that "in order to establish a prima facie case for liability for a nuisance, there must be proof of the nuisance, proof of the underlying tortious conduct giving rise to the nuisance, and proof that the tortious conduct was the legal cause of the nuisance" (¶ 6).

Liability for a nuisance may be based on either intentional or negligent conduct. An interference is intentional if the actor "(a) acts for the purpose of causing it, or (b) knows that it is resulting or is substantially certain to result from his conduct. Thus, a nuisance is based on intentional conduct when the defendant, through ill will or malice, intends to cause the interference or if the defendant, without any desire to cause harm, nonetheless has knowledge that his otherwise legal enterprise is causing harm or is substantially certain to cause the invasion at issue. It is important to clarify that when a nuisance is alleged to fall under the second category of intentional conduct, the `knowledge' requirement refers to knowledge that the condition or activity is causing harm to another's interest in the use and enjoyment of land" (¶¶ 37-38) (citations omitted). In this case the pleadings and record did not support any claim that the city intentionally created a nuisance.

The court found that the only actionable tortious act giving rise to nuisance in this case was the city's alleged negligence in failing to repair its leaky water main before it burst. "We reaffirm our existing case law that when a nuisance is predicated on negligence, all the usual rules and defenses applicable to negligence claims apply. Thus, when a nuisance is predicated on a negligent failure to act, there must be proof that the defendant's conduct constituted actionable negligence, including proof of notice, regardless of whether the alleged nuisance is public or private" (¶ 7).

The court also discussed municipal immunity under section 893.80(4) and Wisconsin's immunity jurisprudence since Holytz v. City of Milwaukee, 17 Wis. 2d 26, 115 N.W.2d 618 (1962). The court held that "a municipality may be immune from nuisance suits depending on the nature of the tortious acts giving rise to the nuisance. A municipality is immune from suit for nuisance if the nuisance is predicated on negligent acts that are discretionary in nature. A municipality does not enjoy immunity from suit for nuisance when the underlying tortious conduct is negligence and the negligence is comprised of acts performed pursuant to a ministerial duty. Decisions concerning the adoption, design, and implementation of a public works system are discretionary, legislative decisions for which a municipality enjoys immunity. Thus, the City is immune from suit relating to its decisions regarding the adoption of a waterworks system, the selection of the specific type of pipe, the placement of the pipe in the ground, and the continued existence of such pipe. In contrast, the City may be liable for its negligence in failing to repair the leaky water main. However, since there exists a material issue of fact as to whether the City had notice of the leaking water main, we cannot determine whether the City was under a ministerial duty to repair its water main prior to the break. Thus, we cannot determine whether the City is immune under § 893.80(4) from liability predicated upon a negligent failure to repair the water main before it burst" (¶¶ 90-91). (Because the record in this case did not support a claim of nuisance based on intentional conduct, the court did not consider whether immunity would apply to a claim of nuisance premised on conduct that would constitute an intentional tort (see ¶ 50 n.11).)

Lastly, with regard to the grant of summary judgment, the supreme court concluded that there are at least two disputed issues of material fact in this case: 1) whether the city had notice of the leaking water main before the break occurred, and 2) what caused the MMSD sewer to collapse. Accordingly, the supreme court affirmed the decision of the court of appeals, reversing the circuit court's grant of summary judgment to the city.

Justice Prosser filed a concurring opinion.

Exculpatory Contracts - Public Policy

Atkins v. Swimwest Family Fitness Ctr., 2005 WI 4 (filed 19 Jan. 2005)

Charis Wilson drowned in a four-foot-deep lap pool at an instructional swimming facility (Swimwest). Her minor son brought this wrongful death action against Swimwest and its operators. The circuit court granted summary judgment in the defendant's favor because Wilson had signed a guest registration form that contained an exculpatory paragraph. The court of appeals certified the issue to the supreme court.

The supreme court, in an opinion written by Justice Crooks, reversed. "This case turns on the interpretation of Swimwest's guest registration and waiver form, and whether it relieves Swimwest of liability for harm caused by its negligence" (¶ 12). Swimwest's exculpatory clause violated public policy for at least three reasons. "First, this exculpatory waiver, which uses the word `fault,' is overly broad and all-inclusive. Second, the form, serving two functions and not requiring a separate signature for the exculpatory clause, thus not sufficiently highlighting that clause, does not provide the signer adequate notification of the waiver's nature and significance. Third, there was little or no opportunity to bargain or negotiate in regard to the exculpatory language in question" (¶ 18). (The guest registration/waiver is reproduced in the opinion.) The court also held that Wilson's son was a proper claimant for a wrongful death claim brought under Wis. Stat. section 895.04.

Concurring, Justice Roggensack wrote separately to stress that 1) Wilson's opportunity to bargain was not "dispositive of a waiver's validity," and 2) Wilson's contemplation of her own death when she signed the waiver presented an issue of fact (see ¶ 31).

Justice Wilcox dissented based on the majority's public policy analysis and its failure to "articulate a clear test as to what types of exculpatory agreements are enforceable in this state" (¶ 44).

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