Vol. 76, No. 10, October 2003

Court of Appeals Digest

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

Attorney Fees Civil Procedure Commercial Law Criminal Law Criminal Procedure

Evidence Family Law Insurance Professional Responsibility

Attorney Fees

Reasonableness - Local Rules - Referees

Kolupar v. Wilde Pontiac Cadillac Inc., 2003 WI App 175 (filed 22 July 2003) (ordered published 27 Aug. 2003)

Kolupar bought a used Mercedes automobile in 1994. She sold the car later that same year for substantially less than she paid for it. In 2000 Kolupar sued the car dealer and the salesman for fraud relating to the car's poor condition. The case "ballooned into a morass of discovery disputes" and "general inefficiency," yet the parties eventually settled the matter when Kolupar accepted about $6,000 (much more than she received for the car). The remaining issue concerned the amount of reasonable attorney fees owed to Kolupar's attorney, whose fees had swelled to $53,000 (¶ 5). After "untangling the messy record" with the assistance of a discovery referee, the trial court determined that Kolupar's lawyer was entitled to $15,000. The judge refused, however, to admit into evidence an invoice submitted by Kolupar's lawyer, because it had not been provided to opposing counsel in a timely fashion as required by local court rules.

The court of appeals, in a decision authored by Judge Curley, affirmed. First, the trial court properly excluded the invoice under the local rule that controlled "motions," including those seeking attorney fees. "The rule attempts to insure that the parties are completely prepared to argue their positions prior to the hearing and guards against the possibility that one side will be 'ambushed' by new material" (¶ 10). Moreover, any error in excluding the invoice was harmless because the trial judge never disputed counsel's claim that he honestly worked the hours claimed; rather, the judge determined that $15,000 represented a reasonable amount of compensation. Second, the trial court properly relied on the recommendation of its "discovery referee," a former judge who recommended the $15,000 amount. Third, the trial judge applied the correct legal standard in setting the amount of attorney fees, "including the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal service properly, the amount involved, and the results obtained. The trial court also properly considered whether the costs could have been avoided by a reasonable and prudent effort" (¶ 17). (The final issue involved a wrangle over whether taxable costs had been assessed.)

Judge Fine dissented, particularly because of the trial court's reliance on the referee's "off-the-cuff recommendation." (See ¶ 28.)

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Civil Procedure

Settlement Offers - Double Costs and Interest - Stipulations

Tomsen v. Secura Ins., 2003 WI App 187 (filed 8 July 2003) (ordered published 27 Aug. 2003)

The plaintiff was injured in an automobile accident. In July 2002, he offered to settle the case for $200,000 under auspices of Wis. Stat. section 807.01. The defense rejected the offer but, after losing a critical motion, made its own section 807.01 settlement offer of $450,000 in December 2002. The plaintiff accepted the offer, the parties stipulated to a judgment, and then the plaintiff requested double costs under section 807.01(3) and interest under section 807.01(4). The trial court denied the request.

The court of appeals, in an opinion written by Chief Judge Cane, reversed, relying on Prosser v. Leuck, 225 Wis. 2d 126 (1999). "In Prosser, the supreme court determined that Prosser was entitled to costs and interest, and there judgment was entered on a stipulation. Similarly, the parties here stipulated to the judgment, and it was greater than [the plaintiff's] earlier settlement offer. While [the defense] correctly points out that the issue regarding costs and interest in Prosser was whether the judgment was 'greater than or equal to' the settlement offer, rather than whether judgment was recovered, the supreme court nonetheless approved double costs and interest on a stipulated judgment greater than the plaintiff's earlier Wis. Stat. § 807.01 settlement offer. Similarly, the parties here reached a stipulated judgment greater than [the plaintiff's] earlier § 807.01 settlement offer. He is entitled to double costs and interest" (¶ 8) (citations omitted).

Claim Preclusion - Open Records

Levin v. Board of Regents, 2003 WI App 181 (filed 3 July 2003) (ordered published 27 Aug. 2003)

Levin retired from the U.W. Medical School faculty in the wake of a misconduct inquiry. Although Levin ultimately negotiated his retirement, a committee had issued findings and conclusions that culminated in a recommendation that he be discharged. Several years later, a public records request was made for the committee's report. Levin objected and in October 2000 filed an action against the U.W. Board of Regents seeking an injunction and damages based on his allegations that the records had been improperly released anyway. Later, the circuit court affirmed the records custodian's decision to release the requested records and dismissed all other claims because Levin had failed to file a notice of claim. He did not appeal the final judgment. In March 2002 the U.W. received yet another open records request for the same records from a different person. Based on the earlier action, the U.W. records custodian again determined that the records should be released. Levin then began this action to block their release. The circuit court, however, determined that either claim or issue preclusion barred Levin's claims, and dismissed the suit. The court of appeals, in a decision authored by Judge Roggensack, affirmed. "Claim preclusion is a doctrine that prevents relitigation of the same claim when: (1) there is an identity of parties or their privies in the prior lawsuit; (2) there is an identity of claims for relief that were brought, or could have been brought; and (3) a final judgment on the merits in a court of competent jurisdiction resolved the first lawsuit.... Claim preclusion prevents repetitive litigation" (¶¶ 10-11). The only issue here was whether "having two different requesters for the same records is a difference material to the analysis under the open records law]" (¶ 13). The court held that such a difference was not "material." In essence, the "identity and purpose of the requester" is not part of the balancing test that governs whether the records should be released (¶ 14).

Sanctions - Expert Witness Misconduct - "Incredible" Testimony - Summary Judgment

Ricco v. Riva, 2003 WI App 182 (filed 23 July 2003) (ordered published 27 Aug. 2003)

The Riccos alleged that the defendant sellers had misrepresented the condition of real estate the Riccos had purchased. During the summary judgment process, the judge ruled that the Riccos' expert witness had misrepresented his qualifications both in this and a prior unrelated action. For this reason, and because the expert's affidavit was untimely, the judge ordered it stricken, dismissed the Riccos' misrepresentation claims, and precluded the expert from testifying at the trial.

The court of appeals, in an opinion written by Judge Nettesheim, reversed. First, the court held that the summary judgment record did not support a finding that the expert witness was "incredible as a matter of law" (¶ 16). Sharing the trial court's concern that the witness was "playing fast and loose with his qualifications," the court nonetheless held that his "specious claims about his credentials" did not render his opinions "incredible," which would require that his testimony "conflict with the uniform course of nature or with fully established or conceded facts" (¶ 17). Nor was the expert so "unqualified" that his testimony was properly excluded for that reason. Under Wisconsin law, trial judges play a "limited gatekeeping" role in policing expert testimony, yet the "reliability" of the expert's testimony is not properly before the trial judge; reliability is a question of fact for the jury.

The court next addressed the timeliness of the expert's affidavit. Although it was filed two days beyond the deadline set by the local circuit court rule, the affidavit was timely nonetheless because it was filed within the statutorily prescribed time set forth in Wis. Stat. section 802.08(2). Since the legislature's intent was to ensure a uniform statewide practice, the statute controlled over the local rule. (See ¶ 25.)

Last, the court held that under Wis. Stat. section 100.18(1) the sellers/owners may be liable for allegedly fraudulent representations even though their broker is "exempt" for false declarations made in good faith. The record revealed a genuine issue of fact regarding alleged false statements by the sellers. ( See ¶ 38.)

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Commercial Law

Holder in Due Course - Good Faith

Mid Wisconsin Bank v. Forsgard Trading Inc., 2003 WI App 186 (filed 22 July 2003) (ordered published 27 Aug. 2003)

This case involves the definition of a holder in due course. On May 7 Lakeshore wrote a check to Forsgard Trading (FT) for about $18,000 drawn on a bank in Ironwood, Mich. FT deposited the check in its checking account at Mid Wisconsin Bank on May 8 and was given immediate credit on the deposit. Also on May 8 Lakeshore issued a stop-payment order on the check. Mid Wisconsin received notice of the stop payment on May 16 and deducted $18,000 from FT's account. Because of other checks and transfers, however, the deduction resulted in a negative balance and FT has never "covered" the stopped check. In a lawsuit brought by Mid Wisconsin, the trial court granted summary judgment in favor of Mid Wisconsin on the ground that it was a holder in due course and thus Lakeshore, the drawer, was liable for the bank's losses.

The court of appeals, in a decision written by Judge Hoover, affirmed. "Wisconsin courts have approved the practice of extending immediate credit on deposited checks" (¶ 12). Nor does it matter "whether, as here, the account had been overdrawn previously" (¶ 15). FT had always covered its previous overdrafts and "Mid Wisconsin had no reason to suspect there would be any problem if immediate credit was extended for this check" (¶ 15).

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Criminal Law

Child Pornography - Constitutionality of Wis. Stat. Section 948.12 - Scienter

State v. Schaefer, 2003 WI App 164 (filed 24 July 2003) (ordered published 27 Aug. 2003)

The defendant was convicted under Wisconsin's statute prohibiting possession of child pornography. See Wis. Stat. § 948.12 (2001-2002). Among the issues on this appeal was the constitutionality of this statute. The text of the law requires proof that the defendant "knows or reasonably should know that the child engaged in sexually explicit conduct has not attained the age of 18 years." The defendant argued that by allowing conviction for possession of child pornography when a defendant "reasonably should know" that the child depicted is under age 18 omits a scienter requirement for the offense.

The issue before the appellate court was whether the "knows or reasonably should know" language satisfies the "some element of scienter" that is required under New York v. Ferber, 458 U.S. 747 (1982), and its progeny. In a decision authored by Judge Dykman, the court of appeals held that it does.

The court concluded that the "reasonably should know" standard is less than actual knowledge but still requires more than the standard used in civil negligence actions. The state must show that the defendant had an awareness of certain facts and information that would have caused a reasonable person to conclude that the persons depicted in the materials were minors. As so interpreted, the statute is not constitutionally infirm for want of some level of scienter.

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Criminal Procedure

Guilty Plea to Drug Offense - Failure to Advise Defendant of Ineligibility for Federal Health Care Programs

State v. Merten, 2003 WI App 171 (filed 17 July 2003) (ordered published 27 Aug. 2003)

The defendant entered a no contest plea to one felony count of delivering marijuana. On post conviction motion, the defendant argued that his plea was unknowingly and involuntarily made because the circuit court failed to inform him that his conviction would result in ineligibility for federal health care programs under 42 U.S.C. section 1320a-7(a)(4). This statute excludes individuals convicted of a felony related to a controlled substance from participating in federal health care programs. The circuit court denied the motion for plea withdrawal on this basis.

In a decision authored by Judge Roggensack, the court of appeals affirmed. The court concluded that the effect of the federal statute cited above is a collateral consequence of the defendant's plea and therefore the circuit court was not required to inform the defendant of the statute's effect prior to taking his plea.

Waiver of Counsel - No Requirement to Advise Defendant Regarding Sources of Counsel and Sources for Reimbursement of Counsel

State v. Drexler, 2003 WI App 169 (filed 2 July 2003) (ordered published 27 Aug. 2003)

The defendant appealed from a judgment of conviction for a fourth offense of operating while intoxicated. He argued that, even though he did not qualify for counsel provided by the State Public Defender, the trial court's failure to advise him that he had the right to counsel appointed by the court and paid for by the county (see State v. Dean, 163 Wis. 2d 503, 471 N.W.2d 310 (Ct. App. 1991)), precluded a knowing, intelligent, and voluntary waiver of his constitutional right to counsel.

In a decision authored by Judge Anderson, the court of appeals held that the trial court is only obligated to advise a defendant of the right to counsel. It is not required, before accepting a waiver of counsel, to conduct a colloquy that includes specific advice to a defendant that the right to appointed counsel is broader than the right to counsel provided by the State Public Defender and includes the right to counsel appointed by the court and paid for by the county.

The circuit court in this case did not err by failing to advise the defendant of the variety of sources for appointed counsel and the variety of sources for reimbursement of counsel. In the view of the appellate court, only the Wisconsin Supreme Court can answer the ultimate question of whether, in the future, a defendant's right to counsel should include a requirement that trial courts provide a more detailed description of this right.

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Evidence

Hearsay - Videotaped Statement of Child Victim

State v. Snider, 2003 WI App 172 (filed 24 July 2003) (ordered published 27 Aug. 2003)

This case concerns the admissibility of a videotaped statement of a child victim who alleged that she had been molested by the defendant. Wis. Stat. section 908.08(2) and (3) establishes several conditions for the admission of such videotaped statements, such as 10 days prior notice of the intent to use the tape and a requirement that the statement be made under oath or affirmation. These requirements were not met in this case. Nonetheless, the tape was admitted at the defendant's trial. The circuit judge concluded that section 908.08(7) allowed for admission of the tape under the residual hearsay exception.

In a decision authored by Judge Deininger, the court of appeals affirmed. Section 908.08(7) provides that a court may admit into evidence a videotaped oral statement of a child that is hearsay and is admissible under Wis. Stat. chapter 908 as an exception to the hearsay rule. The court agreed with the state's position that the plain language of this statute permits the admission of a child's videotaped statement under any applicable hearsay exception regardless of whether the various procedural requirements of section 908.08(2) and (3) have been met. Put another way, section 908.08 recognizes two ways for a court to ensure that a videotaped statement is sufficiently trustworthy to be admitted into evidence: by requiring the proponent of the statement to comply with section 908.08(2) and (3), or by requiring the proponent to show that the statement comes within a hearsay exception. On the facts of this case, the appellate court concluded that the trial judge applied the correct legal standard and articulated a reasonable basis for his decision to admit the videotaped statement under the residual hearsay exception.

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Family Law

Divorce - Marital Debt - Restitution Ordered Against One Spouse Only

Sokoagon Gaming Enter. Corp. v. Curda-Derickson, 2003 WI App 167 (filed 3 July 2003) (ordered published 27 Aug. 2003)

Lynn and Richard Derickson were married in 1988. In 1994 Richard was appointed the tribal planner for the Sokoagon Chippewa Community, a federally recognized American Indian nation. Between 1995 and 1997 he embezzled more than $370,000 from the Sokoagon Gaming Enterprise Corp. ("Sokoagon Gaming").

Both Richard and Lynn were indicted on several counts in federal court. Richard entered into a plea agreement and agreed to make restitution in the amount of the embezzled monies and to forfeit any right, title, and interest in real and personal property traceable to assets obtained with the misappropriated funds. Lynn also agreed to forfeit any right, title, and interest in assets purchased with money from Sokoagon Gaming but excluding certain specific parcels of real property. The indictment against her ultimately was dismissed.

Lynn subsequently filed for divorce, and Sokoagon Gaming moved to intervene as a third party claiming an interest in the real and personal marital property to be divided by the court. Specifically, it requested that the court classify the criminal restitution order against Richard as a marital debt. The circuit court, however, dismissed the request to classify the restitution order as a marital debt, reasoning that Sokoagon Gaming had failed to demonstrate that Lynn was involved in the embezzlement.

In a decision authored by Judge Roggensack, the court of appeals affirmed. As characterized by the court, the underlying purpose of this appeal was plain: Sokoagon Gaming wants to recover from Lynn the indebtedness created by the restitution order and it seeks the court's ruling that the order is a "marital debt" under Wis. Stat. section 767.255. In the view of the court, Sokoagon Gaming's right to reach Lynn's property to satisfy the restitution order is not determined by section 767.255, but instead is driven solely by the classification into which the obligation falls under section 766.55.

Section 766.55(2)(cm) provides that "an obligation incurred by a spouse during marriage, resulting from a tort committed by the spouse during marriage, may be satisfied from the property of that spouse that is not marital property and from the spouse's interest in marital property." The appellate court concluded that because the restitution order was the result of conduct that constituted the tort of conversion, which was committed by Richard alone, the restitution order is Richard's sole obligation under the statute.

Sokoagon Gaming also argued on policy grounds that when a marital estate benefits from a tort committed by a spouse during the marriage, the subsequent restitution order should be a marital debt. This is tantamount to applying a "family purpose analysis" to obligations arising from a tort committed by a spouse. See Wis. Stat. § 766.55(2)(b). The court declined to adopt this approach.

Maintenance - Funding an Adult Child's Post-High School Education

Rohde-Giovanni v. Baumgart, 2003 WI App 136 (filed 26 June 2003) (ordered published 30 July 2003)

The parties were divorced in 1992. This appeal involved an order of the circuit court converting the petitioner ex-wife's original maintenance award from an indefinite term award to a limited term award expiring in December 2003. Among other things, the petitioner argued that the circuit court erroneously found that she could live at the marital standard of living without maintenance based in part on the court's failure to consider the expense she was incurring for an adult child's higher education when calculating her current standard of living. In a majority opinion authored by Judge Lundsten, the court of appeals affirmed.

The circuit court found that, during the marriage, the parties never agreed to pay for their adult children's higher education. Further, there was no evidence that the parties engaged in saving for college during their marriage. Thus, the appellate court saw the limited question before it as being whether funding an adult child's post-high school education, when there has been no agreement to do so and when there had been no savings for this purpose during the marriage, is an appropriate factor in setting maintenance. The court answered in the negative.

Said the court, "it is undisputed that the circuit court does not have the power to require [the petitioner's ex-husband] to fund his child's higher education once the child reaches the age of majority and graduates from high school.... We conclude that it would be incongruous to allow maintenance for the purpose of providing the payee spouse with money to pay for the education of an adult child when the child support statutes prohibit such payments as child support. The effect of adopting [the petitioner's] position would be to render the child support statute prohibition on such payments meaningless" (¶¶ 16-17).

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Insurance

Illusory Coverage - Excess Clause

Janssen v. State Farm Mut. Auto. Ins. Co., 2003 WI App 183 (filed 1 July 2003) (ordered published 27 Aug. 2003)

Janssen was injured in a two-car accident while a passenger in one of the vehicles. Neither driver was insured. Janssen had uninsured motorist (UM) coverage through a vehicle she owned. And because she lived with her parents, State Farm also provided UM coverage through their policy. After her insurer paid the $25,000 limit, Janssen sought to recover the $25,000 limit under the State Farm policy. Following several hearings and an earlier appeal, the trial court ruled that State Farm's antistacking provision was unambiguous, but "when read together with the excess clause, the policy's coverage was rendered illusory" (¶ 5).

The court of appeals, in a decision written by Judge Peterson, affirmed. The court put the matter succinctly: "The State Farm policy states that coverage is 'excess to any motor vehicle coverage which applies to the vehicle or the driver as primary coverage.' Additionally, the excess coverage is only for 'the amount by which it exceeds the primary coverage.' However, there is no primary coverage in this case. The policy does not state whether or how the excess clause is to be applied where there is no primary coverage. Consequently, the excess clause is ambiguous" (¶ 12). Moreover, the coverage also was illusory in light of the "nonowned vehicle provision."

Disability - "Total"

Peterson v. Pennsylvania Life Ins. Co., 2003 WI App 166 (filed 5 June 2003) (ordered published 27 Aug. 2003)

Peterson, a rough carpenter, severely injured his heel when he fell from a roof in 1996. From the date of his injury until June 1999, his insurer paid him "disability" benefits under a rider that covered accidents resulting in "total disability." The insurer stopped payments because it concluded that Peterson was not "totally disabled" as defined in the policy. Peterson sued the insurer for benefits. The trial court concluded that "although Peterson could no longer perform rough carpentry and roofing, he had many transferable job skills that qualified him for employment in at least four occupational areas" (¶ 10).

The court of appeals, in a decision authored by Judge Roggensack, affirmed. First, the court held that "the policy definition unambiguously provides that an insured is totally disabled only if he cannot engage in any employment or occupation with normal on-the-job training and with his current education, training and experience or when he becomes able to engage in any employment or occupation with education, training or experience that he can reasonably be expected to obtain" (¶ 17).

Second, the record supported the trial court's determination. "Here, Peterson has never tried to find a job, and the record shows he has many employment possibilities. It is true that the record would not support a factual finding of disability if it showed that the jobs the court found Peterson could perform required a college or graduate school education.... However, the types of employment the circuit court considered here were those jobs for which Peterson already had the skills or for which he could reasonably obtain the skills through on-the-job training"(¶ 19).

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Professional Responsibility

Client Perjury - Defense Counsel - Narrative Testimony

State v. McDowell, 2003 WI App 168 (filed 22 July 2003) (ordered published 27 Aug. 2003)

The defendant was convicted of robbery, sexual assault, and kidnapping. The court of appeals, in a decision written by Judge Schudson, underscored that this appeal "present[ed] the important issue of whether, and under what circumstances, a criminal defense attorney may require his or her client to testify in unaided narrative, rather than in the usual question-answer style, in order to avoid complicity in the client's perjury. Resolving this issue, [the court] determine[d] and appl[ied] the standards that ... govern criminal defense counsel's legal obligations in assessing and responding to a client's possible perjurious testimony" (¶ 2). More precisely, the court faulted defense counsel for 1) shifting to narrative questioning without advising the defendant that he was going to do so and for 2) using narrative questioning despite believing that the defendant intended to testify truthfully. Nonetheless, defense counsel's errors were not prejudicial enough to warrant a new trial.

The signal issue concerned how criminal defense counsel are to handle situations in which it appears that a defendant will testify falsely, an open issue in Wisconsin practice (see ¶ 36). Weighing the contours of the defendant's constitutional right to effective assistance of counsel in light of sundry ethical rules, the court held that defense counsel must actually know - not suspect or reasonably believe - that the client intends to testify falsely. Moreover, defense counsel's knowledge of the client's intent to commit perjury must be predicated on "the client's affirmative statement of an intent to lie" (¶ 44). "To retreat from question-answer in presenting a defendant's testimony, when the defendant has not admitted any intent to testify falsely, would be a defining step in a sad parade - the pathetic parade that so often features the travesty of defense counsel marching defendants to negotiated guilty pleas and Alford pleas when defendants maintain their innocence" (¶ 44). The predicate showing of a client's confessed intent to commit perjury will be excused only in "extraordinary circumstances" (¶ 47).

The court then turned to the protocol that governs defense counsel who have such actual knowledge based on the client's admission. "If, however, a defendant informs counsel of the intention to testify falsely, counsel's 'first duty ... is to attempt to dissuade the client from the unlawful course of conduct.' Cynics aside, we do not dismiss the persuasive power of counsel to do so on ethical, legal, and moral grounds. Additionally, counsel may be persuasive on pragmatic grounds. By explaining what may be the evidentiary weakness of the false account, counsel can describe the likely consequences that, obviously, the defendant does not desire. Such consequences may include a greater likelihood of conviction brought about by a defendant's incredible account, a longer sentence, and the potential for a perjury prosecution. Thus, as the Supreme Court has emphasized, defense counsel's effort to dissuade a defendant from testifying falsely is wholly consistent with counsel's representation of a defendant's interests" (¶53) (citations omitted).

And what happens when the client, unpersuaded, persists in his or her perjurious plan? In particular, how does counsel balance the "duties of zealous advocacy, confidentiality and loyalty to the client on the one hand, and a responsibility to the courts and our truth-seeking system of justice on the other[?]" The court held that "only narrative questioning fairly accounts for both counsel's allegiance to the client and duty to the court. Only full disclosure to the court, followed by narrative questioning, provides the appropriate 'method of effectuating both the right of the accused to testify and the duty of a defense lawyer not to assist in presenting known perjured testimony'" (¶ 54) (citations omitted).

The court then cogently summarized the required protocols in several paragraphs, which are reproduced here for the reader's convenience. "Therefore, if the attempt to turn the defendant away from perjury is unsuccessful, counsel must inform the defendant that: (1) he or she may move to withdraw; (2) future counsel will have to operate under the same legal standards, thus bringing about the likely repetition of the current circumstance; and (3) if continuing as counsel, he or she will not be allowed to suborn perjury and, therefore, will only be able to question the defendant by asking the usual formal, introductory questions, followed by a question or two eliciting a narrative response. Counsel must explain what that would entail and advise the defendant of the need to provide the full, intended account without added assistance of question-answer or redirect questioning to further the perjurious account.

"If unable to dissuade a defendant from testifying falsely, counsel, outside the presence of the jury of course, must advise opposing counsel and the trial court before the defendant testifies. The court, in turn, must examine counsel and the defendant to ensure a clear and full record of: (1) the basis for counsel's conclusion that the defendant intends to testify falsely; (2) the defendant's understanding of the right to testify, notwithstanding the intent to testify falsely; and (3) the defendant's, and counsel's, understanding of the nature and limitations of the narrative questioning that will result" (¶¶ 56-57). (Because of space limitations, the court's application of the rule to the facts will not be summarized further.)

The court also resolved several ancillary issues. It held that the defendant had not, in fact, requested new counsel, thus obviating any consideration of whether the court properly denied such a demand. It also rejected claims relating to jury instructions and sentencing.

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