Wisconsin Supreme Court adds eight cases to docket, including high-capacity well dispute

Dec. 16, 2010 – The Wisconsin Supreme Court has accepted review of eight new cases, including disputes over a high-capacity well near Lake Beulah and another in which Wauwatosa is challenging the tax exempt status of a medical outpatient center.

Back in 2003, the Village of East Troy obtained a permit to build a high-capacity well 1,400 feet from Lake Beulah in Walworth County to eliminate water deficiencies and supplement future growth. But local conservation organizations contested the permit, arguing that in issuing the permit, the Department of Natural Resources (DNR) violated its obligation under the public trust doctrine to “protect navigable waters, groundwater and the environment as a whole.”

The conservancies lost at the administrative and circuit court levels, but in Lake Beulah Management District et al. v. Wisconsin Department of Natural Resources, 2008AP3170, the appeals court ruled that the DNR may consider the public trust doctrine in deciding whether to grant applications for new wells. Thus, the appeals court ordered the DNR to reconsider the permit in light of scientific evidence that a high-capacity well would have adverse impacts.

Upon review, the supreme court is expected to decide the reach of the public trust doctrine. The supreme court will also decide whether a municipal ordinance governing groundwater transfers is preempted by state law and, therefore, invalid and unenforceable.

After the DNR reissued the well permit upon consideration of scientific evidence, the Lake Beulah Management District – which operates with the powers of a municipal corporation – attempted to stop operation of the well by adopting an ordinance that prohibited ground and surface water transfers from the area that included the location of the disputed well.

The Village of East Troy brought an action seeking a declaratory judgment that the ordinance was invalid and unenforceable. In Lake Beulah Management District v. Village of East Troy, 2009AP2021, the appeals court ruled that the ordinance was preempted by state legislation, giving the DNR exclusive authority to regulate waters in the state. Oral argument on both cases is scheduled for March 9, 2011.

In Covenant Healthcare System, Inc. v. City of Wauwatosa, 2009AP1469/1470, an appeals court ruled that St. Joseph’s Outpatient Center in Wauwatosa is not tax exempt property under Wis. Stat. section 70.11(4m)(a). The outpatient center is operated by St. Joseph Hospital Regional Medical Center, Inc., a nonprofit corporation.

Covenant owned the property, and sought property tax exemptions for the clinic and the land on which it was located. The Wauwatosa assessor denied the exemptions. Covenant filed suit, and recovered the taxes paid. The City of Wauwatosa appealed, and the appeals court ruled that the clinic is a doctor’s office and thus did not qualify for tax exemption.

The supreme court will clarify whether the clinic, which provided space for unrelated physicians and other healthcare professionals, is eligible for property tax exemption.

The supreme court will also hear the following cases:

McReath v. McReath, 2009AP639

In this divorce case, the supreme court is asked to review whether a circuit court may double count the value of a divorcing professional’s “professional goodwill” by first valuing the professional’s business practice for property division purposes, and then awarding maintenance based upon the professional’s earning capacity.

The McReaths were married for 20 years before divorcing in 2008. Timothy McReath has an orthodontics practice, and Tracy McReath is a homemaker pursuing a degree. Tracy’s expert valued Timothy’s practice at $1.058 million. Timothy’s expert valued the practice at $415,000. The circuit court accepted Tracy’s valuation and granted her half that amount.

The circuit court also awarded Tracy $16,000 per year of maintenance per month for 20 years by calculating Timothy’s annual net cash flow earning for the preceding five years. The appeals court upheld the circuit court decision, noting a lack of clarity in prior Wisconsin law.

Timothy appealed, arguing that the circuit court erred as a matter of law when it treated the professional goodwill portion of the valuation of his practice as divisible property.

State v. Denson, 2009AP694-CR

The case examines whether the circuit court is required to conduct a colloquy with a defendant who chooses to waive his right not to testify.

Denson was convicted by a jury for false imprisonment and first-degree reckless endangerment. Denson testified in his own defense. The court did not engage him in a colloquy regarding his right not to testify. On his motion for post-conviction relief, Denson argued that the trial court’s failure to conduct such a colloquy violated his due process rights and the right against compulsory self-incrimination. The circuit court denied the motion. The appeals court affirmed.

The supreme court will decide if a defendant must waive personally the right not to testify, whether the remedy is a new trial, and whether the court’s failure to engage in a colloquy is subject to a harmless error analysis.

Bushard v. Reisman and PressEnter LLP, 2009AP438

In 1995, Steven Reisman and David Bushard formed PressEnter LLP as a limited liability partnership, but did not enter into a written partnership agreement. The supreme court is asked to examine business partnership law as it relates to a dispute between the two estranged business partners who were ordered by the court to “wind up” their partnership.

Both partners contributed equal capital and initially were involved in the day-to-day operations. But in 1999, Bushard asked for dissolution. Attempts to sell the business were unsuccessful. Bushard ceased involvement in the business, but Reisman continued to manage it for the next nine years. Both partners received equal distributions from profits during this time.

But Reisman began taking a salary in 2004. Bushard objected two years later and filed suit seeking dissolution and an order requiring Reisman to repay the salary draw amounts. Reisman counterclaimed, alleging Bushard breached his fiduciary duties and was unjustly enriched through profits received after he ceased involvement.

The circuit court ruled that Reisman was prohibited from taking a salary without Bushard’s consent based on its interpretation of the governing statutes, and dismissed Bushard’s counterclaims. The appeals court affirmed.

Capital One Bank v. Summers, 2009AP1337/1338

Capital One sued Eugene Summers for a total of $10,908 alleging a failure to pay his credit card accounts. Attached to the complaints in both cases were documents, including monthly statements, showing unpaid charges and other amounts due. Summers requested copies of the “writings evidencing any transactions” pursuant to Wis. Stat. sections 425.109(1)(h) and (2).

Capital One did not provide additional writings other than monthly statements, and relied on its affidavit stating that Capital One’s books and records showed Summers was indebted on the accounts in the amount sought plus interest at 25.9 percent.

Summers claimed that his credit card records were lost or misplaced, and so he could not be sure of the terms or interest rates on the accounts or whether his payments were properly applied. He argued that if he did not know the terms and conditions, he could not know whether Capital One’s claims were accurate.

The circuit court ruled that Capital One needed to provide only a monthly account statement going back to a zero balance, and ordered summary judgment in Capital One’s favor. The appeals court affirmed.

Summers asks the supreme court to determine whether the pertinent statutes require only evidence of monthly charges to form a basis for money judgment, and whether a judgment can be obtained if a lender fails to provide complete copies of the credit agreement plan.

Wilkinson v. Arbuckle, 2009AP2868

On certification, the supreme court will determine whether Estate of Sustache v. American Family Mutual Insurance Co., 2008 WI 87, ¶24, 311 Wis. 2d 548, 751 N.W.2d 845, leaves open the possibility that the “four-corners rule” does not apply when the insured’s policy provides coverage for injuries sustained by acts of self defense.

Jeffrey Wilkinson filed a civil complaint against James Arbuckle, alleging assault and battery. Arbuckle affirmatively defended on the grounds that he was defending his father, and counterclaimed for intentional battery.

The circuit court entered summary judgment in favor of the intervening defendant, Acuity, which argued that it had no duty to defend or provide coverage for Arbuckle. Specifically, the circuit court ruled that an intentional battery is not an “occurrence” covered under the policy.

However, the circuit court did not consider the exclusion section provision that provided coverage for intentional acts “committed to protect persons or property,” ruling that under Estate of Sustache, it may only look to exclusion sections after determining that coverage exists.

The appeals court contends that the four-corners rule is in direct conflict with the clear and unambiguous language of the policy and the parties’ intentions.

Summaries derived from a Wisconsin Supreme Court press release. Contact Joe Forward, Legal Writer, State Bar of Wisconsin.