Civil Procedure

Notice of Claim – Noncompliance with Notice-of-claim Statute Is Affirmative Defense

Maple Grove Country Club Inc. v. Maple Grove Estates Sanitary Dist., 2019 WI 43 (filed 23 April 2019)

HOLDING: Another party’s noncompliance with the notice-of-claim statute is an affirmative defense that must be set forth in a responsive pleading.

SUMMARY: This case concerns Wisconsin’s notice-of-claim statute, Wis. Stat. section 893.80(1d). The statute provides that notice of injury must be provided to enumerated governmental agencies within 120 days after the happening of the event giving rise to the claim. See id. A potential claimant must also file informational documentation that gives a municipality the opportunity to compromise and settle a claim, to avoid the burdens of litigation. See Wis. Stat. § 893.80(1d)(b).

Two issues were before the supreme court in this case: 1) whether noncompliance with the notice-of-claim statute is an affirmative defense or compliance with the statute is a jurisdictional prerequisite to filing suit, and 2) whether the defendant waived the defense of noncompliance with the notice-of-claim statute by failing to plead the defense in its answer.

In a unanimous decision authored by Justice A.W. Bradley, the supreme court concluded that “noncompliance with the notice of claim statute set forth in Wis. Stat. § 893.80 is an affirmative defense and not a jurisdictional prerequisite to filing suit” (¶ 36). The court further concluded that noncompliance with the notice-of-claim statute must be raised in a responsive pleading (see ¶ 45). In this case, because the defendant sanitary district failed to set forth the defense in its answer and did not amend its answer to include the defense (as it could have done as a matter of course at any time within six months after the summons and complaint were filed or at any time thereafter with leave of the court), the defense was deemed waived (see ¶¶ 51, 56).

Justice Abrahamson withdrew from participation in this case.

Pleading Standard – Wisconsin’s Pleading Standard NOT CHANGED BY Data Key

Cattau v. National Ins. Servs. of Wis. Inc., 2019 WI 46 (filed 30 April 2019)

PER CURIAM HOLDINGS:The supreme court’s decision in Data Key did not change Wisconsin’s pleading standard in civil actions. However, in this case, the supreme court was equally divided on whether the plaintiffs stated a claim upon which relief may be granted.

SUMMARY: In an unpublished decision, the court of appeals affirmed a circuit court’s dismissal of the plaintiffs’ claims against the defendants. The court of appeals held that the decision in Data Key Partners v. Permira Advisers LLC, 2014 WI 86, 356 Wis. 2d 665, 849 N.W.2d 693, created a new, heightened pleading standard in Wisconsin, and that under this new standard, the plaintiffs had failed to state a claim upon which relief may be granted.

In a per curiam decision, the supreme court unanimously concluded that its decision in Data Key did not change Wisconsin’s pleading standard as previously articulated in Strid v. Converse, 111 Wis. 2d 418, 331 N.W.2d 350 (1983).

“To explain further, the pleading standard we set out in Data Key is consistent with the pleading standard in Strid, and is grounded in Wis. Stat. § 802.02(1)(a)’s (2017-18) requirement that a complaint contain ‘[a] short and plain statement of the claim, identifying the transaction or occurrence or series of transactions or occurrences out of which the claim arises and showing that the pleader is entitled to relief.’ When determining whether a complaint states a claim upon which relief may be granted, courts must accept as true all facts well-pleaded in the complaint and the reasonable inferences therefrom. If the facts reveal an apparent right to recover under any legal theory, they are sufficient as a cause of action” (¶ 4) (internal citations and quotations omitted).

The supreme court continued: “While courts must accept all well-pleaded facts as true, courts cannot add facts to a complaint, and do not accept as true legal conclusions that are stated in the complaint. For this reason, a formulaic recitation of the elements of a cause of action is not enough to state a claim upon which relief may be granted. The sufficiency of a complaint depends on substantive law that underlies the claim made because it is the substantive law that drives what facts must be pled. If proof of the well-pleaded facts in a complaint would satisfy each element of a cause of action, then the complaint has stated a claim upon which relief may be granted” (¶¶ 5-6) (internal citations and quotations omitted).

The Wisconsin Supreme Court has interpreted the U.S. Supreme Court’s pleading decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), as being consistent with Strid (see ¶ 7). “Therefore, Data Key controls Wisconsin’s pleading standard and it reaffirmed Strid” (id.).

Notwithstanding the supreme court’s unanimous conclusion regarding Wisconsin’s pleading standard (as described above), the court was equally divided on whether the plaintiffs stated a claim upon which relief may be granted. Therefore, the decision of the court of appeals was affirmed by an equally divided court (see ¶ 8).

Justice Abrahamson withdrew from participation in this case before oral argument.

Creditor-Debtor Law

Loan Defaults – Wisconsin Consumer Act

Security Fin. v. Kirsch, 2019 WI 42 (filed 19 April 2019)

HOLDING: A debtor who is sued for default on a consumer credit transaction without first receiving a notice of a right to cure default under Wis. Stat. ch. 425 is not entitled to damages from the creditor under the Wisconsin Consumer Act.

SUMMARY: Security Finance (Security) loaned Kirsch $1,000, a debt he failed to pay. Security filed a small-claims action based on the default. Kirsch answered and filed counterclaims based on Security’s admitted failure to provide notice of the right to cure a default as required by Wis. Stat. chapter 425; Kirsch claimed this omission entitled him to damages under several provisions of Wis. Stat. section 427.104, part of the Wisconsin Consumer Act (WCA). The circuit court dismissed the WCA counterclaims and, in an unpublished decision, the court of appeals affirmed.

The supreme court affirmed in an opinion authored by Justice Ziegler. The court “cabin[ed]” its “analysis to whether the ch. 425 failure to send sufficient notice of a right to cure default can form the basis for a violation of ch. 427 of the WCA” (¶ 11). Kirsch contended that the failure to provide the required chapter 425 notice violated Wis. Stat. section 427.104(1)(g) (improper communications) and (1)(j) (enforcing a nonexistent right).

The supreme court disagreed. Security violated Wis. Stat. chapter 425, but Kirsch’s relief was the dismissal of Security’s complaint (see ¶ 16). The opinion examines the penalties that inhere in Wis. Stat. chapters 425 and 427 (see ¶ 19). “While a failure to provide a notice of default and right to cure is not expressly linked with a statutory remedy under the WCA, the WCA’s proportionate treatment of differing violations supports a conclusion that the procedural deficiency Kirsch complains of does not fall under § 427.104, and does not lead to the harsh penalties imposed by §§ 427.105 and 425.304” (id.).

Justice Kelly, joined by Justice R.G. Bradley, concurred but concluded that the court should overrule Kett v. Community Credit Plan Inc., 228 Wis. 2d 1, 596 N.W.2d 786 (1999), which conflicts with the court’s reasoning in this case.

Justice A.W. Bradley, joined by Justice Abrahamson, dissented. The majority’s “pardon” of Security for violating Wis. Stat. chapter 425 “is inconsistent with the parties’ loan agreement, our case law and the legislature’s stated purposes in enacting the WCA” (¶ 47).

Justice Dallet did not participate in this case.

Criminal Procedure

Duration of Traffic Stops – “Mission”-related Activities

State v. Wright, 2019 WI 45 (filed 30 April 2019)

HOLDING: Asking a motorist whether he had any weapons in the vehicle and whether he had a permit to carry a concealed weapon did not violate the motorist’s Fourth Amendment rights.

SUMMARY: During a traffic stop for a headlight violation, a law enforcement officer asked defendant Wright if he had any weapons in the vehicle and whether he was a “carry a concealed weapon” (CCW) permit holder. The defendant responded that he had just finished the CCW permit class and that he had a firearm in the vehicle. He consented to the officer retrieving that firearm. The officer then went back to the squad car “to run [the defendant’s] information”; this included running a CCW permit check. When the officer discovered that the defendant did not have a CCW permit, he arrested the defendant for unlawfully carrying a concealed weapon.

The defendant moved to suppress the weapon from evidence. He argued that the police violated the Fourth Amendment by taking three actions unsupported by reasonable suspicion of criminal activity: 1) the police asked Wright whether he had a weapon in the vehicle; 2) the police asked Wright whether he held a permit to carry a concealed weapon; and 3) the police verified whether Wright in fact had a valid CCW permit by conducting the CCW permit check.

The circuit court, relying on Rodriguez v. United States, 135 S. Ct. 1609 (2015), held that the officer unlawfully extended the traffic stop by asking Wright whether he had a weapon in the vehicle and whether he held a CCW permit; accordingly, it suppressed the evidence.

In an unpublished opinion, the court of appeals affirmed the circuit court. In a unanimous decision authored by Justice Abrahamson, the supreme court reversed the court of appeals.

To reach a decision in this case, the supreme court examined “whether the questions posed by [the officer] fall under the ‘mission’ of the stop, and if they do not, whether they ‘measurably extend[ed] the duration of the stop.’ If they constitute part of the mission of the stop, they will not be considered an extension of that stop. If, however, they are unrelated to the mission of the stop, they will violate the Fourth Amendment if they measurably extended the duration of the stop” (¶ 28) (citation omitted).

Citing Rodriguez, the supreme court noted that the “mission” of a traffic stop includes “(1) addressing the traffic violation that warranted the stop; (2) conducting ordinary inquiries incident to the stop [for example, checking driver’s license status, vehicle registration and proof of insurance, and the existence of any outstanding warrants]; and (3) taking negligibly burdensome precautions to ensure officer safety” (¶ 24).

The court concluded that the question about the presence of weapons in the defendant’s vehicle “constitute[d] part of the stop’s mission because the question is a negligibly burdensome precaution taken to ensure officer safety” (¶ 29). See also State v. Floyd, 2017 WI 78, 377 Wis. 2d 394, 898 N.W.2d 560 (supporting conclusion that police officer may ask about presence of weapons during traffic stop without violating the Fourth Amendment).

The court next examined the officer’s question about the CCW permit and the CCW permit check. The parties agreed, as did the court, that the CCW permit question and CCW permit check were not part of the ordinary inquiries incident to the traffic stop (see ¶ 36). The court further concluded that “[i]n the absence of reasonable suspicion of criminal activity, asking whether a motorist holds a CCW permit and conducting a CCW permit check constitute an unrelated investigation into whether the motorist is unlawfully carrying a concealed weapon” (¶ 37).

This, however, does not mean that the question and permit check violated the Fourth Amendment, because the Fourth Amendment tolerates certain unrelated investigations that do not lengthen the roadside detention. “Inquiries unrelated to the original justification for the stop are permissible ‘so long as those inquiries do not measurably extend the duration of the stop’” (¶ 38) (citing Rodriguez).

In the present case the court found no evidence that the CCW permit question CCW permit check measurably extended the duration of the traffic stop. The permit question and permit check were conducted while mission-related activities were occurring (see ¶ 45). It is true that the permit question took some amount of time to ask. However, the court viewed the time it took to ask the CCW permit question “as de minimis and virtually incapable of measurement” (¶ 47). The court also concluded that “the CCW permit check in the instant case did not violate the Fourth Amendment because it was conducted concurrently with mission-related activities, namely, running [the defendant’s] information” (¶ 49).

Probation – Circuit Courts Lack Authority to Reduce or Terminate Period of Probation

State v. Schwind, 2019 WI 48 (filed 3 May 2019)

HOLDING: Circuit courts lack inherent authority to reduce or terminate a term of probation.

SUMMARY: Wisconsin Statutes section 973.09(3)(d) codifies six criteria that must be satisfied for a circuit court to modify a person’s period of probation and to discharge the person from probation. In this case the defendant could not satisfy those six requirements. However, he nonetheless sought early termination of his probation, arguing that the circuit court had the inherent authority to reduce or terminate a term of probation. The circuit court disagreed and denied his motion. In an unpublished summary disposition order, the court of appeals affirmed.

In a majority opinion authored by Chief Justice Roggensack, the supreme court affirmed the court of appeals. It concluded that “the circuit court does not have the power to grant Schwind’s motion for early termination of probation. Inherent authority of courts consists of only those powers that are necessary for the judiciary to accomplish its constitutionally mandated functions and preserve its role as a coequal branch of government. Probation is a statutory creation, and the power to reduce or terminate a term of probation is not necessary for courts to accomplish their constitutionally mandated functions. Therefore, Wisconsin courts do not have the inherent authority to reduce or terminate a period of probation” (¶ 35).

In reaching this conclusion, the majority noted the difference between sentencing, on one hand, and imposing a probationary disposition (which is not a sentence), on the other. “Sentencing is a shared power [among the three branches of government] because it comes within the inherent authority of the judiciary, implicit in the Wisconsin Constitution due to its incorporation of common law as it existed in 1848. Given this deeply rooted historical practice, we have recognized that courts have inherent authority to modify sentences within certain narrowly defined limits. In contrast, probation is a shared power not because it is a common-law judicial power that was incorporated into the Wisconsin Constitution, but only because the legislature chose to permit it. While courts had the power to impose sentences at common law even in the absence of a legislatively created sentencing range, courts have never had the power to impose probation without statutory authorization” (¶¶ 27-28) (citations omitted).

Justice Dallet filed an opinion concurring in part and dissenting in part that Justice A.W. Bradley joined.

Justice Abrahamson withdrew from participation in this case before oral argument.

Municipal Law

Annexations – Unanimous Approval

Town of Lincoln v. City of Whitehall, 2019 WI 37 (filed 17 April 2019)

HOLDING: The municipal annexation in this case was not a petition for direct annexation by unanimous approval.

SUMMARY: Landowners sought to annex part of a town (Lincoln) to a city (Whitehall) to facilitate the development of a sand mine. Although the annexation petition was formally labelled a petition for “direct annexation by unanimous approval,” one owner’s signature was missing. The city passed a series of annexation ordinances to detach the land from the town. In turn, the town sought review by the Wisconsin Department of Administration and later challenged the annexation in circuit court, which ruled for the city. In a published decision, the court of appeals affirmed. See 2018 WI App 33.

The supreme court reversed the court of appeals in a unanimous opinion authored by Justice A.W. Bradley. The town and the city had sparred over issues relating to contiguity, but the supreme court held that the annexation failed because the petition had been erroneously denominated as one by unanimous approval. Such petitions require they be signed by “all of the electors residing in the territory and the owners of all of the real property in the territory” (Wis. Stat. § 66.0217(2); ¶ 29).

The city conceded that such petitions require unanimous approval, which this petition lacked. The mistake was not de minimis (see ¶ 32).

“Additionally, allowing a petition for annexation to proceed as a petition for direct annexation by unanimous approval despite a facial deficiency in the unanimity of the petition would potentially encourage the mislabeling of annexation petitions. This would prevent towns from raising challenges that would otherwise be available under the law if the petition had been labeled accurately. We are not bound by the labels placed on documents and instead must look to their substance” (¶ 33).

The court was also unpersuaded by arguments that “other parties” could challenge the annexation regardless, as notice requirements differed among the types of annexations (see ¶ 34). “Practically speaking, if electors or property owners in the annexation area receive no personal notice of a proposed annexation, how are they to file a timely challenge?” (¶ 36).

Torts

Handguns – Unlawful Purchase – Communications Decency Act

Daniel v. Armslist LLC, 2019 WI 47 (filed 30 April 2019)

HOLDING: A victim of a mass shooting committed by an individual who unlawfully purchased the gun on the internet could not maintain a claim against a website that advertised the firearm for sale by a third party.

SUMMARY: A restraining order barred RH from possessing a firearm. Nonetheless, he used a website, armslist.com, to find a person who sold him a firearm and ammunition. The next day, RH used the gun to kill his wife and two other people and to injure other people at his wife’s workplace before killing himself. His wife’s estate sued Armslist LLC, which allows users to post and view advertisements for weapons. (Here the gun sale took place face-to-face between RH and the seller.) The circuit court dismissed the claim against Armslist pursuant to the Communications Decency Act of 1996 (CDA), 47 U.S.C. § 230. In a published decision, the court of appeals reversed, finding that the CDA did not bar the claim. See 2018 WI App 32.

The supreme court reversed the court of appeals in an opinion authored by Chief Justice Roggensack. The opinion lays out the CDA’s terms and policies, which are designed to limit state and federal regulation of the internet and its free market functions (see ¶ 14). The CDA bars claims that meet three criteria: “(1) the defendant ‘is a provider or user of an interactive computer service’; (2) the claim is based on ‘information provided by another information content provider’; and (3) the claim would treat [the defendant] ‘as the publisher or speaker’ of the information” (¶ 19).

The estate did not dispute the first element. As to the second, Armslist “did not develop the content” of the seller’s firearm advertisement, so it was not an information content provider (¶ 36). Nor does the CDA contain a good-faith requirement. The court rejected the argument that Armslist intends to make illegal firearms sales easier, referring to the “litany of cases” in which lawsuits against website operators for failing to screen content have been dismissed (¶ 39). As to the third element, Armslist was not a “publisher or speaker” of third-party content. That it may have known its website could facilitate unlawful gun purchases did not change the result (again, there is no good-faith requirement) (see ¶ 52).

Justice A.W. Bradley dissented. She said that the majority’s concession that the complaint presented “artful pleading” effectively acknowledged that the complaint states a claim (¶ 61). The majority “errs in its interpretation of the CDA by basing its decision not on the actual claims pled in the complaint but on its own manufactured interpretation of those claims” (¶ 66).

Justice Abrahamson withdrew from participation in this case before oral argument.