Author: Hamilton

Park Meadows Homes Association, Inc. v. American Family Mutual Insurance Co. (Compelled Appraisal)

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In Park Meadows Homes Association, Inc. v. American Family Mutual Insurance Co. (2018AP1484), the Court of Appeals District I held that American Family could invoke a policy’s appraisal clause after litigation began and did not breach its contract or act in bad faith.

Park Meadows submitted a claim to its insurer American Family for property damages after a storm. American Family paid the claim. Park Meadows later presented a claim for a full roof replacement but provided no cost estimate. American Family denied the claim for the roof replacement, and Park Meadows filed the instant lawsuit.

During the litigation, American Family moved to compel appraisal, pursuant to its policy with Park Meadows. The policy allowed either party to compel appraisal if there was a disagreement on the amount of a loss. The policy also required Park Meadows to provide the amount of the loss to American Family in the event of a loss.

The circuit court ordered appraisal. An appraisal panel issued an award to Park Meadows, and American Family paid the award. The circuit court then granted summary judgment in favor of American Family. Park Meadows appealed, arguing that American Family could not invoke the appraisal clause of the policy once the dispute had moved to litigation.

Citing the 1991 case Lynch v. American Family Insurance Co., the court of appeals held that American Family could invoke the appraisal clause after the commencement of litigation. Lynch said that an insurer cannot invoke an appraisal clause subsequent to the filing of a lawsuit when it had the opportunity to invoke appraisal prior to the lawsuit. In this case, American Family did not have a prior opportunity to invoke appraisal because Park Meadows had not provided the insurer the amount of the loss. Without an amount of loss, there was no disagreement on the amount on which American Family could compel appraisal prior to the lawsuit. Without an opportunity to invoke the appraisal clause before Park Meadows began the litigation, American Family could move to compel appraisal during the litigation.

The court of appeals further found that Park Meadows pointed to no genuine issues of material fact regarding its breach of contract and bad faith claims against American Family. Therefore, the court upheld summary judgment in favor of American Family.

Jossund v. Heim Plumbing, Inc. (Fraudulent Misrepresentation)

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In Jossund v. Heim Plumbing, Inc. (2018AP209), the Court of Appeals District II allowed fraudulent misrepresentation claims against US Bank to proceed because the complaint alleged misrepresentation by US Bank’s agent.

Benjamin and Kristina Jossund purchased a house through US Bank. When they found defects in the plumbing, they filed the instant lawsuit against the plumbing inspector and its insurer, the realtor, and US Bank. The complaint contained four causes of action related to misrepresentation and also alleged negligence. A circuit court allowed the claims to proceed against the plumbing inspector and realtor but granted US Bank’s motion to dismiss. The Jossunds appealed.

The court of appeals partially reversed the circuit court. The Jossunds’ complaint failed to suggest US Bank itself made misrepresentations damaging to the Jossunds. However, previous case law shows that sellers may be held liable for their agents’ representations. In this case, the court found the complaint did sufficiently specify misrepresentations by the realtor, which was acting as an agent of US Bank by negotiating the sale on the bank’s behalf.

Because the misrepresentation claims were against US Bank’s agent, the court allowed the four misrepresentation claims to proceed. The court dismissed the negligence claim against US Bank.

Village of Slinger v. Polk Properties, LLC (Property Zoning & Assessment)

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In Village of Slinger v. Polk Properties, LLC (2017AP2244), the Court of Appeals District II held that agricultural use of a residentially zoned property was not a legal nonconforming use, so the village was entitled to recover daily forfeitures and the value of residential taxes on the land. The case arises from the same underlying facts addressed in the 2018 Supreme Court decision Thoma v. Village of Slinger.

Polk purchased farmland to develop into a residential neighborhood. Polk then successfully petitioned the Village of Slinger to rezone the agricultural land to residential and signed a declaration related to its proposed residential development requiring residential use of the land. Polk later had trouble selling the lots and in the meantime continued agricultural use of the land. The village commenced this action enjoining Polk’s agricultural use.

The court of appeals addressed several issues in this case. First, the court determined that Polk’s agricultural activities on the property were not a legal nonconforming use of the residentially zoned property. Polk had already committed to agricultural use by 1) seeking the rezoning from village, 2) entering into a development agreement wherein the property was zoned residential, and 3) signing the declaration requiring residential use. There was no exception in the declaration allowing agricultural use. Additionally, Wis. Stat. § 236.293, related to restrictive covenants, prevented Polk from amending the declaration without a waiver from the village.

Because the agricultural activity was not a legal nonconforming use, the court held Polk violated the residential zoning code. As damages, the court awarded the village the difference between the amount Polk had paid at the lower agricultural tax rate and what it should have paid at the residential rate. The court rejected Polk’s argument that the award of lost property taxes was an unlawful reassessment outside of the court’s jurisdiction.

Hanning Regency LLC v. Town of Brookfield Board of Review (Property Assessment)

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In Hanning Regency LLC v. Town of Brookfield Board of Review (2018AP1584), the Court of Appeals District II held that the Town of Brookfield proceeded on an incorrect theory of law when assessing a commercial property.

The year after Hanning Regency bought commercial properties in Brookfield, the town reassessed the properties for tax purposes at nearly double Hanning’s purchase price. Hanning appealed the assessment to the town board, then circuit court, both of which ruled in favor of the town. The court of appeals reversed, holding that the assessor and the town both failed to apply the proper statutory methodology for property assessment evaluations.

Wis. Stat. § 70.32(1) requires assessors to value property by considering 1) recent arm’s length sales, 2) recent comparable sales, and 3) other factors, including how much income the property is likely to generate. Case law has established that assessors should consider these factors in order and stop their analysis when enough information is available. In this case, the court of appeals determined that the assessor and the town board did not follow this hierarchy of tiers. Instead, the assessor and town used an income approach (tier three) when information on recent arm’s length sales (tier one) was available. Therefore, the town proceeded on an incorrect theory of law in assessing Hanning’s property, so the court of appeals ruled in favor of Hanning.

Rosneck v. LIRC (Employment Discrimination)

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In Rosneck v. LIRC (2018AP1179), the Court of Appeals District IV upheld a Labor and Industry Review Commission (LIRC) decision that the University of Wisconsin-Madison did not discriminate against employee Karen Rosneck when it declined to reclassify her position.

During a state reallocation survey of library services assistant positions, Roscneck requested administrators reclassify her from her current paraprofessional position as a library services assistant-advanced to the professional position of librarian. After an audit of her position, the administration declined to reclassify her. Rosneck filed a complaint alleging UW violated the Wisconsin Fair Employment Act by discriminating against her based on her age, sex, and prior discrimination complaints. LIRC decided against Rosneck, finding no evidence of discrimination.

The court of appeals upheld LIRC’s decision. Regarding her complaint of discrimination based on prior complaints, the court found the UW employees evaluating Rosneck’s position were likely unaware of her previous complaints. The court dismissed Rosneck’s complaint that another male employee was reclassified quicker because the male employee requested a horizontal move to another paraprofessional position, while Rosneck requested a more substantial move from a paraprofessional to professional position. Overall, there was substantial evidence to support LIRC’s decision that UW did not discriminate against Rosneck.

Anderson v. DFI (Due Process)

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In Anderson v. DFI (2017AP1670), the Court of Appeals District II held that the Department of Financial Institutions’s (DFI) notice to the plaintiff regarding his liability for involvement in illegal securities transactions violated constitutional due process.

DFI sent plaintiff Gregory Anderson a notice alleging that he was engaging in illegal securities transactions. The notice informed Anderson that an order requiring takings of $3 million in restitution plus a $25,000 civil penalty would become final unless Anderson requested a hearing within 30 days. Anderson sent a request on the thirtieth day. DFI, reading an administrative rule (Wis. Admin. Code § DFI § 8.01) in conjunction with the securities statute (Wis. Stat. Ch. 551), denied Anderson’s request because it was not timely. DFI argued the request must be received by DFI within 30 days.

In an opinion written by Wisconsin Supreme Court Justice-elect Brian Hagedorn and joined by Chief Judge Lisa Neubauer, the appeals court opted not to decide whether DFI needed to receive Anderson’s filing before the thirtieth day. The court seemed to disagree with DFI’s reading of the statute, especially since no other jurisdiction sharing Wisconsin’s Uniform Securities Act has interpreted filing requirements in this way.

But without ruling on whether DFI’s reading is correct, the court ruled in favor of Anderson by determining DFI’s notice to Anderson violated constitutional due process. Both the federal and Wisconsin constitutions require government to provide sufficient notice prior to taking private property. Reasonable notice must be given as to how the recipient of the notice can prevent the taking of his or her property. In this case, DFI did not provide reasonable notice that DFI must receive Anderson’s response by the thirtieth day.

In a dissent, Judge Gundrum agreed with DFI’s reading of the code and statute and said the DFI notice to Anderson provided reasonable notice of how to timely request a hearing; therefore, the notice did not violate Anderson’s due process rights.

Correa v. Wooodman’s Food Market (Personal Injury)

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In Correa v. Wooodman’s Food Market (2018AP1165), the Court of Appeals District I held that a plaintiff who slipped and fell in a grocery store lacked sufficient evidence to establish the store had constructive notice of the hazard.

Jose Correa slipped and fell on an unidentified substance in a Woodman’s store and subsequently filed negligence and safe place statute (Wis. Stat. § 101.11(1)) claims against Woodman’s. A trial court found Woodman’s negligent and awarded Correa nearly $170,000 in damages. Woodman’s appealed, arguing Correa’s evidence that Woodman’s had constructive notice of the spill was speculative.

The appeals court agreed that Correa’s evidence was speculative. The safe place statute and related case law require owners to have constructive knowledge of conditions causing the plaintiff’s injuries. Constructive notice means the condition existed for a long enough time period to allow the owner to discover and repair the condition.

In this case, Correa could not prove the spill existed for a long enough time period to establish Woodman’s was negligent. Video footage before the accident did not show a spill happening and could not identify any substance on the floor of the store. Because Correa lacked sufficient evidence, the court ruled in favor of Woodman’s.

Wisconsin Supreme Court Rules Extraordinary Session Laws Constitutional in League of Women Voters Case

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In a 4-3 decision on June 21, the Wisconsin Supreme Court affirmed that the Legislature’s 2018 extraordinary session was constitutional in League of Women Voters v. Evers (2019 WI 75), thus upholding 2017 Acts 368, 369, and 370 and the confirmation of 82 appointments.

 

Background

The Wisconsin Legislature passed three laws limiting the power of the attorney general and the governor in a “lame duck” extraordinary session in December 2018, after Gov. Tony Evers was elected but before he took office. Additionally, the Senate approved 82 former Gov. Scott Walker appointees in the December extraordinary session.

The League of Women Voters and other plaintiffs subsequently filed the instant lawsuit seeking to overturn the laws and appointments. The League argued the Legislature does not have the constitutional authority to convene an extraordinary session.

 

Decision

The Supreme Court opinion, authored by Justice R. Bradley (joined by Chief Justice Roggensack, Justice Kelly, and Justice Ziegler) rules in favor of the Legislature, finding the Legislature constitutionally met to vote on the laws and the appointments.

The court said the Wisconsin Constitution authorizes the Legislature to meet only as provided by law or when convened by the governor (Wis. Const. Art. IV, § 11). Wis. Stat. § 13.02(3) provides that the Legislature can implement a work schedule. The Legislature provided a work schedule for the 2017-18 session in 2017 Senate Joint Resolution 1, specifically stating that any days not reserved for scheduled floorperiods are available for the Legislature to convene an extraordinary session. Furthermore, Art. IV § 8 of the Constitution provides that “Each house may determine the rules of its own proceedings.” Therefore, the court ruled the Legislature met as provided by law under the Constitution and Wis. Stat. § 13.02(3).

The League of Women Voters argued that 13.02(3) only authorizes “regular” sessions, not “extraordinary” sessions. However, the court said the lack of the work “extraordinary” in the statute does not make it unconstitutional.

Regarding separation of powers arguments, the Supreme Court said the circuit court’s decision ruling the extraordinary session unconstitutional improperly encroached on the Legislature’s constitutional powers. While the courts can determine whether laws enacted by the Legislature are constitutional, courts do not have jurisdiction over how the Legislature enacts laws.

 

Dissent

Justice Dallet’s dissent (joined by Justices Abrahamson and Walsh Bradley) would have affirmed the circuit court’s decision blocking the extraordinary session laws. The dissent said the court’s reading of the constitutional provisions would give the Legislature unlimited authority to convene, which was contrary to the intention of the drafters of Art. IV, § 11. Furthermore, the joint resolution allowing the Legislature to meet for extraordinary sessions was not “law” as required by Art. IV, § 11.

 

There are other cases both in state and federal court seeking to declare the extraordinary session laws unconstitutional. Read more about the other litigation here.

Tort Filings in Wisconsin Increase in 2018

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Source: Wisconsin Circuit Court Statistics

Despite a general decrease in tort filings in Wisconsin courts over the past decade, tort filings increased slightly in Wisconsin in 2018. 5,996 tort cases were filed in 2018, 58 more than in 2017 but still 130 less than in 2016 and over 500 cases less than the average number of tort cases filed from 2018 to 2004 (the first year for which data are available).

As is typical, most tort cases filed in 2018 were personal injury cases related to automobile accidents (63 percent). The 3,757 auto personal injury cases filed in 2018 is 119 less than in 2017.

Other personal injury cases made up 16 percent of tort filings in 2018, and property damage cases made up 13 percent. Products liability, medical malpractice, wrongful death, and intentional torts altogether made up the remaining 8 percent of cases filed. Most categories did not change much from 2017 to 2018, but property damage cases increased from 614 cases in 2017 to 785 cases in 2018.

Source: Wisconsin Circuit Court Statistics

The percent of cases settled without going to trial decreased by 6 percent from 2017 to 2018. The percent of settlements in Wisconsin tort has cases has generally been on the rise since a significant bump in 2011. The number of cases going to jury trial has remained steady over the past decade at 3 to 4 percent.

 

Wisconsin overall has a positive legal climate that keeps these tort filing numbers in a reasonable range. In its 2018-19 “Judicial Hellholes” report, American Tort Reform Association recognized Wisconsin as a “Point of Light” for the 2018 Wisconsin Supreme Court decision upholding limits on noneconomic damages in medical malpractice cases and civil litigation reforms in 2017 Act 235.

Wisconsin AG Joins Lawsuit to Block T-Mobile-Sprint Merger, Other Multistate Actions

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On June 11, Wisconsin Attorney General Josh Kaul joined eight other states and Washington, D.C. in a civil antitrust lawsuit to block the proposed merger of wireless communication companies T-Mobile and Sprint.

The complaint argues that combining the market share of T-Mobile and Sprint would result in less competition, higher prices, and reduced innovation. The state attorneys general allege the merger is in violation of the Clayton Act, the federal antitrust law prohibiting mergers that substantially lessen competition. Therefore, the U.S. District Court for the Southern District of New York should permanently enjoin the merger and award the plaintiff states fees and costs.

T-Mobile and Sprint agreed to merge in 2018. As part of the merger, the companies have made commitments to the Federal Communications Commission (FCC) that the newly merged company would work to deploy 5G technology and broadband, including in rural areas. The companies also committed to keeping rates the same or better for three years after the merger.

The FCC has not yet approved the merger, though some commissioners have announced their support. The federal Department of Justice is expected to issue a decision on the merger soon. T-Mobile and Sprint had hoped to close the deal by July 2019, but the state attorneys general lawsuit could cause a delay.

Wisconsin DOJ press release

On June 12, Attorney General Kaul also signed onto two additional multistate attorneys general actions. Kaul joined 43 state attorneys general in comments urging the Federal Trade Commission to develop antitrust policies for major tech companies like Facebook, Google, and Amazon, suggesting prior approval of acquisitions and transparency requirements. Kaul also joined a coalition of 20 states in an amicus brief in Sierra Club et al. v. Trump et al. The brief opposes the federal government’s motion to stay a preliminary injunction blocking the use of federal funds diverted to construct a border wall in New Mexico and Arizona.