Author: Hamilton

Carlin Lake Association, Inc. v. Carlin Club Properties, LLC (County Ordinances)

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In Carlin Lake Association, Inc. v. Carlin Club Properties, LLC (2017AP2439), the Court of Appeals District III upheld an injunction on a business’s pumping and transporting well water on its property and allowed riparian property owners’ claims that the activity violated county ordinances to proceed.

Carlin Club owned a lodge on Carlin Lake that was deemed a legal nonconforming use with respect to a Vilas County zoning ordinance prohibiting commercial use of the property. When Carlin Club began making changes to the property in order to start transporting, bottling, and selling well water, seven landowners and the Carlin Lake Association filed the instant lawsuit claiming the activity was distinct from the legal nonconforming use of the lodge and thus in violation of county ordinances. The circuit court issued an injunction on Carlin Club’s new pumping and transporting activities and declared them in violation of the Vilas County ordinances.

On appeal, Carlin Club argued:

  1. The landowners lacked standing to sue under the state statute for enforcement of county ordinances (Wis. Stat. § 59.69(11)) because they were not “affected by the regulation.”
  2. The Lake Association lacked standing under § 59.69(11) because it was not an “owner of real estate” in the regulated zone.
  3. The landowners’ claims were not ripe because Carlin Club had not yet engaged in commercial activity in violation of the ordinance.
  4. The injunction was not equitable.
  5. The county ordinance is preempted by the Department of Natural Resources’s (DNR) authority to regulate groundwater withdrawal.

The appeals court rejected all Carlin Club’s arguments but the second. The court said:

  1. The language “affected by regulation” refers to the “district” not the “owner of real estate” in § 59.69(11). Therefore, the landowners did not need to show they suffered special damages in order for their claims to stand.
  2. The Lake Association was made up of individual property owners but did not own property itself, so its claims could not stand under § 59.69(11). The appeals court ordered the Lake Association to be removed as a party.
  3. An enforcement claim under § 59.69(11) is ripe, even before a zoning violation actually occurs, if plaintiffs show a “sufficient probability” that a violation will occur. Here, Carlin Club’s activities in preparation for pumping and transporting well water were enough for the landowners to show a sufficient probability the violation would occur.
  4. Circuit courts should not shift the burden of showing whether an injunction would be equitable from the plaintiff to the defendant in § 59.69(11) cases. Although the circuit court should not have shifted this burden to Carlin Club, the facts presented in the case still led the appeals court to the “only reasonable conclusion” that the injunction should be upheld.
  5. The general duty of DNR to regulate groundwater withdrawal does not interfere with the local ordinances at issue here.

Town of Lincoln v. City of Whitehall (Annexation of Town)

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In Town of Lincoln v. City of Whitehall (2019 WI 37), the Wisconsin Supreme Court held that a petition for direct annexation not signed by all property owners is not a petition “by unanimous approval,” allowing a town to challenge the petition more broadly.

Wis. Stat. § 66.0217(2) requires petitions for “direct annexation by unanimous approval” to list signatures of all property owners and electors in the territory to be annexed. Such petitions by unanimous approval may only be challenged in circuit court regarding the contiguity of the annexed territory to the city (Wis. Stat. § 66.0217(11)(c)).

In this case, Whitehall Sand wanted a sand mine site it was purchasing in the Town of Lincoln to be included in the limits of the City of Whitehall. Whitehall Sand submitted a petition to the city for “direct annexation by unanimous approval”; however, the petition was missing a signature from a railroad owner in the territory.

The City of Whitehall approved the annexation petition. Following the approval, the Town of Lincoln sought review from the Department of Administration (DOA), which determined that the annexed territory was not contiguous. The DOA determination allowed the town to challenge the annexation in circuit court pursuant to Wis. Stat. § 66.0217(11)(c) and § 66.0217(6)(d)(2). The town’s challenges included:

  • The petition was not “unanimous” because it was missing a signature.
  • The annexed territory was not contiguous, as determined by DOA.
  • The annexation was arbitrary.
  • The city was the “real controlling influence” behind the petition.

In response to the town’s challenges, the City of Whitehall argued that Wis. Stat. § 66.0217(11)(c) prevented the town from bringing any challenges other than contiguity. However, the supreme court agreed with the town that, since the petition was not “unanimous” as required by § 66.0217(2), the limitation on challenges to petitions by unanimous approval in § 66.0217(11)(c) did not apply. The court remanded the case to circuit court to rule on the substance of the town’s challenges.

Security Finance v. Brian Kirsch (Wisconsin Consumer Act)

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In Security Finance v. Brian Kirsch (2019 WI 42), the Wisconsin Supreme Court held that debtors sued without first receiving a notice of right to cure default may not sue a creditor for damages under the Wisconsin Consumer Act.

The underlying claim in this case arose when Security Finance sued Brian Kirsch for a default on a loan. Kirsch counterclaimed that Security Finance’s complaint failed to give him proper notice of right to cure the default under Wis. Stat. Ch. 425. Security Finance ultimately voluntarily dismissed the case, but Kirsch wanted to maintain his counterclaims and pursue remedies for violations of Wis. Stat. § 427.104 (1)(g) and (j), which respectively prohibit creditors from harassing and threatening debtors and from attempting to enforce a right that doesn’t exist.

The court decided Kirsch cannot sue for damages under Ch. 427 simply because Security Finance failed to give proper notice of right to cure. Because Security violated the notice requirement under Ch. 425, Kirsch was entitled to the dismissal of the action without prejudice. However, the Ch. 425 violation is simply a procedural error and does not relinquish Security’s right to collect. In contrast, Ch. 427 addresses illegal “egregious behavior” by collectors, and Security’s Ch. 425 procedural violation does not entitle Kirsch to remedies under that chapter, which include damages caused by emotional distress (Wis. Stat. § 427.105(1)).

Justice Daniel Kelly (joined by Justice R. Bradley) wrote a concurring opinion that agreed with the court but also would have overturned Kett v. Community Credit Plan, Inc. (1999). While the court distinguished between Kett and the instant case, Kelly said both cases address the same issue: whether a procedural mistake by creditors allows debtors to collect remedies under § 427.105. The concurring opinion would overrule Kett to say that, in addition to the holding in Security Finance that violation of notice requirements do not constitute a Ch. 427 violation, filing in an improper venue is not grounds for damages under § 427.105.

In a dissent, Justice Walsh Bradley (joined by Justice Abrahamson) said the court should have followed Kett and allowed Kirsch’s § 427.105 claims to stand. Security Finance filing a lawsuit without proper notice of right to cure constituted enforcement of a right it had reason to know did not exist, thus violating § 427.104(1)(j).  Furthermore, the dissent argued the court’s ruling contradicts the overall purpose of the Wisconsin Consumer Act to protect consumers against unfair practices.

Maple Grove Country Club, Inc. v. Maple Grove Estates Sanitary District (Notice of Claim)

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In Maple Grove Country Club, Inc. v. Maple Grove Estates Sanitary District (2019 WI 43), the Wisconsin Supreme Court held that failure to comply with the notice of claim statute is an affirmative defense. If a party fails to set forth the affirmative defense in a responsive pleading, the defense is waived.

Maple Grove Country Club owned a sewer system, which it leased to the Sanitary District. When the Country Club and Sanitary District failed to come to an agreement on a new lease, the Country Club served the Sanitary District with a notice of claim under Wis. Stat. § 893.80(1d)(a), stating that the Sanitary District was illegally occupying its property in violation of statutory condemnation proceedings. Three years later, the Country Club filed the instant action in circuit court. In the Sanitary District’s response to the Country Club’s complaint, it did not affirmatively plead that the Country Club had failed to comply with the notice of claim statute. Later the Sanitary District attempted to raise the affirmative defense by motion. The Country Club then argued that the Sanitary District had waived the affirmative defense of noncompliance with the notice of claim statute by not including the defense it its initial response.

The issues before the court were 1) whether noncompliance with the notice of claim statute is an affirmative defense, and 2) whether failing to plead the affirmative defense in response to a complaint waives the defense.

First, the court determined that case law provides that failure to comply with the notice of claim statute is an affirmative defense. Second, the court determined that such an affirmative defense must be raised in a responsive pleading, not by motion. Wis. Stat. § 802.02(3) states that affirmative defenses “shall” be set forth in responsive pleadings. Furthermore, noncompliance with notice of claim is not included in the list of affirmative defenses that may be brought by motion under Wis. Stat. § 802.06(2). The court overruled previous case law Lentz v. Young (1995) that had ruled defendants may raise affirmative defenses by motion.

Accordingly, the Sanitary District’s affirmative defense that the Country Club did not comply with the notice of claim statute was waived.

Daniel v. Armslist, LLC (Communications Decency Act Liability)

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In Daniel v. Armslist, LLC (2019 WI 47), the Wisconsin Supreme Court held that the federal Communications Decency Act (CDA) prohibited liability claims against a website for publishing a third-party seller’s advertisement.

The underlying claim is against Armslist.com, which connects arms buyers and sellers with each other. Radcliffe Haughton, who had been legally prohibited from firearm ownership, obtained a firearm via an ad posted on Armslist by a third-party seller and used the gun to kill four people. Yasmeen Daniel, the daughter of one of the victims, filed several state tort claims against Armslist. Armslist argued the CDA blocks Daniel’s claims.

The CDA states (§230(c)(1)) three criteria for a third-party host website like Armslist to be immune from claims against its content:

  1. The defendant is an “interactive computer service” that passively displays third-party sellers’ information.
  2. The claim is based on content provided by someone other than the defendant. The defendant must have “materially contributed” to the content in order for the claim to proceed.
  3. The claim would treat the defendant as a “publisher or speaker of” the content.

It was undisputed that Armslist is an interactive computer service, so the Supreme Court’s decision was based on the second and third criteria.

On the second criterion, Daniel argued the design and operation of Armslist meant it helped develop the content of the advertisement in question. However, the court determined Armslist is a “neutral tool” that can be used both for legal and illegal transactions. The CDA does hold interactive computer services liable for providing such neutral tools, even if the defendant knows the tools may be used illegally, and does not require services to implement proactive cautionary measures against illegal use. Since Armslist did not create the firearm advertisement at issue here, and instead just provided a neutral tool for third-party user transactions, it did not materially contribute to the content, barring Daniel’s claims.

On the third criterion, Daniel argued Armslist wasn’t a publisher or speaker of the content, but facilitated and encouraged illegal firearm sales. However, the court determined that Daniel’s claims all require the court to treat Armslist as a publisher or speaker. “Facilitating” the illegal sale is just a restatement of “publishing” the third-party advertisement.

Because Armslist is an interactive computer service that did not develop the content of the firearms advertisement at issue here, and because all the plaintiff’s claims require the court to treat Armslist as a publisher, the CDA blocks the plaintiff’s claims.

Justice Walsh Bradley’s dissent argues that the court misunderstands the complaint. According to the dissent, Daniel’s claim seeks to hold Armslist liable for the overall structure of its website, specifically a search function that allows users to filter out licensed dealers. Whereas Armslist would not be liable for the third-party firearm advertisement under the CDA, the dissent argues Armslist is a liable content provider with respect to the “content” of its site’s general structure.

Cattau v. National Insurance Services of Wisconsin, Inc. (Pleading Standard)

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In Cattau v. National Insurance Services of Wisconsin, Inc. (2019 WI 46), a unanimous Wisconsin Supreme Court held that Data Key Partners v. Permira Advisers, LLC did not heighten the pleading standard in Wisconsin. However, the court was divided as to whether plaintiffs in this case stated a claim upon which relief could be granted.

The plaintiffs, former teachers and school administrators, claimed negligence, breach of fiduciary duty, and misrepresentation against MidAmerica and National Insurance Services (NIS), which administered their retirement plans. The plans were noncompliant with federal law, and the plaintiffs ultimately owed several years of tax dollars back to the Internal Revenue Service. The plaintiffs claim they relied on MidAmerica and NIS as experts to administer a qualifying plan, and MidAmerica and NIS misrepresented the plan as federally compliant.

While the Supreme Court reversed the appeals court reasoning that Data Key created a new pleading standard, it was evenly divided on whether the plaintiffs stated an adequate claim against MidAmerica and NIS. With Justice Shirley Abrahamson not participating, the 3-3 court affirmed the court of appeals decision that plaintiffs failed to state a claim.

Legislature to Intervene in Act 21 Cases

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The Legislature’s Joint Committee on Legislative Organization has voted to intervene in two cases addressing the application of 2011 Act 21. The 2011 legislation clarified that agencies may not enforce requirements unless explicitly permitted by statute or properly promulgated rule. The two cases, both titled Clean Wisconsin, Inc. v. DNR, would clarify the general scope of Act 21 in environmental cases.

One case (appeal no. 2018AP59) will decide whether Act 21 precludes the Department of Natural Resources (DNR) from considering cumulative environmental impacts in issuing high capacity well permits under Wis. Stat. § 281.34. DNR argues that Act 21 prevents the agency from considering environmental impacts not specifically noted in the statutes. DNR’s argument relies on a May 2016 formal opinion from former Attorney General Brad Schimel.

Clean Wisconsin argues that the 2011 Supreme Court decision Lake Beulah Management District v. DNR still holds. Lake Beulah broadly held that DNR has the authority to preserve waters of the state under the constitutional and statutory public trust doctrines. Since the Supreme Court decided Lake Beulah after the enactment of Act 21 but declined to address the Act’s bearing on the case, a decision in the Clean Wisconsin case would clarify DNR’s authority on high capacity well permits.

The second case (consolidated appeal nos. 2016AP1688 and 2016AP2502) will decide whether DNR has the authority to impose off-site groundwater monitoring requirements and an animal maximum for CAFO wastewater permits. In this case, Clean Wisconsin argues that a Wisconsin Pollution Discharge Elimination System permit allowing the expansion of Kinnard Farms CAFO in Kewaunee County should have included these restrictions. DNR argues Act 21 prohibits DNR from imposing the permit conditions because the statutes do not grant the agency explicit authority.

The Supreme Court accepted both Clean Wisconsin appeals on April 9 and stated it will hear oral arguments on the cases on the same date (not yet scheduled). Several business groups are participating as amici curiae and intervenors in the cases.

Previously, the Department of Justice (DOJ) sided with DNR in both cases. However, Attorney General Josh Kaul has filed two motions seeking to change DOJ’s position on the cases.

Rabitoy v. Billington (Safe Place Statute & Negligent Supervision)

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In Rabitoy v. Billington (2018AP270), the Court of Appeals District III held that a property owner was not liable for injuries sustained when an employee on his property misused equipment outside the scope of his employment.

Defendant Robert Billington employed Richard Klobucher, who lived on Billington’s property, for odd jobs on the property including repairing Billington’s vehicles. Although Billington expressly prohibited using his property for work on third-party vehicles, Klobucher decided to use Billington’s truck hoist to repair a truck belonging to his friend, plaintiff Timothy Rabitoy. During the repair work, the truck rolled off the hoist and injured Rabitoy. Rabitoy filed the instant lawsuit against Billington and Klobucher, claiming violation of Wisconsin’s safe place statutes, vicarious liability, and negligent hiring, training and supervision.

The appeals court dismissed all of Rabitoy’s claims. The Safe Place Act (Wis. Stat. § 101.11) did not apply because Rabitoy failed to introduce evidence that there was any unsafe condition. Instead, Rabitoy’s claims focused on Klobucher’s negligence in using the property equipment. Furthermore, there was no evidence Billington had notice of an unsafe condition on the property.

Finally, the court dismissed Rabitoy’s vicarious liability and negligent supervision claims because Klobucher was acting outside the scope of his employment. There was no issue of material fact as to whether Klobucher was acting in his capacity as Billington’s employee because Billington had expressly prohibited work on third-party vehicles.

Supreme Court Accepts Clean Wisconsin v. DNR Appeal

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The Wisconsin Supreme Court has agreed to hear the appeal in Clean Wisconsin v. DNR, which will decide whether 2011 Act 21 precludes DNR from considering cumulative environmental impacts in issuing high capacity well permits under Wis. Stat. § 281.34. The Court of Appeals District II had submitted in January a certification for the Supreme Court to take up the case.

DNR argues that Act 21, which clarified that agencies may not enforce requirements unless explicitly permitted by statute or properly promulgated rule, prevents the agency from considering environmental impacts not specifically noted in the statutes. DNR’s argument relies on a May 2016 formal opinion from former Attorney General Brad Schimel.

Clean Wisconsin argues that the 2011 Supreme Court decision Lake Beulah Management District v. DNR still holds. Lake Beulah broadly held that DNR has the authority to preserve waters of the state under the constitutional and statutory public trust doctrines. Since the Supreme Court decided Lake Beulah after the enactment of Act 21 but declined to address the Act’s bearing on the case, a decision in the Clean Wisconsin case would clarify DNR’s authority on high capacity well permits and the general scope of Act 21 in environmental cases.

 

Assembly Committee Passes Bill Allowing DAs to Engage in Private Civil Suits

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Last week, the Assembly Judiciary Committee voted 8-1 to recommend passage of AB 25, which would allow district attorneys to engage in the private practice of law for certain civil purposes.

Current Wisconsin law explicitly prohibits a full-time district attorney, deputy district attorney, or assistant district attorney from engaging in the private practice of law. AB 25 would reverse current law to allow district attorneys to provide pro bono legal services, defined as including legal services for individuals of “limited means, or for a charitable, religious, civic, community, governmental, or educational organization.”

While AB 25 may be well intentioned, WCJC opposes the bill because it poses several unintended consequences. First, if an attorney is a full-time employee paid by Wisconsin taxpayers, their first and foremost obligation is to work for the taxpayers. Second, allowing a governmental attorney the opportunity to moonlight as a private attorney, even in a pro bono capacity, creates a host of potential conflicts of interest. AB 25 could also lead to situations where district attorneys provide pro bono legal services for interest groups as a means to influence public policy while being subsidized by Wisconsin taxpayers.

The League of Women Voters has also expressed concerns with AB 25, including that the legislation could create the perception of favoritism in Wisconsin’s justice system.

The legislation is supported by the State Bar of Wisconsin. The Wisconsin District Attorneys Association has not taken a position on the bill.

SB 29, the Senate companion to AB 25 is currently in the Senate Committee on Judiciary. No public hearing or vote has been held.