Author: Hamilton

Court of Appeals Decision: Aamaans Properties, Inc. v. DOT (Inverse Condemnation)

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In Aamaans Properties, Inc. v. DOT (2017AP1220), the Court of Appeals District IV held that a property owner is not entitled to compensation when the Department of Transportation (DOT) relocates a nearby highway but does not physically take the property or legally change its use.

Aamaans owned a property on a road that closely intersected with Highway 26 and developed the property into a sort of travel station with a gas station and restaurant. In 2011, DOT relocated Highway 26 so that it no longer connected with the road where the Aamaans property was located. The relocation increased travel time from the highway to the property by over a mile, decreasing the property’s value as a convenient travel stop. The restaurant closed and the assessed value of the property dropped by hundreds of thousands of dollars.

Aamaans argued that the relocation of the highway was a compensable inverse condemnation. However, the court ruled that compensable takings must be either a physical taking of property or a regulatory taking wherein all practical use of the property becomes restricted by law. Here, DOT did not physically take Aamaans’s property. Furthermore, the relocation of the highway did not impose any legal restrictions causing the property to lose all practical uses. Therefore, Aamaans was not entitled to compensation for his property’s loss of value.

Gov. Walker Signs Extraordinary Session Legislation Limiting AG Authority

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Last week, Gov. Scott Walker signed into law the extraordinary session legislation passed by the legislature earlier this month. The legislation, 2017 Act 369, provides a more stable, predictable regulatory and litigation environment for Wisconsin businesses by limiting the authority of activist attorneys general.

The extraordinary session legislation gives the legislature more oversight of settlements pursued by Wisconsin’s attorney general. The bill requires Joint Committee on Finance (JFC) approval of any compromise or discontinuance of an action pursued by the Department of Justice. (Current law requires approval from the governor.) Settlement plans my not concede the invalidity of a statue unless the Joint Committee on Legislative Organization approves. Actions for injunctive relief or proposed consent decrees are also subject to a 14-day passive review period by JFC. The legislation also removes the attorney general’s authority to expend settlement funds and instead automatically deposits any settlement funds directly into the general fund.

Under the Act, the legislature also may intervene in cases alleging that a state statute is unconstitutional, been preempted by federal law, or the validity of the statute is otherwise challenged.

Other provisions of Act 369 include the statutory removal of agency deference, incorporating the 2018 Wisconsin Supreme Court decision Tetra Tech v. Department of Revenue, and transparency and legislative oversight requirements for agency rulemaking.

Legislature Names Judiciary & Courts Committee Chairpersons

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Senate Majority Leader Scott Fitzgerald (R-Juneau) and Assembly Speaker Robin Vos (R-Rochester) have announced 2019-20 committee leaders for their respective chambers, including those committees that will likely be tasked with legal reform bills.

In the Senate, Sen. Van Wanggaard (R-Racine) was renamed chairman of the Committee on Judiciary & Public Safety. In addition, Sen. Dave Craig (R-Big Bend) will chair a Committee on Insurance, Financial Services, Government Oversight & Courts. (List of all Senate committee chairs.)

On the Assembly side, Rep. Jim Ott (R-Mequon) will again chair the Committee on Judiciary. (List of all Assembly committee chairs.)

Announcements on the makeup of committees are expected closer to the start of the 2019-20 legislative session on Jan. 7.

Supreme Court Decision: Midwest Neurosciences Associates, LLC v. Great Lakes Neurosurgical Associates, LLC (Arbitrability)

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In Midwest Neurosciences Associates, LLC v. Great Lakes Neurosurgical Associates (2018 WI 112), the Supreme Court held that circuit courts may decide whether a dispute should be arbitrated when an original contract contains a mandatory arbitration clause but a subsequent contract does not.

The parties in this case entered into an “Operating Agreement” contract with a noncompete restrictive covenant. The Operating Agreement contained a mandatory arbitration clause, incorporating by reference a rule that the arbitrator has jurisdiction to rule on arbitrability of disputes arising from the contract.

In the process of restructuring, Midwest and Great Lakes drafted a “Redemption Agreement” that contained a merger clause releasing Great Lakes from the terms of the Operating Agreement. Because Midwest did not officially sign the Redemption Agreement, the parties dispute whether it is enforceable.

The underlying litigation in this case involves whether Dr. Pannu violated a noncompete clause in the Operating Agreement by engaging in competitive practice after he signed the Redemption Agreement. The issue before the Supreme Court was whether the circuit court had authority to determine arbitrability despite the original Operating Agreement mandating arbitrability be determined by an arbitrator.

In a 5-1 ruling (Justice Ziegler, joined by Justices Walsh Bradley, Kelly, and Chief Justice Roggensack, with Justice Abrahamson concurring), the court determined that the circuit court can determine arbitrability when a subsequent contract does not contain an arbitration clause, even if the original contract mandated arbitration. The court stated that freedom of contract principles allow parties who have agreed to arbitrate to subsequently contract out of the arbitration agreement. The court also found that, if valid, the Redemption Agreement would supersede the Operating Agreement’s arbitration clause. However, because there were still issues of material fact as to whether both parties formally agreed to the Redemption Agreement, the Supreme Court remanded the case to circuit court to determine the validity of the Redemption Agreement.

In her concurring opinion, Justice Abrahamson suggested that, because the subject matter of the Redemption Agreement differed from the Operating Agreement, the Redemption Agreement did not entirely supersede all terms of the Operating Agreement. Abrahamson said circuit courts do have the authority to determine whether any part of a subsequent contract (here, the Redemption Agreement) supersede arbitration provisions in a previous contract.

In a dissent, Justice R. Bradley argued that the question of whether the Redemption Agreement supersedes the Operating Agreement is an issue of substantive arbitrability governed by the Operating Agreement. Therefore, an arbitrator – not the courts – should decide whether the Redemption Agreement is valid.

Court of Appeals Decision: DSG Evergreen Family Limited Partnership v. Town of Perry (Eminent Domain)

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In DSG Evergreen Family Limited Partnership v. Town of Perry (2017AP2352), the Court of Appeals District IV held that the plaintiff had no private right of action against the town and claim preclusion applied, barring this eminent domain case.

The Town of Perry took property from DSG in an eminent domain action. The land taken included a road, and the condemnation petition required the town to replace the road at a different location. DSG argued that the new road did not meet the “same construction standards” as the former road, violating the petition.

The appeals court held that DSG had no private right of action requiring the town to comply with certain construction standards under Wis. Stat. § 82.50(1) in completing the new road. Furthermore, DSG had no private right of action under the town’s ordinances.

The appeals court further held that claim preclusion applied because DSG failed to bring up its road construction standards argument in previous proceedings regarding just compensation for the eminent domain condemnation of its property.

Court of Appeals Decision: The Lamar Company, LLC v. DOT (Litigation Expenses for Condemnation)

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In The Lamar Company, LLC v. DOT (2017AP1001), the Court of Appeals District IV held that Lamar was not entitled to litigation expenses under Wisconsin’s eminent domain statutes because the outdoor advertising statutes do not include the award of litigation costs.

Wisconsin’s outdoor advertising statutes in Wis. Stat. § 84.30 provide a procedure for determining just compensation when the Department of Transportation (DOT) removes a sign. In previous cases, the Supreme Court has held § 84.30 is the exclusive remedy for outdoor advertising just compensation disputes like Lamar’s. § 84.30 does not provide for litigation expenses.

However, § 84.30 directs DOT and sign owners to follow an alternate procedure in § 32.05 if the parties cannot agree on just compensation. § 32.05 allows for litigation expenses. DOT initiated an action under § 32.05 in this case.

Lamar argued that it should have been allowed litigation expenses because it was subject to following the § 32.05 procedures. However, relying on the Supreme Court decision in Vivid, Inc. v. Fiedler (1998), the appeals court held that litigation expenses were not due because § 84.30 is the exclusive remedy for outdoor advertising cases. While the appeals court acknowledged Lamar’s argument that this reading of the statute creates an inequity, the court said such an issue should be addressed by the legislature or Supreme Court.

Court of Appeals Decision: Troy Paulson v. DNR (Wetland Permit)

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In Troy Paulson v. DNR (2018AP696), the Court of Appeals District III upheld a Department of Natural Resources (DNR) decision to deny Paulson a wetland permit because he failed to timely file for judicial review under Wis. Stat. Ch. 227.

Paulson was seeking a wetland general permit under Wis. Stat. § 281.36(3g) to fill in a wetland on his property. The statute states that DNR has 30 days to issue a decision or request more information on the general permit, otherwise the permittee can continue with the wetland project. DNR may extend the 30-day deadline if weather prevents an accurate on-site inspection.

In this case, DNR notified Paulson 29 days after he submitted his application that they would use a weather extension. Ten days after DNR finally conducted the on-site inspection, DNR issued a decision denying Paulson’s permit. Almost a year after DNR denied his permit, Paulson commenced the instant case against DNR, arguing that DNR did not issue its decision within the 30-day time limit.

The appeals court held that because Paulson’s request for review of a DNR decision falls under the procedures in Ch. 227, Paulson should have filed his lawsuit within 30 days of the DNR decision, as required by Wis. Stat. § 227.53(1)(a)(2m). Because Paulson failed to timely file for judicial review, the court lacked competency to proceed on the case, and case was properly dismissed.

Court of Appeals Decision: Joan A. Kelly v. Amanda E. Berg (Dog Bite Liability)

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In Joan A. Kelly v. Amanda E. Berg (2017AP2033), the Court of Appeals District III, based on policy concerns, denied double damages to a plaintiff injured by a dog bite.

In 2015, WCJC supported reforms to Wisconsin’s long standing dog bite liability statute (Wis. Stat. § 174.02(1)(b)) in 2015 Act 112. Act 112 clarified that owners are only be liable for double damages for injuries caused by their dog if a dog bites a person with “sufficient force to break the skin and cause permanent physical scarring or disfigurement” if the owner knew the dog had previously done so. That is, both bites must break the skin and cause permanent scarring or disfigurement, and the owner must have known of the first bite.

Under prior law, dog owners were liable for double damages for dogs that cause injury to people, domestic animals, or property if the dog had previously done so. The prior law did not take into account the severity or type of the damage done. For instance, a dog could cause minor property damage, which would count as the first bite, and then cause physical damage to an individual on the second bite. The owner would be liable for double damages for the second incident despite the innocuous nature of the first damage.

This case occurred before Act 112, so plaintiff Kelly sought double damages when her neighbor Berg’s dog bit her. Kelly claimed Berg’s dog had caused previous “injury to property” by digging holes under her fence, and that Berg’s knowledge of this previous injury entitled Kelly to double damages.

However, the appeals court limited Berg’s liability under the previous Wis. Stat. § 174.02(1)(b) on public policy grounds. The court mentioned several factors limiting liability that applied in this case:

  1. The injury to Kelly was too remote from Berg’s negligence because Berg simply failed to predict her dog’s extraordinary, unprovoked attack.
  2. The recovery of double damages would be out of proportion and an unreasonable burden related to Berg’s limited negligence.
  3. The recovery of double damages would have no “just stopping point” because any minor damage would be considered attributable to Berg’s negligence.

Although owner Berg was not held liable for double damages under the 2013-14 statutes that govern this case, the case demonstrates the importance of Act 112 reforms in limiting these types of cases that had the potential to hold owners liable for dog bite injuries that are unpredictable and out of their control.

Court of Appeals Decision: Michael Bukovic v. LIRC (Worker’s Compensation)

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In Michael Bukovic v. LIRC (2017AP1612), the Court of Appeals District III held that the plaintiff was not entitled to worker’s compensation fees because he was acting outside the course of his employment.

Bukovic worked at CPF, Inc., a machine and fabrication shop, and was injured in an explosion while trying to transfer gas from a CPF tank to his own personal tank. Bukovic intended to use the gas for a welder at his home. While CPF allows employees to purchase items from its inventory, Bukovic never asked to purchase the gas, nor was transferring gas between tanks a standard practice that took place on site.

The appeals court upheld the Labor and Industry Review Commission’s decision that Bukovic was not “performing services growing out of and incidental to his…employment” (Wis. Stat. § 102.03(1)(c)1.) when he transferred the gas without permission and caused the explosion. Thus, Bukovic was not entitled to worker’s compensation.

Court of Appeals Decision: M. Samir Siddique v. UW Board of Regents (Attorney Fees Under Wis. Equal Access to Justice Act)

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In M. Samir Siddique v. UW Board of Regents (2017AP1443), the Court of Appeals District I held that a plaintiff is not considered a “prevailing party” entitled to attorney fees if the defendant voluntarily changes its conduct.

Siddique received sanctions for misconduct from UW Milwaukee after violating university policy in an incident involving student government organizations. Siddique appealed to the Board of Regents. After the Board of Regents upheld the UW Milwaukee decision, Siddique filed an action in circuit court. While the circuit court case was pending, Siddique had graduated, so UW Milwaukee voluntarily agreed to dismiss its discipline decision.

The issue in the instant appeal is whether Siddique is entitled to attorney fees as a “prevailing party” under the Wisconsin Equal Access to Justice Act (WEAJA). The WEAJA states that circuit courts must award fees to the “prevailing party in any action by a state agency” (Wis. Stat. § 841.245(3)).

Citing federal cases dealing with a federal law similar to the WEAJA, the appeals court ruled that a party is not considered a “prevailing party” if the defendant voluntarily changes its conduct outside of the court. In this case, UW Milwaukee decided to dismiss the discipline decision before the trial court decided on the merits of the case. Thus, there was no “judicially sanctioned change in the legal relationship” (see Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources) between the university and Siddique, and Siddique was not a “prevailing party” entitled to fees.