Author: Hamilton

2018-19 ATRA Judicial Hellholes Report Highlights Wis. Accomplishments

Posted on by Hamilton

The American Tort Reform Association recently released its 2018-19 Judicial Hellholes report. While the report’s focus is to recognize some of the worst-ranking civil justice climates in the country, the report also highlights several “Points of Light,” including civil justice reform accomplishments in Wisconsin over the past year.

The report recognizes the Wisconsin Supreme Court’s decision to uphold the constitutionality of a $750,000 limit on noneconomic damages in medical malpractice cases (Mayo v. Wisconsin Injured Patients and Families Compensation Fund, 2018 WI 78). WCJC had filed an amicus brief in the case, successfully arguing that the liability limit is constitutional.

The report also highlights civil justice reforms in AB 773 (signed into law as 2017 Wisconsin Act 235). Act 235 enacted several e-discovery and class action reforms to lower the costs of litigation for businesses, as well as groundbreaking provisions requiring transparency in third-party litigation funding.

Supreme Court December Oral Arguments

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The Wisconsin Supreme Court will meet just once for oral arguments in December. Of note, the Dec. 11 oral arguments include West Bend Mutual Insurance Co. v. Ixthus Medical Supply, Inc. The case will determine whether West Bend has a duty to defend Ixthus in a case involving the alleged illegal domestic sale of diabetic glucose test strips.

Health care manufacturing company Abbott filed a suit against Ixthus, claiming that Ixthus wrongfully diverted test strips intended for international markets to domestic markets. Ixthus subsequently filed a claim with its insurer West Bend for a covered “advertising injury” under its policy.

West Bend argues there is no coverage because the policy also contained an exclusion for instances where the insured knowingly violates the rights of another. West Bend also argues there is no connection between Ixthus’s covered advertising activity and the injury to Abbott.

The Supreme Court will review the Court of Appeals District II decision that granted Ixthus coverage.

3rd District Court of Appeals Decision: Engelking v. Enbridge (Pipeline Right of Way Grant)

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The Court of Appeals District III held in Engelking v. Enbridge (2017AP2450) that property owners’ future damages claims against Enbridge for pipelines located on their property were barred by claim preclusion. The appeals court also upheld summary judgment in favor of Enbridge, allowing it to continue transporting natural gas liquids (NGLs) via the pipelines.

Property owners Barbara and Jeremy Engelking inherited a Right of Way Grant from their predecessor in title. The grant allowed Enbridge right of way to transport “crude petroleum, its products and derivatives” via the pipelines on the Engelking property.

The Engelkings had filed a previous action against Enbridge in 2010, seeking damages for trespass and unjust enrichment from the pipelines on their property. The Engelkings argued the instant case is distinct from their 2010 claims because they sought future damages, whereas the 2010 claims sought remedy for past damages. However, the court ruled that the 2010 claims precluded the instant case because the Engelkings did have the opportunity to pursue future economic damages claims in 2010.

The Engelkings also argued the grant did not allow Enbridge to transport NGLs via the pipelines on their property because NGLs are not a derivative of crude petroleum. However, the court ruled the grant’s language as unambiguously including NGLs as an eligible derivative of crude petroleum, citing an Enbridge chemical engineer’s affidavit. The court upheld summary judgment in favor of Enbridge accordingly.

Final MU Poll Before Election Shows Close AG Race

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On Oct. 31, Marquette University Law School (MU) released its final poll before the 2018 midterm elections. Overall, numbers remained largely the same as in the previous poll. Incumbent Attorney General Brad Schimel is still up, but his lead has narrowed to a two point race. Schimel led Democrat opponent Josh Kaul by four points earlier in October and seven points in September.

In this poll, Kaul’s favorable/unfavorable numbers improved slightly to 16 percent favorable and 12 percent unfavorable, up from 10 percent favorable and 8 percent unfavorable in the previous poll. On the other hand, Schimel’s favorable ratings decreased to 29 percent favorable and 25 percent unfavorable from 32 percent favorable and 22 percent unfavorable in the previous poll.

Kaul’s name recognition has also begun to improve slightly from the previous two polls, in which around 67 percent of voters hadn’t heard enough about him to form an opinion. However, this poll showed 56 percent still haven’t heard enough about Kaul, compared to 33 percent who haven’t heard enough about Schimel.

This poll is the last snapshot of voter opinions before they head to the polls on Tuesday, but still anything can happen to shift the outcome of the election in the next few days.

Read more MU poll results. 

2018 State of the Judiciary Address Highlights Business Court Pilot

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On Oct. 31, Chief Justice Patience Roggensack delivered the 2018 State of the Judiciary Address. Among other topics, Chief Justice Roggensack’s remarks highlighted Wisconsin’s Commercial Docket (a.k.a. Business Court) Pilot Project that began in July 2017.

According to Chief Justice Roggensack, the commercial docket has handled 35 cases as of September, 14 of which have been resolved. The majority of cases have been filed as prohibited business activity cases, and other cases include internal business organizations, business sale consolidations, franchise related claims, and sales securities. Chief Justice Roggensack said while these cases typically take about 36 months to resolve, the commercial docket has resolved the 14 completed cases in less than one year.

The Chief Justice noted positive anecdotal feedback of the project and said the Commercial Docket Pilot Project judges are recommending expanding case types handled by the business court to include receiverships in excess of $250,000 and enforcement of arbitration awards.

Chief Justice Roggensack acknowledged that one challenge of the pilot project has been getting attorneys to file their cases in the commercial docket, rather than waiting for the clerk of courts or a judge to transfer the case.

In her address, Chief Justice Roggensack also discussed eFiling, research and justice statistics, drug treatment courts, and judicial salaries.

Read the full address.

Supreme Court Decision: SECURA Insurance v. Lyme St. Croix Forest Co. (Occurrences from a Single Cause)

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In SECURA v. Lyme St. Croix Forest Co., LLC (2018 WI 103), the Supreme Court issued its first major decision of the 2018-19 term, ruling in a unanimous decision on a tort case involving insurance coverage for property damaged in the Germann Road Fire.

The issue before the court was whether multiple occurrences may arise from a single cause for insurance coverage purposes. In this case, SECURA argued that the fire spreading across multiple property lines was a single occurrence and thus coverage arising from the fire would be capped at the per-occurrence limit of $500,000. On the other hand, plaintiffs argued that a separate occurrence began each time the fire crossed into another property. Thus, coverage would be capped at $500,000 per property damaged, up to the policy’s $2 million aggregate limit.

The court ultimately sided with SECURA, determining that the fire was a single occurrence and coverage should be capped at the policy’s $500,000 per-occurrence limit. The court based its decision on the “cause theory” that says damages from a “single, uninterrupted cause” are a single occurrence. The court ruled the fire a single, uninterrupted cause and argued ruling otherwise would have arbitrary and unreasonable consequences.

Supreme Court Adopts Petition Amending Default Judgment Rule

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Recently, the Supreme Court adopted a petition amending the default judgment rule (Wis. Stat. § 806.02) for parties failing to timely file answers to complaints. Under previous law, only plaintiffs could obtain default judgments against defendants who fail to comply with deadlines in Wis. Stat. § 802.06(1). Under the statute as amended by the Supreme Court, default judgment may now be rendered in favor of any party in the case that does not comply with deadlines for answers and replies to complaints, counterclaims or cross claims.

The statutory changes from the petition are effective Jan. 1, 2019.

Supreme Court November Oral Arguments

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The Supreme Court will hear oral arguments in six cases next week, marking the beginning of the November calendar.

On Monday, Nov. 5, the court will hear arguments in two cases of note:

  • Yacht Club at Sister Bay Condo Association, Inc. v. Village of Sister Bay will determine whether each nuisance-causing event at a town venue is a new “event” triggering a new 120-day notice period for filing a claim against the town.
  • Peter Ogden Family Trust of 2008 v. Board of Review for the Town of Delafield will review the standards for assessing land as agricultural versus residential for property tax purposes.

On Wednesday, Nov. 7, the court will hear three more cases, including Daniel Marx v. Richard Morris. In this case, the court will decide whether members of a limited liability company (LLC) have standing to assert a claim against another member of the LLC as individuals, not on behalf of the LLC. Furthermore, the court will decide whether Wisconsin’s LLC law pre-empts common law claims.

1st District Court of Appeals Decision: Official Committee on Unsecured Creditors of Great Lakes Quick Lube LP v. John Theisen (Fraudulent Transfer Statute of Limitations)

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In Official Committee on Unsecured Creditors of Great Lakes Quick Lube LP v. John Theisen (2018AP333), the Court of Appeals District I held that the fraudulent transfer statute of limitations begins when plaintiffs could reasonably have discovered the fraudulent nature of the transfer, rather than when the transfer itself occurred.

The instant state case arises from a federal bankruptcy case between the plaintiff creditors of Great Lakes Quick Lube and the debtors who sold their oil change businesses to Great Lakes Quick Lube. The creditors alleged fraudulent transfer against the sellers, but the sellers argued the claims were barred under the one-year statute of limitations for fraudulent transfer in Wis. Stat. § 893.425.

The court sided with the creditors in this case, holding that plaintiffs must file fraudulent transfer actions within one year after the fraudulent transfer could reasonably been discovered. The court rejected the sellers’ reading of the statute that the clock begins one year after the transfer itself. The decision cited cases in other states that ruled similarly on the Uniform Fraudulent Transfer Act.

Since the plaintiffs in this case could not reasonably have discovered the fraudulent nature of the debtors’ transfer more than one year before the date the instant action was initiated, the court dismissed the debtors’ motion for summary judgement and remanded the case to circuit court for further proceedings.

3rd District Court of Appeals Decision: Kmart Corp. v. Herzog Roofing, Inc. (Economic Loss Doctrine)

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In Kmart Corp. v. Herzog Roofing, Inc.(2017AP1041), the Court of Appeals District III ruled that the economic loss doctrine barred Kmart’s negligence claim for property damages.

Herzog and Kmart entered into a contract by which Herzog would provide materials and install a rubber roofing system on an Eau Claire Kmart store. Ten years later, the roof collapsed, and Kmart filed a negligence claim against Herzog.

The court ruled the economic loss doctrine barred the negligence claim. In the decision, the court defines the economic loss doctrine as “generally barring contracting parties from pursuing tort claims…for economic losses arising from the parties’ contractual relationship.” Under the doctrine, the claim is barred if it meets two requirements:

  1. The contract is predominantly for the sale of a product. Here, the court determined that the contract was predominantly for the sale of the roofing materials, not the service of installing them, so the economic loss doctrine applies.
  2. The plaintiff is seeking solely economic damages, not including damages to other property than the contracted product. Here, the court determined that the roof was an integral part of the damaged building. Furthermore, Kmart should have foreseen that the roof’s failure would have caused damages to the building and should have protected against that loss in the contract. Therefore, the damaged building was not “other property” that would prevent application of the economic loss doctrine.