Author: Hamilton

Final MU Poll Before Election Shows Close AG Race

Posted on by Hamilton

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

Posted on by Hamilton

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.

4th District Court of Appeals Decision: Stelpflug v. Rural Mutual Insurance Co. (Inception of Covered Loss)

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In Stelpflug v. Rural Mutual Insurance Co. (2018AP34), the Court of Appeals District IV held that, when a barn burned down due to damages from a tornado a year earlier, the “inception of the loss” was the date of the barn fire, not the date of the tornado.

A tornado damaged the Stelpflugs’ barn in 2015. Rural Mutual covered damages from the tornado. Almost a year later, a fire started in the barn because the barn’s wiring had been pulled free by the tornado. When Rural Mutual stopped making payments to the Stelpflugs for the fire damages, the Stelpflugs filed the instant lawsuit. Rural Mutual argued the claim was barred by the statute of limitations in Wis. Stat. § 631.83(1)(a) because the “inception of the loss” was the tornado that led to the exposed wiring.

The court agreed with the Stelpflugs that the “inception of the loss” was the fire because the losses from the fire were separate and distinct from the losses from the tornado. The court cited several previous cases stating that the “inception of the loss” is not the causation of the loss, but the date on which the loss occurred. In this case, the loss occurred on the date of the fire, so the Stelpflugs did file a timely claim.

4th District Court of Appeals Decision: Security Health Plan v. American Family (Primary Coverage)

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In Security Health Plan v. American Family (2017AP1914), the Court of Appeals District IV concluded that American Family’s automobile insurance policies’ medical expense coverage was not a “plan” under Wis. Admin. Code § INS 3.40. Therefore, American Family did not owe Security reimbursement for medical expenses of 42 claimants insured by both entities.

Wis. Admin. Code § INS 3.40 states that, if an insured holds two “plans” with medical expenses coverage, the primary plan would pay the insured’s medical expenses first; the secondary plan would pay after the primary plan limits are exhausted. The issue before the court was whether the medical expense coverage in the American Family policies constituted a “plan” invoking this coordination of coverage.

The court held that the American Family medical expense coverage was not a “plan” as defined in the insurance administrative code because the medical expense coverage is not “required by law” (Wis. Admin. Code § INS Appendix A, II(C)(ii)). While Wis. Stat. § 632.32(4)(a)(2) requires automobile policies to include medical expense coverage, an exception in the subsequent § 632.32(4)(bc) allows insureds to reject that coverage. Therefore, medical expenses coverage is not required by law.

Another definition of “plan” in the insurance administrative code states that, for traditional automobile insurance contracts like American Family’s, only group medical benefits contracts are included as “plans” (Wis. Admin. Code § INS 3.40(6)(f)). The court rejected Security’s argument that American Family’s medical benefits coverage policies were “‘no-fault’ contracts” included in the definition.

Because American Family’s medical expense coverage is not a “plan,” the court ruled American Family was excluded from the coordination of coverage requirements in Wis. Admin. Code § INS 3.40 and did not owe reimbursement to Security for the claimants’ medical expenses.

Wisconsin Tort Costs Fair Well in U.S. Chamber Study

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At its annual summit in October, the U.S. Chamber Institute for Legal Reform released a comprehensive study on how the tort system imposes costs on society. The study shows Wisconsin’s costs and compensation in its tort system fair well in comparison to other states.

The study showed Wisconsin has the fourth lowest tort costs per household at $2,464, almost $1,000 below the national average. In comparison, New York has the highest costs per household of any state at $6,066, more than double Wisconsin’s costs. Wisconsin’s tort costs make up 1.8 percent of the state’s gross domestic product (GDP), substantially below the national average of 2.3 percent. The highest of any state, Florida’s tort costs make up 3.6 percent of its GDP, again more than double Wisconsin’s numbers.

Wisconsin has enacted several significant legal reforms in the last few years to reduce tort costs, including the passage of 2017 Act 235. Act 235 included groundbreaking litigation funding transparency provisions, along with several other common-sense reforms to address the high transactional cost of litigation.

Despite the progress made by Wisconsin reforms, tort costs still impose significant costs for both businesses and individuals. The study estimated total tort costs and compensation paid in the U.S. at $429 billion. The study overall evaluated the tort system as inefficient, with 43 percent of costs covering litigation, insurance, and risk transfer expenses, rather than covering plaintiffs’ compensation. Furthermore, the costs estimated in the study do not include immeasurable costs such as disincentive for innovation and development that leads to lower employment and general harm to states’ economies.