Author: Hamilton

4th District Court of Appeals Decision: Feldman v. Farris (Statute of Limitations)

Posted on by Hamilton

In Feldman v. Farris (2017AP692), the Court of Appeals District IV upheld summary judgment dismissing the plaintiffs’ negligence claims against their accountant based on the statute of limitations.

The plaintiffs, shareholders of Woodside Ranch Resort, retained certified public accountant (CPA) Fred Farris, who facilitated a sale of the plaintiffs’ shares to Midcoast Investments. Farris told the plaintiffs they would not be at risk for transferee tax liability after the deal. However, Midcoast later failed to pay federal taxes owed, and the plaintiffs received notice of transferee liability for over $1 million in unpaid taxes. The plaintiffs sued Farris for negligence.

The questions before the appeals court included:

  1. Whether the plaintiffs’ claim was barred under Wis. Stat. § 896.66, which bars actions against CPAs after six years, unless the CPA has committed concealment.
  2. Whether there were issues of material fact that would prohibit summary judgment.

Under the first question, the court concluded that Wis. Stat. § 896.66 did apply, barring the present action. The court dismissed the plaintiffs’ claims that Farris waived the right to the affirmative defense of Wis. Stat. § 896.66 by not making that specific defense in his initial answer. (Farris first cited the specific statute as a “statute of repose” in a post-deadline amended answer.) The court concluded that Wis. Stat. § 896.66 is a statute of limitations and, since statues of limitations are affirmative defenses, must be specifically pleaded or raised in motion. However, the appeals court concluded that circuit court properly exercised its broad discretion in allowing Farris’s amended complaint.

Under the second question, the court upheld summary judgment because the plaintiffs did not prove any issues of material fact regarding:

  • Whether Farris intentionally delayed the plaintiffs from pursuing legal action against him by cooperating in their federal level proceedings. The court said there were no issues of material fact because Farris and the plaintiffs had mutual interests in advocating in federal court to avoid transferee liability.
  • Whether Farris was providing “professional accounting services” under Wis. Stat. § 869.66 applicable. The court said there were no issues of material fact because referring the plaintiffs to Midcoast was part of a broader range of accounting services Farris provided to the plaintiffs.
  • Whether Farris committed “concealment” under the exception to the statute of limitations. The court said there were no issues of material fact because concealment must be intentional.

1st District Court of Appeals Decision: Buena Vista Hall v. City of Milwaukee (Liquor License)

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In Buena Vista Hall v. City of Milwaukee (2017AP1943), Buena Vista Hall challenged the City of Milwaukee’s decision not to grant a liquor license. Buena Vista claimed the committee chairperson reviewing the application was biased, and thus the city’s decision was made without fair due process. The Court of Appeals District I upheld the city’s decision.

Buena Vista’s allegation of bias was based on several points from the committee hearing reviewing the liquor license application. The owner of a grocery store next to Buena Vista’s property, along with two of his employees, were the only people to testify at the hearing. The grocery store owner had also previously made an attempt to buy the Buena Vista property. Testimony from the hearing showed the grocery store owner, his wife, and two of his employees had donated a total of $1,388 to the committee chairperson’s campaign.

Despite these allegations, the court upheld the denial of the license. The court ruled the campaign donations small enough to be insignificant and dismissed Buena Vista’s other concerns about the grocery store owner because they failed to show bias in the committee chairperson or committee process. The court deemed the committee’s decision to regard the grocery store owner’s testimony as credible to be an issue outside of its review.

Overall, there was not substantial evidence that the committee acted arbitrarily or unreasonably against Buena Vista. Concerns raised at the hearing about security and parking at the Buena Vista venue provided ample evidence for the city to deny the license. The court further reasoned that that it could not order the city to approve Buena Vista’s application because liquor licenses are discretionary and not a legal right.

4th District Court of Appeals Decision: Shari Vander Galien v. WERC (Hazardous Duty Pay)

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In Shari Vander Galien v. WERC (2017AP790), the Court of Appeals District IV held that a correctional officer was not entitled to hazardous duty pay for absences after she returned to work following an on-duty injury. Wis. Stat. § 230.36 entitles guards to full pay for missed work for injuries resulting from acts by inmates.

Correctional officer Shari Vander Galien was injured when she collided with an inmate and received nearly four months of hazardous duty pay before returning to work. For over two years, Vander Galien continued to work, and meanwhile sought treatment for a neck and back condition and for anxiety. Then, she submitted a second claim for hazardous duty pay, alleging permanent disability from post-traumatic stress disorder (PTSD) following the collision with the inmate. When the Department of Corrections (DOC) denied the PTSD claim, Vander Galien submitted another claim, alleging permanent physical disability as a result of the collision. DOC ultimately medically separated Vander Galien from employment.

On Vander Galien’s appeal of the hazardous duty pay claims, the Wisconsin Employment Relations Commission (WERC) again denied the hazardous duty pay because it determined her medical absences were for preexisting conditions and were unrelated to the initial injury from her collision with the inmate. The appeals court upheld WERC’s denial of the benefits. Furthermore, the court rejected Vander Galien’s argument that she was entitled to hazardous duty pay because the work injury was a cause if not the only cause of her disability. The court ruled that Vander Galien failed to show that the injury was even a cause of her disability.

 

 

Wisconsin AG Race Heats Up

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In the race for Wisconsin attorney general, an August Marquette Law School poll showed many voters have not heard enough about the attorney general candidates to form an opinion. However, the attorney general race has started to gain more attention in the several weeks following August primary elections.

The Marquette poll showed 26 percent of likely voters have a favorable opinion of incumbent Attorney General Brad Schimel, while 16 percent have an unfavorable opinion. However, 47 percent of respondents said they have not heard enough about Schimel.

The poll showed voters are even less familiar will Schimel’s opponent Josh Kaul. Kaul had a rating of just 4 percent favorable to 3 percent unfavorable, while 74 percent of likely voters had not heard enough about him.

Although the August poll showed voters’ lack of knowledge about the attorney general candidates, this race is beginning to gain national attention as November approaches. Governing has labeled the Wisconsin attorney general race one of six toss up attorney general seats in the country. National attorneys general organizations are also joining in, as the Republican Attorneys General Association launched an ad this week highlighting Schimel’s work on the Department of Justice’s school safety grants. The Democratic Attorneys General Association has indicated they will be spending a similar amount in Wisconsin to support Kaul.

Meanwhile, both candidates have nearly doubled their fundraising efforts since the beginning of the year. Schimel leads Kaul with about $1 million cash balance as of the end of July, compared to Kaul’s $750,000. January reports showed Schimel with about $500,000 and Kaul with nearly $300,000.

The candidates plan to participate in debates on Oct. 12 and Oct. 16.

 

Wisconsin Continues to Lead ACA Litigation

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Earlier this year, Wisconsin Attorney General Brad Schimel and Texas Attorney General Ken Paxton, along with 18 other states, filed a brief in support of preliminary injunction in federal district court against the federal government’s enforcement of the individual mandate of the Affordable Care Act (ACA). A judge from the Northern District of Texas court heard oral arguments in the case last week to decide whether to grant the injunction that would suspend the individual mandate until the case is decided.

Congress repealed the tax penalty, yet left in place the ACA’s individual mandate, in the federal tax reform bill in December 2017. The attorneys general argue that the remaining mandate, without the tax penalty, violates the Commerce Clause of the U.S. Constitution, and Congress does not have the constitutional authority to compel citizens to purchase health insurance.

Wisconsin and Texas, along with four other states, are involved in simultaneous ACA litigation in the same Texas court, contesting imposition of a Health Insurance Providers Fee (HIPF) on Medicaid managed care contracts. A ruling this week agreed with the state attorneys general that the ACA exempted states from paying the HIPF and ordered refunds to the states for payments made in 2014 to 2016. Wisconsin would receive a refund of $88.9 million, so long as the ruling is not appealed.

Supreme Court Hears Oral Arguments in SECURA, First Cases of 2018-19 Term

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The Wisconsin Supreme Court has initiated its 2018-19 term with oral arguments beginning last week in several cases.

Of note, the justices heard arguments on Sept. 5 in SECURA Insurance v. Ray Duerr Logging LLC, which will decide whether multiple occurrences may arise from a single cause for insurance coverage purposes. In this case, SECURA argued that a fire spreading across multiple property lines was a single occurrence and thus coverage for Ray Duerr Logging, which started the fire, would be capped at the per-occurrence limit of $500,000. On the other hand, Ray Duerr Logging 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 circuit court and appeals court sided with Ray Duerr Logging, and SECURA appealed to the Supreme Court.

The court also heard oral arguments on Sept. 7 in three cases, including Koss Corp. v. Park Bank. That case involves the application of a process to assess “bad faith” in violation of Wisconsin’s Uniform Fiduciaries Act.

The court will continue oral arguments on Sept. 24 and 25. Other notable upcoming cases to be heard in September include:

  • Michael Engelhardt v. City of New Berlin – government ministerial duties immunity (Sept. 24)
  • Philip Myers v. Department of Natural Resources – amending of previously issued construction permit (Sept. 25)

Full schedule of September oral arguments.

Supreme Court Accepts More New Cases

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In the last few weeks, the Wisconsin Supreme Court accepted several more new cases. On Aug. 28, the court accepted eight cases, including:

  • Maple Grove Country Club Inc. v. Maple Grove Estates Sanitary District – notice of claim
  • Yasmeen Daniel v. Armslist, LLC – liability for breach of duties from publication of third-party seller’s information
  • Rural Mutual Insurance Co. v. Lester Buildings, LLC – contractor subrogation waivers
  • David W. Paynter v. ProAssurance Wisconsin Insurance Co. – medical malpractice

On Sept. 7, the court accepted 10 more cases. Of note, the court will decide in:

  • Enbridge Energy Co., Inc. v. Dane County – pipeline conditional use permits
  • Security Finance v. Brian Kirsch – notice of right to cure under Wisconsin Consumer Act
  • Alan W. Pinter v. Village of Stetsonville – governmental immunity and private nuisance

The court accepted a list of 27 other cases in July.

3rd District Court of Appeals Decision: Klatt v. Penske Truck Leasing Co. (Duty to Defend)

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In Klatt v. Penske Truck Leasing Co. (2017AP2064), the Court of Appeals District III held that, although it acknowledged Great West Casualty Co. breached its duty to defend Penske Truck Leasing Co., Penske forfeited its right to recover defense costs because it failed to raise that argument in a previous appeal.

The underlying liability proceedings in this case arose from an accident that occurred on a Penske parking lot. Plaintiff James Klatt worked for a transport company that rented trucks from Penske and was injured upon returning a truck to a Penske lot. Klatt sued Penske for his injuries resulting from “large accumulations of ice” in the lot.

Great West insured Klatt’s employer transport company, and Penske was an additional insured under the plan. Great West rejected Penske’s tender of defense of the complaint because it argued the policy was for auto liability only, and the accident may not have occurred in relation to a vehicle.

As is proper procedure in a coverage dispute, the circuit court stayed the liability dispute between Klatt and Penske while the third-party coverage dispute between Great West and Penske was settled.

The circuit court eventually granted Great West summary judgment because additional evidence had clarified that Klatt’s injury was unrelated to use of a covered vehicle.  Penske appealed, and the appeals court reversed and remanded, agreeing with Penske’s argument that Great West had a duty to defend under the four corners of Klatt’s complaint, which, without additional evidence, showed there was possible need for coverage.

In the meantime, Penske had settled with Klatt. With the case back in circuit court, Penske moved for reimbursement of its defense costs and settlement payment, arguing Great West breached its duty to defend. Great West argued it did not yet have a duty to defend because the liability proceedings had been stayed. The parties disagreed on whether a scheduling conference that had occurred after the stay was in place had effectively lifted the stay. The circuit court ruled that the stay had not been lifted at the scheduling conference, and thus Great West had not breached its duty to defend.

In the instant decision, the appeals court determined that the stay had been effectively lifted by the scheduling conference, even though the circuit court never provided formal notice that it was modifying the stay order. Thus, Great West did breach its duty to defend by not covering Penske’s defense and settlement costs. However, since Penske did not raise an argument regarding Great West’s duty to defend in its prior appeal, Penske forfeited its right to that claim here. In its per curiam decision, the court noted that this case is unusual because the parties did not follow the proper procedure of staying an underlying liability dispute while third parties are settling a coverage dispute.

4th District Court of Appeals Decision: Peter N. Anderson v. WEA Trust (Health Insurance Coverage)

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In Peter N. Anderson v. WEA Trust (2017AP2386), the Court of Appeals District IV held that health insurance company WEA Trust did not breach its implied contractual duty of good faith when it denied primary coverage of medical expenses because its denial was unambiguously stated on the plaintiff’s monthly statements.

Under Peter Anderson and his wife’s retiree insurance plan, WEA provided secondary insurance for expenses above and beyond Medicare Part B. For the first few months of the plan, Anderson had not yet enrolled in Medicare Part B and incurred approximately $3,000 in medical expenses. WEA denied Anderson’s claims for those expenses that should have been covered under Medicare Part B. Anderson claimed that WEA breached its implied contractual duty of good faith because it failed to inform him that it had denied coverage.

The court of appeals upheld the ruling that Anderson’s monthly statements from WEA clearly stated that WEA denied his claims. The court declined to address Anderson’s other appellate arguments that WEA failed to state clearly in the contract that it was only offering secondary insurance and that WEA failed to inform him he was not enrolled in Medicare Part B.

1st District Court of Appeals Decision: Theresa Payton-Myrick v. LIRC (Worker’s Compensation)

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In Theresa Payton-Myrick v. LIRC (2016AP2463), the Court of Appeals District I held that the plaintiff was not entitled to further worker’s compensation and disability payments because her disability-causing surgery was not related to a compensable work injury.

Plaintiff Theresa Payton-Myrick was diagnosed with degenerative disc disease and arthritic changes in her spine. While working as an administrative assistant at University of Wisconsin-Milwaukee, Payton-Myrick fell out of her desk chair and sustained several muscle strains. She subsequently received opinions from several doctors, one of whom recommended spinal fusion surgery.

Despite conflicting medical opinions, Payton-Myrick underwent the surgery, which resulted in two procedures and left her arguably disabled. The UW System denied her benefits for the surgeries and subsequent disability. The Labor and Industry Review Commission (LIRC) determined that Payton-Myrick’s muscle strains were a compensable work injury, but the work injury had healed and did not aggravate her preexisting condition enough to necessitate surgery.

The appeals court upheld LIRC’s decision denying Payton-Myrick further worker’s compensation benefits. The court echoed LIRC’s argument that 2017 Wisconsin Supreme Court case Tracie Flug v. LIRC controls the instant case.

In Flug, the Supreme Court held that the worker’s compensation statute (Wis. Stat. § 102.42(1m)) extending benefits to workers who undertake a not medically necessary treatment in good faith does not apply to secondary treatment not related to the compensable injury. In Payton-Myrick’s case, LIRC and the appeals court determined that her surgeries were a result of her preexisting condition and not related to the work injury from falling out of the chair.