Author: Hamilton

3rd District Court of Appeals Decision: Patrick Humfeld v. State Farm Fire and Casualty Co. (Recreational Immunity)

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The Court of Appeals District III held in this case that, under Wisconsin’s recreational immunity statute (Wis. Stat. § 895.52), a property owner is not liable for a hunter shot on his land.

John Marsh allowed plaintiff Patrick Humfeld – and several other individuals – to hunt on his property. Humfeld was shot by another hunter while both were hunting on Marsh’s property. Humfeld subsequently filed a lawsuit against Marsh and his insurer, State Farm, claiming negligence because Marsh did not properly monitor the hunters on his property. State Farm argued Marsh was not liable under recreational immunity.

Humfeld argued the social guest and profit exceptions made the recreational immunity inapplicable in this case. The social guest exception says that owners are liable for injuries to guests expressly invited for a specific occasion. The court held that the social guest exception did not apply here because Marsh gave Humfeld general permission to hunt on his property at any time. Marsh allowed several different people to hunt on his property, so he falls within the intent of the recreational immunity statute: to open private land to the public.

The profit exception says that owners are liable for injuries if they collect payments from those using their property for recreational activity. Although Marsh leased part of his land for hunting, the court held the profit exception did not apply in this case because Humfeld did not pay Marsh, nor was he hunting on the leased portion of the property.

Humfeld plans to appeal to the Supreme Court.

Supreme Court Upholds $750,000 Limit on Noneconomic Damages in Med Malpractice Cases

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The Wisconsin Supreme Court in a 5-2 decision (Mayo v. Wisconsin Injured Patients and Families Compensation Fund) has upheld Wisconsin’s $750,000 limit on noneconomic damages in medical malpractice cases. The Court determined that the cap is constitutional because the legislature had a rational basis in enacting the cap statute to ensure affordable and accessible health care in Wisconsin.

Notably, neither the statutes nor the Court’s decision preclude plaintiffs from being compensated for their injuries. Current law only limits the amount of noneconomic damages, i.e., pain and suffering, a plaintiff may receive at $750,000. There is no limit on the amount of damages a plaintiff can receive for his or her physical injuries.

The case arose from a septic infection resulting in the amputation of the plaintiff’s limbs. The lower court did not find negligence, but instead rested liability on improper informed consent regarding diagnosis and treatment options. The jury awarded the plaintiff $15 million in noneconomic damages, such as pain and suffering, and $1.5 million to the plaintiff’s husband for loss of society and companionship. Unaffected is the reported $8.8 million award for economic damages, which has no statutory limitation.

Ruling the cap constitutional, the Supreme Court remanded the case to circuit court to impose the $750,000 cap on the plaintiffs’ noneconomic damages.

The decision also clarified the definition and application of the “rational basis test” for courts considering reversal of legislative enactments. Courts use the rational basis test to determine the constitutionality of a statute based on whether the statute appears to have a rational basis in achieving the legislature’s objective in writing it. Since Ferdon v. Wis. Patient Comp. Fund (holding that the previous $350,000 cap was facially unconstitutional), the courts have been unclear regarding the “rational basis” test as it relates to an equal protection claim. The Mayo decision reversed new scrutiny level created by Ferdon called “rational basis with teeth.”

Supreme Court Ends Agency Deference

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The Wisconsin Supreme Court recently issued a decision (Tetra Tech v. Department of Revenue) that ends the “agency deference” doctrine. Previously, Wisconsin courts deferred to regulatory agencies when interpreting statutory provisions that ultimately define agencies’ own power and reach. Under the decision, courts will continue to give “due weight,” or respectful consideration, to agencies’ expertise but not yield to them.

The business community in Wisconsin has applauded the decision, saying it will bring more predictability and level the playing field between businesses and agencies in civil lawsuits.

In 2007, the Environmental Protection Agency required several paper companies to remediate the environmental impact of harmful chemicals into the Fox River. The collective group of paper companies formed Fox River Remediation, which hired Tetra Tech to perform the remediation. Tetra Tech subsequently hired Stuyvesant Dredging, Inc. (SDI) as a subcontractor. The Department of Revenue (DOR) audited the entities and found that Tetra Tech owed sales tax on the portion of its sale for services to Fox River Remediation on SDI’s activities, and Fox River Remediation owed use tax on the purchase of remediation services from Tetra Tech on SDI’s activities. The entities filed petitions for redetermination with DOR, then with the Tax Appeals Commission. A Wisconsin circuit court, then appeals court upheld the commission’s ruling, giving great weight deference to DOR’s interpretation of tax statutes. The case was then appealed again at the Wisconsin Supreme Court, with the Court asking parties brief the constitutionality of providing deference to agencies on questions of law.

In a unanimous decision with three concurring opinions, the court again upheld the Commission’s ruling on the tax issue. The court also decided to end the practice of agency deference, and the three concurring opinions disagreed on this aspect of the decision.

Wisconsin Civil Justice Council Applauds Wisconsin Supreme Court’s Decision Upholding Limits on Noneconomic Damages

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Today, the Wisconsin Supreme Court in a 5-2 decision (Mayo v. Wisconsin Injured Patients and Families Compensation Fund) upheld Wisconsin’s limit on noneconomic damages in medical malpractice cases. Importantly, the Court reversed its 2005 decision, Ferdon v. Wisconsin Patients Compensation Fund, which held unconstitutional Wisconsin’s previous limit on noneconomic damages.

“The Court’s decision is a victory for the rule of law and reconfirms that the legislature, not the judiciary, is the proper branch of government to determine public policy,” said Bill G. Smith, president of the Wisconsin Civil Justice Council and Wisconsin Director for the National Federation of Independent Business.

“The importance of this decision cannot be overemphasized. Gone are the days of the Supreme Court of Wisconsin setting public policy and overriding laws enacted by the legislative branch,” added Smith. “We applaud the Court for correcting its erroneous decision in Ferdon and upholding the law.”

It is also important to note that neither the statutes nor the Court’s decision preclude plaintiffs from being compensated for their injuries. Current law only limits the amount of noneconomic damages, i.e., pain and suffering, a plaintiff may receive at $750,000. There is no limit on the amount of damages a plaintiff can receive for his or her physical injuries.

The Wisconsin Civil Justice Council consists of representatives from Wisconsin’s leading business and professional organizations whose mission is to promote fairness and equity in Wisconsin’s civil justice system, with the ultimate goal of making Wisconsin a better place to work and live.

Supreme Court Decision: Winebow v. Capitol-Husting (“Dealership” Definition)

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In a 4-3 decision crossing ideological lines, the Supreme Court ruled that wine grantor-dealer relationships are not considered “dealerships” under Wisconsin’s Fair Dealership Law.

The decision answers a certified question from a U.S. Court of Appeals that will ultimately decide whether Winebow violated the Fair Dealership Law in unilaterally terminating its relationships with distributors Capitol Husting and L’Eft Bank Wine Co.

The Fair Dealership Law defines “dealership” in Wis. Stat. § 135.02(3)(b) as an agreement by which a “wholesaler” is granted the right sell, distribute, or use a commercial symbol related to “intoxicating liquor.”

Writing for the majority, Justice Gableman (joined by fellow conservatives Justice Ziegler and Chief Justice Roggensack and liberal Justice Walsh Bradley) argued wine grantor-dealer relationships do not fall under the definition of “dealership” because a definition of “intoxicating liquor” later in Ch. 135 explicitly excludes wine. The majority backs its position with an examination of the legislative history and intent of the statute, pointing to Gov. Tommy Thompson’s partial veto that deleted cross-references to the definition of “intoxicating liquor” that does include wine. Furthermore, the majority states that the definition that excludes wine is the only definition of “intoxicating liquor” present in Ch. 135, and courts should aim to use a uniform definition of a single term throughout a chapter.

In the dissent, conservative Justice R. Bradley (joined by conservative Justice Kelly and liberal Justice Abrahamson) sides with the distributors in that wine grantor-dealer relationships should be included in the definition of “dealership” under the Fair Dealership Law. The dissent states that the phrase “In this chapter” in Wis. Stat. § 135.02 is evidence the definition of “dealership” in § 135.02(3)(b) governs the entire chapter. Instead of focusing on the definition of “intoxicating liquor” later in Ch. 135 that excludes wine, the dissent focuses on the definition of “wholesaler” in § 135.02(3)(b) that, when cross-referenced, does include wine. The dissent criticizes the majority for focusing on legislative intent rather than the explicit statutory language.

 

Supreme Court Decision: Voters with Facts v. City of Eau Claire (TIDs)

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In a 5-2 decision, the Supreme Court upheld the dismissal of plaintiffs’ claims for declaratory judgement in a case protesting the formation of two tax incremental districts (TIDs) in the city of Eau Claire. The case sets a precedent for other TID and tax credits such as Foxconn to proceed.

The plaintiffs claimed that:

  1. The city did not establish a lawful purpose for the TIDs under Wis. Stat. § 66.1105(4)(gm)4.a because it did not give evidence for its findings of blight in the TID area.
  2. The city’s joint review board did not reasonably conclude that development would not occur without the TID (Wis. Stat. § 66.1105(4m)(b)2).
  3. The city unlawfully allowed developers to use cash grants from the TID to destroy historic properties (Wis. Stat. § 66.1105(2)(f)1.a) because the development agreement did not explicitly prohibit them from using the grants for this purpose.
  4. The city violated the Uniformity Clause of the Wisconsin Constitution (Art. 8 § 1) because the cash grants effectively reimbursed developers for their property taxes, thus taxing the developers at a more favorable rate than identically assessed properties.

The Court decided the plaintiffs did not present claims upon which relief could be granted because:

  1. The statutory language does not require the city to provide evidence for findings of blight. Other closely related sections near the TID statutes explicitly state when there must be itemized evidence for findings of blight, but the TID section does not. Overall, the Court held that findings of blight are legislative determinations and not justiciable issues of fact or law.
  2. The statutory language does not require the joint review board’s assertion that development would not occur without the TIDs to be backed by itemized evidence. Again, the Court held that the joint review board’s conclusions are legislative determinations and not justiciable issues of fact or law.
  3. The historic buildings were already demolished, and the complaint failed to present facts showing the developer used tax incremental financing (TIF) funds to reimburse demolition costs.
  4. The list of costs that may be covered by cash grants in Wis. Stat. § 66.1105(2)(f)1.a-n does not include property taxes, and the plaintiffs’ complaint did not establish the grants were used or were intended to be used to reimburse property tax payments. Since constitutional challenges must be demonstrated “beyond a reasonable doubt,” the plaintiffs did not provide enough facts to present a claim for relief to be granted.

On the first two claims, the Supreme Court remanded the case to the circuit court for certiorari review, since there is no statutory appeal process for reviewing TID formation.

In their dissent, Justices R. Bradley and Kelly parted with the majority on each of the four claims.

On the plaintiffs’ first and second claims, the dissent said the majority mistakenly characterizes the city’s finding of blight and joint review board’s approval as legislative determinations. The dissent agreed that the city’s authority to create TIDs is a legislative determination, but the preconditions of that authority (e.g. finding of blight) are not, and taxpayers must have a judicial avenue to challenge the accuracy of the city’s findings.

On the third and fourth claims, the dissent disagreed with the majority by arguing that the plaintiffs’ complaints are sufficient under Wisconsin’s notice pleading law (Wis. Stat. § 802.02(1)(a)). However, the dissent noted that TIF cash grants do not act as tax rebates and thus do not violate the Uniformity Clause.

Supreme Court Decision: Golden Sands Dairy v. Town of Saratoga (Building Permit Rule)

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The Supreme Court issued a 5-2 decision in Golden Sands Dairy v. Town of Saratoga holding that the Building Permit Rule applies not only to building structures but to all land “specifically identified” in a building permit application.

Wisconsin’s Building Permit Rule states that, upon submitting a complete building permit application, owners have a right to build in accordance with the permit and current zoning regulations but are not subject to rezoning ordinances enacted after the permit application.

In this case, Golden Sands Dairy filed a permit application with Saratoga to build seven structures on 92 acres of land for a dairy farm. Shortly after the permit was filed, Saratoga implemented a new zoning ordinance that would have excluded Golden Sands’s land for agricultural use. The Building Permit Rule allowed Golden Sands to continue constructing the seven structures.

At issue was whether the Building Permit Rule applied to the 92 acres of land intended for agricultural use. Saratoga argued that the rule does not extend to use of land. However, the Court sided with Golden Sands in extending the Building Permit Rule so that owners have the right to use all land that is specifically identified in a building permit application without being subject to future rezoning.

The opinion, written by Justice Gableman, argues that the purpose of the Building Permit Rule is to provide predictability for developers and to avoid lengthy litigation. Separating the structures from the associated land would lead to further litigation regarding how much land is necessary for their construction and how much could be rezoned. Furthermore, the land is necessary for carrying out the agricultural use of the structures, so making the land subject to future rezoning would thereby also make the structures vulnerable to a local ordinance blocking their use. This unpredictability is exactly what the Building Permit Rule aims to avoid, so, according to the majority, the rule must extend to the land use, as well as physical structures.

Justice Abrahamson’s dissent claims the court’s ruling actually increases unpredictability because it fails to require how owners should “specifically identify” land in building permit applications and how detailed they should be in disclosing the intended use of the land.

SCOTUS Decision: Gill v. Whitford (Redistricting)

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In a long-awaited decision of this term, the U.S. Supreme Court decided the plaintiffs in Gill v. Whitford, the legal challenge to Wisconsin Republicans’ 2010 redistricting map, lack standing to challenge the statewide map. The Court remanded the case to district court, giving the plaintiffs another opportunity to demonstrate concrete injuries to their individual votes. The opinion was unanimous, with Chief Justice Roberts writing the lead opinion, and each justice writing or joining a concurring opinion.

The plaintiffs, all Democratic voters from Wisconsin, argued that the map violated their rights to association and equal protection because it unfairly diminished their chances to achieve a majority and resultant legislative outcomes. The map, they said, unfairly gave Republicans a better chance of “translating their votes into seats.”

In defense, the state of Wisconsin argued the plaintiffs lack standing to challenge the entire map. The Court agreed that plaintiffs can only challenge their own voting districts and thus lacked standing for their statewide gerrymandering claim.

Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor agreed that the plaintiffs did not have standing, and suggested the plaintiffs expand on the theory that the redistricting infringed upon their First Amendment rights of association. Kagan also suggested if enough plaintiffs allege the map diluted their votes in their individual districts, the aggregate claims could force the statewide map to be redrawn.

Justice Thomas, joined by Justice Gorsuch, agreed the plaintiffs lacked standing, but did not agree with the Court’s decision to remand the case to district court because remanding is not the standard practice of the Supreme Court in such cases.

Supreme Court Decision: Forshee v. Neuschwander (Restrictive Covenants on Short-Term Rentals)

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In a 6-1 decision, the Supreme Court ruled in Forshee v. Neuschwander that a restriction on “commercial activity” in a restrictive covenant did not preclude short-term and long-term rentals.

Lee and Mary Jo Neuschwander own property on a subdivision on Hayward Lake. The subdivision is under a restrictive covenant that provides: “There shall be no commercial activity allowed on any of said lots.” The Neuschwanders engage in short-term and long-term rentals of the house on their property. Their neighbors complained that these rentals constituted “commercial activity” forbidden by the restrictive covenant.

The Court ruled in favor of the Neuschwanders. The lead opinion (written by Chief Justice Roggensack, joined by Justices Gableman and Ziegler) stated that “commercial activity” is an ambiguous term that cannot be enforced under the covenant.

Two concurring opinions agreed with the majority ruling but differed on the reasoning behind it. Justice Abrahamson argued “commercial activity” is not ambiguous, and short-term rentals do qualify as a commercial activity. However, since the restrictive covenant governs what the occupants do on the property rather than how it is used by the owners, the restrictive covenant does not govern the Neuschwanders’ rentals.

In a grammatical analysis of the covenant’s language, Justice Kelly’s concurrence (joined by Justice R. Bradley) argued that the covenant is location specific, so the Court need not go further than the plain language that says commercial activity can’t take place on the land. The rental transaction takes place off the land, so it is not governed by the restrictive covenant.

Justice Walsh Bradley dissented, reasoning that the clear definition of “commercial activity” is an activity “having profit as a chief aim.” Walsh Bradley cites the Neuschwanders’ acquisition of property via a tax exchange, records of profits, and room tax paid to Hayward as evidence that the Neuschwanders rent the property with profit as a “chief aim.” Additionally, Justice Walsh Bradley expressed concerns similar to the lead opinion about the breadth of the covenant but criticized the majority’s broad ruling in the context of the growing issues surrounding short-term rentals.

Supreme Court Decision: Adams Outdoor Advertising v. City of Madison (Property Rights)

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In a 4-3 decision, the Court held that an outdoor advertising company is not entitled to compensation from the City of Madison after the City constructed a bridge blocking visibility of a billboard. Justice Walsh Bradley wrote the decision, joined by Justices Abrahamson, Gableman, and Ziegler.

The City of Madison constructed a pedestrian bridge that blocked visibility from the Beltline Highway of the west-facing side of Adams Outdoor Advertising’s billboard. The billboard is nonconforming to a Madison City Ordinance stating that new outdoor advertising signs are prohibited, so Adams may keep but not modify the billboard.

Adams argued they were entitled to just compensation for private property taken for public use, under the Fifth Amendment of the U.S. Constitution and Art. 1 § 3 of the Wisconsin Constitution. According to Adams, the property interest in this case is the right to the legal nonconforming use of its property, which was taken when the bridge diminished the property’s sole use – visibility. The Court said that Adams still retains the right to legal nonconforming use of the billboard, despite the bridge placement, because the City did not physically alter Adams’ property.

The Court agreed with the City that the property interest in this case is Adams’ right to visibility of his property from a public road, which is not a recognized property right. Thus, a property interest does not exist for the purpose of just compensation under the U.S. and Wisconsin Constitutions. Since Adams failed to demonstrate a recognized property interest, the Court affirmed the summary judgement in favor of the City of Madison.

Justices R. Bradley, Kelly, and Chief Justice Roggensack dissented, writing that an unconstitutional taking occurs when government denies all economically viable use of a person’s property. In contrast to the majority, the dissent defined the property interest as the billboard permit. The dissent determined that the value of the property was in the permit for nonconforming use and the visibility of the billboard for advertisers wishing to rent space. Because the bridge eliminated the entire value of the permit for the west-facing side of the billboard, the bridge construction was a compensable taking.