Author: Hamilton

Wisconsin Supreme Court Rules “Lemon Law King” Not Entitled to Attorney’s Fees

Posted on by Hamilton

In a 5-1 decision authored by Justice Ziegler and joined by Justices Crooks, Bradley, Prosser, and Gableman (Chief Justice Abrahamson dissenting and Justice Roggensack not participating), the Wisconsin Supreme Court handed the self-proclaimed “Lemon Law King” a defeat by refusing to award him attorney’s fees in a lawsuit. The case is Betz v. Diamond Jim’s Auto Sales, 2014 WI 66.

Background

The plaintiff, Randy Betz, purchased a used vehicle from Diamond Jim’s Auto Sales. Betz experienced problems with the automobile and ultimately sued Diamond Jim’s. Betz hired plaintiff attorney Vince Megna, the self-proclaimed “Lemon Law King.” Under one of the statutes (Wis. Stat. § 100.18(11)) that Megna sued under allowed for attorney’s fees for the plaintiff (commonly referred to as a “fee-shifting” provision).

However, before the case went to trial, Betz and the general manager of Diamond Jim’s entered into a settlement agreement without their attorneys’ knowledge. The settlement agreement did not include attorney’s fees for Megna.

Megna intervened in the case as a plaintiff arguing that the right to cover attorney’s fees under the statute belonged to him as a lawyer, not the client. The circuit court dismissed Megna’s lawsuit. The court of appeals reversed.

Wisconsin Supreme Court Decision

The Court reversed the court of appeals and held that the plaintiff (Megna’s client) did not assign his right to recover the attorney’s fees under statute to Megna in the fee agreement between Megna and Betz. Therefore, the Court held that Megna could not seek the statutory attorney’s fees directly from Diamond Jim’s (the defendant).

In reaching its decision, the Court stated that there were two issues to be decided: 1) whether Betz assigned his statutory right to recover attorney’s fees to Megna under their fee agreement, and 2) whether Diamond Jim’s had notice of the assignment at the time of the settlement.

Looking at the language of the fee agreement between Megna and his client, the Court determined that the language could not “be fairly characterized as a written assignment of Betz’s statutory authority right to recover fees.”

The Court went out of its way to give attorneys advice in how to properly draft their contracts with plaintiffs. Specifically, the Court stated that “attorneys are cautioned to clearly draft a fee agreement so that it unambiguously assigns the client’s statutory right to recover attorney’s fees from the defendant.” According to the Court, a “more clearly drafted fee agreement [between Megna and his client (Betz)] … would have resolved the problem without the necessity of additional litigation.”

Wisconsin Supreme Court Holds Property Owner Can Be Held Liable for Actions of Independent Contractor When Activity is “Inherently Dangerous”

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In a 4-3 decision authored by Justice Crooks, joined by Justices Roggensack, Ziegler, and Gableman (Chief Justice Abrahamson concurring/dissenting, joined by Justices Bradley and Prosser) the Supreme Court held that a property owner may be held liable for damage caused by an independent contractor hired to perform work on his or her property. The case is Brandenburg v. Briarwood Forestry Services, LLC, 2014 WI 37.

Background

The facts in the case are straight forward. The defendant (Robert Leuthi) hired an independent contractor to spray herbicide on his property. The spraying drifted to the plaintiffs/neighbors’ property, damaging a number of trees. The plaintiffs sued the the property owners for the negligence of the independent contractor. The circuit court ruled in favor of the defendant/employer, while the court of appeals reversed holding that the act of spraying was “inherently dangerous” and thus was an exception to the rule exempting liability of the employer for the actions of an independent contractor.

Wisconsin Supreme Court Decision

The Supreme Court engaged in a lengthy analysis of Wisconsin’s law as it relates to the negligence of independent contractors and the “inherently dangerous” exception. The Court explained the general rule that a principal employer is not generally liable for an independent contractor’s negligence. However, the exception to that rule is that if the independent contractor was performing an “inherently dangerous” activity which caused harm to the plaintiff, the employer (the defendant in this case) could be liable for the independent contractor’s negligence. The Court further explained that the employer can still avoid liability depending on whether the employer exercised “ordinary care.” Therefore, the Court held in this case that the activity of spraying an herbicide could be considered an inherently dangerous activity, yet the employer could still not be liable for the independent contractor’s negligence if it is determined that the employer exercised “ordinary care.” The Court therefore remanded the decision back to the lower court to decide: 1) whether the employer failed to use ordinary care with regard to any danger inherent in the herbicide spraying that he know or had reason to know about, and 2) if so, whether any harm that occurred was caused by the spraying.

Concurring/Dissenting Opinion

The dissent agreed with the majority that the matter was to be remanded to the circuit court to determine whether the independent contractor was negligent in damaging the neighbor’s property. However, the dissent disagreed that the lower court was to decide whether the property owner failed to use “ordinary care” with regard to the activity of spraying the herbicide. Instead, the dissent argued that because it was already determined that the spraying of herbicide was inherently dangerous activity, there was no need to inquire into the property owner’s level of care. According to the dissent, the determination that the activity of spraying herbicide was inherently dangerous means that the employer was automatically liable for the independent contractor’s negligence.

Wisconsin Supreme Court Holds Property Owner Can Be Held Liable for Actions of Independent Contractor When Activity is “Inherently Dangerous”

Posted on by Hamilton

In a 4-3 decision authored by Justice Crooks, joined by Justices Roggensack, Ziegler, and Gableman (Chief Justice Abrahamson concurring/dissenting, joined by Justices Bradley and Prosser) the Supreme Court held that a property owner may be held liable for damage caused by an independent contractor hired to perform work on his or her property. The case is Brandenburg v. Briarwood Forestry Services, LLC, 2014 WI 37.

Background The facts in the case are straight forward. The defendant (Robert Leuthi) hired an independent contractor to spray herbicide on his property. The spraying drifted to the plaintiffs/neighbors’ property, damaging a number of trees. The plaintiffs sued the the property owners for the negligence of the independent contractor. The circuit court ruled in favor of the defendant/employer, while the court of appeals reversed holding that the act of spraying was “inherently dangerous” and thus was an exception to the rule exempting liability of the employer for the actions of an independent contractor.

Wisconsin Supreme Court Decision The Supreme Court engaged in a lengthy analysis of Wisconsin’s law as it relates to the negligence of independent contractors and the “inherently dangerous” exception. The Court explained the general rule that a principal employer is not generally liable for an independent contractor’s negligence. However, the exception to that rule is that if the independent contractor was performing an “inherently dangerous” activity which caused harm to the plaintiff, the employer (the defendant in this case) could be liable for the independent contractor’s negligence. The Court further explained that the employer can still avoid liability depending on whether the employer exercised “ordinary care.” Therefore, the Court held in this case that the activity of spraying an herbicide could be considered an inherently dangerous activity, yet the employer could still not be liable for the independent contractor’s negligence if it is determined that the employer exercised “ordinary care.” The Court therefore remanded the decision back to the lower court to decide: 1) whether the employer failed to use ordinary care with regard to any danger inherent in the herbicide spraying that he know or had reason to know about, and 2) if so, whether any harm that occurred was caused by the spraying.

Concurring/Dissenting Opinion The dissent agreed with the majority that the matter was to be remanded to the circuit court to determine whether the independent contractor was negligent in damaging the neighbor’s property. However, the dissent disagreed that the lower court was to decide whether the property owner failed to use “ordinary care” with regard to the activity of spraying the herbicide. Instead, the dissent argued that because it was already determined that the spraying of herbicide was inherently dangerous activity, there was no need to inquire into the property owner’s level of care. According to the dissent, the determination that the activity of spraying herbicide was inherently dangerous means that the employer was automatically liable for the independent contractor’s negligence.

Supreme Court Rules Plaintiff Cannot Seek UIM Coverage When Not Using Vehicle that Injured Her

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In an unanimous decision authored by Justice Patrick Crooks (Justice David Prosser not participating), the Wisconsin Supreme Court held that a sheriff deputy could not seek underinsured motorist coverage under her employer’s insurance policy when she was struck by a vehicle in a cross-walk. The case is Jackson v. Wisconsin County Mutual Ins. Corp., 2014 WI 36.

Background
The plaintiff, Rachelle Jackson, was working as a deputy sheriff for Milwaukee County at the Milwaukee airport. While on duty on a sidewalk, a motorist approached Jackson and asked her for directions.

After providing the driver with directions, Jackson directed the driver back out into the traffic. As Jackson walked in the crosswalk in front of the vehicle, the driver unexpectedly moved forward and hit Jackson, injuring her.

Jackson sued many parties, including her employer’s insurer, Wisconsin County Mutual Insurance Corporation, seeking underinsured motorist coverage (UIM).

The insurance company argued that Jackson was not “using an automobile” as required by the insurance policy. The district court agreed, holding that Jackson was not entitled to the UIM coverage. The Court of Appeals, District 1, reversed holding that Jackson “manipulated” the vehicle being driven by the motorist who struck her and thus was “using” the vehicle, entitling her to coverage under the policy.

Issue
Whether the plaintiff was “using” the vehicle being driven by the driver who struck the plaintiff, entitling her to underinsured motorist coverage under her employer’s insurance policy.

Supreme Court Decision
The Supreme Court reversed the court of appeals. The court began its analysis by noting that Jackson satisfied two out of the three requirements allowing her to obtain UIM coverage under her employer’s insurance policy: 1) she was within the scope of her employment, and 2) she was insured under the policy.

However, the court determined that Jackson did not meet the third requirement – she was not “using an automobile” as prescribed under the policy. The court looked to the definition of “using” under the policy, which included “driving, operating, manipulating, riding in and any other use.”

The court explained that the only way Jackson could possibly be covered under this definition is under the “manipulating” or “other use” provisions. The court proceeded to review a number of cases where a person not driving the vehicle was deemed to be using the vehicle. However, the court determined that the facts in this case did not arise to Jackson controlling or using the vehicle that ultimately hit and injured her.

According to the court, “[u]nlike the cases in which the person guiding or giving directions was ‘controlling’ and therefore deemed a user of the vehicle, Jackson did not exercise such control over the vehicle to the extent that she essentially became the user. She was not communicating with, signaling, or exercising active control over the vehicle at the time of the injury.”

The court therefore concluded that Jackson could not recover under the policy because her actions did not “constitute using a vehicle in any way that is consistent with interpretations of ‘use’ in Wisconsin case law or with those of cases from other jurisdictions.”

Huffington Post – Wisconsin Asbestos Trust Fund Transparency Law Helps Veterans

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The Huffington Post recently published a column by Sara Warner in which she praised Wisconsin’s recently enacted Asbestos Trust Fund Transparency law (2013 Wisconsin Act 154). The article was notable for a number of reasons.

First, the Huffington Post is a left-of-center publication that doesn’t normally side with businesses. Second, the column agreed with the Wisconsin Civil Justice Council’s position that the law is not only decidedly not harmful to veterans, but the law actually helps veterans by ensuring that unscrupulous plaintiffs’ attorneys do not deplete the trust funds through double-dipping.

Below is an excerpt from the article:

Two things make this a veterans’ issue:

First, while many trust fund claims were no doubt driven by lawyers, they were signed — under penalty of perjury — by veterans or their survivors. Of course, people just signed whatever the lawyer told them to sign. But, as the Garlock case showcased, companies have made it clear that clients, not just lawyers, are subject to questions, thus reopening some old cases.

Secondly, anybody actually “gaming” the system reduces the funding available for legitimate claims, meaning that veterans seeking trust fund compensation are paid less than they would have been otherwise.

To see how veterans’ groups are front-and-center, you only need look at Wisconsin, which passed a state FACT Act this year. Alerted by FACT opponents, groups like the Wisconsin VFW and the Wisconsin Military of the Purple Heart expressed concerns that vets face more hurdles for compensation.

Republicans, usually known for supporting military issues, found themselves accused of being anti-vet. But then the state AMVETS group supported the legislation, saying that “in short, this bill is about transparency and fairness to protect our veterans with an emphasis on availability on assets for our current and future veterans.”

Plaintiff Lawyer Explains How Asbestos Trust Funds Are Platforms for “Institutionalized Fraud”

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In a recent Forbes magazine article, Daniel Fisher discusses a publication by a former asbestos plaintiff lawyer who explains how some of the asbestos trust funds set up under the U.S. Bankruptcy Code facilitates “fraud.” According to the article, the plaintiff attorneys explains how the trust funds are designed to be accessed by claimants with little evidence of exposure.

Fisher quotes from the article:

Plaintiff asbestos lawyers then use the millions of fees obtained from the system they were instrumental building, to run countless advertisements designed to obtain more clients so that they can submit more claims and obtain more fees. Thus, institutionalized fraud, as built into the system, allows the system to perpetuate itself.

To read more, click here.

U.S. Chamber Institute for Legal Reform Recognizes Wisconsin’s “Common Sense” Legal Reforms

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Lisa Rickard, President of the U.S. Chamber of Institute for Legal Reform (ILR), recently wrote an article (“Wisconsin: Capital of Common Sense”), in which she commends Gov. Scott Walker and the Wisconsin Legislature for leading the nation over the past three years in enacting civil justice reforms.

As Rickard notes:

During the current decade, Governor Walker and lawmakers have mindfully enacted bold legal reforms in Wisconsin — a major reason Walker feels confident in his push to create more jobs and job security in his state…The last three years of landmark reforms have provided a template that other elected officials — governors, state legislators and even members of Congress — can and should utilize.

In the article, Rickard highlights the comprehensive legislation Wisconsin has enacted into law over the past three years, including:

  • 2011 Wisconsin Act 2, which contained comprehensive reforms, such as capping punitive damages, adopting standards (Daubert) of submitting expert evidence in lawsuits, product liability changes, and curbing frivolous lawsuits.
  • 2013 Wisconsin Act 105 (Transparency in Private Attorney Contracting), which promotes transparency and limiting contingency fees when the state hires outside private plaintiffs’ attorneys.
  • 2013 Wisconsin 154 (Asbestos Trust Fund Transparency), which helps prevent double-dipping by plaintiffs’ attorneys by creating greater transparency from attorneys when pursuing claims from asbestos personal injury settlement trusts set up to compensate asbestos victims and suing solvent Wisconsin businesses.

Not mentioned in the ILR article are the other civil justice reforms introduced by Gov. Walker and enacted by the Wisconsin Legislature during the 2011-12 session, including:

  • 2011 Wisconsin Act 69, which sets reasonable pre- and post-judgment interest rates at the Federal Reserve prime rate, plus one percent.
  • 2011 Wisconsin Act 93, which protects owners and possessors of land by codifying  Wisconsin’s case law as it relates to the duty of care owed to a trespasser by a possessor of land.
  • 2011 Wisconsin Act 92, which set forth criteria courts are to consider when awarding attorneys’ fees when plaintiff’s’ attorneys seek attorneys’ fees. The law also created a rebuttable presumption that attorneys’ fees are no more than three times compensatory damages.

WCJC and WMC last year were recipients of ILR’s prestigious “Outstanding Organization Award” for helping pass these sweeping reforms over the past three years.

 

 

Wisconsin Supreme Court Rules Excessive Punitive Damages Unconstitutional

Posted on by Hamilton

On April 22, the Wisconsin Supreme Court issued a positive decision (4-2) in Kimble v. Land Concepts, Inc., 2014 WI 21, holding that $1 million in punitive damages against a title insurance company violated due process and therefore was unconstitutional. Justice Annette Ziegler authored the decision, and was joined by Justices Patrick Crooks, Patience Roggensack, and Michael Gableman. Chief Justice Shirley Abrahamson authored a dissenting opinion and was joined by Justice Ann Walsh Bradley. Below is a discussion of the case and the court’s decision.

Wisconsin Insurance Alliance, Wisconsin Civil Justice Council, and Wisconsin Manufacturers & Commerce filed an amicus brief in the case arguing that the $1 million award of punitive damages was unconstitutional.

Issue: Whether the $1,000,000 punitive damages award against First American Title Insurance Company violates the Wisconsin Constitution or the common law of the state of Wisconsin.

Facts: The case involves a jury verdict awarding the plaintiff-property owners $1 million in punitive damages against First American Title Insurance Company for bad faith in denying the insureds’ requested defense of title and claim.

The plaintiffs purchased property in Door County that was land-locked on three sides and surrounded by water on the other side. The plaintiffs-buyers believed they had an easement over adjoining property allowing access to the nearest road. However, it was determined after the purchase of the property that the plaintiffs did not have an easement and therefore filed suit against First American Title Insurance Company when it denied that the policy coverage had been triggered.

The case went to trial and the court awarded the plaintiffs $29,738 in compensatory damages against First American. The jury also awarded the plaintiffs $1 million in punitive damages against First American for its bad faith in denying the claim. The court of appeals upheld the punitive damages.

The sole issue before the Wisconsin Supreme Court is whether the $1 million is unconstitutional. (The new caps under 2011 Wisconsin Act 2 are not implicated because this case was commenced prior to enactment of Act 2.)

Wisconsin Supreme Court’s Decision: The court held that the award of $1 million did “not bear a ‘reasonable relationship’ to either the compensatory damages award or the potential harm faced by the plaintiff.” According to the court, the punitive damages award was excessive and deprived the First American its right to due process under the constitution. Therefore, the court reversed the lower court and held that appropriate amount of punitive damages was $210,000, plus compensatory damages.

PolitiFact Gives Mary Burke “False” Rating for Claiming that Gov. Walker Repealed Wisconsin’s Equal Pay Act for Women

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In 2009, the Wisconsin Legislature enacted legislation (2009 WI Act 20), which for the first time imposed punitive and compensatory damages under the Wisconsin Fair Employment Law (WFEL), the law prohibiting discrimination in the workplace. Before 2009 WI Act 20, the WFEL allowed individuals to sue for back pay, reinstatement of the job, plus compensation for costs of bringing the suit and attorney fees.

WCJC and the entire business community actively opposed Act 20 because it added punitive and compensatory damages that went beyond what was allowed under federal law. Plus, WCJC felt that the current remedies were more than adequate.

During the 2011-12 legislative session, WCJC and the business community supported legislation (2011 WI 219) that repealed the punitive and compensatory damages that were included in 2009 WI Act 20. (Click here to read WCJC’s memo, “Myths vs. Facts” – SB 202: Eliminating Punitive and Compensatory Damages.”)

In the 2012 elections and recall of Gov. Walker, the Democrats used the repeal of the punitive and compensatory damages under the WFEL for the basis of its “War on Women” theme by arguing that Gov. Walker removed “equal pay for women.” Fortunately, PolitiFact (which is a unit of the Milwaukee Journal Sentinel), saw through this falsehood and labeled such statements as “False.” (Click here and here to view the “False” ratings by PolitiFact.)

Some politicians are once again picking up on the “War on Women” theme and continuing to argue that Gov. Walker repealed the “Equal Pay Act” when he signed into law 2011 WI 219.

Most recently, Democratic gubernatorial candidate Mary Burke alleged in a press release that Wisconsin is “one of five states without an equal pay law protecting women from gender discrimination in their paycheck.” Ms. Burke based this comment on the repeal of the 2009 punitive and compensatory damages law.

PolitiFact analyzed this statement, and not surprisingly, gave Ms. Burke a “False” rating. In its article, PolitiFact explained how the repeal of the punitive and compensatory damages law did not remove the ability of women to sue for workplace discrimination.

According to PolitiFact:

So the 2009 bill allowed persons to sue in court – and get compensatory and punitive damages – after they had exhausted their administrative cases in the state Department of Workforce Development.

But that 2009 law – the one repealed in 2012 by Walker and the Republicans – was a fairly narrow one focused on tougher enforcement of existing protections for women and other groups.

It did not establish a new set of equal-pay protections – those already were in the Fair Employment law, where they have ben since 1982 and where they remained even after the 2012 repeal.

…

But while Walker reversed an attempt to toughen up Wisconsin law, its protections against gender discrimination in workplace pay date back decades. The governor’s 2012 action left those in place, albeit without tougher penalties for employers.

We rate Burke’s claim False.

Walker Signs Trust Fund Transparency Bill

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Gov. Walker earlier today signed AB 19, asbestos trust fund transparency, into law as Act 154. The new law allows greater transparency by:

  • Requiring asbestos plaintiffs to disclose any and all claims that they have filed or will file with asbestos trust funds, along with all of the documents and information that support the trust claims.
  • Requiring judges to admit trust claims and supporting materials into evidence at trial; prohibiting plaintiffs from spuriously alleging that trust claims and their supporting documents are privileged.
  • Providing defendants with a powerful tool to ensure that plaintiffs file and disclose all possible claims with asbestos trusts. AB 19 authorizes defendants to identify trust claims that the plaintiff could and should file. If a judge agrees, the case is stayed until that claim is filed and disclosed.

Wisconsin now joins Ohio and Oklahoma by having a law in place that protects businesses from unscrupulous plaintiff attorneys double-dipping against trust funds and suing those solvent businesses that have little, if any, fault.