Category: Courts of Appeals

Society Insurance v. Bessemer Plywood Co. (Duty to Defend)

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In Society Insurance v. Bessemer Plywood Co. (2018AP224), the Court of Appeals District III held that an insurer had no duty to defend because an injury occurred during the course of employment; therefore, the policy’s employment exclusion applied.

Bessemer Plywood Co. hired Maki Trucking & Logging to pick up a load of plywood from a Bessemer facility. At the facility, Maki employee Scott Friedle fell off the trailer of a Maki truck while securing the plywood.

Society insured Maki for worker’s compensation claims and made payments to Friedle accordingly. Great West Casualty Co. insured Maki for other liability. The Great Lakes policy specifically excluded coverage for injuries to employees arising out of the course of their employment with Maki.

Society brought the instant case against Bessemer to recover the worker’s compensation payments, arguing Bessemer was negligent. Bessemer tendered its defense to Great West, arguing it was an insured because it was a permissive user of the Maki truck covered under the Great West policy.

The appeals court held that Great West had no duty to defend because Friedle’s injury arose from the course of his employment, and such employment injuries were specifically excluded from the Great West policy. The court said that, because the employment exclusion applied, it did not matter whether or not Bessemer was a permissive user of the covered truck.

Swanson v. Gatzke (Dental Malpractice)

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In Swanson v. Gatzke (2018AP305), the Court of Appeals District III held that a circuit court erred in changing jury apportioned negligence in this dental malpractice case.

Mary Swanson was diagnosed with a dental disease that increases the patient’s susceptibility to tooth decay. Despite recommendations from several practitioners, Swanson did not see her dentist Dr. Gatzke regularly. Dr. Gatzke failed to diagnose tooth decay in Swanson’s teeth, forcing her to ultimately undergo a total restoration of her teeth. Swanson filed the instant lawsuit against Gatzke for dental malpractice.

At the circuit court trial, the jury found Swanson 60 percent negligent for her own injuries. According to Wisconsin’s contributory negligence laws (Wis. Stat. § 895.045), Swanson did not receive damages because her negligence was greater than Dr. Gatzke’s. However, the circuit court later determined that the jury did not properly apportion negligence and reapportioned negligence to 50 percent liability for both Swanson and Dr. Gatzke. The new apportionment allowed Swanson to recover damages.

The court of appeals determined that the circuit court erred in reapportioning negligence. Furthermore, the court declined to award Swanson a new trial. The appeals court determined there was sufficient evidence supporting the jury’s decision that Swanson’s negligence was greater than Dr. Gatzke’s.

Gene Frederickson Trucking and Excavating, Inc. v. Wagner (Prima Facie Tort)

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In Gene Frederickson Trucking and Excavating, Inc. v. Wagner (2018AP436), the Court of Appeals District III declined to adopt a new “prima facie tort” under Wisconsin law.

Frederickson contracted with an LLC to perform trucking and excavation work. The LLC failed to fully pay Frederickson. The LLC later defaulted on two separate loans from a bank and faced a foreclosure action. Frederickson was unable to collect the unpaid fees from the contract because of the foreclosure. Owners of the LLC then formed a new entity which purchased the bank’s rights to the foreclosed property and purchased the property back from a sheriff’s sale. The sale extinguished Frederickson’s ability to collect the unpaid fees from its contract with the original LLC.

In the instant lawsuit, Frederickson alleged the owners’ deliberate default on the loans, formation of a new entity, and buyback of the property was a civil conspiracy. Furthermore, Frederickson asked the court to adopt a new civil cause of action for “liability for intended consequences.” What Frederickson refers to as a “prima facie tort” would provide a cause of action for harmful conduct that does not fall within an existing category of tort liability.

The appeals court declined to adopt the “prima facie tort,” which the opinion notes has been adopted in other states, because it does not currently exist under Wisconsin law. Instead, the appeals court leaves the development of a new form of tort liability up to the state Supreme Court. The appeals court also dismissed Frederickson’s civil conspiracy argument for failure to state a claim.

Carlin Lake Association, Inc. v. Carlin Club Properties, LLC (County Ordinances)

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In Carlin Lake Association, Inc. v. Carlin Club Properties, LLC (2017AP2439), the Court of Appeals District III upheld an injunction on a business’s pumping and transporting well water on its property and allowed riparian property owners’ claims that the activity violated county ordinances to proceed.

Carlin Club owned a lodge on Carlin Lake that was deemed a legal nonconforming use with respect to a Vilas County zoning ordinance prohibiting commercial use of the property. When Carlin Club began making changes to the property in order to start transporting, bottling, and selling well water, seven landowners and the Carlin Lake Association filed the instant lawsuit claiming the activity was distinct from the legal nonconforming use of the lodge and thus in violation of county ordinances. The circuit court issued an injunction on Carlin Club’s new pumping and transporting activities and declared them in violation of the Vilas County ordinances.

On appeal, Carlin Club argued:

  1. The landowners lacked standing to sue under the state statute for enforcement of county ordinances (Wis. Stat. § 59.69(11)) because they were not “affected by the regulation.”
  2. The Lake Association lacked standing under § 59.69(11) because it was not an “owner of real estate” in the regulated zone.
  3. The landowners’ claims were not ripe because Carlin Club had not yet engaged in commercial activity in violation of the ordinance.
  4. The injunction was not equitable.
  5. The county ordinance is preempted by the Department of Natural Resources’s (DNR) authority to regulate groundwater withdrawal.

The appeals court rejected all Carlin Club’s arguments but the second. The court said:

  1. The language “affected by regulation” refers to the “district” not the “owner of real estate” in § 59.69(11). Therefore, the landowners did not need to show they suffered special damages in order for their claims to stand.
  2. The Lake Association was made up of individual property owners but did not own property itself, so its claims could not stand under § 59.69(11). The appeals court ordered the Lake Association to be removed as a party.
  3. An enforcement claim under § 59.69(11) is ripe, even before a zoning violation actually occurs, if plaintiffs show a “sufficient probability” that a violation will occur. Here, Carlin Club’s activities in preparation for pumping and transporting well water were enough for the landowners to show a sufficient probability the violation would occur.
  4. Circuit courts should not shift the burden of showing whether an injunction would be equitable from the plaintiff to the defendant in § 59.69(11) cases. Although the circuit court should not have shifted this burden to Carlin Club, the facts presented in the case still led the appeals court to the “only reasonable conclusion” that the injunction should be upheld.
  5. The general duty of DNR to regulate groundwater withdrawal does not interfere with the local ordinances at issue here.

Legislature to Intervene in Act 21 Cases

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The Legislature’s Joint Committee on Legislative Organization has voted to intervene in two cases addressing the application of 2011 Act 21. The 2011 legislation clarified that agencies may not enforce requirements unless explicitly permitted by statute or properly promulgated rule. The two cases, both titled Clean Wisconsin, Inc. v. DNR, would clarify the general scope of Act 21 in environmental cases.

One case (appeal no. 2018AP59) will decide whether Act 21 precludes the Department of Natural Resources (DNR) from considering cumulative environmental impacts in issuing high capacity well permits under Wis. Stat. § 281.34. DNR argues that Act 21 prevents the agency from considering environmental impacts not specifically noted in the statutes. DNR’s argument relies on a May 2016 formal opinion from former Attorney General Brad Schimel.

Clean Wisconsin argues that the 2011 Supreme Court decision Lake Beulah Management District v. DNR still holds. Lake Beulah broadly held that DNR has the authority to preserve waters of the state under the constitutional and statutory public trust doctrines. Since the Supreme Court decided Lake Beulah after the enactment of Act 21 but declined to address the Act’s bearing on the case, a decision in the Clean Wisconsin case would clarify DNR’s authority on high capacity well permits.

The second case (consolidated appeal nos. 2016AP1688 and 2016AP2502) will decide whether DNR has the authority to impose off-site groundwater monitoring requirements and an animal maximum for CAFO wastewater permits. In this case, Clean Wisconsin argues that a Wisconsin Pollution Discharge Elimination System permit allowing the expansion of Kinnard Farms CAFO in Kewaunee County should have included these restrictions. DNR argues Act 21 prohibits DNR from imposing the permit conditions because the statutes do not grant the agency explicit authority.

The Supreme Court accepted both Clean Wisconsin appeals on April 9 and stated it will hear oral arguments on the cases on the same date (not yet scheduled). Several business groups are participating as amici curiae and intervenors in the cases.

Previously, the Department of Justice (DOJ) sided with DNR in both cases. However, Attorney General Josh Kaul has filed two motions seeking to change DOJ’s position on the cases.

Rabitoy v. Billington (Safe Place Statute & Negligent Supervision)

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In Rabitoy v. Billington (2018AP270), the Court of Appeals District III held that a property owner was not liable for injuries sustained when an employee on his property misused equipment outside the scope of his employment.

Defendant Robert Billington employed Richard Klobucher, who lived on Billington’s property, for odd jobs on the property including repairing Billington’s vehicles. Although Billington expressly prohibited using his property for work on third-party vehicles, Klobucher decided to use Billington’s truck hoist to repair a truck belonging to his friend, plaintiff Timothy Rabitoy. During the repair work, the truck rolled off the hoist and injured Rabitoy. Rabitoy filed the instant lawsuit against Billington and Klobucher, claiming violation of Wisconsin’s safe place statutes, vicarious liability, and negligent hiring, training and supervision.

The appeals court dismissed all of Rabitoy’s claims. The Safe Place Act (Wis. Stat. § 101.11) did not apply because Rabitoy failed to introduce evidence that there was any unsafe condition. Instead, Rabitoy’s claims focused on Klobucher’s negligence in using the property equipment. Furthermore, there was no evidence Billington had notice of an unsafe condition on the property.

Finally, the court dismissed Rabitoy’s vicarious liability and negligent supervision claims because Klobucher was acting outside the scope of his employment. There was no issue of material fact as to whether Klobucher was acting in his capacity as Billington’s employee because Billington had expressly prohibited work on third-party vehicles.

Smith v. Goshaw (Property Manager Negligence)

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In Smith v. Goshaw (2017AP2008), the Court of Appeals District III held that the defendant was entitled to a new trial because the jury received instructions that erroneously elevated the standard of care landlords must exercise for upkeep of properties.

Plaintiff Nevin Smith was injured when a fire escape collapsed while he was standing on it. Smith filed the instant negligence action against his landlord Dale Goshaw. At trial, the circuit court accepted Smith’s request to modify the jury instructions for the standard of care for property owners. Generally, the jury instructions require a property owner to exercise ordinary care to avoid an unreasonable risk of harm. The modified jury instructions said, “Every building and all parts thereof shall be kept in good repair.”

Goshaw argued that the modified instructions elevated the standard of care from ordinary negligence to strict liability and thus misled the jury to find him negligent. The appeals court agreed with Goshaw, According to the court, the standard of ordinary care requires an analysis of the “totality of the circumstances,” including whether the property owner should have known about the repairs needed. Modifying the jury instructions to require all parts of buildings to be kept in good repair heightened the ordinary care standard to an absolute duty and misled the jury from taking into account the totality of the circumstances.

Because the modified instructions prejudiced the jury to find Goshaw negligent for repairs he might not have known about – a strict liability instead of ordinary negligence standard – the court awarded Goshaw a new trial with proper instructions.

 

Appeals Court Issues Stay of Injunction on Extraordinary Session Laws

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The Court of Appeals District III has issued a stay of the temporary injunction in League of Women Voters v. Evers, one of the cases challenging the constitutionality of the 2018 extraordinary session laws. The stay comes after a Dane County circuit court judge ordered the injunction of 82 appointments confirmed in the extraordinary session and the extraordinary session laws in their entirety.

The appeals court order reasons that the Dane County circuit court failed to evaluate the irreparable harm that could result from enjoining the legislation if it is later found valid. The order stays the temporary injunction and establishes an expedited appeal process with all briefs due by the end of April.

Read more about the League of Women Voters case.

Despite the appeals court order reinstating the extraordinary session laws in League of Women Voters, some parts of the extraordinary session laws are still unenforceable after a second Dane County judge issued a temporary injunction in a separate case, SEIU v. Vos. The SEIU injunction prevents enforcement of provisions requiring legislative approval for the attorney general to discontinue or settle cases, requiring transparency for agency guidance documents, and allowing for more legislative oversight of agency rulemaking, while leaving in place other portions of the laws. The defendant Legislature also plans to appeal this injunction, but there has yet to be an appeals court ruling on a stay.

Read more about the SEIU case.

Court of Appeals Decision: Emer’s Camper Corral, LLC v. Alderman (Negligent Procurement)

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In Emer’s Camper Corral, LLC v. Alderman (2018AP458), the Court of Appeals District III held that plaintiffs claiming negligent procurement by an insurance agent must establish that they could have obtained a non-injurious policy but for their agent’s alleged negligence. In this case, Camper Corral failed to produce evidence that it could have otherwise obtained a desired policy, so its agent Alderman did not cause Camper Corral’s damages.

After Camper Corral, a business that sells campers, had twice previously filed claims under previous insurers for approximately $100,000 in hail damage, Alderman procured an insurance policy through Western Heritage Insurance Company for Camper Corral to insure its inventory. The Western Heritage policy had a hail damage deductible of $5,000 per unit. According to Camper Corral, the following year Alderson told Camper Corral he obtained a reduced deductible of $1,000 per unit with a $5,000 total deductible cap. However, when Camper Corral filed a claim for another hail storm under the policy, the policy language actually retained the original $5,000 per unit.

Camper Corral filed the instant negligence action, seeking damages of amounts they were required to pay above the $5,000 total deductible cap they thought the policy included. Alderman argued that there was no evidence Camper Corral could otherwise have obtained a policy with the desired $1,000 per unit, $5,000 total deductible cap, so Alderman could not be held liable.

With no Wisconsin precedent to rely on, the appeals court looked to a Minnesota decision that requires plaintiffs to show they would have been able to obtain the desired policy terms absent the agent’s negligence. Camper Corral did not produce evidence to prove it could have obtained the desired hail damage policy, so its negligence claim failed.

 

 

 

Court of Appeals Decision: O’Brien v. Travelers Inn, LLC (Minimum Wage)

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In O’Brien v. Travelers Inn, LLC (2018AP1483), the Court of Appeals District IV held that employees are entitled to the minimum wage minus a statutorily set lodging deduction, regardless of the value of the lodging provided.

Travelers Inn compensated employee Deborah O’Brien solely with lodging at a value of $500 per month. Divided by the number of hours O’Brien worked, the value of the lodging equaled $12.17 per hour, which is above the minimum wage. However, Wisconsin statutes and administrative code require a maximum lodging deduction of $58 per week or $8.30 per day (Wis. Stat. § 104.035(1)(b)1.; Wis. Admin. Code § DWD 272.03(3)(a)1.).

Although the value of the lodging was more than the maximum allowable lodging deduction, the court held that Travelers could only deduct the maximum $58 per week or $8.30 per day from the minimum wage owed to O’Brien. Therefore, Travelers owed O’Brien wages beyond the lodging. The court held that Wisconsin statutes do not allow Travelers to contract out of the minimum wage and maximum lodging deduction obligations.

Additionally, the court found that Travelers could not claim a lodging deduction under federal law because it did not comply with record keeping requirements. The court awarded O’Brien back pay and liquidated damages and stated she is entitled to attorney fees under federal law.