Category: Courts of Appeals

4th District Court of Appeals Decision: Gage Corp. v. Tamareed Co. (Contract Dispute)

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In Gage Corp. v. Tamareed Co.(2017AP881), the Court of Appeals District IV held that Gage Corp. did not owe commission to sales agent Tamareed Corp. after Gage’s deal for a Saudi building project collapsed.

Tamareed procured a contract between Gage and the Saudi company. Gage and the Saudi company entered into an agreement, but Gage later discovered that the Saudi company was counterfeiting the design for its product. The two companies settled, and Gage offered Tamareed a portion of its settlement proceeds. Tamareed rejected the settlement funds and sought its full commission payment in court.

The court determined that email agreements between Gage and Tamareed established a contract between the parties that Gage would only pay Tamareed upon receiving payment for the goods it sold. Therefore, since Gage ultimately sold no goods to the Saudi company, Tamareed was not entitled to the full commission payment. The court rejected Tamareed’s argument that a prior case, Foster v. Holbrook-Armstrong Iron Co., created a blanket rule that sales agents should receive commission for procuring contracts between buyers and sellers, whether or not the sale ultimately goes through. The court ruled such a “procuring clause doctrine” favoring sales agents does not override contracts. Furthermore, the court said Tamareed could not pursue an unjust enrichment claim as an alternative to its breach of contract claim.

The court also rejected Tamareed’s argument that the circuit court erred in allowing expert witness testimony under the Daubert standard. The court ruled the expert used by Gage to testify to custom and usage in the trade industry was relevant and reliable, so the admissibility was at the proper discretion of the circuit court.

3rd District Court of Appeals Decision: Olson v. Wisconsin Mutual Insurance Co. (Off-Property Coverage)

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In Olson v. Wisconsin Mutual Insurance Co. (2017AP1567), the Court of Appeals District III held that a request for “full coverage” did not make an insurance agent negligent for failing to include off-property automobile coverage in a homeowner’s policy, nor did it make the policy eligible for reformation.

Jeffrey Keyes had automobile insurance through Wisconsin Mutual Insurance Co. He also had a farmowners policy from Rural Mutual Insurance Co. with attached umbrella liability coverage. The umbrella coverage specifically excluded coverage for occurrences related to the use of automobiles away from the covered property. When Keyes was involved in an accident on a public road, he sought coverage from Rural under the umbrella policy, and Rural denied coverage based on the off-property exclusion.

On appeal, Keyes sought reformation of his Rural policy because he claimed there was a “mutual mistake” in that the policy was issued with the off-property exclusion. Keyes contended that his request for “full coverage” meant his insurance agent should have included off-property occurrences in the policy and suggested his agent was negligent in implementing the off-property exclusion in the policy. Because Keyes never specifically asked for off-property coverage, the court denied his claim for policy reformation and his claim of agent negligence, citing precedent that generic requests for coverage do not trigger an obligation for agents to include coverage for specific risks in a policy.

The court also denied Keyes’s argument that his satisfying of the policy’s underlying insurance requirement through a separate insurer should have made him eligible for off-property umbrella coverage.

3rd District Court of Appeals Decision: Badgerland Overhead Door v. Today’s Overhead Door (Successor Garnishment Action)

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In Badgerland Overhead Door v. Today’s Overhead Door (2017AP714), the Court of Appeals District III held that Day Enterprises was liable for $20,000 owed to Badgerland Overhead Door after Day purchased assets and became successor to Today’s Overhead Door.

Day and Today’s Overhead Door entered into an asset purchase agreement that included the provision of a $20,000 credit to Today’s Overhead Door from Day. Following the purchase, Badgerland Overhead Door sought a garnishment action against Day, claiming it could collect from Day debts owed by Today’s Overhead Door because Day still owed the company the $20,000 credit.

Agreeing with the circuit court, the court of appeals held that the $20,000 credit was “property” eligible for garnishment under Wis. Stat. § 812.01(1). The court denied Day’s arguments that the circuit court improperly applied successor liability and that Today’s Overhead Door breached their contract with Day.

2nd District Court of Appeals Decision: Green Bay Sportservice, Inc. v. DWD (Overtime Exemptions)

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In Green Bay Sportservice, Inc. v. DWD (2017AP608), the Court of Appeals District II held that concessionaire for Lambeau Field, Green Bay Sportservice, does not meet standards of a seasonal recreational establishment that would exempt it from paying employees overtime.

Green Bay Sportservice (GBS) operates concessions for Green Bay Packers games at Lambeau Field and operates a year-round restaurant in Lambeau Field that is open to the public. GBS employees filed a complaint that GBS failed to pay them overtime. GBS claimed it was exempt because it is a seasonal recreational establishment under Wis. Admin. Code § DWD 274.04(8).

The court ruled that GBS was not exempt from overtime payments because it failed to meet the recreational establishment and seasonal requirements in the Department of Workforce Development regulations. GBS is not a recreational establishment because its year-round restaurant prevents it from being considered a “single establishment” with recreational establishment Lambeau Field. Furthermore, GBS’s non-concession operations outside of game days are not de minimis, so it cannot be considered solely a recreational establishment for football games hosted at Lambeau Field. GBS also failed the seasonal requirement because it failed to produce evidence that it operates significantly more during one half of the year than the other, thus requiring GBS to pay employees overtime.

4th District Court of Appeals Decision: City of Weyauwega v. Wisconsin Central Ltd. (FRSA Pre-Emption)

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In City of Weyauwega v. Wisconsin Central Ltd.(2017AP2298), the Court of Appeals District IV held that the Federal Railroad Safety Act (FRSA) pre-empts a city ordinance prohibiting trains from obstructing cross-streets for more than 10 minutes. Wisconsin Central had received several citations for blocking roads and argued that FRSA regulations pre-empt the City of Weyauwega’s ordinance.

The FRSA includes two saving clauses exempting states’ (in this case the city’s) regulations from pre-emption (49 U.S.C. § 20106(a)(2)). First, the city may enforce a regulation so long as federal regulations do not cover the same subject matter. Here, the court determined that the subject of the city’s ordinance was the operation and movement of trains. Federal regulations on speed, crossing, and brake testing mean Wisconsin Central could violate federal regulations if it complies with the city’s ordinance. Therefore, the federal regulations do cover the same subject matter, and the first saving clause does not apply.

The second saving clause states that the city may enforce a regulation that is necessary to reduce a local safety hazard. The city argued that blocking cross streets increases emergency services response times, creating a local safety hazard. However, the court determined that increased emergency response times are not an issue unique to Weyauwega, so the second saving clause does not apply.

Because the city’s ordinance failed to pass either saving clause, the FRSA pre-empts, and trains may block Weyauwega streets for more than 10 minutes.

4th District Court of Appeals Decision: General Beer v. Johnson (Procedural Arbitrability in Distribution Transfer)

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In General Beer v. Johnson (2017AP1288), the Court of Appeals District IV held that procedural issues related to statute-mandated arbitration should be solved in arbitration rather than in court.

In this case, a brewer transferred its distribution rights in a certain territory from Johnson Distributing, Inc. to General Beer-Northeast, Inc. The transfer statutorily (Wis. Stat. § 125.33(10)) required General Beer to compensate Johnson for the fair market value of the distribution rights. Since General Beer and Johnson could not agree on a fair market value, Wis. Stat. § 125.33(10)(d) required arbitration within 90 days. However, Johnson made the demand for arbitration after the 90 day period. Johnson argued arbitration could still proceed because the parties had mutually agreed to extend the 90 day period.

Specifically, the issue in this case was whether the timeliness of Johnson’s claim should be decided in court or by arbitration. The appeals court maintained, based on Wisconsin Supreme Court precedent, that issues of procedural arbitrability (including the timeliness of demand at issue here) should be decided in arbitration.

2nd District Court of Appeals Decision: Schultz v. LIRC (Discrimination Based on Disability)

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In Schultz v. LIRC (2017AP1169), the Court of Appeals District II found credible and substantial evidence to support a Labor and Industry Review Commission (LIRC) decision that Manitowoc County discriminated against an employee who was laid off and not rehired for a different position.

While working for Manitowoc County as a highway patrolman, Scott Schultz requested to be removed from flag duty due to a back injury. Schultz did not provide medical documentation, so the request was not considered an accommodation for disability. Several years later, Schultz was laid off along with 16 other employees. Many of these employees applied for new highway maintenance worker positions. Schultz applied, but the county did not grant him an interview. Schultz filed a complaint that the county discriminated against him based on his back disability in its decision to terminate and not rehire him.

In an appeal to LIRC, LIRC concluded that Schultz’s back condition was not considered a disability under Wisconsin statutes. Even if it was considered a disability, LIRC determined the condition was unrelated to the county’s decision to terminate and not rehire him.

The appeals court found the testimony of the Manitowoc County interviewers stating that Schultz’s attitude and people skills were subpar to other candidates substantial enough evidence to uphold the LIRC decision.

3rd District Court of Appeals Decision: Renstrom v. Progressive (Injury Coverage)

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In Renstrom v. Progressive Preferred Insurance, Co. (2017AP859), the Court of Appeals District III held that the plaintiff’s injuries were not covered because the Progressive policy did not list the location at which they occurred as a scheduled premise.

Plaintiff Rolayne Renstrom was injured in an accident with a wood splitter on a cabin property owned by Pauline Reagor. The cabin property was insured by Little Black Mutual Insurance Company. Reagor also had a policy with Progressive that listed only her condominium in Stillwater, Minnesota as a covered scheduled premise. After the accident Renstrom filed the present suit against Progressive seeking coverage for her injuries.

Despite Renstrom’s arguments that the policy’s language was ambiguous, the court upheld that her injuries were not covered because the cabin property was not listed as a scheduled premise under the Progressive policy. Furthermore, the court maintained that Renstrom’s injuries did arise from Reagor’s ownership of the cabin property because, among other reasons, they were splitting wood to use for the cabin’s stove when the injury occurred. The causal connection between the injury and the unscheduled cabin property means Progressive was not required to cover the injury.

4th District Court of Appeals Decision: Arty’s v. DOR (Alcohol Taxation)

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In Arty’s v. DOR (2017AP886), the Court of Appeals District IV sided with the Department of Revenue’s (DOR) interpretation of the liquor occupational tax on a company producing premixed cocktails. The court also upheld the constitutionality of the tax’s structure.

Arty’s produces bottled premixed cocktails. First, it buys distilled spirits from a distillery. Then, it mixes the spirits with other nonalcoholic ingredients and bottles the product to sell to wholesalers. Wholesalers then sell the bottles to retailers. The premixed bottles are 6.9 percent alcohol by volume.

The questions before the appeals court included:

  1. When does Arty’s incur tax liability under Wisconsin’s liquor occupational tax (Wis. Stat. § 139.03(2m))?
  2. How much of Arty’s final bottled product should be taxed?
  3. Is the structure of the liquor occupational tax unconstitutional?

Under the first question, the court determined that Arty’s incurs tax liability when it sells its mixed bottled product to wholesalers. The court decided that Arty’s is a “rectifier” defined in Wis. Stat. § 125.02(16)(c) because it mixes spirits with nonalcoholic ingredients. Wis. Stat. § 134.04(4) says no taxes are levied in transactions in bulk between manufacturers (i.e. the distilleries) and rectifiers (i.e. Arty’s). Because Wisconsin law states that liquor taxes are levied at the “time of the first sale” (Wis. Stat. § 139.06(1)(b)), the court reasoned that the § 134.04(4) exclusion forced the transaction between Arty’s and wholesalers to be the “first sale” where tax liability is incurred.

Under the second question, the court determined that Arty’s tax calculation should include the entire content of the bottle, not just the alcoholic portion. The structure of the liquor occupational tax creates three categories of alcoholic beverages, each taxed at a different level: intoxicating liquor (defined as beverages with 0.5 percent or more alcohol by volume, excluding fermented malt beverages), wine, and fermented malt beverages. DOR considered Arty’s products in the highest-taxed intoxicating liquor category. While Arty’s argued the statues are ambiguous as to whether the nonalcoholic and alcoholic portions of each beverage should be taxed, the court agreed with DOR’s taxation of the entire content of the bottle.

The court also rejected Arty’s constitutional equal protection challenge of the tax structure. The court determined that the legislature had a rational basis in creating and taxing differently the three classes of alcoholic beverages based on type of liquor rather than alcohol content because the current structure is easier to enforce.

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

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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.