Category: Courts of Appeals

Paynter v. ProAssurance Wisconsin Insurance Co. (Medical Malpractice Coverage)

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In Paynter v. ProAssurance Wisconsin Insurance Co. (2017AP739), the Court of Appeals District III held that a medical malpractice insurance policy did not provide coverage for a doctor’s alleged liability connected with services performed in another state.

The underlying claim in the case arose when Dr. James Hamp, who operates offices in both Wisconsin and Michigan, misdiagnosed a growth on patient David Paynter, a Michigan resident. Paynter first saw Dr. Hamp in his Michigan office, but Dr. Hamp called Paynter with the misdiagnosis from his Wisconsin office. Paynter was residing in Michigan at the time of the call and for the next four years before he found out his growth was cancerous.

Paynter sued Dr. Hamp and his Wisconsin malpractice insurer ProAssurance, claiming both negligence and violation of the patient’s right to informed consent. The Wisconsin Supreme Court dismissed Paynter’s informed consent claim based on Wisconsin’s borrowing statute, remanding the negligence claim to the court of appeals. The issue remaining on appeal was whether the ProAssurance policy provided coverage for the negligence claim.

The ProAssurance policy included a location endorsement, which stated ProAssurance would not cover “liability arising from, relating to, or in any way connected with the rendering of or failure to render professional services…in the State of Michigan and/or outside the State of Wisconsin.” The appeals court agreed with ProAssurance that, because Dr. Hamp first tested Paynter in Michigan, the alleged negligent misdiagnosis was “connected with” services provided in Michigan. Therefore, the ProAssurance policy’s location endorsement unambiguously excluded coverage for Paynter’s negligence claim.

State of Wisconsin ex rel. Collison v. City of Milwaukee Board of Review (Property Tax Assessment)

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In State of Wisconsin ex rel. Collison v. City of Milwaukee Board of Review (2018AP669), the Court of Appeals District I upheld the tax assessment of a property with environmental pollution.

Property owner Ronald Collison appealed a $31,800 tax valuation of his property, arguing the property’s fair market value is zero dollars due to environmental pollution. However, the court upheld the assessor’s decision to derive market value by potential income generated from the property. The assessor was aware that there was contamination but had no information regarding the extent or cleanup costs. In reaching the $31,800 valuation, the assessor found that the property could generate income as a parking lot regardless of contamination. The court found that the assessor properly used the income assessment approach because it represented the highest and best use of the property.

Collison further challenged the legality of the City of Milwaukee Environmental Contamination Standards (CMECS), which he argued conflict with a requirement in Wis. Stat. § 70.32(1m) requiring assessors to consider impairment value from environmental pollution. CMECS prohibit assessors from valuing property as contaminated unless an audit has substantiated the contamination. The court rejected Collison’s argument because the assessor took into account impairment from environmental pollution even though the property had not undergone an audit.

Finally, Collison argued that the income approach in the Wisconsin Property Assessment Manual conflicts with § 70.32(1m). The court held that the assessor’s use of the income approach was compatible with the statutory requirements to take environmental pollution into account.

Mueller v. LIRC (Worker’s Compensation)

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In Mueller v. LIRC (2018AP707), the Court of Appeals District III held that employees must show actual wage loss attributable to a work-related injury in order to be eligible for temporary disability worker’s compensation benefits. Employees may not receive temporary disability if they voluntarily retire, nor if subsequent attempts to re-enter the labor market are not impaired by a work-related injury.

Janet Mueller was injured when working for Ashley Furniture. Ashley placed Mueller on light duty with supplemental temporary partial disability benefits. Four months later, Mueller retired. Shortly after her retirement, Mueller reapplied for employment at Ashley but was not rehired. Mueller later found a part-time retirement job at a café.

Mueller filed this lawsuit seeking worker’s compensation benefits from Ashley during her retirement and during several months of her new part-time job. The court upheld the Labor & Industry Review Commission’s (LIRC) decision finding that Mueller could not show an actual wage loss entitling her to benefits because her voluntary retirement from Ashley was unrelated to her injury.

Alternatively, Mueller argued that her attempts to re-enter the labor market after retirement showed an actual wage loss entitling her to benefits. The court upheld the LIRC decision finding that Mueller showed no evidence her attempts to re-enter the labor market were impaired by a work-related injury. The record showed Ashley declined to hire Mueller because better applicants applied, and Mueller voluntarily chose to work part-time at the café.

 

 

Chapp v. Colgate-Palmolive Co. (Talcum Powder)

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In Chapp v. Colgate-Palmolive Co. (2018AP937), the Court of Appeals District I held that the plaintiff presented insufficient evidence that Colgate talcum powder caused his wife’s cancer and therefore upheld summary judgment in favor of Colgate.

Ruth Chapp used Colgate’s Cashmere Bouquet talcum powder daily. Her husband Dale Chapp, who worked in an occupation where asbestos was present, acknowledged his wife was also regularly exposed to asbestos from being around his products, machinery, and work clothes. After Ruth died from mesothelioma, Chapp filed this lawsuit against Colgate, alleging its Cashmere Bouquet talcum powder contained asbestos that was a contributing cause to her cancer.

Chapp contended that the talc deposits where Colgate obtained its supply also contained asbestos. Some tests showed asbestos in the Colgate talc products, including the type of talcum powder that Ruth used, but Colgate’s expert challenged those tests, stating they were based on unreliable methodologies that are no longer used today. The actual product Ruth used was never tested for asbestos.

The court found that the probability of whether or not Ruth used Cashmere Bouquet talcum powder containing asbestos was speculative, so summary judgment by the court, not a jury trial, was appropriate. Any inference that the talc mines Colgate used contained asbestos and that the Cashmere Bouquet talcum powder Ruth used actually contained asbestos would be based on speculation or conjecture.

Furthermore, the court held that the exception in Wis. Stat. § 907.03 allowing experts to rely on inadmissible evidence did not apply in this case. Chapp presented expert testimony from two doctors, who each opined that Cashmere Bouquet contained asbestos which caused Ruth’s cancer. The court determined that these experts could not use § 907.03 to bring in the otherwise inadmissible hearsay that the Cashmere Bouquet talcum powder contained asbestos because that opinion was outside of their expertise as physicians.

Because Chapp did not present sufficient evidence to establish causation between the Colgate product and his wife’s cancer, the court upheld summary judgment dismissing the lawsuit against Colgate.

 

Freund v. Nasonville Dairy, Inc. (Receivership Proceedings – Voidable Preference)

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In Freund v. Nasonville Dairy, Inc. (2018AP1215), the Court of Appeals District III held that, in receivership proceedings, a preference is voidable under Wis. Stat. § 128.07(2) if an ordinarily prudent business person would have reasonable cause to believe 1) the transferor is insolvent and 2) the transfer would enable the recipient to obtain a greater percentage of debt than other creditors of the same class.

Wisconsin’s creditors’ action law (Wis. Stat. Ch. 128) encourages equal distribution of assets when an entity cannot fully pay its creditors. When an insolvent debtor obtains a court-appointed receiver to manage its assets, the receiver may recover certain preferential payments made by the debtor. A payment is preferential if it allows a creditor to obtain a greater percentage of its debt than any other creditor of the same class (§ 128.07(1)(a)). Section 128.07(2) deems preferential payments voidable if the payment was made within four months of the appointment of the receiver and the recipient has reasonable cause to believe the payment would effect a preference.

The issue in this case was whether § 128.07(2) requires the receiver to prove not only 1) that the recipient had knowledge the debtor was insolvent, but also 2) that the recipient had reasonable cause to believe they would obtain a greater share of their debt than other creditors of the same class. The court held that the statute does require proof of both elements to determine a payment voidable and recoverable by the receiver.

In this case, the court ordered Nasonville Dairy to return a voidable preferential payment to Liberty Milk Marketing Cooperative’s receiver. The court found that Nasonville 1) knew Liberty Milk was insolvent because Nasonville had been engaging in unusual business loan transactions with Liberty Milk that were increasing in size and frequency; and 2) had reasonable cause to believe that Nasonville would obtain a greater share of their debt than other creditors of the same class because Nasonville knew Liberty Milk was using the loaned funds to attempt to keep up with payments to its producers. Because the preferential payment to Nasonville met both elements of § 128.07(2), the payment was voidable, and the court ordered the payment returned to Liberty Milk’s receiver.

 

 

Wisconsin & Milwaukee Hotel, LLC v. City of Milwaukee (Property Tax Assessment)

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In Wisconsin & Milwaukee Hotel, LLC v. City of Milwaukee (2018AP1744), the Court of Appeals District I upheld property tax assessments of a downtown Milwaukee hotel.

Wisconsin & Milwaukee Hotel (WMH) owns and operates the Milwaukee Marriott Downtown. The city assessor valued the property at $24 million in 2014 and $37 million in 2015. WMH challenged both assessments, arguing the method of valuation violated both the Wisconsin Property Assessment Manual and the state constitution’s Uniformity Clause.

The court found that the assessor did not violate the law when she used an income-based method for valuing the hotel. Wisconsin statutes and the assessment manual lay out three tiers of methods for property assessment: 1) recent sales of the property, 2) comparison to sales of similar property, and 3) analysis of income generated by the property. The court agreed with the assessor that there were no recent sales and no similar sales to compare with the Marriott because other hotels sold differed in age, space, location, amenities, and other features. The assessor’s use of the income approach to value a hotel was consistent with the assessment manual.

The court further found that the assessments did not violate the Uniformity Clause (Wis. Const. Art. VIII § 1), which provides “the rule of taxation shall be uniform.” WMH contended that the Marriott’s tax burden as assessed was significantly higher than other similarly located hotels of the same class. The court held WMH failed to establish a uniformity violation because it did not provide evidence of what it believed would be a fair market value. 

Because WMH did not overcome the presumption of correctness in favor of the assessor, the court upheld the property tax assessments.

 

 

Paul R. Ponfil Trust v. Charmoli Holdings, LLC (Settlement Agreement)

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In Paul R. Ponfil Trust v. Charmoli Holdings, LLC (2018AP1321), the Court of Appeals District II held that a settlement agreement was unenforceable because it lacked agreement on material terms.

During the course of this action, the Trust and Charmoli signed a “Mediation Settlement Agreement,” which included five paragraphs of terms related to their joint ownership of a quarry. The fifth paragraph was an agreement between the parties to sign a separate substantive agreement on liability and indemnity.

However, after many subsequent communications between Trust and Charmoli, the parties were unable to reach an agreement on liability and indemnity. The Trust filed a motion to compel enforcement of the Mediation Settlement Agreement without the separate substantive agreement.

The court held that the Mediation Settlement Agreement was not enforceable because the parties had not reached an agreement on the material terms of paragraph five, related to liability and indemnity. The court cannot enforce settlement agreements under Wis. Stat. § 807.05 if the agreements contain indefinite terms that were never agreed to in writing.

In a dissent, Judge Reilly argued that the Mediation Settlement Agreement was enforceable because the parties expressly agreed it settled the case. The dissent states that paragraph five of the Mediation Settlement Agreement was not a material term but a “clean-up paragraph” to execute details of the agreement. Therefore, the Mediation Settlement Agreement was enforceable even without a separate substantive agreement.

Convenience Store Leasing & Management v. Annapurna Marketing (Frustration of Purpose)

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In Convenience Store Leasing & Management v. Annapurna Marketing (2017AP1505), the Court of Appeals District II held defendants could not prove frustration of purpose excused breach of their fuel supply agreement with the plaintiff.

After purchasing a gas station, plaintiff Bulk Petroleum Corp. entered into a fuel supply agreement with defendants Annapurna (AP) Marketing. The agreement required AP Marketing to purchase a certain amount of fuel from Bulk. Bulk was required to select a “Branded Supplier,” in this case major brand fuel marketer U.S. Oil/Exxon Mobil, to supply fuel to the station. U.S. Oil required AP Marketing to make several cosmetic changes to the building.

AP Marketing ultimately decided that U.S. Oil’s branding requirements were too costly and walked away from the fuel supply agreement. Bulk filed the instant action for breach of contract. AP Marketing argued its breach of the contract was excused by frustration of purpose.

The appeals court held that Bulk’s claim that AP Marketing did not comply with the fuel supply agreement was not excused by frustration of purpose.  U.S. Oil’s costly branding requirements did not frustrate the principal purpose of the contract. The principal purpose of the contract was to supply fuel, and lower profits due to branding requirements do not frustrate that purpose. Furthermore, there was no basic assumption under the fuel supply agreement that such branding upgrades would not be required. In fact, the contract specifically referenced that AP Marketing may have to make cosmetic changes as required by the selected Branded Supplier. Because AP Marketing could not meet the principal purpose and basic assumption elements of the frustration of purpose doctrine, the court reinstated Bulk’s claim that AP Marketing breached the fuel supply agreement.  

Eco-Site, LLC v. Town of Cedarburg (Conditional Use Permit for Cell Tower)

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In Eco-Site, LLC v. Town of Cedarburg (2018AP580), the Court of Appeals District II upheld a town’s denial of a conditional use permit for a cell tower.

Eco-Site and T-Mobile applied to the Town of Cedarburg for a conditional use permit to place a cell tower on a horse farm in the town. The desired location for the tower was zoned as agricultural, and the surrounding area was zoned as residential. The town board denied the conditional use permit for reasons including: the tower would reduce value of the surrounding properties, was incompatible with the “rural and rustic” adjacent land, and would be detrimental to public welfare because of its effect on the “beautiful and scenic area.”

Eco-Site sought judicial review of the permit denial, arguing that the town’s decision was not in accordance with its zoning ordinances and violated statutory requirements that towns not prohibit cell towers solely because of aesthetic concerns.

The court found that the town properly applied its zoning ordinances. Cedarburg’s conditional use ordinances require that the use will not be detrimental to public welfare and will be compatible with adjacent land. The court agreed with the town that the cell tower would be incompatible with the agricultural and residential uses of the adjacent land. The tower would be detrimental to public welfare because it would diminish property values.

The court also found that the town did not violate state law prohibiting towns from denying cell towers solely for aesthetic reasons. Though the board’s comments on the application contained many aesthetic complaints, the court held that the aesthetic impact was distinct from the economic impact of lower property values from the cell tower. The law (Wis. Stat. 66.0404(5)(g)) only prohibits denial based solely on aesthetic concerns. Because the town based its decision on the economic impact and incompatibility with the town’s ordinances, the town’s decision was valid.

In a concurring opinion, Judge Reilly agreed with the town’s permit denial but with different reasoning than the court. The concurring opinion argues that Eco-Site lacked evidence it needed a new tower at that specific site. Eco-Site explained that the new tower would accommodate more carriers. However, the concurring opinion found no evidence the town needed a new tower and additional carriers to meet its communications needs.

Garfield Baptist Church v. City of Pewaukee (Municipal Fees)

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In Garfield Baptist Church v. City of Pewaukee (2018AP673), the Court of Appeals District II held that entities must challenge municipal sewerage and storm water fees with the Public Service Commission (PSC), not in circuit court. Furthermore, the burden of proving that municipal fees do not bear a “reasonable relationship” to the services provided should be on the challenger, not the defendant municipality.

Garfield Baptist Church alleged that the City of Pewaukee’s storm water management fees were unreasonable and inequitable. The court of appeals rejected the church’s means of challenging the city fees. Wis. Stat. § 66.0821(5) allows users to file complaints regarding unreasonable and unjust sewerage and storm water rates with PSC. PSC decisions, like other agency decisions, are then subject to judicial review under Wis. Stat. Ch. 227. The appeals court found that under that statute the church should have first filed a complaint with PSC about the city’s imposed fees.

The court of appeals also determined that the circuit court erred in imposing the burden of proof on the city to establish that its fees bore a “reasonable relationship” to the service provided, as required under Wis. Stat. § 66.0628(2). According to the court, common law generally places the burden of proof in municipal fee cases on the party challenging the fee (in this case the church). Additionally, § 66.0628(4) allows parties challenging municipal fees to appeal to the tax appeals commission and places the burden of proof of “reasonable relationship” on the city. The court found that by stating that the burden of proof is on the city in tax appeals commission cases, the law implies that the burden of proof is on the challenger in cases not before the tax appeals commission. Therefore, the burden of proof should be on the church to establish that the fees imposed by the city did not bear a reasonable relationship to the sewerage and storm water services provided.

In a concurring opinion, Judge Reilly agreed that the church did not properly challenge the city fees. However, the concurring opinion would have required the church to appeal to the tax appeals commission under § 66.0628(4), not PSC. According to the concurring opinion, PSC should handle challenges to rates, whereas the tax appeals commission should handle challenges to fees.