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Fankhauser v. Hestad (Damages Award)

Posted on by Hamilton

In Fankhauser v. Hestad (2019AP110), the Court of Appeals District III upheld a $500,000 damages award against a garbage collector who was driving on a customer’s bridge when it collapsed.

Curtis Hestad, an employee of Allied Waste Services, drove an Allied vehicle onto the Fankhausers’ property. The Fankhausers had instructed Allied to use the west entrance to their property when collecting their garbage, instead of the east entrance. Access from the east entrance required crossing a bridge on the Fankhausers’ property. When Hestad drove to pick up the Fankhausers’ trash for the first time, his GPS took him to the east entrance, and he crossed the bridge. The bridge collapsed under the weight of Hestad’s truck.

The Fankhausers sued Hestad and Allied for negligence, and a jury awarded them $500,000 in damages. Hestad and Allied filed counterclaims for negligence and violation of the safe place statute, but the circuit court dismissed the counterclaims. Hestad and Allied appealed both the jury award and the dismissal of their counterclaims.

The appeals court upheld the dismissal of Hestad and Allied’s counterclaims, finding that Hestad was a trespasser on the Fankhausers’ property when the bridge collapsed. Wisconsin case law has established that landowners are not liable to trespassers, nor does the safe place statute protect trespassers. The court found Hestad to be a trespasser because the Fankhausers had specifically instructed Allied – and Allied had instructed Hestad – to use the west entrance to their property. Since Hestad did not have permission to enter via the east entrance, the court considered him a trespasser and dismissed the negligence and safe place statute claims.

The appeals court also upheld the jury award of $500,000 to the Fankhausers. The appeals court found:

  • The circuit court property denied the defendants’ motion for a directed verdict because there was sufficient evidence for the jury to determine the precollapse value of the bridge.
  • The $500,000 award was not excessive because there was credible evidence to support the award (i.e. replacement cost, lost property value without a replacement, the Fankhausers’ loss of privacy and loss of recreational and access uses of the bridge).
  • The circuit court properly denied cross-examination questions the defendants asked the Fankhausers about their maintenance of the bridge. The court determined that such questions would have confused the jury, since the Fankhausers’ negligence in bridge maintenance was not at issue.
  • The Fankhausers’ expert on replacement cost used reliable principles and methods.
  • The circuit court did not need to include separate questions on the special verdict for different categories of damages.

For these reasons, the appeals court affirmed the circuit court’s dismissal of Hestad and Allied’s counterclaims and upheld the jury award of $500,000 to the Fankhausers.

 

 

ATRA Releases 2019-20 Judicial Hellholes Report

Posted on by Hamilton

The American Tort Reform Association recently released its 2019-20 Judicial Hellholes report. The annual report highlights some of the worst-ranking civil justice climates in the country.

Topping the report this year are Philadelphia, California and New York City. Wisconsin neighbors Illinois and Minnesota also made the top ten list, at #5 and #9, respectively.

The report also takes a closer look at three civil justice topics growing across the country: the expansion of public nuisance law and locality litigation, increased employment liability and reduction of arbitration, and growth of privacy and security litigation.

Wisconsin was lauded in last year’s Judicial Hellholes report for positive civil justice reforms, including 2017 Wisconsin Act 235 and the Wisconsin Supreme Court’s Mayo decision. Act 235 – authored by Republican Sens. Tom Tiffany (Hazelhurst) & Dave Craig (Big Bend) and Reps. Mark Born (Beaver Dam) & John Nygren (Marinette) – included landmark reforms to Wisconsin’s rules of procedure regarding discovery and class actions, as well as a nationally recognized, groundbreaking requirement that litigation funding deals be disclosed in civil cases.

ILR Names Top 10 Most Ridiculous Lawsuits of 2019

Posted on by Hamilton

The U.S. Chamber Institute for Legal Reform recently released its list of Most Ridiculous Lawsuits of 2019. Number one this year was a lawsuit against Blistex, alleging that the packaging of their lip balm prevented the plaintiff from accessing the lip balm left at the bottom of the tube. Also making the top ten this year were silly lawsuits over food labels, the TV show Dexter, the video game Fortnite, and an online review of an animal hospital.

Read the full list.   

Oral Argument Preview: Correa v. Woodman’s Food Market (Personal Injury)

Posted on by Hamilton

On Jan. 21, the Wisconsin Supreme Court will hear oral arguments in Correa v. Woodman’s Food Market, which will address the standards of proof for establishing constructive notice of a hazard and the determinations a jury may make from video surveillance in premises liability cases. 

 

Facts & Lower Court Decisions

In this case, plaintiff Jose Correa slipped and fell on an unidentified substance in a Woodman’s store and subsequently filed negligence and safe-place-statute (Wis. Stat. § 101.11(1)) claims against Woodman’s. A trial court found Woodman’s negligent and awarded Correa nearly $170,000 in damages. Woodman’s appealed, arguing Correa’s evidence that Woodman’s had constructive notice of the spill was speculative.

The Court of Appeals found that Correa could not prove the spill by which he was injured existed for a long enough time period to establish the store was negligent. Video footage before the accident did not show a spill happening and could not identify any substance on the floor of the store. Because Correa lacked sufficient evidence, the appeals court ruled in favor of the store. 

 

Issues Presented at Supreme Court

When the Supreme Court hears oral arguments this month, justices will revisit the court’s position in Kochanski v. Speedway SuperAmerica (2014 WI 72).  Kochanski similarly dealt with whether juries can draw reasonable inferences from existing video surveillance in premises liability cases. In Correa, the Supreme Court will review whether the Court of Appeals improperly expanded the Kochanski holding and will generally revisit its position on the role of video surveillance in constructive notice in premises liability claims.

Supreme Court Accepts Agency Rulemaking Case Papa v. DHS

Posted on by Hamilton

The Wisconsin Supreme Court recently accepted five new cases, including one that will again address agency rulemaking, following the court’s recent decision in Lamar Central Outdoor. The newly accepted case, Papa v. DHS, will determine whether a Wisconsin Department of Health Services (DHS) policy in DHS’s Medicaid Provider Handbook has the “force of law” (Wis. Stat. § 227.01(13)) and should be promulgated as an administrative rule and subject to judicial review.

Medicaid-certified nurse Kathleen Papa and Professional Homecare Providers, Inc. (PHP) filed this lawsuit against DHS regarding Topic #66 in DHS’s Medicaid Provider Handbook. Topic #66 states that Medicaid providers must “meet all applicable program requirements” for reimbursement. If providers fail to meet all requirements, DHS can recoup payments from the providers. Papa and PHP argued that Topic #66 was an illegal unpromulgated administrative rule and that the policy exceeded DHS’s explicit statutory authority under Wis. Stat. Ch. 227.

The Supreme Court will review the Court of Appeals finding that Topic #66 was not an administrative rule, and thus Papa and PHP could not obtain a declaratory judgement via Wis. Stat. Ch. 227 judicial review of administrative rule proceedings. Additionally, the Supreme Court will review whether Topic #66 – if not a rule – is a guidance document also subject to judicial review under Ch. 227.

Lamar Central Outdoor, LLC v. Division of Hearings & Appeals (Rulemaking Requirements)

Posted on by Hamilton

In the Wisconsin Supreme Court’s first decision affecting the business community in the 2019-20 term, the court issued an important opinion on agency rulemaking in Lamar Central Outdoor, LLC v. Division of Hearings & Appeals (2019 WI 109). The Supreme Court held that the Department of Transportation (DOT) was required to promulgate a rule when it changed its interpretation of statutes regarding nonconforming billboards.

The billboard in this case was erected on a state highway in 1991. When the highway became an interstate in 1996, the sign was deemed legal but nonconforming according to state law. Lamar acquired the legal, nonconforming billboard in 1999. In 2012, Lamar sought a permit from DOT to remove vegetation obstructing the sign. From the photographs in Lamar’s permit application, DOT recognized that the sign had been enlarged by extensions in violation of Wis. Admin. Code § TRANS 201.10(2)(e). Although Lamar had removed the extensions, DOT determined that the previous existence of illegal enlargements to the billboard caused it to lose its legal, nonconforming status. DOT ordered Lamar to remove the sign, and Lamar appealed.

The Supreme Court decided the case in favor of Lamar on the grounds that rulemaking requirements in Wis. Stat. Ch. 227 require DOT to promulgate a rule before it changed its interpretation of the billboard nonconforming use statutes.

DOT argued that under Wis. Stat. § 84.30(11), it could order Lamar to remove the billboard because it temporarily exceeded its legal size. However, DOT had previously granted legal, nonconforming sign owners 60 days to cure violations, as Lamar did here. Lamar argued that, according to Ch. 227 rulemaking requirements, DOT could not change its interpretation of whether § 84.30(11) allows legal, nonconforming sign owners a right to cure without promulgating an administrative rule. Under Ch. 227, DOT must promulgate as a rule “each interpretation of a statute which it specifically adopts to govern its enforcement or administration of that statute” (§ 227.10(1)).

The court agreed with Lamar that Ch. 227 required DOT to promulgate a rule before it interpreted § 84.30(11) as not allowing legal, nonconforming sign owners a right to cure. The court rejected DOT’s arguments as follows:

  1. DOT argued its order for Lamar to remove the sign was a contested case decision exempt from rulemaking under § 227.10(1). (“An interpretation of a statute made in the decision of a contested case…does not render it a rule or constitute specific adoption of a rule and is not required to be promulgated as a rule.”) The court said that though § 227.10(1) does not require DOT to promulgate rules for every contested case applying its interpretation of a statute, DOT must promulgate rules specifying a new interpretation of a statute before it can apply the new interpretation in a contested case. Here, the court ruled, DOT could not create a new interpretation of § 84.30(11) via the Lamar contested case before it promulgated a rule specifying its new interpretation of the statute to not allow a right to cure.
  2. DOT argued § 84.30(11) is clear and unambiguous, so its interpretation that Lamar had no right to cure the violation was simply conforming to statutory requirements. According to DOT, an agency conforming to unambiguous statutory requirements does not require new rulemaking under a 1976 case, Schoolway Transportation Co. v. DMV. However, Schoolway held that rulemaking is required for agencies changing their interpretation of ambiguous statutes. Here, the court found § 84.30(11) was ambiguous as to whether Lamar had a right to cure its billboard violation, so rulemaking was required for DOT to change its interpretation of the statute.

Thus, the court unanimously decided in Lamar to require rulemaking when agencies change their interpretation of an ambiguous statute. This case could set the stage for other rulemaking cases to come in the 2019-20 term. 

 

Western National Mutual Insurance Co. v. Advanced Disposal Services Solid Waste Midwest, LLC (Jury Verdict on Damages)

Posted on by Hamilton

In Western National Mutual Insurance Co. v. Advanced Disposal Services Solid Waste Midwest, LLC (2018AP2213), the Court of Appeals District IV upheld a jury’s award of $25,000 in damages to American Wood Recycling for a trailer damaged by American Disposal.

American Wood alleged that American Disposal negligently overloaded one of American Wood’s trailers, which resulted in a $50,289 invoice for the total cost of repairs. At trial, the jury found that $25,000 would fully compensate American Wood for damage to its trailer. American Wood appealed that verdict.

The court of appeals upheld the jury verdict, finding that there was evidence to support the jury’s damages award. At trial, American Wood and American Disposal disputed how much of the repairs were pre-existing damage and what were new damages due to American Disposal’s negligent overloading. Although the total cost of both pre-existing and new damages repairs was $50,289, the court found sufficient evidence to support the jury’s finding that $25,000 was sufficient for repairs of the new damage from American Disposal’s negligent overloading.  

William Sesing Construction, Inc. v. American Bank (Liability for Embezzlement)

Posted on by Hamilton

In William Sesing Construction, Inc. v. American Bank (2018AP1126), the Court of Appeals District II held that American Bank did not breach its contract nor was it negligent when a Sesing employee embezzled funds from an American Bank account.

Sesing hired Denise Heffner as its bookkeeper. In 2013, Sesing discovered that Heffner was embezzling money by writing to herself blank checks that had been signed by authorized Sesing signatories. Sesing also alleged that Heffner transferred funds without authorization from the Sesing money market account to its checking account, both held by American Bank. Sesing filed this lawsuit against American Bank, claiming breach of contract and negligence and seeking to recoup funds transferred by Heffner from the money market to the checking account.  

Citing the 2019 Wisconsin Supreme Court decision in Koss Corp. v. Park Bank, American Bank argued that Heffner was a fiduciary under Wisconsin’s Uniform Fiduciaries Act (UFA) (Wis. Stat. § 112.01), and Sesing failed to show that American Bank acted in bad faith according to the UFA. Sesing disputed whether Heffner was a fiduciary, but the court found that American Bank was not negligent regardless of the UFA’s applicability.

Instead, the court found that Sesing failed to provide evidence that American Bank breached any of its duties when it permitted Heffner to transfer funds between the two Sesing accounts. The court found that American Bank acted in accordance with the agreed upon security protocols regarding transfers. American Bank could not have known Heffner was impersonating an authorized Sesing employee when she made the unauthorized transfers. American Bank also provided monthly statements to Sesing, which could have alerted Sesing to any irregular activity.

Finally, the court found American Bank could not be negligent because Heffner’s transfers of funds from the money market to the checking account were not the proximate cause of Sesing’s loss. When the money was transferred to the checking account, it was still in Sesing’s control. Heffner’s removal of money from the checking account, not the transfer of funds between accounts, led to Sesing’s losses.

Payette v. Marx (Prejudgment Interest)

Posted on by Hamilton

*Case recommended for publication.

 

In Payette v. Marx (2018AP627), the Court of Appeals District III held that insurers do not owe prejudgment damages under Wis. Stat. § 628.46 when a third party demands general damages and the insurer is not certain it actually owes the demanded sum.

Defendant David Marx struck and killed plaintiff Payette while Payette was biking on a county highway. Marx had a $500,000 automobile insurance policy with SECURA and $1 million in additional coverage with 1st Auto.

Payette’s estate estimated damages related to the accident at $3.5 million to $5 million and sent 1st Auto a demand package seeking the full $1 million policy limit. The demand package listed:

  • $7,806.42 in medical and funeral expenses,
  • $1,988,779 in future damages, and
  • an unspecified amount of damages for Payette’s conscious pain and suffering.

When 1st Auto declined to comply with the demand package, the Estate filed this lawsuit against 1st Auto. The jury awarded the Estate a total of $672,806.42 in damages. SECURA had already paid the Estate its $500,000 policy limit, leaving 1st Auto owing $172,806.42.

Before the appeals court in this case was the question of whether 1st Auto owed prejudgment interest on that amount under § 628.46. Section 628.46 requires insurers to pay interest on overdue insurance claims. (Note that this case occurred before 2017 Act 235 decreased the interest rate on overdue claims from 12 percent to 7 percent.)  Previous case law (Kontowicz v. American Standard Insurance Co., 2006 WI 48) holds that prejudgment interest is due when:

  1. There is no question of the insured’s liability.
  2. There is a sum certain amount of damages.
  3. Written notice is provided to the insurer.

At issue here was the second condition.

1st Auto argued that the Estate’s demands for damages for conscious pain and suffering and pecuniary losses of Payette’s children were general damages that were not sum certain. The court agreed with 1st Auto that those general damages requested by the Estate did not satisfy the sum certain condition. Therefore, the Estate was not entitled to § 628.46 prejudgment damages.

The court declined to go as far as to say that general damages can never satisfy the sum certain condition, but in this case Payette’s conscious pain and suffering was unknown and Payette’s children needed to prove their pecuniary loss before it was owed by 1st Auto.

Overall, the court found that third parties are not entitled to § 628.46 prejudgment damages when an insurer is overdue on a claim of general damages that the insurer is not certain it actually owes.

The Wisconsin Insurance Alliance and Wisconsin Association for Justice filed amicus briefs in this case.

Wargaski v. NCI Group, Inc. (Warranty Forum Selection Clause)

Posted on by Hamilton

In Wargaski v. NCI Group, Inc. (2018AP2014), the Court of Appeals District III found that a warranty’s forum selection clause applied, barring the Wisconsin lawsuit.

Robert Wargaski alleged breach of warranty when NCI Group, Inc. rejected his warranty claim for faded paint on roofing panels Wargaski had purchased. The warranty contained a forum selection clause designating Texas as the venue for any disagreements over the warranty.

NCI sought to dismiss Wargaski’s lawsuit, arguing the case had been filed in the wrong jurisdiction according to the forum selection clause. Wargaski argued the warranty’s forum selection clause was unenforceable because it was procedurally and substantially unconscionable.

The court sided with NCI and dismissed Wargaski’s lawsuit. The forum selection clause was not procedurally unconscionable because the warranty had been conveyed to Wargaski when it was placed in the box of roofing panels he purchased, in accordance with 16 C.F.R. § 700.11(b). The forum selection clause was not substantially unconscionable because NCI’s principal place of business is Texas. The court found that general federal law allowing warranty suits to be filed in “any court of competent jurisdiction in any State” (15 U.S.C. § 2310(d)(1)(A)) did not preclude the more specific forum selection clause in the warranty.