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.

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.

In Christus Lutheran Church of Appleton v. DOT (2018AP1114), the Court of Appeals District III held that when the Department of Transportation (DOT) independently decides to include additional items of compensation in a jurisdictional offer for property condemnation, DOT must obtain a new appraisal supporting the new items in the offer.

DOT sought to take several acres of Christus Lutheran’s land to expand a state highway. DOT provided Christus Lutheran with an initial offer of $133,400 for the land, supported by an appraisal. The appraisal considered but did not include severance damages, which cover the loss of value to the remaining property after the taking.

After Christus Lutheran did not accept the offer, DOT sent a revised offer of $403,000, which did include $159,574 in severance damages. Christus Lutheran did not accept the revised offer and advised DOT to proceed with the acquisition by eminent domain. 

Finally, DOT provided Christus Lutheran with a jurisdictional offer similar to the revised offer, and the property was transferred to DOT. Christus Lutheran filed this lawsuit seeking to void the offer and prohibit the acquisition because DOT failed to provide an appraisal supporting the jurisdictional offer.

2017 Wisconsin Court of Appeals case Otterstatter v. City of Watertown found, based on Wis. Stat. § 32.05(2)(b) and (3)(e), that an appraisal must be a “supporting part or fundamental ingredient of the jurisdictional offer.” In this case, the court found in favor of Christus Lutheran that the initial appraisal did not support the offer because the initial appraisal did not include the severance damages. Because DOT decided to include the severance damages independently of an appraisal, DOT violated the statutory requirements and intent that the state provide the property owner with a transparent, narrative appraisal of the taking.

Thus the court found that DOT must obtain a new appraisal in jurisdictional offers where it believes additional compensation beyond the bounds of the initial appraisal is warranted.