WISCONSIN SUPREME COURT CALENDAR

AND CASE SYNOPSES

JANUARY 2012

 

The cases listed below will be heard in the Wisconsin Supreme Court Hearing Room, 231 East, State Capitol.

 

This calendar includes cases that originated in the following counties:

Brown

Milwaukee

Outagamie

Walworth

 

TUESDAY, JANUARY 10, 2012

9:45 a.m.         09AP2848                -  Lindy Orlowski v. State Farm Mut. Automobile Ins. Co.                   

10:45 a.m.       09AP2752                -  Michelle B. Wadzinski v. Auto-Owners Ins. Co.                                

1:30 p.m.         {#10AP594               -  State v. Carl Cornelius Gilbert, Jr.

                        {#10AP1155             -  State v. Price T. Hunt

 THURSDAY, JANUARY 12, 2012

9:45 a.m.         10AP784                  -  State v. Tyler T.                                             

10:45 a.m.       10AP878                  -  Wisconsin Public Service Corp. v. Arby Construction          

1:30 p.m.         10AP1391-CRNM   -  State v. Jeffery G. Sutton                              

FRIDAY, JANUARY 13, 2012

9:45 a.m.  -      09AP2099                -  Admiral Insurance Company v. Paper Converting Machine Co.

10:45 a.m.       10AP1523-D            -  Office of Lawyer Regulation v. Joseph W. Weigel                                        

1:30 p.m. -       {09AP1212               -  Estate of Brianna Kriefall v. Sizzler USA Franchise, Inc.

                        {10AP491                                                                                                           

                          

                                                  

In addition to the cases listed above, the following case will be decided by the court based upon the submission of briefs without oral argument:

                        10AP2566-D            -  Office of Lawyer Reg. v. Bridget E. Boyle (Boyle has a practice in Milwaukee)

                                                        

 

 

 

The Supreme Court calendar may change between the time you receive this synopsis and when the cases are heard.  It is suggested that you confirm the time and date of any case you are interested in by calling the Clerk of the Supreme Court at 608-266-1880. That office will also have the names of the attorneys who will be arguing the cases.

 

Radio and TV, and print media wanting to take photographs, must make media requests 72 hours in advance by calling Supreme Court Media Coordinator Rick Blum at 608-271-4321. Summaries provided are not complete analyses of the issues presented.

 

WISCONSIN SUPREME COURT

TUESDAY, JANUARY 10, 2012

9:45 a.m.

 

This is a certification from the Wisconsin Court of Appeals, District I, headquartered in Milwaukee. The Court of Appeals may certify cases that it believes cannot be resolved by applying current Wisconsin law. The Wisconsin Supreme Court, as the state’s preeminent law-developing court, often accepts such certifications from the Court of Appeals. This case originated in Milwaukee County Circuit Court, Judge Dennis P. Moroney, presiding.

 

2009AP2848                           Orlowski v. State Farm

This certification, originally arising from a traffic accident, asks the Supreme Court to resolve an apparent conflict between a Court of Appeals’ decision and a previous Supreme Court decision involving under-insured motorist coverage and “the collateral source rule.”

Specifically, the Court of Appeals asks the Supreme Court whether the Court of Appeals’ holding in Heritage Mutual Ins. Co. v. Graser, 2002 WI App 125, 254 Wis. 2d 841, 647 N.W.2d 385 – that the collateral source rule is inapplicable to any claim under an underinsured motorist (UIM) policy – is in conflict with the Supreme Court’s collateral source rulings. See, e.g., Koffman v. Leichtfuss, 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 210; Leitinger v. DBart, Inc., 2007 WI 84, 302 Wis. 2d 110, 736 N.W.2d 1.

Some background: Lindy Orlowski sustained injuries in a motor vehicle accident arising out of the negligence of an underinsured motorist. After recovering the policy limit from the underinsured motorist’s liability carrier, she brought a claim under her UIM policy against State Farm Mutual Automobile Insurance Company. Orlowski and State Farm submitted the claim to arbitration under the terms of the UIM policy.

In its initial decision, the arbitration panel found that there was “no negligence on the part of  Orlowski and that the collateral source rule does not apply as per the case of Heritage Mutual. Therefore, the panel awarded $2,325 for unreimbursed wage loss; $9,498.55 for the claimed medical lien for the medical bills paid, and also awarded the plaintiff $2,000 for the out-of-pocket medical expenses paid by the claimant. The panel also awarded the plaintiff $42,500 for past and future pain, suffering and disability.

The “claimed medical lien” of $9,498.55 was the subrogation claim by Orlowski’s health insurance carrier, United Healthcare. Orlowski asked for a supplemental finding of the full reasonable value of her medical expenses. The arbitrators issued a supplemental decision, noting that there was no challenge to the reasonableness and necessity of the medical services.

The parties stipulated that the difference between the amounts billed and the amount paid by Orlowski and her health insurance was due to health insurance company write-offs or reductions, and that Orlowski was no longer responsible for payment of these bills. However, the parties did not stipulate that these damages were not “sustained” as that term is used in the State Farm policy.

Orlowski filed a petition in Milwaukee County Circuit Court asking for modification of the arbitration award pursuant to Wis. Stat. § 788.11 to conform the award to the UIM policy by including the full reasonable value of the necessary medical services she received.

 The circuit court found that under the UIM policy, Orlowski was legally entitled to collect the full reasonable value of medical expenses from the tortfeasor, thus the arbitrator’s refusal to award that amount of the medical expenses was a refusal to apply the plain language of the UIM policy and constituted a manifest disregard of the law. The circuit court modified the award. State Farm appealed.

The primary issue is whether a plaintiff may recover from her own insurer under a UIM policy the reasonable value of the medical treatments she received or the lesser amount that was actually paid by the plaintiff, her health insurer, the underinsured motorist or his insurance company.

The Court of Appeals frames the issue this way: In order to determine what the language of an underinsured motorist (UIM) policy requires, and thus whether an arbitration panel exceeded its authority and issued an award that must be modified under WIS. STAT. § 788.11, we must consider how Wisconsin Supreme Court law in collateral source cases such as Koffman v. Leichtfuss, 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 201, and Leitinger v. DBart, Inc., 2007 WI 84, 302 Wis. 2d 110, 736 N.W.2d 1, effects our holding in Heritage Mut. Ins. Co. v. Graser, 2002 WI App 125, 254 Wis. 2d 851, 647 N.W.2d 385, where we held that collateral source law is inapplicable to any UIM policy.  If Graser is incompatible with controlling supreme court law, we have no power to withdraw or modify language in Graser to resolve the conflict. See Cook v. Cook, 208 Wis. 2d 166, 189-90, 560 N.W.2d 246 (1997).

The Court of Appeals says only the Supreme Court has the power to overrule, modify or withdraw language from a published opinion of the Court of Appeals.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

TUESDAY, JANUARY 10, 2012

10:45 a.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District III (headquartered in Wausau), which reversed a Brown County Circuit Court decision, Judge William M. Atkinson, presiding.

 

2009AP2752               Wadzinski v. Auto-Owners Ins. Co.  

This case reviews whether language contained in an executive umbrella policy provides uninsured motorist coverage for a man killed in an accident while riding his motorcycle in Door County in 2006.

The Supreme Court examines principles of construction of the policy: whether an ambiguity in one provision may be sufficient to overcome the clear purpose and objective of the policy as a whole.

Some background:  Steven Wadzinski was a covered insured under three separate Auto-Owners’ policies, including the only policy that is subject of this appeal: an executive umbrella policy with $2 million limits issued to Wadzinski. 

The circuit court concluded the policy language does not mention uninsured motorist (UM) coverage and can be reasonably interpreted in only one way. The circuit court said it is well established that an exception to an exclusion cannot create coverage when the coverage grant does not extend coverage.

Michelle B. Wadzinski, individually and as personal representative of the Estate of Steven M. Wadzinski (Wadzinski) appealed. The Court of Appeals found ambiguity and concluded that reading the endorsement as a whole suggests a grant of coverage, not an exclusion. 

Auto-Owners claims the Court of Appeals’ decision is the first and only decision in Wisconsin to hold a third party umbrella policy, that contains no mention of the UM coverage anywhere in the policy, must be construed to provide such coverage. It argues the decision transforms the nature of the risk insured under such third-party umbrella policies, subjecting excess insurers to a new class of claims.

Auto-Owners contends the Court of Appeals’ decision conflicts with case law indicating umbrella policies providing excess third-party liability coverage cannot be construed to require payment of supplemental UM benefits by implication, unless the policy expressly mentions UM coverage.  See § 809.62(1r)(d).

The disputed language reads:

 

EXCLUSION OF PERSONAL INJURY TO INSUREDS FOLLOWING FORM

We do not cover personal injury to you or a relative.  We will cover such injury to the extent that insurance is provided by an underlying policy listed in Schedule A.

 

The Court of Appeals said the first sentence unambiguously informs the insured the executive umbrella does not provide first-party coverage.  Nonetheless, it concluded the second sentence appears to limit the effect of the first by stating that, under certain circumstances, the insurer will provide first-party coverage. 

Wadzinski argues Auto-Owners sold the commercial umbrella and executive umbrella policies in combination and they carry a single policy number.  Thus, she argues, sold as a single policy and issued together, these umbrella coverages would naturally be read together.  She says policyholders reasonably view umbrella coverage as an extension of underlying coverage and the title of the policy reinforces that natural impression.  See Oelhafen v. Tower Ins. Co., 171 Wis. 2d 532, 538-39, 492 N.W.2d 321 (Ct. App. 1992).  She says nothing in the declarations page advised that even though the underlying policy carried UM coverage, the executive umbrella policy did not. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

TUESDAY, JANUARY 10, 2012

1:30 p.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District III (headquartered in Wausau), which reversed a Brown County Circuit Court decision, Judge William M. Atkinson, presiding.

 

2010AP594                                         State v. Gilbert/

2010AP1155                                       State v. Hunt

In these consolidated cases, the Supreme Court examines whether the state may bring a Wis. Stat. ch. 980 commitment petition to judgment when the subject of the petition is in the custody of the Department of Corrections (DOC).

Some background: The Court of Appeals affirmed circuit court orders committing Carl Cornelius Gilbert, Jr., and Price T. Hunt as sexually violent persons under § 980.06, Stats. 

Gilbert was in prison because of sequential convictions, one of which was a predicate offense under ch. 980. On Dec. 4, 2006, before Gilbert’s mandatory release date, the state filed a petition seeking his commitment.

Following a hearing on March 22, 2007, the circuit court found probable cause to believe that Gilbert was sexually violent and ordered him transferred to the Wisconsin Resource Center “or such other authorized institution as may be determined by the DHS (Department of Health Services).”

While detained for evaluation, Gilbert violated his parole. He was revoked and returned to the custody of the DOC. He was later released on parole again.  He violated this parole as well, and was again revoked and returned to the custody of the DOC.  Gilbert was placed at the Milwaukee Secure Detention Facility on Nov. 29, 2007 for the remainder of the ch. 980 commitment proceeding. On Feb. 7, 2008, a jury found that Gilbert was a sexually violent person.  The circuit court ordered him committed to the DHS “for control, care and treatment until such time as [he] is no longer a sexually violent person.”  The court also ordered commitment “to institutional care in a secure mental health facility.” 

Gilbert filed a post-conviction motion arguing that the commitment proceeding became moot when his parole was revoked because the relief sought by the state, commitment to the custody of DHS pursuant to §§ 980.06 and 980.065, was impossible since he was in the custody of the DOC.  The circuit court denied the motion.

Similarly, Hunt asks the Supreme Court whether a ch. 980 petition should be dismissed when, while the petition is pending, the subject of the petition is returned to the custody of the DOC.

Hunt was convicted of two offenses in 2003, one of which was a ch. 980 predicate offense.  He was sentenced to five years of initial confinement and five years of extended supervision on the predicate offense and to a concurrent nine-month term on the other offense.  Prior to Hunt’s Sept. 4, 2007 release on prison on extended supervision, the state filed a ch. 980 petition for his commitment. The circuit court found probable cause to believe that Hunt was eligible for a ch. 980 commitment and ordered him transferred to a detention facility approved by the DHS and ordered a probable cause hearing.

While in the custody of the DHS, and while the ch. 980 petition was pending, Hunt was disruptive, violent and abusive toward a staff member of the Wisconsin Resource Center. On May 29, 2008, an administrative law judge revoked Hunt’s extended supervision. On Aug. 21, 2008, the circuit court ordered Hunt re-confined to prison for two years.  Hunt’s presumptive release date was on or about Aug. 21, 2010.  Hunt was transferred to the Racine Correctional Institution. 

Hunt moved to dismiss the ch. 980 commitment petition or, in the alternative, to be transferred to “an approved DHS facility.”  The circuit court denied both requests.  Hunt remained at Racine Correctional during the remaining steps of the commitment proceedings.  Following a trial to the court which occurred during his reconfinement period, Hunt was found to be a sexually violent person and was ordered committed.  The circuit court explained that under the commitment order, Hunt was to be transferred to a DHS facility after he completed the re-confinement period. 

Gilbert and Hunt argue that because they were both in the custody of the DOC at the time their commitment orders were issued, the orders were incapable of being executed and the proceedings should have been dismissed as moot.  The Court of Appeals disagreed.

The state says incarceration while a person is subject to a ch. 980 commitment order is not unconstitutional.  The state says it is the language of the statute, not its application, which determines whether a statute is punitive for constitutional purposes.  See Hudson v. United States, 522 U.S. 93, 99 (1997).  The state says Gilbert was still serving a sentence at the time he committed the act that resulted in his re-incarceration, and both State v. Szulczewski, 216 Wis. 2d 495, 574 N.W.2d 660 (1998) and State v. White, 2000 WI App 147, ¶9, 237 Wis. 2d 699, 615 N.W.2d 667 at least implicitly concluded that in the absence of a stay, a criminal sentence takes precedence over a civil commitment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, JANUARY 12, 2012

9:45 a.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District II (headquartered in Waukesha), which affirmed a Walworth County Circuit Court decision, Judge James L. Carlson, presiding.

 

2010AP784                             State v. Tyler T.

This case examines the fairly narrow issue of whether it is improper for an assistant district attorney to appear at a waiver recommendation meeting when neither the juvenile nor his attorney was asked to attend.

Some background:  At age 15, a delinquency petition charged Tyler T. as a party to an armed robbery of a gas station, contrary to Wis. Stat. §§ 939.05 and 943.32(2).  The state requested the juvenile court waive Tyler into adult court because armed robbery is a felony involving aggression and premeditation.  Members of the Walworth County Department of Health and Human Services (WDHHS) held a staff meeting to decide whether to recommend that Tyler be tried as an adult.  See Wis. Stat. § 938.18(2m).  The assistant district attorney was invited to the meeting but Tyler and his defense counsel were not.

Although the assistant district attorney recommended at the meeting that Tyler be tried as an adult, the WDHHS made no recommendation in its report because the staff members could not reach a consensus.  The circuit court ordered Tyler waived into adult court.  However, the circuit court noted that it judged this on its “own feelings” and not based on any recommendation. 

The Court of Appeals affirmed, rejecting Tyler’s assertion that a waiver investigation report should be treated the same as a pre-sentence investigation (PSI) report. The Court of Appeals explained:

A waiver investigation report is distinct from a PSI report.  A petition to waive a juvenile into adult court can be filed by the prosecution, the juvenile, or the court.  See Wis. Stat. § 938.18(2).  A PSI is ordered exclusively by the court.  See § 972.15(1).  In this case, the assistant district attorney filed the waiver petition.  While § 938.18 does not address whether a prosecutor may be present at a waiver recommendation report meeting, there is nothing in the Wisconsin statutes or case law that precludes a prosecutor from appearing.  Indeed, it is entirely appropriate for the prosecution to appear at this meeting given that the assistant district attorney was the one who requested that Tyler be tried as an adult.

 

The state says Tyler has not addressed any constitutional issue and there is no rule forbidding the waiver investigation report writer from communicating with either the district attorney or the juvenile’s attorney. It says communication with the district attorney regarding waiver is compatible with the fluid roles both agencies share in the juvenile justice system.

Tyler argues that a waiver investigation report is comparable to a presentence investigation report (PSI), as both are to be prepared by a neutral author to provide information to the court.  See Wis. Stat. § 938.18(2m); § 972.15.  Tyler points out that case law emphasizes the critical importance of neutrality in preparing the PSI.  See State v. Knapp, 111 Wis. 2d 380, 386, 330 N.W.2d 242 (Ct. App. 1983); see also State v. Howland, 2003 WI App 104, ¶¶32, 33, 264 Wis. 2d 279, 663 N.W.2d 340.

Tyler says the factual distinctions between previous cases and his situation does not address the problem whether the prosecutor’s advocacy at the departmental meeting could consciously or subconsciously influence the author of the waiver investigation report.  He claims in his case, the report’s neutrality was compromised. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, JANUARY 12, 2012

10:45 a.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District III (headquartered in Wausau), which affirmed a Brown County Circuit Court decision, Judge Donald R. Zuidmulder, presiding.

 

2010AP878                 Wis. Public Service Corp. v. Arby Construction

This case involves a dispute over insurance coverage following a propane gas pipeline explosion that killed two people and injured others. The Supreme Court examines the scope and application of the claim preclusion doctrine, which forecloses the opportunity for claims actions under certain circumstances. Here, the court examines whether the “functional equivalent” of a counterclaim is sufficient to warrant claim preclusion.

Some background: Arby Construction provided excavation and boring services under a contract with Wisconsin Public Service Corp. (WPS).  Under the terms of that contract, Arby was required to defend and indemnify WPS and its insurers for certain losses. While performing services under the contract with WPS, Arby struck and damaged a portion of an underground propane gas line, causing explosions that resulted in the deaths of two people and injury to several others. 

A personal injury action ensued on behalf of those victims, (collectively, Brooks) naming WPS, Arby, Associated Electric & Gas Insurance Services Limited (AEGIS), and a number of other entities as defendants in Brooks v. Old Republic Ins. Co., Case No. 06-C-996 (E.D. Wis.).  AEGIS was named because, as Brooks’ amended complaint alleged and AEGIS admitted, it had issued an excess indemnity policy that provided coverage to WPS for the alleged negligence of WPS. 

 AEGIS claims that it is entitled to indemnification under an indemnification contract between Arby and AEGIS’s insured, WPS. 

The circuit court, however, concluded that AEGIS was barred from seeking indemnification against Arby based on claim preclusion, because there was a stipulated judgment in a prior case in which AEGIS, Arby, and WPS were defendants.  

The Court of Appeals affirmed, concluding that AEGIS’s affirmative defense in the prior action asserting Arby’s contractual obligation to indemnify AEGIS as WPS’s insurer was the “functional equivalent” of a cross-claim for purposes of claim preclusion. 

AEGIS’s petition followed, contending that the requirements for claim preclusion were not met on the theory that AEGIS did not file a cross-claim against Arby for indemnification under the contract between WPS and Arby in the Brooks action.  According to AEGIS, without this cross-claim (which, AEGIS points out, was not compelled), the requirements for claim preclusion were not met.

Arby contends that the dispute is whether the affirmative defense in the prior action – asserting Arby’s obligation under the contract to indemnify AEGIS as WPS’s insurer – had the same effect as a cross-claim for purposes of applying the doctrine of claim preclusion in the current action.

The Court of Appeals concluded that considering the substance of AEGIS’s affirmative defense, it is, effectively, a claim against Arby and its insurers for indemnification for any damages for which WPS and its insurers are liable to Brooks.  It stated:

Thus, the substance of AEGIS’s affirmative defense in the prior action asserts the same claim against Arby that AEGIS now asserts in this action. 

 

AEGIS specifically asks the Supreme Court to review several questions:

-          Can a functional claim based on the substance of an affirmative defense be considered a prior claim for the purposes of claim preclusion?

-          Can a “Functional Claim” create adversity between parties for purposes of applying the doctrine of claim preclusion?

-          Where “all claims set forth in the pleadings” are the subject of an order of dismissal, can claims not set forth in the pleadings be the subject of claim preclusion?

-          Do inter-jurisdictional claim preclusion concerns require that Wisconsin apply Federal Rules of Civil Procedure in this case

-          Should the Court of Appeals apply inferences regarding the parties’ intentions when only pleadings were before the court?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, JANUARY 12, 2012

1:30 p.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District I (headquartered in Milwaukee), which affirmed a Milwaukee County Circuit Court decision, Judge Dominic S. Amato, presiding.

 

2010AP1391-CRNM                          State v. Sutton 

This criminal case examines the proper procedural mechanism for raising a claim of ineffective assistance of post-conviction or appellate counsel when the defendant has finished serving his or her sentence and the direct appeal is concluded or expired.

Some background: On Aug. 21, 2008, the state filed a criminal complaint charging Jeffery Sutton with retail theft of a packet of powdered lemonade, a can of cinnamon rolls, cookies and candy from a Save A Lot store.  Initially, Sutton requested a jury trial.  About a month later, he filed a Waiver of Trial by Jury which prompted the circuit court to conduct a colloquy to determine whether the waiver was knowing, intelligent and voluntary.

The court approved the waiver, and the case proceeded to a court trial. Sutton was found guilty of retail theft, contrary to § 943.50(1m)(b) and the court sentenced him to one day, time served.  He promptly filed a notice of intent to pursue post-conviction relief.

Sutton’s post-conviction/appellate counsel, Atty. Maayan Silver, filed an appeal, which ended in a voluntary dismissal and a remand to the circuit court.  At the circuit court, she filed a Wis. Stat. § 809.30(2) post-conviction motion challenging Sutton’s waiver of his right to a jury trial on the ground that the court had failed to inform Sutton that: (1) at a jury trial, a 12-person jury would have to agree on all elements of the crime charged; and (2) at a court trial, a single judge would make this determination.

The circuit court denied relief because the motion neglected to allege that Sutton was, in fact, unaware of his right to a unanimous verdict at the time he waived his right to a jury trial. See State v. Grant, 230 Wis. 2d 90, 102, 601 N.W.2d 8 (Ct. App. 1999). Silver filed numerous pleadings in the circuit court and the Court of Appeals in an effort to preserve Sutton’s right to direct appeal on the jury issue, trying to return the case to the circuit court in order to litigate the ineffective assistance of counsel claim.

On May 24, 2010, Attorney Silver moved the Court of Appeals for an extension of the § 809.30 deadline so that she could file a motion for reconsideration in the circuit court explaining why her post-conviction motion had neglected to allege that Sutton was unaware of his right to a unanimous verdict at the time he waived his right to a jury trial.  The Court of Appeals denied the extension request.

Sutton now asks the Supreme Court to review whether Wis. Stat. § 809.32(1)(g) requires the Court of Appeals to remand a case to the circuit court for an evidentiary hearing where, during the course of a no-merit proceeding, an arguably meritorious claim for ineffective assistance of post-conviction counsel becomes apparent.

 

 

 

 

 

WISCONSIN SUPREME COURT

FRIDAY, JANUARY 13, 2012

9:45 a.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District III (headquartered in Wausau), which affirmed an Outagamie County Circuit Court decision, Judge Mitchell J. Metropulos, presiding.

 

2009AP2099               Admiral Ins. v. Paper Converting Machine Co.

This case arises from a dispute over insurance coverage for a woman who was injured at an International Paper manufacturing plant on Feb. 22, 2005, while working on a machine made by Paper Converting Machine Co. The Supreme Court examines jurisdictional issues and lower court decisions that resulted in dismissal of the appeal of two insurance companies as untimely.

Some background: Admiral Insurance Co. and Chubb Custom Insurance Co. sought a declaration that no insurance coverage is available for the claim of Elizabeth Young against Paper Converting.  The insurers sought reimbursement of a $3.3 million settlement payment.  According to the trial court’s decision, Paper Converting was self-insured for products liability at the time Young was injured. Following Young’s accident, Paper Converting, which was bought out by another company, sought insurance. 

In September 2005 Paper Converting purchased a retroactive claims-made policy covering claims made after the policy effective date, including injuries that occurred in the prior ten years, from Admiral.  It also purchased an excess liability policy from Chubb. 

Paper Converting was required to disclose all pending occurrences that could reasonably result in litigation that had taken place before coverage by Admiral and disclosed a number of occurrences, including Young’s accident, to Admiral’s policy department.  Young had not yet made a claim.

On May 8, 2006, Young sued Paper Converting for her injuries. Paper Converting notified the claims department at Admiral. An agreement was reached settling the lawsuit for $3.5 million, signed only by Young and Paper Converting. 

However, after the agreement was reached but before payment, Admiral discovered the incident occurred. Admiral paid the policy maximum $2 million, reserving its right to seek reimbursement from Paper Converting in a subsequent lawsuit.  Chubb paid $1.3 million and joined Admiral’s request for reimbursement. The parties agreed that payment would not constitute a waiver of the insurers’ claim for reimbursement.

On March 26, 2009, the circuit court issued a “Decision and Order” that made findings of facts, conclusions of law, denied the insurers’ summary judgment motions, and granted Paper Converting’s summary judgment of dismissal. The court said that Paper Converting had disclosed the accident to the policy department and reasonably assumed the claims department knew the accident had occurred prior to the implementation of the insurance policy.

 The decision stated the case was dismissed.  However, it is undisputed this decision and order did not comply with Wambolt/Tyler directive. See Wambolt v. West Bend Mutual Insurance Co., 2007 WI 35, 299 Wis. 2d 723, 728 N.W.2d 670; Tyler v. RiverBank, 2007 WI 33, par. 25, 299 Wis. 2d 751, 728 N.W.2d 686 (final orders entered after September 1, 2007, must include a statement that the order or judgment is final for purposes of appeal).

On Dec. 7, 2010, the Court of Appeals affirmed the summary judgment but on Dec. 21, 2010, on its own motion, the Court of Appeals ordered its Dec. 7 decision withdrawn and dismissed the appeal as untimely.  

Admiral and Chubb ask the Supreme Court to review whether the March 26, 2009 judgment was final for purposes of appeal when it lacked the Wambolt language, and the prevailing party, which had asserted counterclaim for attorney fees, asked the court not to enter a final judgment until the attorney fee issue was resolved. They also ask the Court to review the issue of reimbursement under the circumstances here.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

THURSDAY, JANUARY 13, 2012

10:45 a.m.

 

The Wisconsin Supreme Court is responsible for supervising the practice of law in the state and

protecting the public from misconduct by lawyers. Lawyers must follow a code of ethics

developed by the Court. When there is an allegation that a lawyer has acted unethically, the

Supreme Court's Office of Lawyer Regulation (OLR) investigates, and, if warranted, prosecutes

the attorney. A referee - a court-appointed attorney or reserve judge - hears the discipline cases

and makes recommendations to the Supreme Court. The lawyer involved in this case has a

practice in Milwaukee.

 

2010AP1523               Office of Lawyer Regulation (OLR) v. Joseph W. Weigel

This is one of two lawyer regulation cases arising from the contentious dissolution of a Milwaukee law firm. (See OLR v. Eisenberg, 2009AP284-D).

On June 21, 2010, the OLR filed a complaint alleging that Atty. Joseph W. Weigel committed three counts of professional misconduct. More specifically, the complaint alleged: (1) that Weigel violated SCR 20:5.6(a) by causing the firm of Eisenberg, Weigel, Carlson, Blau & Clemens, S.C. (“Firm”), to enter into an employment agreement with Atty. Alvin H. Eisenberg (“Eisenberg”) that included an impermissible non-compete covenant; (2) that Weigel violated SCR 20:7.1(a)(1), SCR 20:7.5(a) and SCR 20:8.4(c) (2005) [1] by causing the Firm to continue to use the name “Eisenberg” in the Firm name after Eisenberg resigned from employment with the Firm and objected to the continued use of his name; and (3) that Weigel violated SCR 20:5.4(a) by paying bonuses to a non-lawyer legal assistant under a system using clients’ gross recoveries in contingent fee cases as a factor in the computation.

Weigel defended against these allegations and an evidentiary hearing was conducted.  On March 17, 2011, Referee Christine Harris Taylor filed a report and recommendation concluding that Weigel committed the professional misconduct alleged in the complaint and recommending a 60-day suspension and imposition of the costs of the disciplinary proceeding.  Weigel filed a timely notice of appeal.

On April 14, 2011, Weigel filed a motion to reopen the matter “for receipt of additional evidence or, in the alternative, for an order directing the referee to consider the merits of Weigel’s motion to reopen based on newly discovered material facts.” The court briefly stayed the disciplinary proceeding and remanded the matter to the referee “to evaluate the merits of the respondent-appellant’s motion and to determine whether additional proceedings before this referee are warranted.” 

The referee concluded that the newly discovered evidence did not meet the standards necessary to warrant reopening the matter and recommended the motion be denied.  The court concluded that in the interests of judicial efficiency, the appeal from the March 17, 2011 report and recommendation and review of the May 24, 2011 report and recommendation would be briefed and considered together.

OLR contends that the referee correctly concluded that Weigel violated Supreme Court Rules regarding the non-compete clause, the use of Eisenberg’s name, and the method by which the non-lawyer legal assistant was to be paid.

Weigel disputes the OLR’s allegations.  He contends that the evidence demonstrates that Eisenberg and Weigel intended to enter into an of counsel/retirement relationship and that it was Eisenberg, not Weigel, who demanded that Eisenberg be contractually proscribed from competing with the firm. He asserts that OLR has failed to establish, among other things, that the Supreme Court Rules prohibit Weigel’s firm from using Eisenberg’s name.  He asserts that the bonus system at issue was originally established by Eisenberg and that OLR failed to present any evidence relating to the paralegal’s bonus that would implicate the rule prohibiting fee sharing. He asserts that the referee’s recommended discipline is not supported by the evidence and requests dismissal of the complaint or imposition of a public reprimand.

The Supreme Court is expected to decide if Weigel engaged in misconduct, and if so, the appropriate sanction.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WISCONSIN SUPREME COURT

FRIDAY, JANUARY 13, 2012

1:30 p.m.

 

This is a review of a decision of the Wisconsin Court of Appeals, District I (headquartered in Milaukee), which affirmed in part and reversed in part a Milwaukee County Circuit Court decision, Judge Charles F. Kahn, presiding.

 

2009AP1212/2010AP491       Estate of Kriefall v. Sizzler USA Franchise

This appeal stems from a group of consolidated lawsuits arising out of the consumption of food contaminated with the E. coli bacterium at two Milwaukee-area Sizzler restaurants. The case now before the Supreme Court does not directly relate to the claims of those injured by ingesting contaminated food. Rather, it deals solely with cross claims among the defendants, including the restaurant franchisor, franchisee, meat supplier and their respective insurers. The Court is asked to examine a series of somewhat intricate legal issues related to damage/lost profit limitations for breaches of express and implied warranties, indemnification and attorney fees.

Some background: There are two sets of plaintiffs.  The estate of Brianna Kriefall (a three-year-old child who died), Chad Kriefall (Brianna’s brother who became ill but survived),[1] and members of their family are one set of plaintiffs (collectively, the Kriefalls). There also are a sizeable number of claimants who are not related to the Kriefall plaintiffs but became ill from eating E. coli contaminated food (collectively, the non-Kriefall plaintiffs).

There are a number of defendants and third-party defendants.  E&B Management Co., Waukesha (E&B) was the franchisee that ran the two restaurants at issue. E&B’s insurer was Secura Insurance. The franchisor for the restaurants was Sizzler USA Franchise, Inc. (Sizzler USA). The original supplier of the contaminated meat was Excel Corporation (Excel), which was insured by American Home Assurance Co.

Excel had previously supplied meats to Sizzler USA’s parent company, Sizzler International, Inc. (Sizzler Int’l), which is not a party to this suit. In 1997, after a five-year hiatus, Excel once again sought to sell meat to Sizzler and its franchisees.

In order to resume the relationship, Sizzler Int’l required Excel to provide a guaranty that its meat products would not be adulterated.  Sizzler Int’l and Excel entered into a “Continuing Guaranty,” which stated, among other things, that “[t]his guaranty shall not render [Excel] liable for any incidental or consequential damages . . . .”

According to the Court of Appeals’ decision, the jury made the following findings that are relevant to the parties’ petitions for review:

1.                  Excel breached “an implied warranty of merchantability or implied warranty for the sale of food;”

2.                  Excel’s breach was “a cause of damage” to Sizzler USA;

3.                  As a result of the breach, Sizzler USA was awarded $6.5 million for lost profits from the corporate restaurants, $350,000 for lost franchise fees, and $311,000 for out-of-pocket expenses (the jury refused to award Sizzler USA the $1.5 million it had paid to the Kriefalls as an out-of-pocket expense);

4.                  Excel was negligent in selling meat adulterated with the E. coli bacterium;

5.                  Excel’s negligence was a cause of injury to the customers of E&B’s two Sizzler restaurants;

6.                  E&B was negligent at the time of the E. coli outbreak;

7.                  E&B’s negligence was a cause of injury to the customers of its Sizzler restaurants;

8.                  Sizzler USA was not negligent as a franchisor;

9.                  Causal negligence was apportioned as follows:  Excel: 80 percent and E&B: 20 percent.

 

Excel asks the Supreme Court to review Court of Appeals’ rulings that (1) affirmed the circuit court’s judgment awarding lost profit damages to Sizzler USA; (2) reversed a circuit court’s ruling and awarded an additional $1.5 million in damages to Sizzler USA to reimburse it for a payment that Sizzler USA made to the Kriefalls; and (3) affirmed a circuit court judgment that required Excel and American Home to reimburse E&B for settlement payments E&B and Secura had made to the non-Kriefall plaintiffs in exchange for Pierringer releases.  Pierringer v. Hoger, 21 Wis. 2d 183, 124 N.W.2d 106 (1963). According to the Court of Appeals, “[A] Pierringer release operates to impute to the settling plaintiff whatever liability in contribution the settling defendant may have to non-settling defendants and to bar subsequent contribution actions the non-settling defendants might assert against the settling defendants.”  Van Cleve v. City of Marinette, 2003 WI 2, ¶39, 258 Wis. 2d 80, 655 N.W.2d 113.

 

More specifically, Excel has asked the Supreme Court to review three issues:

1.  When an express guarantee that was a negotiated and agreed upon term of the parties’ sales contract states: “This guaranty shall not render seller liable for any incidental or consequential damages of whatsoever nature . . . ,” is Sizzler [USA] barred from recovering lost profits and incidental costs as damages for a breach of the express warranty, but entitled to recover the same damages under a theory of implied warranty?

2.  Is Sizzler USA entitled to recover from Excel the $1.5 million Sizzler USA paid the Kriefall plaintiffs on a theory of equitable indemnity under the series of circumstances presented in this case?

3.  Is E&B entitled to recover contractual indemnity for the non-Kriefall Pierringer release settlements under the circumstances in this case?

 



[1] According to Excel’s response to Sizzler USA’s petition for cross review, Brianna and Chad became sick after eating watermelon that had become cross-contaminated with the E. coli bacterium.  The jury apparently concluded, however, that the bacterium had been introduced originally into the restaurant as part of Excel’s meat shipments.