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Wisconsin Supreme Court accepts four new cases

Madison, Wisconsin - June 8, 2012

The Wisconsin Supreme Court has voted to accept four new cases. The Court also acted to deny review in a number of cases. The case numbers, issues, and counties of origin are listed below. Court of Appeals opinions available online for the newly accepted cases are hyperlinked.

2011AP813-814 City of Menasha v. Gracia
These consolidated cases involve challenges to two separate drunken driving convictions against Juan G. Gracia. In one case, the Supreme Court examines whether police entry into Gracia's bedroom while investigating a 2010 incident that led to his fourth operating while intoxicated (OWI) conviction was lawful under the community caretaker doctrine. Because of the progressive nature of the penalties for OWI convictions, Gracia also challenges his second OWI conviction, which occurred in 1998, on the ground that he did not validly waive his right to counsel before entering a pro se guilty plea.

Some background: On February 26, 2010, Menasha police observed a yellow traffic light pole that had been struck and was lying near an intersection. Police found a license plate nearby that was ultimately tied to a white 1999 Buick Regal apparently owned by a member of the Gracia family.

After receiving additional information, police went to Gracia's trailer home where they found a white 1999 Buick Regal with considerable damage to its right front that bore some yellow paint similar to the paint used on traffic poles.

Police officers were not able to get Gracia to respond to their visit. As police were about to leave, Gracia's brother, who also lived in the trailer, arrived. Police told him they wanted to check to see if Gracia was OK because they were concerned he may have been injured in an accident.

Gracia's brother went into the home for a short time before returning to lead officers into the home and toward Gracia's locked bedroom. Officers tried to open the door, but could not. Gracia objected to the police presence and asked his brother to make the police go away. Without any explicit suggestion or request from police, the brother rammed his shoulder into the door, causing it to open. The officers then simply walked into the bedroom.

Once inside the bedroom, the police found Gracia lying on his bed and detected the smell of alcohol. Gracia told the police that he had been driving the Buick. The officers then arrested him, and Gracia was charged with OWI-fourth offense. He filed a motion to suppress, arguing that the officers' warrantless entry into his bedroom had been unconstitutional. The circuit court denied the motion, finding that the officers' entry into his bedroom had been justified under the community caretaker doctrine.

While the charge was pending, Gracia also filed a motion collaterally attacking his 1998 conviction for OWI-Second Offense in order to reduce the current charge from an OWI-Fourth Offense to an OWI-Third Offense.

At the time of the 1998 case Gracia was 23 years old and had never been represented by an attorney. He testified at the hearing in the 2010 case that he had believed he did not have any defenses to the OWI-Second Offense charge against him and that a lawyer would not really be able to help him. Gracia consistently indicated in 1998 that he did not want a lawyer. The circuit court at the time ultimately went forward with the plea colloquy and accepted Gracia's plea.

In the 2010 case, the circuit court rejected Gracia's collateral attack on his 1998 conviction, concluding that Gracia had validly waived his right to counsel through a "conscious decision" to not spend the money it would cost to hire an attorney.

The Court of Appeals affirmed on both issues.

Gracia asserts that the Court of Appeals decision is "tantamount to permitting police to make warrantless entries to the homes of Wisconsin citizens after every car accident to see if someone may be hurt." He also argues that he did not make a truly knowing and intelligent waiver of his right to counsel in 1998 case. He points to the fact the trial court never explained that an attorney might be able to find defenses to the charge or might be able to mitigate the charge or the potential sentence.

A decision by the Supreme Court could clarify law surrounding the community caretaker function of police and the standards involved in waiving the right to counsel. From Winnebago County.

2011AP1240 Johnson v. Masters
This certification, arising from a divorce judgment entered into more than 20 years ago, examines Wis. Stat. § 893.40, the statute of repose.

More specifically, the Court of Appeals has asked the Supreme Court: When a wife seeks to obtain a pension award by submitting a qualified domestic relations order (QDRO) as required by the divorce judgment, and the submission is approximately one year after the former husband retires, but more than twenty years after the divorce judgment, is this an "action" which is barred by the statute of repose, Wis. Stat. § 893.40?

Some background: Patricia Johnson and Michael Masters initiated divorce proceedings in 1989. They entered into a marital settlement agreement that awarded to Johnson one-half of Masters' pension (valued up to the date of the divorce judgment). The agreement further stated that "[a] QDRO shall be submitted to secure these rights."

At the time the divorce judgment was entered in July 1989, the Wisconsin Retirement System (WRS), which administered Masters' pension, did not recognize QDROs. No QDRO was submitted at the time of the divorce, or for many years thereafter.

Masters retired in 2009. On March 5, 2010, Johnson submitted a QDRO to the circuit court – 20 years and seven months after the date of the divorce judgment. Masters objected and sought to dismiss Johnson's motion as being barred by the 20-year statute of repose.

The circuit court granted the motion to dismiss. Relying on Hamilton v. Hamilton, 2003 WI 50, 261 Wis. 2d 458, 661 N.W.2d 832, it concluded that the submission of the QDRO was an action to enforce the 1989 divorce judgment that was filed more and 20 years after the entry of the judgment. It construed Johnson's argument as being that the right to a QDRO had not accrued until Masters had retired and rejected that argument based on the statement in Hamilton that statutes of repose apply regardless of when a cause of action has accrued.

In certifying the case, the Court of Appeals identifies five "concerns" or issues regarding whether Hamilton truly should apply to the present case:

  • Whether the submission of the QDRO constituted an "action" on the divorce judgment under the language of Wis. Stat. § 893.40 since it did not involve the filing of a summons and complaint.
  • Whether Hamilton should apply here because that case involved a third party (the state of Wisconsin) filing an action to collect child support arrearages, while the present matter involves the same two parties and the same divorce proceeding.
  • Whether the statement in Hamilton about statutes of repose not depending on the accrual of causes of action applies to the vesting of Johnson's right to a portion of Masters' pension, especially when the WRS did not accept QDROs at the time the divorce judgment was entered.
  • Whether Hamilton can be applied to this case consistent with Wis. Stat. § 753.03, which provides that the circuit courts of this state have the power to issue writs or orders necessary to carry their judgments into effect.
  • Whether Johnson's attempt to collect on that part of the pension is really an "action" on the divorce judgment and whether Masters has standing to object to Johnson's attempt to collect on the property interest that was legally conferred on her.

From Waukesha County.

2009AP2432 Acuity v. Society Insurance
This case examines whether damages arising from faulty construction work performed by a contractor qualifies as an "occurrence" under the terms of a commercial general liability (CGL) insurance policy.

Some background: Ron Stoikes d/b/a RS Construction, and Terry Luethe d/b/a Flint's Construction, entered into an $8,500 contract with VPP Group LLC to remove and reinstall a concrete wall on the south side of a building containing VPP's engine room, which provided refrigeration and utility services to the company's animal processing plant.

VPP supplied all materials, and RS and Flint provided all labor. Work began in May 2006. RS shored up the engine room and removed the existing wall to grade level. The VPP processing plant continued at full operation during the phase of the work.

On June 12, 2006, during Flint's excavation of a trench adjacent to the south wall site, the soil began to erode from under the concrete slab of the first floor of the engine room. As a result, the engine room's first floor slab cracked and a portion deflected downward, as did a portion of the second floor and roof. The engine room's masonry walls adjacent to the south wall also sustained damage, disrupting utility service and reducing the plant's refrigeration capacity. As a result, VPP incurred costs of approximately $380,000.

VPP repaired the engine room by replacing the portion of the first floor concrete slab that had cracked, jacking up the second floor, and replacing portions of the roof slab. VPP contacted its insurer, Acuity, following the loss. Acuity paid a total of $636,466.39 to VPP in final settlement of the loss claims, including the $380,000 claimed for extra expenses and damages relating to the repair of the building, excluding costs to VPP related to replacing the south wall. Acuity commenced a subrogation action against RS, Flint, and their insurer, Society Insurance, seeking to recover damages arising from the engine room collapse.

The circuit court concluded the CGL policy did not provide coverage because there was no "occurrence." The Court of Appeals concluded the damages suffered by VPP were the result of an "occurrence." The Court of Appeals also concluded the economic loss doctrine did not bar coverage and that no business risk exception in the policy applied.

Society argues the Court of Appeals' decision is in direct conflict with a Court of Appeals decision in another case recently granted review by the Supreme Court, Yeager v. Society Insurance (see 2010AP2733 below).

Society points out that in Yeager, the Court of Appeals held that faulty workmanship was not an "occurrence" and that the damage caused by the faulty workmanship could not itself be the "occurrence" while the Court of Appeals in this case came to the opposite conclusion. Society goes on to argue that the Court of Appeals' interpretation of Exclusions k.(5) and k.(6) was very narrow and in fact is contrary to the plain language of the exclusions.

Society asks the Supreme Court to review:

  • If "faulty workmanship" is not an "occurrence" under a general liability insurance policy, then may an occurrence be found solely from the bad result caused by the faulty workmanship?
  • If the exclusion, found in all general liability policies, precluding coverage for damage to property on which the insured is performing operations, limited solely to that specific property on which work is being done at the time of the property damage, or does the exclusion apply to all of the property within the insured's control and responsibility?
  • When a claim clearly falls within the economic loss doctrine, and therefore may only be brought as a breach of contract, and not a tort claim, is there insurance coverage under a standard general liability policy for the breach of contract claim? From Monroe County.

2010AP2733 Yaeger v. Polyurethane Foam Insulation
This case examines whether property damage caused accidentally by a contractor is covered as an "occurrence," under the terms of a commercial general liability (CGL) insurance policy that defines occurrence as "an accident." A decision by the Supreme Court is expected resolve an apparent conflict between recent Court of Appeals decisions. See also 2009AP2432, Acuity v. Society Insurance, which was recently granted for review by the Supreme Court.

Some background: In October of 2004, Mark Yeager began construction on a new home. In December 2007, he hired Polyurethane Foam Insulation (PFI) to insulate the exterior walls of the home using a spray-in foam product. About one week after PFI finished its work, Yeager became concerned that the insulation had not been properly installed. He subsequently sued both PFI and the product manufacturer, BioBased Insulation, LLC. Yeager's complaint alleged causes of action for breach of contract, negligent breach of contract, and breach of warranty with respect to PFI. He asserted that PFI failed to install the insulation according to the specifications of the contract and that PFI negligently installed the insulation.

At his deposition Yeager claimed that PFI sprayed the insulation unevenly, causing frost pockets to form in places on the surface of the insulation. He contended that PFI allowed liquid resin to leak from a spray hose, staining the floors of the house and leaving behind an oily residue. He also asserted that PFI "oversprayed the insulation, depositing foam on windows, exposed beams, two ladders, a work light, a ceiling fan, and a chimney." He also claimed that PFI spilled fuel oil in the home and failed to remove staging material. He also asserted that, due to PFI's failure to properly install the insulation, condensation built up on the home's windows, causing grey staining and water damage.

Society Insurance, which had issued a CGL policy to PFI, was granted leave to intervene. The circuit court granted Society's motion to bifurcate and stay, ruling that it would determine whether Society's policy provided coverage for Yeager's claims against PFI before reaching the merits of Yeager's claims.

The policy defined "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

Society had also issued a "Contractors Errors and Omissions" endorsement to PFI, which provided that Society would pay "those sums that [PFI] becomes legally obligated to pay for damages covered by this insurance because of ‘contractors errors and omissions" to which this insurance applies." Society's limit under the endorsement was $10,000, and the endorsement said that Society's right and duty to defend ended when it used up that amount in the payment of judgments or settlements for contractors errors and omissions.

Society moved for summary judgment. While it conceded that the contractors errors and omissions endorsement provided coverage for Yeager's claims against PFI, it argued there was no other coverage for claims under the CGL policy because Yeager did not allege any property damage caused by an "occurrence." In the alternative, Society argued that certain exclusions in the CGL policy applied. Society also asked the court to declare that it had no further duty to defend PFI. Society offered to pay the $10,000 limit in the errors and omissions endorsement in fulfillment of Society's obligation.

The circuit court granted Society's motion for summary judgment. It held that the CGL policy did not provide coverage for Yeager's claims because "the exclusions apply here." The court also held that since Society paid $10,000 to the clerk of court, it had no further duty to defend PFI under the Errors and Omissions endorsement. Society was thus dismissed from the case. Yeager appealed, and the Court of Appeals affirmed. The Court of Appeals agreed with the circuit court that a CGL policy that Society issued to PFI did not provide coverage for Yeager's claims against PFI because Yeager's claims against PFI failed to allege property damage caused by an "occurrence" as that term was defined in the CGL policy. Yeager says the Court of Appeals drastically narrowed the coverage available to Wisconsin contractors who purchased general liability insurance. Yeager says prior to this decision, contractors who purchased CGL insurance could expect coverage for claims regarding damage they caused accidentally. Yeager says under the current decision, contractors will no longer have coverage if they accidentally cause property damage at a job site because that damage will be considered "faulty workmanship," which is not an "occurrence." From Oneida County.

Review denied: The Supreme Court denied review in the following cases. As the state's law-developing court, the Supreme Court exercises its discretion to select for review only those cases that fit certain statutory criteria (see Wis. Stat. § 809.62). Except where indicated, these cases came to the Court via petition for review by the party who lost in the lower court:

2011AP174 State v. Hipsher

2010AP2808-CR State v. Geske
2011AP1484-CRNM State v. Nicholas
2011AP2923-W Sturdevant v. Cir. Ct. Brown Co.

2010AP748 Baumeister v. Auto Prods.
2012AP284-W Moore v. Pollard

Eau Claire
2009AP2610 Eau Claire co. v. Softscape
2010AP3085-CR State v. Anderson

Fond du Lac
2009AP2832-CRNM State v. Crain

2010AP2515-CR State v. Randall
2010AP2919-CR State v. Benjamin
2011AP1057-CR State v. Collins

2010AP2855 Geegan v. Wolff
2011AP66/67 State v. Jacobs - Justice Ann Walsh Bradley did not participate.

2009AP2830 State v. Gladney
2010AP2264-W Welch v. Thurmer
2010AP2338 State v. Townsend
2010AP2432 Park Terrace v. Transp. Ins.
2010AP3108-CR State v. Slater
2011AP65 State v. Johnson
2011AP209 Schotz v. Indianapolis Life Ins.
2011AP336-CR State v. Harvey
2011AP963-CR State v. Nelson
2011AP1475-W Orozco-Martinez v. Pugh
2011AP1757-CR State v. Flowers - Justice Patience Drake Roggensack did not participate.

2010AP3002-CR State v. McKay

2011AP608 State v. Briganti

2011AP25 Engel. v. Parker

2011AP658-CR State v. Brantley
2011AP1111-W Kaprelian v. Torhorst
2011AP2411-W McKinney v. Pollard - Justice David T. Prosser, Jr. did not participate.

2010AP2239-CR State v. Clayton-Jones
2010AP2918 Rabine v. Rabine

2012AP368/69-OA Krueger v. COA

2011AP430 Co. of Washington v. Walker

2011AP511-CR State v. Austin

Tom Sheehan
Court Information Officer
(608) 261-6640

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