Author: Hamilton

Schroeder v. Zurich American Insurance Co. (Governmental Immunity)

Posted on by Hamilton

In Schroeder v. Zurich American Insurance Co. (2018AP1737), the Court of Appeals District IV dismissed a personal injury case against a government contractor on the grounds of governmental immunity.

Keith Schroeder was injured when he rode his motorcycle over loose gravel on a road Fahrner Asphalt Sealers had been repairing for the Town of Fulton. Schroeder sued Fahrner for negligence. Fahrner argued it was an “agent” of the town entitled to governmental immunity under Wis. Stat. § 893.80(4).

The appeals court determined that Fahrner was a government “agent” entitled to immunity because

  1. The town had approved precise specifications in the contract for the road work.
  2. Fahrner conformed to those specifications.
  3. There were no dangers related to the work about which Fahrner knew and failed to warn the town.

Finally, the court determined Fahrner was implementing the town’s “legislative or quasi-legislative acts” in performing the road work.

Since these elements for establishing agency for the purpose of governmental immunity applied, the court held that Fahrner was immune from liability and dismissed Schroeder’s personal injury claim.

Stop the Ongoing Mine Permit v. Town of Ashford Board of Appeals (Sand Mine Permit)

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In Stop the Ongoing Mine Permit v. Town of Ashford Board of Appeals (2018AP1843), the Court of Appeals District II upheld a conditional use permit for a sand mine in the Town of Ashford.

The Town of Ashford issued a conditional use permit for Batzler Trucking, Inc. to operate a sand mine in the town. Stop the Ongoing Mine Permit (STOMP), a group of nearby property owners opposed to the sand mine, challenged the permit, arguing the mine violates an Ashford zoning ordinance requiring conditional use permits 1) will not be detrimental to the enjoyment of adjacent properties and 2) are compatible with adjacent existing uses.

The appeals court held that there was sufficient evidence to support the town’s decision to issue the permit. The town issued the permit with several conditions mitigating detrimental effects to residential neighbors of the mine, such as limiting the time frame for operation of the mine, not allowing blasting at the site, and requiring trucks to exit the pit in a direction away from residents. Furthermore, operation of the sand mine is compatible with use of adjacent land for farming, and the conditions of the permit require the land to ultimately be returned to agricultural use. Because STOMP did not meet its burden to overcome the presumption that the town’s decision to issue the permit was correct, the court allowed sand mine operations to proceed.

Moore v. Zurich American Insurance Co. (Duty to Defend & Indemnify)

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In Moore v. Zurich American Insurance Co. (2017AP781), the Court of Appeals District I, interpreting Ohio law, held that one corporation had no duty to defend and indemnify another corporation under their contract.

Konecranes, Inc. and Badger Alloys, Inc. entered into a contract for Konecranes to perform heavy equipment lifting for sand foundry Badger. A Konecranes employee was injured during the course of the work and filed an action against Konecranes. Konecranes tendered the claim to Badger under their contract. Badger refused to indemnify.

Due to the contract’s choice of law provision, the appeals court interpreted Ohio law and ruled in favor of Badger. The court determined that the duty to defend must be express and is not implied in an indemnification provision. Since the contract between Badger and Konecranes did not contain an express duty to defend in the indemnification provision, Badger had no duty to defend.

Furthermore, Badger had no duty to indemnify Konecranes because Konecranes’s own negligence caused the injury. While Konecranes argued Badger had a duty to indemnify based on initial allegations in the employee’s complaint, the court determined that the duty to indemnify is contingent on the actual allocation of liability. Because a jury determined that Konecranes, not Badger, was negligent in the accident, Badger had no duty to indemnify.

Wisconsin Supreme Court Reinstates Extraordinary Session Laws in SEIU Case

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On June 11, the Wisconsin Supreme Court granted a stay on the temporary injunction in the extraordinary session challenge SEIU v. Vos, reinstating provisions of the legislation that had been blocked by a Dane County Circuit Court. Additionally, the Supreme Court stayed proceedings on the case in the lower court, cancelling the trial on guidance document provisions of Act 369 set to begin in Dane County on June 12.

In this case, the plaintiffs allege that the extraordinary session laws are an unconstitutional violation of the separation of powers doctrine. The defendant legislature argues that the Wisconsin Constitution explicitly allows the legislature to prescribe the powers of the attorney general. Furthermore, Wisconsin case law has interpreted the Constitution as a fluid rather than rigid political design of separate branches of government. A Dane County circuit court issued an injunction on certain provisions of the extraordinary session laws earlier this year.

The Supreme Court’s June 11 order states that the circuit court made errors of law in analyzing the factors for granting a stay pending appeal, as requested by the Legislature. In their analysis, the Supreme Court noted that presumption of constitutionality applies in this case, making it likely the defendants will succeed upon appeal. Furthermore, the defendant Legislature and the public suffer irreparable harm when duly enacted laws are declared unenforceable without appellate review. For example, if the Legislature is denied the opportunity to review an attorney general settlement, as provided in Act 369, there is no appropriate remedy to undo the settlement if Act 369 is eventually upheld by the Supreme Court.

However, the Supreme Court left in place the injunction on Act 369 provisions that would have rescinded improperly promulgated guidance documents on July 1, 2019. The court determined that agencies would not have enough time to meet the July 1 deadline for holding notice and comment periods for existing guidance documents. Guidance documents created after the circuit court injunction would still be subject to the July 1 deadline.

In a dissent, Justice Dallet (joined by Justices Abrahamson and Walsh Bradley) disagreed with the court’s order to reinstate certain provisions of Act 369. The dissent argued the circuit court did not err in denying the stay of the temporary injunction because the defendants had not shown specific harms would occur if the injunction remained in place. Furthermore, harm to the attorney general and governor without the injunction would outweigh harm to the defendants with the injunction in place.

The dissent agreed that the injunction of the guidance document deadline should remain in place. The dissent also agreed with the court’s decision to reinstate the provision of Act 369 allowing the Joint Committee on Administrative Rules to suspend administrative rules multiple times.

Justices Dallet, Abrahamson, and Walsh Bradley also dissented from the court’s decision to stay the trial in Dane County Circuit Court.

Read about other extraordinary session litigation.

DOJ Restructuring to Focus on Environmental Enforcement

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On May 23, Attorney General Josh Kaul announced a restructuring at the Department of Justice (DOJ) that will allow for more environmental enforcement. The restructuring merges DOJ’s Environmental Protection Unit and Consumer Protection Unit under a single Public Protection Unit. Kaul said the new unit is “a step toward revitalizing the enforcement of our consumer protection and environmental laws.”

The new Public Protection Unit will have a single director, allowing DOJ to shift the open position of a second unit director to a new environmental attorney. Under the restructuring, there will be a total of six attorneys assigned to environmental cases, plus a combined staff available to work on both environmental and consumer protection cases.

2020 Wisconsin Supreme Court Candidates Taking Shape

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Three candidates have announced they will run for the Wisconsin Supreme Court in the April 2020 election. Conservative Justice Daniel Kelly announced on May 28 that he will run to keep his seat. Challenging him so far are liberal candidates Dane County Judge Jill Karofsky and Marquette University Law School Professor Ed Fallone. A primary to narrow the race down to two candidates will be held in February 2020.

Kelly was appointed to the Supreme Court by Gov. Scott Walker in 2016. Kelly’s previous experience includes working in private practice, as vice president and general counsel for the Kern Family Foundation, and as a law clerk at the Wisconsin Court of Appeals. Kelly is a former president of the Milwaukee chapter of the Federalist Society.

Dane County Judge Jill Karofsky announced her campaign on May 23. Karofsky is a former deputy district attorney for Dane County and was previously the executive director of the state Department of Justice Office of Crime Services. She was elected to the Dane County Circuit Court in 2017.

Also running for Supreme Court in 2020 is Marquette University Law School Professor Ed Fallone, who announced his campaign in March. Fallone previously ran and lost to Chief Justice Roggensack in 2013.

With conservative Judge Brian Hagedorn joining the court this fall, the court will have a 5-2 conservative majority come the 2020 election.

Jury Issues $6 Million Verdict To Plaintiffs in Lead Paint Case

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On May 31, a federal jury in the Eastern District of Wisconsin issued a $6 million verdict to the plaintiffs in a trial relitigating whether plaintiffs can hold companies liable for marketing and manufacturing lead paint before it became illegal in 1978. The case is the first to use Wisconsin’s unique risk contribution theory of liability to allege defendant manufacturers caused the plaintiffs’ injuries, despite their inability to specifically link defendants’ products to their injuries. In this latest case, Burton v. American Cyanamid et al., defendants presented specific evidence that they did not manufacture the paint used in plaintiffs’ homes; however, three out of four defendants were still found liable under the risk contribution theory.

In 2005, the Wisconsin Supreme Court ruled in favor of plaintiffs using risk contribution theory in a similar case (Thomas v. Mallet). The decision allowed plaintiffs to hold manufacturers liable for contributing to the overall risk of lead poisoning, whether or not their paint specifically caused the injuries in question. The burden is placed on lead paint manufacturers to prove they did not produce or market lead paint during the relevant time period or in the geographical market.

Only one of four defendants in Burton v. American Cyanamid was able to prove it was not negligent in producing or marketing lead paint in Milwaukee during the relevant time. The remaining three defendants were found liable for negligently producing and marketing lead paint without adequate warning labels, causing the plaintiffs’ injuries. Accordingly, liability for the plaintiffs’ injuries will be distributed among the remaining three defendants based on their share of the market at the relevant time. The jury awarded $2 million per plaintiff, for a total of $6 million. The jury will determine market share at a subsequent trial.

The defendants plan to appeal the verdict.

More on lead paint cases in Wisconsin.

Teske v. Wilson Mutual Insurance Co. (Claim Preclusion)

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In Teske v. Wilson Mutual Insurance Co. (2019 WI 62), the Wisconsin Supreme Court held that previous litigation related to underinsured motorist (UIM) coverage precludes a second tort claim alleging negligence in the same accident.

The litigation arose from a car accident that injured four members of the Teske family: Julie, Katherine, Elle, and Emily. Emily Teske was driving the vehicle. John Teske was not in the car.

Julie, Katherine, and Elle Teske filed the first action against the other driver and her insurer State Farm. The parties agreed on a settlement wherein State Farm tendered its $300,000 policy limit to the plaintiffs. The Teskes’ insurer Wilson Mutual paid the Teskes their UIM policy limit minus the amount provided by State Farm in accordance with the Wilson policy’s reducing clause. An appeals court determined the validity of the Wilson payment.

After the conclusion of the first action, John, Julie, Katherine, and Elle Teske filed a claim alleging Emily Teske, who was driving the vehicle, was negligent. The Teskes sued Wilson directly as Emily’s insurer. Wilson argued claim preclusion barred this second action.

The Supreme Court held 6-0 that claim preclusion did apply to Julie, Katherine, and Elle’s negligence claim, barring the second action against Wilson. The second action satisfied all three required elements of claim preclusion:

  1. Identity of parties. Julie, Katherine, and Elle Teske and Wilson were named parties in both the first and second lawsuit.
  2. Identity of causes of action. The lawsuits both arose from a single accident. The decision noted claim preclusion analyses should focus on the identity of the facts, not the identity of the legal arguments. The court held that UIM actions involve both contracts and tort law, so the Teskes’ negligence claim against Emily could have been litigated in the first lawsuit.
  3. Final judgment reached. The appeals court did reach a final judgment in the Teskes’ first action.

However, the court was evenly divided as to whether John Teske was a party in the first lawsuit. While he was not named in the first lawsuit, he participated in the settlement process and received proceeds. With an evenly divided court (3-3 with Justice Shirley Abrahamson not participating), the Supreme Court affirmed the appeals court’s decision allowing John Teske’s claims to proceed because the identity of parties element of claim preclusion was not met.

Leicht Transfer & Storage Co. v. Pallet Central Enterprises, Inc. (Crime Insurance Coverage)

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In Leicht Transfer & Storage Co. v. Pallet Central Enterprises, Inc. (2019 WI 61), the Wisconsin Supreme Court held that amounts paid in response to forged delivery tickets are not covered losses under a crime insurance policy.

The underlying claim in the case arose when Pallet Central forged delivery tickets to Leicht. The companies used delivery tickets, which accompanied shipments, for inventory and billing purposes. The delivery tickets ultimately were part of an invoice package, and Leicht paid the invoices. Leicht paid $505,000 in response to the forged delivery tickets. When Leicht discovered the delivery tickets were for pallets it had never ordered or received, it filed a claim for its losses to its insurer, Hiscox Insurance Company, under its forgery coverage policy.

Hiscox denied coverage, arguing the delivery tickets were not a type of covered forged document under Leicht’s crime insurance policy. Leicht argued that the forged delivery tickets should be considered a “direction to pay” under the covered losses in the Hiscox policy.

The Supreme Court ruled in favor of Hiscox. The 6-1 decision stated that the delivery tickets were not covered “directions to pay” under the crime insurance policy because they do not reference any payment or amount due; instead, the delivery tickets simply gave details on the pallets delivered. While the companies used the delivery tickets in function as a direction to pay, the tickets are not actually a direction to pay under the policy.

In a dissent, Justice Ann Walsh Bradley sides with Leicht, arguing that, reading the policy from the perspective of a reasonable insured, the companies’ habitual practices related to the delivery tickets make them a direction to pay covered under the Hiscox policy. According to the dissent, the delivery tickets also fulfill other coverage requirements under the policy, including that they are similar to the listed covered forged documents under the policy and that the forged signatures on the delivery tickets were “purported to have been” made by Leicht employees.

Bill Lueders v. Scott Krug (Open Records Requests)

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In Lueders v. Krug (2018AP431), the Court of Appeals District II held that open records requesters have the right to receive electronic copies of email records.

Bill Lueders, editor of The Progressive magazine and president of the Wisconsin Freedom of Information Council, emailed an open records request to Wisconsin state Rep. Scott Krug (R-Nekoosa) for records on several water-related bills in the 2015-16 legislative session. Krug’s office printed out related emails, and Lueders came in person to look at the printouts. A few days later, Lueders sent Krug another email requesting the records in electronic form.

Krug argued he had already satisfied the open records request by providing the printouts of the emails, which were “substantially as readable as the original” according to Wis. Stat. s. 19.35(1)(b). However, the court noted that the full context of that statutory provision requires copies of records to be “substantially as readable” only if the requester makes the request in person. Lueders made his requests via email. The court further determined that electronic email records contain substantially different information (i.e. metadata about the sender, recipient, attachments, location of server, etc.) than printed email records. Therefore, the email printouts were not a sufficient response to Lueders’s enhanced request for electronic copies.

Wisconsin Institute for Law & Liberty, Wisconsin Freedom of Information Council, the MacIver Institute, Badger Institute, and Americans for Prosperity-Wisconsin filed an amicus brief supporting Lueders in this case.