Wisconsin Business and Commercial Litigation

In Wiley v. MMN Laufer Family Ltd. Partnership, the Wisconsin Court of Appeals considered the relation-back doctrine in the context of a personal injury action:

Verdia Wiley appeals the judgment dismissing her personal injury claims against M.M.N. Laufer Family Limited Partnership (“M.M.N.”)–which owned the roller rink building where she was injured.  Wiley argues that because, pursuant to Wis. Stat. § 802.09(3) (2009-10), the claims against M.M.N. raised in her amended complaint relate back to her original complaint–which asserted claims against Skateland, the business that operated the roller rink–the trial court erred in granting M.M.N. summary judgment.  We disagree.  Wiley’s original complaint asserted claims against the roller rink business but did not assert any claims against the building owner.  The building owner, M.M.N., should not have expected to be added as a defendant pursuant to § 802.09(3) because it had no role in owning, operating, or managing the business of Skateland.  For this same reason, we cannot conclude that Wiley made a “mistake” with respect to the newly-added defendant, see id., as she knew that Skateland, the business operator, was a separate entity from the building owner for nearly a year before the statute of limitations expired.

(I figured I couldn’t summarize it any better than the court did).  The court applied the relation back statute to the plaintiff’s attempt to include MMN: 

Pursuant to § 802.09(3), a party seeking to amend its pleading to add a new party after the statute of limitations has expired must meet the following conditions: (1) the claim the party seeks to assert in the amended complaint must arise out of the transaction, occurrence, or event set forth or attempted to be set forth in the original complaint; (2) the added party must receive notice of the institution of the action such that he or she will not be prejudiced in maintaining a defense on the merits within the period provided by law for commencing a claim; and (3) within the period provided by law for commencing a claim, the added party must know, or should know that, but for a mistake concerning the identity of the proper party, the action would have been brought against the added party.

The parties agreed that the only issue was “mistake.”  The court harmonized the very recent Tews decision (I wrote about Tews on January 13, 2011), reasoning that

In Tews, the Wisconsin Supreme Court reversed a grant of summary judgment on the plaintiff’s amended complaint, which asserted a claim against Wisconsin Electric Power Company (“WEPCo”), because the amended complaint related back to the original. Id., 330 Wis. 2d 389, ¶¶1, 5-6. One of the primary issues in Tews was, as it is in Wiley’s case, whether the third prong of the relation-back test had been satisfied–in other words, whether there were “facts permitting the inference that WEPCo knew or should have known that, but for a mistake concerning its identity as a proper party, the action would have been brought against WEPCo.” See id., ¶76. The supreme court held that this prong was met because the original complaint, which was filed against “We Energies” instead of WEPCo, alleged a claim against “‘the servicer of the electrical sub-station at issue.’” Id. Although We Energies was not the servicer of the sub-station at issue, WEPCo was. See id., ¶16. Because these facts permitted an inference that WEPCo “should have known that, but for a mistake concerning the identity of that servicer of the electrical sub-station, WEPCo was the intended defendant,” summary judgment on the amended complaint against WEPCo was not appropriate. See id., ¶¶77-79.

Tews is inapposite to Wiley’s case because in Tews both the original complaint and the amended complaint at issue asserted a claim against the sub-station server, whereas in Wiley’s case the original complaint asserts a claim against the roller rink business, while the amended complaint asserts a claim against the building owner, which in this case is a separate entity from the business owner. While Wiley did in fact allege that “M.M.N. owned and/or operated and/or managed Skateland,” the facts established in M.M.N.’s affidavit make clear that M.M.N. is solely the building owner, not the business operator. Furthermore, although Wiley directs our attention to several factual similarities her case shares with Tews, including that Laufer family members own both the roller rink business and the building and operate out of the same location, see, e.g., id., ¶75, those similarities support the conclusion that M.M.N. had notice of the action such that it would not be prejudiced in defending a claim–the second prong of the Wis. Stat. § 802.09(3) inquiry–which is not at issue in Wiley’s case but which was at issue in Tews. See id., ¶¶72, 74-75.

The biggest lesson for Wisconsin attorneys is to get things done as soon as possible.  Here, the plaintiff learned of the identity of the owner before the expiration of the statute of limitations, but only filed the amended complaint after the statute had run. 

Petersham Roller Skating Rink photo courtesy Newtown grafitti via this license.

In Barricade Flasher v. Wind Lake Auto Parts, the Wisconsin Court of Appeals considered Barricade Flasher’s efforts to bring suit against Wind Lake in Racine County after failing to name Wind Lake as a defendant in an ongoing Milwaukee County case, also brought by Barricade.  

The procedural history isn’t complicated:

On February 12, 2008, Barricade filed suit in Milwaukee County against Jeffrey E. Bodendorfer Jr. and Sr., alleging theft, fraud, conversion, conspiracy, and breach of fiduciary duty.  The Bodendorfers subsequently sought contribution and indemnification from Wind Lake, and thus added them as third party defendants on November 2, 2009.  On February 15, 2010, the circuit court set a March 15, 2010 deadline for the parties to amend their pleadings.  Two weeks after the deadline, Barricade amended its summons and complaint to add Wind Lake as a defendant.  Barricade then filed a motion to extend the deadline to allow it to add Wind Lake. The circuit court denied the motion.

Barricade then filed suit against Wind Lake in Racine County for fraud.  Wind Lake filed a motion to dismiss pursuant to Wis. Stat. § 802.06(2)(a)10., which provides that a court may dismiss a lawsuit when there is “[a]nother action pending between the same parties for the same cause.”  Barricade argued that as it did not sue Wind Lake in Milwaukee County, its lawsuit in Racine County was not the same action.  The circuit court rejected this argument, stating that “both the Milwaukee County and the Racine County cases are going to deal with the same factual circumstances and the same parties (whether named or not).”  The court also noted that:

Barricade had every opportunity to commence an action against Wind Lake in Milwaukee County and was unable to do so in a timely manner. The Racine County action would cause the parties to essentially litigate the same case in two separate counties. While the relief sought is different, the underlying theory of recovery is not.

Barricade appealed, but the appellate court was also not a fan of the end run:

Barricade argues that its Racine County lawsuit should not have been dismissed because the parties differ from those involved in the Milwaukee County lawsuit.  The defendants in the two Aon lawsuits, however, differed as well, yet we held that the circuit court properly dismissed the second lawsuit because Aon did not demonstrate how the claims it raised in the second lawsuit could not have been brought in the first lawsuit, or why the defendant in the second lawsuit could not have been named in the first lawsuit.  Id.  Bringing a new action against a different party is not enough to get around Wis. Stat. § 802.06(2)(a)10.  As the circuit court noted, the Racine County lawsuit against Wind Lake is based on facts and circumstances that would be brought out in the Milwaukee County lawsuit.  There is no basis for Wind Lake to defend itself against two lawsuits stemming from the same claim.  Barricade had its chance to add Wind Lake as a party and did not do so.  Barricade’s only remedy is to appeal the Milwaukee County circuit court’s decision to deny Barricade’s motion to extend the deadline to amend its complaint.  See Aon, 289 Wis. 2d 127, ¶44.

The lesson for Wisconsin attorneys is to do your best to get all defendants lined up when you find out about them, and follow, to the extent possible, the scheduling order put in place by the court.  My experience is that judges are typically sympathetic to good reasons, and to those who want the ability to present their positions, as long as other parties are not improperly disadvantaged.  But it’s always preferable not to find that out the hard way.

In Radley v. Ives (Oct. 20, 2011), the Wisconsin Court of Appeals wrestled with the costs statute, Wis. Stat. 814.01.  In this medical malpractice case, William Radley was hospitalized following a heart attack.  While his discharging physician recommended daily anticoagulant tests, a ThedaCare physican at the Veterans Home where Radley moved determined daily anticoagulant testing was unnecessary.  Radley died of excessive blood loss two days after the first anticoagulant test was performed. 

ThedaCare stipulated that its negligence in monitoring Radely’s anticoagulants were a substantial factor in causing his death, and that, because it was responsible for about $10,000 in funeral expenses, the court could answer the funeral expenses question on the jury verdict.  A trial was held regarding pre-death pain and suffering caused by ThedaCare, in which the jury awarded no damages. 

Following the trial, the plaintiff submitted a bill of costs pursuant to Wis. Stat. 814.01(1).  Over ThedaCare’s objections, the trial court awarded costs to the plaintiff.  The appellate court agreed with the trial court, reasoning:

 Based upon the plain language of Wis. Stat. § 814.01(1) and Hartwig’s interpretation of “recovery” in an early version of the statute, we conclude that a plaintiff obtains a “recovery” and is entitled to statutory expenses under § 814.01(1) when litigation results in a court judgment awarding a recovery. A prevailing plaintiff for purposes of § 814.01(1) is a plaintiff who is awarded a recovery in a judgment, not, as ThedaCare incorrectly suggests, a plaintiff who obtains a recovery as a result of a recovery dispute resolved by a trial.

The lesson here is that when settling and permitting a judgment to be taken, be aware that the rule in Wisconsin is that costs will be awarded unless the parties agree differently. 

Dr. Tom photo courtesy aue04117’s photostream via this license.

Viking Packaging Technologies v. Vassallo Foods (August 9, 2011) saw the Wisconsin Court of Appeals address UCC issues of acceptance, the definition of “commercial unit,” and revocation of acceptance, all in the context of a contract for the purchase of a pasta bagging system.  Vassallo Foods (d/b/a Country Pasta) ordered from Viking a system to more accurately weigh bags of pasta and automatically close the pasta bags.  The package closing proved to be impossible to accomplish, but that was only discovered after the system had been delivered and installed. 

When Vassallo demanded a refund, Viking sued for the balance of the purchase price, and Vassallo counterclaimed for breach of contract.  As did the trial court, the court of appeals made short work of the breach of contract claim, determining that the lack of specification in the contract meant that Vassallo got what it contracted to get:

The trial court found specifically that Country Pasta wanted its packaging system to be more automatic. It wanted to have the “bags closed or tied and the bags to be weighed more accurately.” Nothing in those photographs, or elsewhere in the contract, establish how quickly the packaging system was required to function. By the end of his second visit to Country Pasta, Parrish testified he was able to give Kellogg a package closed with a tin-tie, but Kellogg was dissatisfied because of the way the tin-tied bag performed during handling. Kellogg himself testified that he thought the bags looked “sloppy.” Nothing in the contract even hints at any handling standards the tin-tie must withstand. The record does not explain how the “look” of the bag delivered differed from the photographs attached to the contract. Country Pasta has not established that the packaging system as a whole, or the tin-tie applicator specifically, failed to meet any identifiable “[p]roduct [p]erformance [s]pecifications.”

Likewise, the court determined that Vassallo had accepted the entire packaging system by accepting a part of the commercial unit:

By retaining all of the items in the contract, Country Pasta treated the packaging system in a way that was inconsistent with the seller’s ownership. This conduct constitutes acceptance of goods pursuant to Wis. Stat. § 402.606(1)(c).

Finally, the court of appeals relied upon the factual findings of the trial court in deciding that Country Pasta knew too much to revoke the contract:

The trial court found that when Parrish “told [Country Pasta's] employees that the tin-tie applicator would not work, that certainly was an indication that there was not going to be additional work done.” The trial court also found that “there was no evidence presented at trial as to any further discussion of [additional work].” Thereafter, as the trial court found, Country Pasta “could not reasonably assume that the nonconformity of the machinery would be cured.” These findings make revocation under Wis. Stat. § 402.608(1)(a) and (2) unavailable to Country Pasta.

The moral of the story is the same as always — make your contracts as specific as you can.  What works 99% of the time in business will fail the 1% of the time you land in litigation.  If something’s wrong with an expensive product purchase, complain early, and often, and find someone who knows how to protect your rights under the UCC. 

Pasta photo courtesy Dottie Mae’s photostream via this license.

In Mahoney v. Menard (Aug. 17, 2011), the Wisconsin Court of Appeals reviewed a motion to dismiss arising from the plaintiff’s service of an authenticated but unsigned complaint.  Even though a signed copy was filed with the court, Menard argued that the lack of a signature on the served complaint was a fundamental defect, and the court therefore lacked personal jurisdiction.

The Court of Appeals disagreed, finding that the defect was technical in nature, and upholding Kenosha County Judge Schroeder’s denial of the motion to dismiss:

Obviously, the copy of the summons and complaint received by Menards was not identical to the one filed in that it was missing signatures, so the clerk erred by authenticating the unsigned copy, and the attorney erred by failing to sign it. However, Menards has not alleged that its copy differed in any substantive way from the original. So, it is obvious to us that the copy of the summons and complaint Menards received gave it notice that the allegations contained within it were on file with the court. As we already explained, the purpose of the signature requirement was fulfilled in the signed complaint on file with the court. We cannot see how the purpose of the authentication requirement in Wis. Stat. § 801.02 was unfulfilled based on the missing signature alone. So, yes, there was a defect. But it was a technical defect, not a fundamental one.

Despite this court’s willingness in this case to overlook such a defect, the decision certainly could have gone the other direction.  In any event, it caused a lot of additional cost to both parties to chase this one down.  It’s best to avoid all defects if you can — although none of us is perfect — but when one arises, this case may assist you in demonstrating technicality.

In Manlick v. Loppnow, the Wisconsin Court of Appeals reviewed a decision by Waukesha County Judge Michael Bohren regarding the riparian rights of two feuding lakefront neighbors.  In my experience, riparian rights lead to disputes as bitter as anything you’ll find in divorce court.  This case doesn’t appear to have been out of character.

When it broke down, the Manlicks put their boat on the opposite side of their pier from where they normally stored it.  The Loppnows took exception to the parking place, and the next season, put their pier right next to the Manlick’s pier, preventing a recurrence.  Chaos ensued:

[T]he Manlicks filed this suit, alleging trespass and conversion, private nuisance, and property loss through misrepresentation pursuant to Wis. Stat. §§ 895.446 and 943.20 (2009-10) because they believed the location of the Loppnows’ pier and shore station since 2007 infringed upon their riparian area. The Loppnows counterclaimed, alleging nuisance and trespass. The crux of the parties’ dispute centered on how to determine the boundaries of the parties’ riparian areas.

The court handily listed the various means of discerning the proper riparian boundaries:

“There is no set rule in Wisconsin for establishing the extension of boundaries into a lake between contiguous shoreline properties.” Borsellino v. Kole, 168 Wis. 2d 611, 616, 484 N.W.2d 564 (Ct. App. 1992).  However, Wisconsin case law sets forth three general methods for determining where riparian boundaries lie.  First, “where the course of the shore approximates a straight line and the onshore property division lines are at right angles with the shore, the boundaries are determined by simply extending the onshore property division lines into the lake.”  Nosek, 103 Wis. 2d at 635.  Second, if “the boundary lines on land are not at right angles with the shore but approach the shore at obtuse or acute angles the division lines should be drawn in a straight line at a right angle to the shoreline without respect to the onshore boundaries.”  Id. at 636 (internal citations omitted).  Third, “where the shoreline is irregular then the boundary line should be run in such a way as to divide the total navigable waterfront in proportion to the length of the actual shorelines of each owner taken according to the general trend of the shore.”  Id. at 637.  Here, the parties advocate for only two of the three methods.  . . . .

Despite providing general methods for determining riparian boundaries based upon property lines, Wisconsin law does not mandate the use of any particular method in any particular circumstance.  See Borsellino, 168 Wis. 2d at 617 (“The methods are not wooden requirements.”).  Instead, case law dictates the proper method is to be determined based upon what is fair and equitable under the circumstances

The court of appeals concluded that the decision about which method to apply was for the court, rather than a jury.  And in this case, the court’s determination that the coterminous method was the fairest was a correct decision. 

Having worked on a number of these cases, I can tell you that it’s not terribly easy to dig up all the necessary precedent.  Having it in one place, set forth in a published decision, is of great help to counsel working in this area.  As the lakes in our state get more and more developed, this sort of dispute is going to become more and more common.  Pay attention to this decision — the next case to walk through your door could be another one of these.

boats photo courtesy momentcaptured1 via this license.

In Alsteen v. Wauleco, the asymptomatic plaintiff argued that because she was exposed to a dangerous chemical, which increased her risk of developing cancer, she should be able to recover from the defendants.  The defendants argued that increased risk of injury is not enough, and because there was no physical injury, the plaintiff’s claim should be dismissed. 

On June 14, 2011, the Wisconsin District III Court of Appeals agreed with the defendants:

In Wisconsin, a plaintiff does not have a personal injury claim until he or she has suffered “actual” injury or damage. Increased risk of future harm is not an actual injury under Wisconsin law.

In an exhaustive review of applicable case law, the Court of Appeals confirms Wisconsin’s requirement of actual injury or damages.  This case, while written in the context of a personal injury, can certainly be applied in other contexts, as demonstrated by the breadth of case law interpreted by the court in its analysis.  As plaintiff’s lawyers become more creative in their approaches, this case is certain to be useful in limiting claims that include risk of damage.

Sorry for the lack of recent posting — I was preparing for a trial that ended up being adjourned at the last minute.  As a result, I’ve got a lot of facts and law stuffed into my head that I won’t be able to use until later this summer.  Also, I’ve got a backlog of decisions that impact how business is conducted in Wisconsin.

In March, the court of appeals reversed Milwaukee County Judge Cooper’s grant of summary judgment to the employer challenge to the City of Milwaukee’s sick leave ordinance.  In MMAC v. City of Milwaukee, the District 1 court of appeals not only reversed the summary judgment that had been granted to MMAC, but remanded with directions to enter summary judgment for the City, upholding the ordinance. 

We disagree with the circuit court and conclude that the proponents of the ordinance, not MMAC, are entitled to summary judgment. Specifically, we hold:

I. The ballot did comply with the statutory requirement that it contain “a concise statement of [the ordinance's] nature” under WIS. STAT. § 9.20(6).

II. The ordinance as a whole and the specific challenged provisions do not violate substantive due process because there is a rational relationship to the City’s police powers.

III. The ordinance is not preempted by state statutes.

IV. The ordinance is not preempted by the National Labor Relations Act (NLRA) or the Labor Management Relations Act (LMRA).

V. The ordinance does not violate the state and federal constitutional prohibitions against impairment of contracts.

VI. The ordinance does not regulate activity outside the City limits.

VII. The two-year period under § 9.20(8), during which the ordinance may not be repealed or amended except by a vote of the electors, excludes the time between the circuit court’s issuance of the temporary injunction and the vacation of the permanent injunction by the circuit court pursuant to this opinion.

As you can see, there’s a lot of detail here, and I’m not going to go into all of it.  This won’t be the last stop for this ordinance, as I’m sure it will end up (if it isn’t already) before the Supreme Court.

In Anderson v. Hebert, the District III Wisconsin Court of Appeals reviewed a Barron County decision regarding the application of the exclusive remedy of workers compensation to a claim alleging post-employment defamation.  The plaintiff resigned from his Barron County Highway Department post after his part in a scheme to overcharge the state by falsifying county work records came to light.   Hebert, the county administrator, made a number of statements on the topic to the local media and in an open meeting of the County Board.  Anderson sued, claiming among other things, that the statements were defamatory.

The County won summary judgment on the defamation claim, arguing that Farady-Sultze v. Aurora Medical Center, 2010 WI App 99, 327 Wis. 2d 110, 787 N.W.2d 433 “stands for the proposition that the Worker’s Compensation Act provides the exclusive remedy for defamation by an employer, even if the defamation occurs after the employee has been terminated.”  Anderson appealed, and the court of appeals reversed:

We conclude the language of the Act is plain and unambiguous. The Act’s exclusive remedy provision states that, where an injury is covered by the Act, “the right to the recovery of compensation under [the Act] shall be the exclusive remedy against the employer, any other employee of the same employer and the worker’s compensation insurance carrier.” WIS. STAT. § 102.03(2). An injury is covered by the Act where certain conditions are present. See WIS. STAT. § 102.03(1).

As relevant here, an injury is only covered if, at the time of the injury: (1) both the employer and employee are subject to the provisions of the Act; and (2) the employee is performing service growing out of and incidental to his or her employment. WIS. STAT. § 102.03(1)(b)-(c)1. It is undisputed that the injury to Anderson–the alleged defamation–did not occur until after Anderson resigned. Thus, at the time of the injury, Anderson was not the County’s employee and was not subject to the provisions of the Act. See WIS. STAT. § 102.03(1)(b). Furthermore, because he had already resigned, Anderson was not “performing service growing out of and incidental to his employment” at the time of the injury. See WIS. STAT. § 102.03(1)(c)1. Anderson’s injury therefore is not covered by the Act. Consequently, the Act’s exclusive remedy provision does not bar his defamation claim.

That’s the current state of the law.  However, stay tuned for what is likely to be a request for review by the Supreme Court. 

Highway truck photo courtesy OregonDOT’s photostream via this creative commons license.

In Briggs & Stratton v. Generac Power Systems (Feb. 8, 2011), these two Wisconsin industrial heavyweights went toe-to-toe over the interpretation of contract language by Milwaukee Circuit Court Judges Jean DiMotto and Bill Pocan.  In 2001, Briggs purchased the assets of Generac’s Portable Products Division.  Four years earlier (1997), Generac created its Portable Products Division, later selling the Division by means of a 1998 Asset Purchase and Sale Agreement to GPPC, which then sold its rights in the Agreement to Briggs. 

A 2005 products lawsuit began the disagreement between Generac and Briggs.  The 2005 lawsuit sought damages arising from the use of a generator manufactured in 1992.  Generac tendered defense of the lawsuit to Briggs, who refused the tender and brought a declaratory judgment action to determine who was on the hook for the defense.

Citing basic rules of grammar and punctuation, the court determined that Briggs only bought liabilities arising after the Division was formally created:

As relevant to this appeal, the parties agreed the Assumed Liabilities consist only of “[a]ll liabilities of [Generac] related to the Division arising in the ordinary course of business after the Closing Date directly on account of [Generac's] ownership and operation of the Division prior to the Closing Date.”  The qualifying phrase “prior to the Closing Date” modifies the next preceding phrase “directly on account of Seller’s ownership and operation of the Division.”  See Hope Acres, Inc., 27 Wis. 2d at 291.  Because the Division did not exist until January 1, 1997, Generac could not have owned or operated the Division before that time.  The Closing Date identified in the Agreement is June 30, 1998.  Thus the Assumed Liabilities for which Briggs agreed to be responsible must relate to Generac’s ownership or operation of the Division between January 1, 1997 and June 30, 1998.  The portable generator involved in the Thompson claim was manufactured in 1992 and sold by Generac several years before the Division existed.  Generac did not own the generator when it operated the Division or when it sold all of the Purchased Assets to Briggs.

The court also relied on the default asset purchase rule that an asset purchaser does not purchase liabilities, unless expressly or impliedly agreed.

Yet another reminder to carefully word your agreements and carefully define terms.

Portable generator photo courtesy Sarvodaya Sri Lanka’s flickr gallery via this creative commons license.