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Weekly Case Digests — Jan. 23-27, 2017

By: WISCONSIN LAW JOURNAL STAFF//January 27, 2017//

Weekly Case Digests — Jan. 23-27, 2017

By: WISCONSIN LAW JOURNAL STAFF//January 27, 2017//

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7th Circuit Digests

7th Circuit Court of Appeals

Case Name: United States of America v. Jesse D. Featherly

Case No.:15-3854

Officials: BAUER, FLAUM, and KANNE, Circuit Judges

Focus: Motion to Quash –Search Warrant – Court Error

Jesse Featherly challenges the denial of his motion to quash the search warrant that led to the discovery of child pornography on his computer. Featherly contended that the government secured the warrant by making an intentionally false statement on the warrant application. The district court disagreed, and Featherly pleaded guilty to receiving child pornography. Because the court did not clearly err in concluding that there was no intentionally false statement and that probable cause supported the warrant, we affirm.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Steven Syms

Case No.:15-3067

Officials: BAUER, ROVNER, and HAMILTON, Circuit Judges.

Focus: Sentencing – Sentence Enhancement – Mandatory Minimum

This case involves a conspiracy to distribute cocaine in St. Louis, Missouri, and the surrounding area. One of the conspirators, Steven Syms, pleaded guilty to conspiracy to distribute and possess with intent to distribute cocaine, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(A)(ii), and 846. The district court sentenced Syms to 151 months’ imprisonment. On appeal, Syms argues that the mandatory minimum sentence contained in 21 U.S.C. § 841(b)(1)(A)(ii) violates the separation-of-powers doctrine. He also argues that the district court improperly based its drug-quantity calculation and sentencing enhancement on speculative and unreliable evidence, and further contends that he qualified for a safety valve reduction in his sentencing, and that his sentence violates the Eighth Amendment. For the reasons that follow, we affirm Syms’ sentence.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Paul Winfield

Case No.: 16-1047; 16-1048

Officials: POSNER, KANNE, and SYKES, Circuit Judges.

Focus: Court Error – Sentencing Guidelines

These consolidated appeals raise a single issue: whether the district court erred by adjusting Paul Winfield’s offense level upwards based on the court’s finding that Winfield “maintained” his apartment for distributing controlled substances, see U.S.S.G. § 2D1.1(b)(12). Winfield argues that the guideline doesn’t apply here because drug dealing was not among his “primary or principal” uses for the apartment, see U.S.S.G. § 2D1.1 cmt. n.17. We disagree and affirm the district court’s judgments.

Affirmed

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7th Circuit Court of Appeals

Case Name: Rhonda Ezell, et al v. City of Chicago

Case No.: 14-3312; 14-3322

Officials: KANNE, ROVNER, and SYKES, Circuit Judges.

Focus: 2nd Amendment Restrictions

This case returns to us with new controversies arising from Chicago’s response to Heller and McDonald, the Supreme Court’s Second Amendment decisions. Last time we addressed an ordinance banning shooting ranges throughout the city. See Ezell v. City of Chicago (“Ezell I”), 651 F.3d 684 (7th Cir. 2011). The range ban was part of a sweeping ordinance adopted in the wake of McDonald, which invalidated Chicago’s law prohibiting handgun possession. McDonald v. City of Chicago, 561 U.S. 742, 791 (2010). To replace the handgun ban, the City established a permit regime for lawful gun possession and required one hour of range training as prerequisite to a permit, but prohibited firing ranges everywhere in the city. Ezell I, 651 F.3d at 689–90. We held that the range ban was incompatible with the Second Amendment and instructed the district court to preliminarily enjoin it. Id. at 710–11. The City responded by replacing the range ban with an elaborate scheme of regulations governing shooting ranges. Litigation resumed, prompting the City to rewrite or repeal parts of the new regime. The district judge invalidated some of the challenged regulations and upheld others. Ezell v. City of Chicago (“Ezell II”), 70 F. Supp. 3d 871, 882–92 (N.D. Ill. 2014). Three provisions currently remain in dispute: (1) a zoning restriction allowing gun ranges only as special uses in manufacturing districts; (2) a zoning restriction prohibiting gun ranges within 100 feet of another range or within 500 feet of a residential district, school, place of worship, and multiple other uses; and (3) a provision barring anyone under age 18 from entering a shooting range. The judge permanently enjoined the manufacturing-district restriction but upheld the distancing and age restrictions. Both sides appealed. We affirm in part and reverse in part.

Affirmed in part

Reversed in part

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7th Circuit Court of Appeals

Case Name: Builders Ban v. Federal Deposit Insurance Corporation

Case No.: 16-2852

Officials: POSNER, EASTERBROOK, and SYKES, Circuit Judges

Focus: Uniform Financial Institutions Rating System

Builders Bank is insured and regulated by the Federal Deposit Insurance Corporation, which conducts a “full‐scope, on‐site examination” every 12 to 18 months. 12 U.S.C. §1820(d). After an examination in June 2015 the FDIC assigned the Bank a rating of 4 under the Uniform Financial Institutions Rating System. The parties call this a CAMELS rating, after the System’s six components: capital, asset quality, management, earnings, liquidity, and sensitivity. The highest rating is 1, the lowest 5. The Bank contends in this suit under the Administrative Procedure Act that its rating should have been 3 and that the lower rating is arbitrary and capricious. But the district court dismissed the suit for want of jurisdiction, ruling that the assignment of ratings is committed to agency discretion by law. 5 U.S.C. §701(a)(2)

Judgment vacated and remanded

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7th Circuit Court of Appeals

Case Name: Rigoberto Velasquez-Banegas v. Loretta E. Lynch

Case No.: 15-2619

Officials: POSNER, RIPPLE, and ROVNER, Circuit Judges

Focus: Removal Proceedings – Immigration

The petitioner, a citizen of Honduras, entered the United States in 2005—without being authorized to do so—when he was 38 years old. He is now 49, still living in this country, still not authorized to live here. In 2014 the Department of Homeland Security began proceedings in the Immigration Court to have him removed from this country (i.e., deported) to Honduras. He applied for withholding of removal and also for protection under the Convention Against Torture, on the ground that he is highly likely to be persecuted if returned to Honduras. The immigration judge denied both applications and ordered him removed. The Board of Immigration Appeals affirmed summarily, and he appeals to us.

Vacated and remanded

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7th Circuit Court of Appeals

Case Name: United States of America v. Eric A. Bloom

Case No.: 15-1445

Officials: BAUER, KANNE, and HAMILTON, Circuit Judges

Focus: Sufficiency of Evidence – Jury Instructions

In August 2007 Sentinel Management Group collapsed. Sentinel managed short-term cash investments for futures commission merchants, individuals, hedge funds, and other entities. Its bankruptcy left customers and creditors in the lurch: over $600 million was lost. In the wake of the collapse, Sentinel president and CEO Eric Bloom was convicted of wire fraud and investment adviser fraud The government’s case rested on three theories. First, the government presented evidence that Bloom, despite assuring customers otherwise, put their funds at significant risk by using them as collateral for Sentinel’s risky proprietary trading. Second, the government contended that Bloom fraudulently manipulated the rates of return paid to clients on their investments. Third, the government claimed that Bloom continued to accept new customer funds even after he knew that Sentinel was about to collapse. The jury found Bloom guilty on all counts, eighteen of wire fraud and one of investment adviser fraud. On appeal, Bloom offers five arguments, which we address in turn. First, Bloom challenges the sufficiency of the evidence supporting his convictions. Second, he argues that his convictions were tainted by prosecutorial misconduct. Third, Bloom argues that the court erred by refusing to instruct the jury properly on the meaning of a federal regulation governing futures commission merchants. Fourth, he challenges several of the district court’s evidentiary rulings. Fifth, he argues that in sentencing the district court used too high a loss amount to calculate the sentencing guideline range. We find no reversible error.

Affirmed

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7th Circuit Court of Appeals

Case Name: Derek Gubala v. Time Warner Cable, Inc.

Case No.: 16-2613

Officials: POSNER, EASTERBROOK, and SYKES, Circuit Judges.

Time Warner Cable provides Internet access, television programming, and other online services to residences via cable. The plaintiff, Derek Gubala, subscribed to Time Warner’s cable services in 2004 and as required provided Time Warner with his date of birth, home address, home and work telephone numbers, social security number, and credit card information. Two years later, how ever, he cancelled his subscription and eight years after that (2014), upon inquiring of Time Warner, learned that all the information he’d given it when he’d subscribed to its residential services a decade earlier remained in the company’s possession. And in apparent (though, as explained later in this opinion, not certain) violation of federal law, none of it had been destroyed

Gubala filed this class-action suit against Time Warner Cable seeking injunctive relief (originally damages as well, but that claim has been abandoned) for alleged violations of 47 U.S.C. § 551(e), the subsection of the Cable Communications Policy Act which provides that a cable operator “shall destroy personally identifiable information if the information is no longer necessary for the purpose for which it was collected and there are no pending requests or orders for access to such information [either by a cable subscriber, seeking access to his own information] … or pursuant to a court order.” The district judge dismissed the suit on the ground that the plaintiff lacked standing to bring it. As an alternative ground for dismissal she ruled that even if the plaintiff had standing, he’d failed to state a claim upon which relief could be granted. He couldn’t be given an injunction, the only remedy he sought, because he had an adequate remedy at law—namely damages, authorized by section 551(f) of the Cable Act—that he had failed to seek.

Affirmed

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7th Circuit Court of Appeals

Case Name: Buruji Kashamu

Case No.:16-1004

Officials: POSNER and KANNE, Circuit Judges

Focus: Mansfield Amendment

Buruji Kashamu, a fugitive for nearly two decades and the alleged leader of a heroinimporting conspiracy that inspired the hit show “Orange is the New Black,” appears before us for a third time not in person but through counsel because he is unwilling to risk being present in the United States, and in fact has never in his life been in the United States. See “Man Who Inspired Orange is the New Black Elected Senator in Nigeria” The Guardian, Apr. 16, 2015, https://www.theguardian.com/ world/2015/apr/16/alleged-drug-kingpin-wanted-us-electedsenator-nigeria (visited Jan. 20, 2017). In 1998 a grand jury in the Northern District of Illinois had charged him and thirteen others with conspiracy to import heroin, in violation of 21 U.S.C. § 963. Eleven coconspirators pleaded guilty, and one other was convicted after trial. But Kashamu, refusing to appear (which would have required his presence in the United States), insisted that the authorities were trying to pin crimes committed by his dead brother—who he said bore a striking resemblance to him—on him. The present suit is Kashamu’s latest attempt to avoid answering the still-pending charges that the Justice Department has brought against him. When he surfaced in England six months after his indictment Justice Department lawyers commenced what turned out to be a four-year legal battle seeking his extradition to the United States—unsuccessfully. Later Kashamu moved to dismiss the American indictment on the ground that the doctrine of collateral estoppel barred his prosecution by the United States. We denied that motion, explaining that the English magistrate’s refusal to authorize his extradition to the United States had been based simply on the Justice Department’s inability to convince the judge that the person it was seeking to extradite was indeed Kashamu. United States v. Kashamu, 656 F.3d 679 (7th Cir. 2011). Because the magistrate had not ruled on Kashamu’s guilt or innocence of the U.S. charges, the refusal to extradite him did not preclude further efforts to prosecute him. Id. at 688.

Affirmed

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7th Circuit Court of Appeals

Case Name: Patricia Holtz, et al v. JPMorgan Chase Bank, N.A. et al

Case No.: 13-2609

Officials: EASTERBROOK, MANION, and SYKES, Circuit Judges.

Focus: Breach of Fiduciary Duty – Investment Inducement

JPMorgan Chase Bank offers to manage clients’ portfolios of securities. Its affiliates sponsor mutual funds in which these funds can be placed. We refer to JPMorgan Chase Bank and all of its affiliates collectively as “the Bank.” According to the complaint in this case, customers invested in these mutual funds believing that, when recommending them as suitable vehicles, the Bank acts in clients’ best interests (as its website proclaims). But Patricia Holtz, on behalf of a class of other investors, alleges that the Bank gives its employees incentives to place clients’ money in the Bank’s own mutual funds, even when those funds have higher fees or lower returns than competing funds sponsored by third parties. Holtz maintains that the Bank violated its promises and its fiduciary duties by inducing its investment advisers to make recommendations in the Bank’s interest rather than the clients’. Holtz filed this suit in federal court under the Class Action Fairness Act, 28 U.S.C. §1332(d)(2), because the class has more than 100 members, the stakes exceed $5 million, and at least one member of the class has citizenship different from the Bank’s. This suit is also a “covered class action” for the purpose of the Securities Litigation Uniform Standards Act of 1998 (SLUSA or the Litigation Act), 15 U.S.C. §78bb(f), because mutual funds are securities. SLUSA requires the district court to dismiss any “covered class action” in which the plaintiff alleges “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security” (§78bb(f)(1)(A)). Under SLUSA, securities claims that depend on the nondisclosure of material facts must proceed under the federal securities laws exclusively. See, e.g., Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71 (2006); In re Mutual Fund Market-Timing Litigation, 468 F.3d 439 (7th Cir. 2006) (Kircher IV). Holtz does not want to invoke federal law and framed her claims entirely under state contract and fiduciary principles. But the district court concluded that these claims necessarily rest on the “omission of a material fact” and dismissed the suit under SLUSA. 2013 U.S. Dist. LEXIS 90066 (N.D. Ill. June 26, 2013).

Affirmed

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7th Circuit Court of Appeals

Case Name: Margaret Richek Goldberg v. Bank of America, N.A., et al

Case No.: 11-2989

Officials: FLAUM, EASTERBROOK, and HAMILTON, Circuit Judges.

Focus: Breach of Contract – Breach of Fiduciary Duty

LaSalle Bank offered custodial accounts that clients used to invest in securities. If an account had a cash balance at the end of a day, the cash would be invested in (“swept” into) a mutual fund from a list that the client chose. LaSalle Bank would sell the mutual fund shares automatically when the customer needed the money to make other investments or wanted to withdraw cash. Stephen Richek, as trustee under the Seymour Richek Revocable Trust, opened a custodial account with a sweeps feature. (The current trustee is Margaret Richek Goldberg; for the sake of continuity we continue to refer to the investor and plaintiff as Richek.) Richek was satisfied with LaSalle’s services until it was acquired by Bank of America. After the acquisition, Bank of America notified the clients that a particular fee was being eliminated. Richek, who had not known about the fee, then sued in state court, contending that LaSalle had broken its contract (which had a schedule that did not mention this fee) and violated its fiduciary duties. Richek proposed to represent a class of all customers who had custodial accounts at LaSalle. (Because LaSalle became a subsidiary of Bank of America, and now operates under its name, we refer from now on to “the Bank,” which covers both institutions.)

Affirmed

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WI Court of Appeals Digests

WI Court of Appeals – District II

Case Name: Suzanne Mullany v. Michael Massie, et al

Case No.: 2015AP318

Officials: Neubauer, C.J., Gundrum and Hagedorn, JJ.

Focus: Bad Faith – Attorney Fees

The respondents, brothers Michael and Loren Massie, and the appellant, Suzanne Mullany, are all beneficiaries of their mother’s trust. Mullany was the co-trustee of that trust. The Massies brought various claims related to Mullany’s purported mishandling of the trust and sought to remove her. The circuit court granted the request, found that the Massies were acting for the benefit of the estate, and found that Mullany had acted in bad faith. On the basis of Mullany’s bad faith, the circuit court charged Mullany personally for the Massies’ attorneys’ fees, leaving her with no remaining share of the trust and a bill to boot. Mullany appeals and argues that WIS. STAT. § 879.37 (2013- 14) precludes an award of fees for a prevailing party out of a particular share of a trust—here, hers. While Mullany is correct as far as it goes, we hold that the circuit court permissibly charged Mullany personally with fees on the basis of its equitable powers and Mullany’s bad faith, and not under § 879.37. Accordingly, we affirm.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. James Earl Gandy

Case No.: 2016AP1666-CR

Officials: Kessler, Brennan and Brash, JJ.

Focus: 4th Amendment – Suppression

James Earl Gandy appeals a judgment convicting him of possession of cocaine with intent to deliver. Gandy argues that cocaine found in his apartment should have been suppressed because firefighters and police officers who entered his home while responding to a 911 call violated his Fourth Amendment rights. We affirm.

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WI Court of Appeals – District II

Case Name: Donald J. Thoma et al v. Village of Slinger

Case No.: 2015AP1970

Officials: Neubauer, C.J., Reilly, P.J., and Hagedorn, J

Focus: Tax Assessments

Donald J. Thoma and Polk Properties LLC filed this action for certiorari review of a decision of the Village of Slinger Board of Review upholding the assessment of properties in a subdivision owned by Thoma and Polk Properties. The subdivision is subject to a number of restrictive covenants, including one preventing the land from being used for agriculture. In 2012, as part of the Village’s suit to enforce the covenants, a court entered an order prohibiting the properties from being used for agriculture. For the 2014 tax year at issue in this case, the Village assessor reclassified the subdivision as residential for tax purposes. Thoma and Polk insist that the Village board of review (the Board) failed to act according to law when it accepted the assessor’s classification; the land, they assert, should have remained classified agricultural. Thoma and Polk also allege that the assessor impermissibly relied upon two sales that were not arm’s-length transactions. We affirm.

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WI Court of Appeals – District III

Case Name: Little Chute Area School District v. Wisconsin Education Association Council, et al

Case No.: 2015AP2033

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Insurance Policy – Collective Bargaining Agreement – Vested Rights

The Wisconsin Education Association Council (“WEAC”) and thirty-seven retirees (collectively and with WEAC, the “Retirees”) from the Little Chute Area School District (the “District”) appeal a summary judgment in the District’s favor. In 2013, the District terminated its group longterm care (“LTC”) insurance policy for the District’s active employees and retirees. The District then filed the present declaratory judgment action, seeking a declaration that it was permitted, under the terms of the relevant collective bargaining agreements (“CBAs”), to terminate the group LTC policy. After analyzing the CBAs’ provisions, the circuit court agreed with the District and rejected the Retirees’ argument that they had a “vested right” to continuing insurance benefits under the specific group LTC policy that had been terminated. We affirm.

Recommended for publication

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. Latrae A. Williams

Case No.: 2015AP2337-CR

Officials: Brennan, P.J., Kessler and Brash, JJ.

Focus: Ineffective Assistance of Counsel

LaTrae A. Williams appeals a judgment convicting him of one count of possession of cocaine with intent to deliver, as a second or subsequent offense, and one count of being a felon in possession of a firearm. He also appeals the circuit court’s order denying his postconviction motion. He argues that he received ineffective assistance of trial counsel because his lawyer did not move to dismiss on the grounds that his right to a speedy trial had been violated. We affirm.

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Jimmie E. Hanson

Case No.: 2015AP2544-CR

Officials: Neubauer, C.J., Reilly, P.J., and Hagedorn, J

Focus: Search Warrant

Jimmie E. Hanson appeals a judgment convicting him of attempted armed robbery and two counts of armed robbery. He contends tainted information in an affidavit authorizing a search of his house, detached garage, and vehicle stripped the warrant of probable cause to believe that evidence of crimes would be found on the premises. For the reasons that follow, we affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Christopher J. McMahon

Case No.: 2015AP2632-CR

Officials: Stark, P.J.

Focus: Ineffective Assistance of Counsel

Christopher McMahon appeals a judgment of conviction and an order denying his postconviction motion alleging his trial counsel provided ineffective assistance. We affirm.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. Antonio Dion Pugh

Case No.: 2016AP338-CR

Officials: Brennan, P.J., Kessler and Brash, JJ

Focus: Court Error – Sentencing

Antonio Dion Pugh appeals a judgment convicting him of one count of substantial battery, as a repeater, and an order denying his motion for postconviction relief. He claims that the circuit court erroneously exercised its sentencing discretion by failing to adequately explain why a near maximum term of incarceration consecutive to a reconfinement sentence was necessary. We affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Scott L. Hull

Case No.: 2016AP364-CR

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Due Process – Victim Interview

Scott Hull appeals a judgment convicting him of second-degree sexual assault of an intoxicated person. He contends the State violated his due process rights by failing to preserve the victim’s recorded interviews with police. Because Hull failed to establish the interviews were “apparently exculpatory,” or that they were potentially exculpatory and the police acted in bad faith, we affirm the judgment.

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WI Court of Appeals – District III

Case Name: Great Lakes Beverages, LLC v. Keith R. Wochinski d/b/a New London Bottling Company, et al

Case No.: 2016AP386

Officials: Stark, P.J., Hruz and Seidl, JJ

Focus: Breach of Contract

We review a decision of the circuit court declaring that insurance policies AMCO Insurance Company issued to GLB Acquisition, LLC (GLBA) excluded coverage to GLBA for third-party claims brought by Keith Wochinski and several related parties (collectively, Wochinski). The circuit court concluded the policies’ “breach of contract” exclusions barred coverage for Wochinski’s claims. We agree that the breach of contract exclusions apply, and we therefore affirm the order dismissing AMCO from this action.

Recommended for publication

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Shaun L. Parish

Case No.: 2016AP439-CR

Officials: Neubauer, C.J., Reilly, P.J., and Gundrum, J.

Focus: Voir Dire

Shaun Parish appeals from a judgment convicting him of one count of repeated sexual assault of a child and from the order denying his motion for postconviction relief. He contends the prosecutor made inappropriate and prejudicial remarks in closing argument and that a juror’s failure to answer voir dire questions accurately, or at all, demonstrates the juror’s bias. We disagree and affirm the judgment and order.

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WI Court of Appeals – District II

Case Name: CED Properties, LLC v. City of Oshkosh

Case No.: 2016AP474

Officials: Neubauer, C.J., Reilly, P.J., and Gundrum, J

Focus: Special Assessments

The City of Oshkosh levied special assessments against CED Properties, LLC (CED) for installation of a roundabout intersection and related improvements pursuant to the City’s police power. CED challenged the special assessments on the grounds that (1) the City was foreclosed from assessing “special benefits” to its property where it failed to allege special benefits in an earlier condemnation action and (2) a genuine issue of material fact remains as to whether its property incurred any special benefits. We affirm the circuit court’s grant of summary judgment to the City.

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WI Court of Appeals – District I

Case Name: State of Wisconsinv. L.H.-H.

Case No.: 2016AP917

Officials: Kessler, J.

Focus: Termination of Parental Rights

L.H.H. appeals the order terminating his parental rights to his daughter, K.H.H. L.H.H. contends that his no contest plea during the grounds phase was not knowing, intelligent and voluntary because he was unaware that he would be found unfit as a result. We disagree and affirm the circuit court.

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. C.M.

Case No.: 2016AP1321

Officials: Reilly, P.J.

Focus: Delinquency – Adult court

C.M. challenges his waiver into adult court on the grounds that the court erroneously exercised its discretion by considering Lincoln Hills School for Boys to be categorically unsuitable for placement of juveniles and that C.M. would be safer in the adult system. We affirm as the court’s comments regarding Lincoln Hills were not the determining factor in its waiver decision.

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