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Negligence Case Analysis

Coincidentally, just two days before this decision was issued, Judge Dykman delivered an address to the Dane County Bar Association on the same theme, entitled, “Torts — Wisconsin Does it Differently.” The lesson of both this decision and that speech is that, if you represent a defendant arguing a negligence case, you are not going to win by arguing that your client did not owe the plaintiff a duty; instead, public policy arguments will make or break the case.

In the case at bar, the parties stipulated that the only issue was whether the defendants owed Hoida a duty, and the trial court held they did not. The court of appeals, however, disagreed, and framed the issue as one of public policy.

On the question of duty that the parties had actually argued, the court summarily wrote that, in Wisconsin, everyone owes a duty to all others to refrain from any act that will cause foreseeable harm to others. Both the duty analysis in the case at bar, and the discussion of duty in the speech last week began (and all but ended) with this cursory holding from Dixson v. WI Health Organization Ins. Co., 2000 WI 95, 237 Wis.2d 149, 612 N.W.2d 721.

Ultimately, the court of appeals based its policy determination on the comprehensive statutory scheme the legislature has set forth for construction loans. The comprehensiveness of this same scheme was one of the reasons the circuit court had concluded there was no duty. The decision makes clear that, to be successful in District IV of the court of appeals, at least, such arguments are more effectively framed in public policy terms, rather than as reasons for an absence of duty.

For a more detailed elaboration of Judge Dykman’s views on negligence, attorneys can turn to three law review articles by the same professor cited at the speech: Richard V. Campbell, Duty, Fault & Legal Cause, 1938 Wis.L.Rev. 402 (1938); Torts, 1941 Wis. L. Rev. 110 (1941); and Wisconsin Law Covering Automobile Accidents — Part 2, 1962 Wis. L. Rev. 240 (1962).

Another theme from the speech that can be seen at work in the decision in the case at bar is that, when arguing the third element of a negligence action — causation — parties should never use the term “proximate cause,” but instead use “substantial factor”: “A defendant’s negligence is ‘a cause’ of a plaintiff’s injury or damage if it was a substantial factor in producing the injury or damage.” Alvarado v. Sersch, 2003 WI 55, par. 34, n.2, 262 Wis.2d 74, 662 N.W.2d 350.

In Dykman’s view, if the string of events between the defendant’s act and the plaintiff’s injury is so attenuated that liability should not result, then liability can be denied based on the first of the six public policy factors set forth in Fandrey v. American Family Mut. Ins. Co., 2004 WI 62, 680 N.W.2d 345: “the injury is too remote from the negligence.”

However, an argument that the elements of a negligence claim were not met, because the action was not the “proximate cause” of the injury, and causation is therefore not present, is a nonstarter before Judge Dykman (In fact, attorneys who vow never to use the term “proximate cause” ever again can actually obtain from Dykman, a button with a red slash mark over the words).

Judge Dykman is not alone on District IV in advocating a methodology in which the four elements of negligence are (relatively) easily met, with the hard analysis all occurring when the public policy considerations are weighed.

Dykman’s colleague on the court, Judge Paul Lundsten, was present at the luncheon, and a spirited debate demonstrated that, while Dykman would abolish use of the term “proximate cause” and subsume all remoteness considerations into the public policy analysis, Lundsten would abolish the element of duty in negligence analysis, and subsume all those considerations into public policy.

As Dykman noted, Lundsten has already done so, when writing for the court of appeals in Alverado v. Sersch, 2002 WI App 227, par. 22, 257 Wis.2d 752, 652 N.W.2d 109, holding that duty was no longer to be examined as a separate element at all, but was folded into the public policy factors.

The Supreme Court reversed the court of appeals, but still rejected the circuit court’s holding, which had denied liability because the plaintiff failed to meet the duty element.

The upshot is, if you are arguing a case in District IV, and Judge Lundsten is on the panel, there exists no set of facts which will cause Lundsten to conclude that duty was lacking, because he rejects it as a distinct element of negligence. If Judge Dykman is on the panel, the methodology is different, as he accepts duty as an element, but the result will almost certainly be the same, because the duty of everyone is so great: “to refrain from any act which will cause foreseeable harm to others.”

Thus, any argument that can be made to the effect that no duty exists, or that the act complained of was not a substantial factor in causing injury, is more effectively made at the end, when addressing public policy factors.

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The decision is also noteworthy for another reason. Wisconsin case law provides six non-exclusive factors to consider when weighing whether public policy should preclude tort liability, but none are even arguably applicable to the case at bar: the injury is not remote from the negligence; the injury is not
out of proportion to the negligence; it is not extraordinary that the negligence caused the harm; allowing recovery would not place an unreasonable burden on the defendant; allowing recovery would not open the way for fraudulent claims; and allowing recovery would not enter a field that has no sensible or just stopping point.

On the contrary, it is standard operating procedure for lenders to obtain lien waivers before disbursing loan proceeds, and the purpose of doing so is to avoid exactly the very foreseeable injury to subcontractors that occurred in this case because that was not done. The bank made the mistake, and the only question is whether the bank should bear the costs of its mistake, or if an innocent subcontractor should.

Admittedly, the six public policy factors are delineated by the Supreme Court, “nonexclusive.” So, the fact that none applies in the case at bar cannot be deemed as placing the court of appeals’ decision in conflict with any case.

Nevertheless, if one does accept that the case at bar was correctly decided, then the list of six public policy factors should be expanded to explicitly enumerate, as a seventh policy ground for precluding tort liability, the existence of a comprehensive statutory scheme that governs the conduct at issue.

However, to list six factors, all of which militate in favor of imposing liability, and then holding that public policy bars recovery because of a factor that bears no resemblance to the enumerated six, is best described as intellectually dishonest, and even that is a very charitable description.

– David Ziemer

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David Ziemer can be reached by email.

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