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Actual Innocence Case Analysis

By: dmc-admin//January 12, 2005//

Actual Innocence Case Analysis

By: dmc-admin//January 12, 2005//

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Technically, this case is an application of Illinois state law, and has no direct bearing in Wisconsin. Nevertheless, as both states have the actual innocence rule, criminal defense attorneys and their insurers should be aware of it.

Wisconsin expressly adopted the actual innocence rule in Hicks v. Nunnery, 2002 WI App 87, 253 Wis.2d 721, 643 N.W.2d 809, 820-823, although its adoption was suggested much earlier, in Harris v. Bowe, 178 Wis.2d 862, 505 N.W.2d 159, 162 (Ct.App.1983).

Like most jurisdictions, Wisconsin has never considered whether actions for breach of contract against criminal defense attorneys are subject to the rule. In the wake of this decision, it should be expected that criminal defendants will attempt to use this decision to evade the rule’s effect.

When that happens, this case demonstrates that they may be successful. As courts and attorneys have found in their experience with the economic loss doctrine, the difference between a negligent provision of services and a breach of contract is not always clear. The Seventh Circuit’s decision in the case at bar blurs that distinction further in the legal area.

One cannot merely ask if the malpractice plaintiff is claiming malfeasance (tort) or nonfeasance (contract), at least not if one applies the Seventh Circuit’s analysis, which states, "It is true that the narrative portion of count one accuses Nagelberg not only of overcharging and of charging for services not rendered but also of being careless, for example in failing to read the statements by Winniczek to the authorities that showed he had no defense. But, the fact that a breach of contract is negligent rather than willful does not change the character of the breach. Sometimes a contract is broken willfully, sometimes unavoidably (circumstances beyond the promisor’s control, but not rising to the level at which he would have a defense of impossibility or force majeure, might have prevented him from fulfilling his promise), and sometimes carelessly (the promisor should have realized he couldn’t fulfill his promise — that he had bitten off more than he could chew). Since liability for breach of contract is, in general, strict liability, the cause, character, and mental element of the breach usually are immaterial."

If Wisconsin courts were to adopt the Seventh Circuit’s reasoning — that "the cause, character, and mental element of the breach usually are immaterial" — a criminal defendant should almost invariably be able to at least survive summary judgment, if not ultimately prevail, although the amount of damages will be limited by the action’s classification in contract, rather than tort.

Wisconsin courts and attorneys should also be aware of a small bit of dicta having the potential to erode the actual innocence rule.

The court wrote, "This ‘actual innocence’ rule presumably has an exception for the case in which, although the defendant is guilty, he received an unlawful penalty, although we cannot find any cases on the point."

In fact, the Wisconsin Court of Appeals has addressed a case presenting these very facts, but in an unpublished decision, Trevino v. Ladd & Milaeger, 2002 WI App 165, 256 Wis.2d 693, 647 N.W.2d 467, 2002 WL 922108 (May 8, 2002, unpublished). Trevino was sentenced to 25 years for crimes carrying a maximum punishment of 20, and sued his attorney to recover the fees he incurred in having his sentenced reduced.

The court of appeals held the claim was barred by the actual innocence rule, without considering whether the rule "presumably has an exception" or not. Squarely presented with the issue, malpractice plaintiffs now have some authority to support such an exception, although it is only persuasive, rather than precedential.

Finally, although the court did not address the issue, the particular facts of this case present the possibility of yet another exception to the "actual innocence" rule —fraud in the inducement to a contract.

Nagelberg told the Winniczeks that their original attorney was inexperienced in federal criminal matters, but that he could beat the charges.

Related Links

7th Circuit Court of Appeals

Related Article

Guilt no bar to contract claim

Any experienced criminal defense attorney or trial judge in Wisconsin has seen the following scenario countless times: a criminal defendant either hires an excellent attorney (or has one appointed for him at no cost to himself); the evidence of guilt is overwhelming and no "technicality" is going to result in dismissal; the defendant fires his excellent attorney and hires a third-rate shyster for whom you know it is only a matter of time before he is disbarred; and the defendant is convicted without the filing of even a single arguably meritorious motion.

You, as the trial judge, or the attorney for a co-defendant, or possibly the original attorney, have no idea what the shyster said to the defendant (or his family) to induce him to fire a perfectly good attorney and hire the shyster. But you have a pretty good idea that whatever it is would qualify as "fraud in the inducement" if it occurred in a normal commercial setting.

In its discussion of Winniczek’s wife, the Seventh Circuit wrote, "She is seeking restitution of money obtained from her by false pretenses or breach of an implied contract (emphasis added)." The court never discussed the false pretenses issue, but if one accepts the court’s reasoning on the contract claim, one can also make a case that a guilty criminal defendant
should be able to sue his attorney, not just in contract, but for the tort of fraud in the inducement to that contract.

In Wisconsin, however, such a claim will depend not just on Wisconsin courts adopting the exception to the actual innocence rule that the Seventh Circuit did in the case at bar, but also that the Supreme Court adopts an exception to the economic loss rule for fraud in the inducement, in the currently pending case of Kaloti Enterprises, Inc. v. Kellogg Sales Co., et al., No. 03-1225 (cert. granted, Aug. 2, 2004).

– David Ziemer

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David Ziemer can be reached by email.


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