Weekly Case Digests — April 2-6, 2018

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7^th Circuit Digests

7^th Circuit Court of Appeals

Case Name: United States of America v. Daniel Ballard

Case No.: 17-2640

Officials: BAUER, FLAUM, and MANION, Circuit Judges.

Focus: Motion for New Trial – Newly Discovered Evidence

The government alleges Daniel Ballard fraudulently obtained construction loans from a bank. After Ballard was convicted on three counts of bank fraud, his attorney obtained a previously undisclosed audio recording of an adverse witness in Ballard’s trial, made during the course of a prior, unrelated criminal investigation. Ballard moved for a new trial as a result of this newly discovered evidence. The district court found certain portions of the recording favorable and material to Ballard’s defense and granted him a new trial. The United States appeals. We affirm.

Affirmed

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7^th Circuit Court of Appeals

Case Name: United States of America v. Joseph Faulkner and Otis Sykes

Case No.: 16-2860; 16-3525

Officials: EASTERBROOK and BARRETT, Circuit Judges, and STADTMUELLER, District Judge.

Focus: Sentencing Guidelines and Sufficiency of Evidence

Joseph Faulkner and Otis Sykes were convicted of conspiring to sell heroin at a place called the Keystone, an open-air drug market on Chicago’s west side. Faulkner was a leader of the gang which ran the market and Sykes was a low-level street dealer. In this consolidated appeal, Faulkner challenges numerous aspects of his conviction, while Sykes takes issue with his sentence. Neither presents arguments which merit reversal of the district court. Accordingly, we affirm the appellants’ convictions and sentences. We have jurisdiction over these appeals pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a).

Faulkner first challenges his convictions on Counts One, Two, and Three. “[W]e review a challenge to the sufficiency of the evidence,” as Faulkner presents here, “to determine only whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt, viewing the evidence in the light most favorable to the government.” United States v. Webster, 775 F.3d 897, 904–05 (7th Cir. 2015). We cannot re-weigh the evidence or reassess witness credibility. United States v. Wasson, 679 F.3d 938, 949 (7th Cir. 2012). In other words, “we will ‘overturn the jury’s verdict only when the record contains no evidence, regardless of how it is weighed, from which the [factfinder] could find guilt beyond a reasonable doubt.’” United States v. Peterson, 823 F.3d 1113, 1120 (7th Cir. 2016) (quoting United States v. Pribble, 127 F.3d 583, 590 (7th Cir. 1997)). This burden has been described as “nearly insurmountable.” United States v. Taylor, 637 F.3d 812, 815 (7th Cir. 2011). None of Faulkner’s arguments can carry it.

We now turn to Faulkner’s co-defendant, Otis Sykes. He was charged in the same 2013 indictment attacking the Double I’s operations. Sykes was not a member of the gang but worked as a street-level seller. He was nevertheless charged with conspiring to distribute a controlled substance, in violation of 21 U.S.C. § 846, and seven counts of distributing heroin and cocaine base, in violation of 21 U.S.C. § 841(a)(1). After a bench trial, he was found guilty on all counts. Judge Bucklo found that Sykes was responsible for distributing less than 100 grams of heroin. The matter proceeded to sentencing. The presentence report calculated a sentencing Guidelines range of 135 to 168 months’ imprisonment. It further noted the government’s intention to introduce evidence of uncharged conduct, namely the murder of Andre Brown. Brown was a Double I member and engaged in various acts of extortion and violence in the Keystone area. He had also robbed Sykes about a week prior to his death. He was killed on the street by two hooded men on June 22, 2012. The district court held multiple evidentiary hearings on the Brown murder. It took testimony from several witnesses who placed Sykes at the scene with a gun, though none saw him actually shoot Brown. Sykes contends that the witnesses lacked credibility and that someone else likely killed Brown.

Sykes presents one issue on appeal: whether his above Guidelines sentence was unreasonable because the district court misapplied the Section 3553(a) factors. Section 3553(a) provides that a sentencing court must “impose a sentence sufficient, but not greater than necessary” to achieve the goals of sentencing, which include promoting respect for the law, punishment, deterrence, and protection of the public. 18 U.S.C. § 3553(a), (a)(2). It supplies seven factors the court must consider in carrying out this task. Id. § 3553(a)(1)–(7). These include accounting for the circumstances of the offense charged, the defendant’s criminal history, the need for deterrence and public protection, the Guidelines range, and the desire to avoid unwarranted sentence disparities among similarly situated defendants. Neither Faulkner nor Sykes offers sufficient reasons to call their convictions or sentences into question. As a result, we AFFIRM.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Deborah Walton v. EOS CCA

Case No.: 17-3040

Officials: WOOD, Chief Judge, and BAUER and BARRETT, Circuit Judges.

Focus: FDCPA and FCRA Violation

Deborah Walton sued EOS CCA, a debt collector, under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. Walton argues that EOS violated the former by failing to contact the creditor directly to “obtain[] verification” of her debt and the latter by failing to investigate disputed information. The district court concluded that EOS had discharged its obligation under both statutes and entered summary judgment for EOS. We affirm the district court’s judgment.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Ernest D. Shields v. United States of America

Case No.: 17-1929

Officials: WOOD, Chief Judge, and BAUER and BARRETT, Circuit Judges.

Focus: Sentencing – Statute Interpretation

In this appeal of a denial of a petition for review under 18 U.S.C. § 2255, Ernest Shields argues that he should not have been sentenced as an armed career criminal because two of his Illinois convictions—one for residential burglary and another for armed robbery—cannot be characterized as violent felonies under the Armed Career Criminal Act, see 18 U.S.C. § 924(e). Our recent precedent forecloses the argument about his residential burglary conviction, and we conclude that armed robbery in Illinois is a violent felony because it requires “force or threatened use of force.” We therefore affirm the district court’s judgment.

Affirmed

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7^th Circuit Court of Appeals

Case Name: The John K. MacIver Institute for Public Policy, Inc., v. Francis D. Schmitz, et al.

Case No.: 17-1790

Officials: WOOD, Chief Judge, and FLAUM and HAMILTON, Circuit Judges.

Focus: Stored Communications Act – Good Faith Defense

This appeal requires us once again to delve into the intricacies of the Wisconsin “John Doe proceeding,” a unique creature of Wisconsin law with some similarities to a grand jury investigation. A putative class of individuals and entities assert that they were swept up in a John Doe investigation that ran roughshod over their federal rights. They sued the members of Wisconsin’s (former) Government Accountability Board and the Milwaukee County District Attorney’s Office, complaining about actions the defendants took between 2012 and 2014 in connection with a multi‐ county John Doe proceeding. The investigation had focused on suspected illegal campaign coordination between certain issue‐advocacy groups and a candidate for elected office. Plaintiff, the John K. MacIver Institute for Public Policy (“MacIver”), is one of those advocacy groups. The defendants obtained search warrants from the state judge presiding over the John Doe proceeding for MacIver’s electronic records; they then executed those warrants through internet service providers without giving notice to MacIver.

MacIver filed suit in the federal district court for the Western District of Wisconsin, alleging that the defendants’ conduct violated the Stored Communications Act (“SCA”), 18 U.S.C. §§ 2703(a)–(c), 2711(3). MacIver seeks damages, a preliminary injunction, and the return of its seized property. The district court dismissed the complaint and MacIver has appealed. Although the parties have briefed a wide variety of issues relating to the SCA and the John Doe process, we conclude that we need reach only one of them: the SCA’s good‐ faith defense. We conclude that the defendants are entitled to this defense and thus affirm the judgment of the district court.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Freedom From Religion Foundation, Inc., et al. v. Concord Community Schools

Case No.: 17-1683; 17-1591

Officials: WOOD, Chief Judge, and EASTERBROOK and SYKES, Circuit Judges.

Focus: 1^st Amendment Violation

Since ancient times, people have been celebrating the winter solstice, which occurs around the third week of December in the Northern Hemisphere. Many of these celebrations are religious in nature, and so in the modern United States they have led to a depressingly steady stream of First Amendment challenges, in which one party wishes to express its religious views in the public sphere and the other party asserts that the Establishment Clause would be violated by the display.

Our case fits that pattern to a T. It arose in Elkhart, Indiana, which is served by the Concord Community Schools. For nearly half a century, Concord High School spread holiday cheer with a “Christmas Spectacular”—a winter concert featuring an elaborate, student‐performed nativity scene. Things changed, however, when some parents, a student, and a non‐profit organization objected to what they perceived to be an impermissibly religious program. The school suggested that the 2015 version of the show would reflect modest alterations to the 2014 version. After the district court preliminarily enjoined the school from putting on even the revised show in 2015 as proposed, Concord scrubbed more of the religious content from the show.

The district court agreed with the plaintiffs that the 2014 Spectacular and the version initially proposed for 2015 violated the First Amendment’s Establishment Clause and awarded nominal damages. But the court sided with the school in finding the latest version of the show constitutional. Because we also find that the school’s second round of adjustments to the Spectacular were enough to push it over the line for compliance with the Constitution, we affirm the judgment of the district court.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Muhammad Sarfraz v. Judy P. Smith

Case No.: 17-1279

Officials: WOOD, Chief Judge, and ROVNER and SYKES, Circuit Judges.

Focus: Statutory Interpretation

In December 2010 a Wisconsin jury found Muhammad Sarfraz guilty of sexually assaulting I.N., a Pakistani immigrant who, along with her father, briefly lived with Sarfraz after arriving in this country in late 2009. At trial I.N. described a violent assault in which Sarfraz forced his way into her apartment, strangled her, threatened her with a knife, and raped her. Abundant physical evidence corroborated her account. Sarfraz claimed that I.N. consented to the sexual intercourse.

To support this defense, Sarfraz sought to introduce evidence that he and I.N. had previously engaged in consensual sexual contact while she and her father were living with him. The trial judge excluded this evidence under Wisconsin’s rape-shield law. On appeal Sarfraz argued that the trial judge misapplied the rape-shield law and deprived him of his right to confront the witnesses against him and his right to present a defense. The state court of appeals reversed the conviction, State v. Sarfraz (“Sarfraz I”), 832 N.W.2d 346, 347 (Wis. Ct. App. 2013), but the Wisconsin Supreme Court reinstated it, reasoning that the State’s interest in excluding the evidence outweighed Sarfraz’s interest in admitting it, State v. Sarfraz (“Sarfraz II”), 851 N.W.2d 235, 247–48 (Wis. 2014).

Sarfraz sought federal review under 28 U.S.C. § 2254, again claiming that the judge’s rape-shield ruling deprived him of his confrontation right and his right to present a defense. A magistrate judge denied relief but certified the issue for appeal.

We affirm. The state supreme court specifically noted but did not separately analyze Sarfraz’s federal constitutional claims. That brings into play the Richter presumption, which requires us to treat the decision as an adjudication on the merits and review it deferentially under § 2254(d). Harrington v. Richter, 562 U.S. 86, 99 (2011). Applying that standard, we agree with the magistrate judge that habeas relief is unwarranted. The state court’s decision did not involve an unreasonable application of federal law.

Affirmed

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7^th Circuit Court of Appeals

Case Name: United States of America v. Walker L. Hampton

Case No.: 16-4094

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

Focus: Plea and Sentencing – Sentencing Guidelines

Walker Hampton was caught breaking into a trucking business and later confessed to robbing a nearby post office as well. He was charged in a four-count indictment. He then entered a conditional guilty plea and was sentenced to 132 months’ imprisonment. Hampton reserved his right to appeal two issues that he now presents, arguing: (1) that robbing a person in lawful custody of United States property, see 18 U.S.C. § 2114(a), is not a “crime of violence” under 18 U.S.C. § 924(c), and (2) that his motion to suppress his recorded confession should have been granted because he was questioned after he invoked his right to counsel. We affirm the judgment because Hampton’s first argument is foreclosed by our precedent, and his second is meritless because Hampton did not clearly express a present desire to consult with counsel before talking with law enforcement.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Marilyn O. Marshall v. Denise L. Blake

Case No.: 17-2809

Officials: BAUER, FLAUM, and MANION, Circuit Judges

Focus: Bankruptcy – Chapter 13 Plan Payments

Appellee Denise L. Blake is a below‐median income debtor who filed for Chapter 13 bankruptcy. In her proposed bankruptcy plan, Blake sought to retain her annual earned income tax credit and a portion of her tax over‐withholdings. Trustee Marilyn O. Marshall objected to confirmation of Blake’s plan, arguing that Blake is required to turn over her entire tax refund for use as additional plan payments. The bankruptcy court confirmed the plan over Marshall’s objection. In doing so, it agreed with Marshall that tax credits are income under the Bankruptcy Code that must be taken into account when calculating the debtor’s projected disposable income for plan payments. However, the bankruptcy court held that Blake could retain her tax refund if she prorated it as monthly income and offset it with reasonably necessary expenses to be incurred throughout the year. The bankruptcy court certified the case for direct appeal to this court. We affirm.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Margery Newman v. Metropolitan Life Insurance Company

Case No.: 17-1844

Officials: WOOD, Chief Judge, and EASTERBROOK and ROVNER, Circuit Judges.

Focus: Insurance Claim – Coverage 

At age 56, Margery Newman purchased a long-term-care insurance plan from the Metropolitan Life Insurance Company (“MetLife”). She opted for one of MetLife’s non-standard options for paying her insurance premiums; MetLife called the method she selected “Reduced-Pay at 65.” When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. MetLife insists that the increase was consistent with Newman’s insurance policy, including its Reduced-Payat-65 feature. Newman was unpersuaded and brought this action to vindicate her position. The district court dismissed for failure to state a claim. We conclude, however, that the dismissal was premature, and that Newman’s complaint plausibly has alleged facts entitling her to relief. We therefore reverse and remand for further proceedings.

Reversed and Remanded

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7^th Circuit Court of Appeals

Case Name: A.D. v. Credit One Bank

Case No.: 17-1486

Officials: WOOD, Chief Judge, and RIPPLE and KANNE, Circuit Judges.

Focus: Arbitration Clause – Cardholder Agreement

A.D., by and through her mother, Judith Serrano, brought this putative class action under the Telephone Consumer Protection Act. She seeks compensation for telephone calls placed by Credit One Bank, N.A. (“Credit One”) to her telephone number in an effort to collect a debt that she did not owe. After discovery, Credit One moved to compel arbitration and to defeat A.D.’s motion for class certification based on a cardholder agreement between Credit One and Ms. Serrano. The district court granted Credit One’s motion to compel arbitration but certified for interlocutory appeal the question whether A.D. is bound by the cardholder agreement. We granted A.D.’s request for permission to appeal. See 28 U.S.C. § 1292(b). We now reverse the district court’s grant of Credit One’s motion to compel arbitration and remand for further proceedings consistent with this opinion. A.D. is not bound by the terms of the cardholder agreement to arbitrate with Credit One, and she has not directly benefited from the cardholder agreement such that equitable principles convince us to apply the arbitration clause against her.

Reversed and Remanded

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7^th Circuit Court of Appeals

Case Name: Robin Austin v. Walgreen Company

Case No.: 17-2629

Officials: BAUER, MANION, AND ROVNER, Circuit Judges.

Focus: Breach of Duty of Care

Robin Austin sued Walgreen Co. after she slipped and fell at a Walgreens store in northwestern Indiana, breaking her knee. A magistrate judge, presiding by consent, granted summary judgment to Walgreen. For the reasons set forth below, we affirm.

Austin argues that Walgreen had knowledge of a hazard because the store’s assistant manager admitted that when there was snow outside, as there was on the day in question, customers could track snow into the store and create potentially hazardous situations. But just because the assistant manager knew that hazards were possible does not mean that he knew they had actually materialized at the place where Austin fell. There are many potential hazards that can exist in a store like Walgreens: soda bottles can fall off a display stand and leak, glass cosmetics jars can shatter on the floor, or toys could clutter an aisle. That any of those hazards and many others could occur at any given moment probably ought to be on the mind of a person charged with managing a store, but that does not automatically impute instantaneous knowledge of when those hazards come about. The law does “not hold [a storeowner] strictly liable for a fall occurring before [it] even had a chance to remove the foreign substance from the floor.” Barsz, 600 N.E.2d at 153–54. Without evidence that Walgreen had a chance to respond to any hazard, Austin cannot establish knowledge. Austin relies on nothing but speculation to suggest that the alleged hazard existed for any significant length of time before her fall. Speculation does not defeat summary judgment.

Even if we were to accept that Austin has shown a dangerous condition, she presented no evidence that Walgreen was or should have been aware of that condition in time to address it. Consequently, she has failed to establish that Walgreen breached its duty of care. The failure to support that element of her claim dooms it.

Affirmed

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WI Court of Appeals Digests

WI Court of Appeals – District I

Case Name: Marathon Petroleum Company LP and U.S. Venture, Inc. v. City of Milwaukee

Case No.: 2016AP939

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

Focus: Property Tax Assessment

Marathon Petroleum Company LP and U.S. Venture, Inc. (collectively the “Oil Companies”) appeal the trial court’s order affirming the City of Milwaukee’s 2008 through 2014 property tax assessments for their oil terminals.

On appeal, the Oil Companies argue that the trial court erred as a matter of law in affirming the City’s 2008 through 2014 property tax assessments for their oil terminals because that valuation included non-assessable intangible value. However, we hold that the income-generating capability of the oil terminals “appertains to” and is “inextricably intertwined” with the land and is thus transferable to future purchasers of the land (the “inextricably intertwined test”). Therefore, this income may be included in the land’s assessment because it appertains to the land.

Moreover, based on our independent review of the record, we uphold the trial court’s determination that the Oil Companies failed to introduce significant contrary evidence to overcome the statutory presumption of correctness attached to the City’s assessment. Specifically, the Oil Companies’ expert failed to apply the inextricably intertwined test and, therefore, he did not properly apply WIS. STAT. § 70.32(1)(2009-10) and the Property Assessment Manual, as required by Wisconsin law. Further, we uphold the trial court’s finding that the Oil Companies’ expert’s appraisal report and testimony was not credible.

The following background, which relies primarily on the trial court’s findings of fact, provides helpful context for the issues in this case. Additional facts are included in our analysis as needed.

Recommended for Publication

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WI Court of Appeals – District III

Case Name: Lake Altoona Rehabilitation and Protection District v. Arvid Jereczek, et al.

Case No.: 2016AP2165

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

Focus: Breach of Contract

Lake Altoona Rehabilitation and Protection District (the Lake District) appeals a judgment dismissing its breach of contract claim against Arvid Jereczek and Stephen Hilger (collectively, Jereczek). The Lake District argues the circuit court erred by determining: (1) Jereczek’s failure to give written notice of termination of the contract was the relevant breach, rather than Jereczek’s failure to make payments according to the terms of the contract, and this breach was not actionable; and (2) the Lake District’s claim was barred by the frustration of purpose doctrine. We agree, and remand for the circuit court to enter judgment in favor of the Lake District for damages due under the contract.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Rick J. Gurholt

Case No.: 2017AP485-CR

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

Focus: Ineffective Assistance of Counsel

Rick Gurholt appeals a judgment convicting him of three counts of sexually assaulting his eleven-year-old stepdaughter, Nancy. He also appeals an order denying his postconviction motion, in which he alleged ineffective assistance of trial counsel. Gurholt contends his counsel was ineffective for: (1) questioning witnesses regarding accusations by his wife, the victim’s mother, that Gurholt looked at child pornography on his computer; and (2) failing to call Rusty Gurholt, his cousin, as a witness to contradict accusations that Rusty pressured the victim into withdrawing her accusations. He also seeks a new trial in the interest of justice, claiming the real controversy was not fully tried. We reject these arguments and affirm both the judgment and the order.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. T.S.R.,

Case No.: 2017AP548

Officials: DUGAN, J.

Focus: Termination of Parental Rights

T.S.R. appeals the trial court’s orders terminating her parental rights to her child, T.S.J., and denying her postdispositional motion. On appeal, she contends that the trial court should have found that trial counsel was ineffective for failing to challenge, as applied to her, two statutory grounds that the State relied upon as the basis for termination of her parental rights was constitutional. Those two grounds are continuing child in need of protective services (CHIPS) and failure to assume parental responsibility.

As to the failure to assume parental responsibility ground, she argues that the statute violates substantive due process because it was impossible for her to exercise daily care and supervision of T.S.J. when T.S.J. was in out-of-home care. As to the continuing CHIPS ground, she argues that the same right was violated because her mental illness made it impossible for her to fulfill the conditions for return.

For the reasons stated below, we conclude that the trial court did not err in determining that T.S.R. was not denied effective assistance of trial counsel, because, as applied to T.S.R., the statutory grounds for terminating parental rights based on continuing CHIPS and on failure to assume parental responsibility are constitutional. Therefore, we affirm.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. D.C.,

Case No.: 2017AP1635

Officials: Dugan, J.

Focus: Termination of Parental Rights

D.C. appeals from an order terminating his parental rights to A.D.C. and the order denying his postdisposition motion. He asserts that the trial court lost competency to terminate his parental rights because the trial court did not conduct an initial appearance in accordance with WIS. STAT. § 48.422(1). He also asserts that the trial court erred in denying his discovery motion. We hold that the trial court complied with WIS. STAT. § 48.422(1) and that the trial court did not err in denying D.C.’s discovery motion. We affirm.

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Angel L. Cartagena

Case No.: 2017AP375-CR

Officials: Reilly, P.J., Gundrum and Hagedorn, JJ.

Focus: Ineffective Assistance of Counsel

Angel L. Cartagena appeals from a judgment of conviction and an order denying his postconviction motion. He contends that the circuit court erroneously exercised its discretion when it denied his ineffective assistance of counsel claims without first holding a hearing. We reject Cartagena’s argument and affirm the judgment and order.

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Robert L. Bentz

Case No.: 2017AP1436-CR

Officials: NEUBAUER, C.J.

Focus: OWI – Motion to Suppress Evidence Denied

Robert L. Bentz appeals from a judgment of conviction for operating a vehicle while under the influence of an intoxicant (OWI) and challenges the denial of his motion to suppress evidence on the grounds that police lacked reasonable suspicion to detain him and lacked probable cause to arrest him. We reject his challenges and affirm.

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WI Court of Appeals – District IV

Case Name: Danny Goeman, et al. v. Wisconsin Department of Transportation

Case No.: 2016AP1362

Officials: Lundsten, P.J., Sherman and Blanchard, JJ.

Focus: Court Error – Exclusion of Evidence

Danny Goeman and Goeman Rubicon Enterprises, LLC (Goeman) appeal a money judgment in favor of the Wisconsin Department of Transportation in this eminent domain case. Goeman contends that he is entitled to a new trial because the circuit court erroneously excluded evidence at trial. For the reasons discussed below, we affirm.

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WI Court of Appeals – District IV

Case Name: The Bank of New York Mellon v. Gloria J. Klomsten, et al.

Case No.: 2017AP405

Officials: Lundsten, P.J., Sherman and Kloppenburg, JJ

Focus: Motion for Summary Judgment – Proper Plaintiff

This case arises out of a foreclosure action initiated by Bank of New York Mellon against Gloria and Steven Klomsten. The circuit court granted summary judgment in favor of the Bank. On appeal, the Klomstens challenge two rulings of the circuit court: (1) the court’s denial of the Klomstens’ motion to dismiss, and (2) the court’s granting of the Bank’s motion for summary judgment. The Klomstens argue that the circuit court should have granted their motion to dismiss for either of the following reasons: the action is barred by the six-year statute of limitations in WIS. STAT. § 893.43 (2015-16), which applies to breach of contract actions, or the complaint fails to state a claim for relief because the Bank does not sufficiently allege that it possesses the original note, which the Bank must prove to prevail on its foreclosure claim. The Klomstens argue that the circuit court erred in granting the Bank’s motion for summary judgment because the Bank’s submissions in support of summary judgment do not establish a prima facie case that the Bank is the proper plaintiff in this foreclosure action.

We reject both of the Klomstens’ arguments relating to the motion to dismiss. First, it is well established that the running of the statute of limitations that applies to enforcement of a note does not prevent timely foreclosure of the mortgage that secures the note, and the Klomstens do not cite any legal authority to the contrary or argue that this action is otherwise untimely. Second, assuming without deciding that the Bank must allege that it has possession or the ability to possess the note, we conclude that the complaint does not fail to state a claim because it can reasonably be inferred from the allegations it contains, along with the copies of the mortgage and note endorsed in blank attached to the complaint, that the Bank is asserting that it possesses, or has the ability to possess when needed, the original note. Therefore, the complaint does not fail to state a claim for the reason alleged by the Klomstens.

However, we agree with the Klomstens’ argument as to the motion for summary judgment. We conclude that the Bank’s submissions in support of summary judgment do not establish each element of its prima facie case for this foreclosure action because the Bank’s submissions do not aver facts showing that the Bank possesses the original note and, therefore, that the Bank is a proper plaintiff in this foreclosure action. Accordingly, we reverse and remand the case for further proceedings.

Recommended for Publication=

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Dakota R. Black

Case No.: 2017AP837-CR

Officials: Lundsten, P.J., Kloppenburg and Fitzpatrick, JJ.

Focus: Sufficiency of Evidence

Dakota Black appeals a judgment of conviction for first degree reckless homicide of five-year-old B.A.T., in violation of WIS. STAT. § 940.02(1) (2015-16). Black argues that the circuit court erred by: excluding evidence regarding a potential cause of B.A.T.’s death; failing to exclude the testimony of two of the State’s expert witnesses and a rebuttal witness; and denying his post-conviction motion for ineffective assistance of counsel. Black also contends that he is entitled to a new trial in the interest of justice. We reject Black’s arguments and affirm.

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WI Court of Appeals – District IV

Case Name: Global Proppant Supply, LLC, v. David M. Tuttle, et al.

Case No.: 2017AP1137

Officials: Lundsten, P.J., Sherman and Blanchard, JJ.

Focus: Foreclosure – Royalty Agreements and Repurchase Options

This case arises out of a failed plan to construct and operate a frac sand mine. An entity called Global Proppant Supply sought foreclosure on property that was to be used for the mine. The circuit court granted a judgment of foreclosure. The dispute here is between Global and the previous owners of the property. It is undisputed that, when these landowners sold their property, the pertinent agreements included royalties and repurchase options for the selling landowners. The agreements were not with Global. The dispute here, broadly speaking, relates to whether the sellers’ interests under the agreements or Global’s mortgage interests take precedence.

At the sellers’ request, the circuit court reformed the written agreements that governed the sellers’ interests. The court then concluded, based on the reformed agreements, that Global’s mortgage interests were subordinate to the sellers’ interests and that the sellers’ repurchase options had ripened. Global appeals. Global argues that the circuit court erred by reforming the agreements. In the first section of our discussion, we explain why we agree with Global that the circuit court erred by reforming the agreements. In the remainder of the opinion, we resolve various disputes among the parties by looking to the unreformed language of the agreements. We conclude that: (1) The Royalty Agreements have no effect on Global’s ability to foreclose; (2) One of the repurchase options is subordinate to Global’s mortgages; (3) Global’s mortgages are subordinate to other repurchase options; and (4) As to the repurchase options that are not subordinate, one has ripened and two have not.

Based on these conclusions, we affirm the judgment in part, reverse the judgment in part, and remand for the circuit court to determine what further proceedings might be necessary consistent with this opinion.

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WI Court of Appeals – District IV

Case Name: Andrew T. Murphy v. State of Wisconsin Employment Relations Commission, et al.

Case No.: 2017AP1488

Officials: Lundsten, P.J., Kloppenburg and Fitzpatrick, JJ.

Focus: Restoration Rights – Back Pay

The Wisconsin Employment Relations Commission (WERC) issued an order refusing to “restore” Andrew Murphy to three positions following a layoff and denying him back pay with respect to a fourth position to which he should have been restored. The circuit court affirmed. On appeal, Murphy argues that: (1) WERC erred in concluding that Murphy was unqualified for the three positions to which he applied and was denied restoration; and (2) Murphy was entitled to back pay as a remedy for being denied restoration to a fourth position to which he applied and for which he was qualified. We conclude that substantial evidence in the record supports WERC’s determination that Murphy was unqualified for the three positions to which he applied and was denied restoration. We also conclude that, under controlling law, Murphy was not entitled to back pay as a remedy for being denied his restoration rights as to the fourth position. Therefore, we affirm.

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Chad David Knauer

Case No.: 2017AP2243-CR

Officials: SHERMAN, J.

Focus: Suppression of Testimony

The State appeals an order of the circuit court suppressing statements made by Chad Knauer to police on the basis that those statements were not made voluntarily. The State’s sole developed argument on appeal is that Knauer’s statements should not have been suppressed because the police did not utilize an improper police tactic to procure Knauer’s confession. I affirm.

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WI Supreme Court Digests

WI Supreme Court

Case Name: Nationstar Mortgage LLC n/k/a Bank of America v. Robert R. Stafsholt, et al.

Case No.: 2018 WI 21

Focus: Abuse of Discretion – Attorney’s Fees

This is a review of an unpublished, per curiam decision of the court of appeals reversing the St. Croix County Circuit Court’s order awarding attorney fees and costs to Robert Stafsholt (“Stafsholt”) and against Nationstar Mortgage LLC (“Nationstar”) on the basis of equitable estoppel. Nationstar Mort. LLC v. Stafsholt, No. 2015AP1586, unpublished slip op. (Wis. Ct. App. Dec. 28, 2016) (per curiam).

Stafsholt raises two issues for our review. First, whether the circuit court properly awarded attorney fees to Stafsholt. Within this issue are two sub-issues: (a) whether circuit courts acting in equity possess the power to award attorney fees to prevailing parties in order to make them whole; and (b) if so, whether the circuit court properly exercised its discretion in this case. Second, whether the circuit court erroneously exercised its discretion in allowing Nationstar to collect interest on the principal amount of the loan during the default period.

We reverse the decision of the court of appeals. As to the first issue, circuit courts may include attorney fees as part of an equitable remedy “in exceptional cases and for dominating reasons of justice.” Sprague v. Ticonic Nat’l Bank, 307 U.S. 161, 167 (1939). The circuit court properly exercised its discretion because it applied the proper standard of law to the facts of record when it concluded that Bank of America acted in bad faith and then awarded attorney fees to Stafsholt.

As to the second issue, we hold that Nationstar may collect interest accrued during litigation because Stafsholt would receive a windfall if he was both excused from paying interest and received his attorney fees. We remand the matter to the circuit court for determination of the reasonable attorney fees Stafsholt incurred before the court of appeals and this court, and to then calculate the balance of the loan.

Reversed and Remanded

Concur:

Dissent:

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Supreme Court Digests

United States Supreme Court

Case Name: Cyan, Inc., et al. v. Beaver County Employees Retirement Fund, et al.

Case No.: 15-1439

Focus: Statutory Interpretation – Securities Litigation Uniform Standards Act of 1998

This case presents two questions about the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 112 Stat. 3227. First, did SLUSA strip state courts of jurisdiction over class actions alleging violations of only the Securities Act of 1933 (1933 Act), 48 Stat. 74, as amended, 15 U. S. C. §77a et seq.? And second, even if not, did SLUSA empower defendants to remove such actions from state to federal court? We answer both questions no.

Affirmed

Dissenting:

Concurring:

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United States Supreme Court

Case Name: Marinello v. United States

Case No.: 16-1144

Focus: Statutory Interpretation – Tax Code

A clause in §7212(a) of the Internal Revenue Code makes it a felony “corruptly or by force” to “endeavo[r] to obstruct or imped[e] the due administration of this title.” 26 U. S. C. §7212(a). The question here concerns the breadth of that statutory phrase. Does it cover virtually all governmental efforts to collect taxes? Or does it have a narrower scope? In our view, “due administration of [the Tax Code]” does not cover routine administrative procedures that are near-universally applied to all taxpayers, such as the ordinary processing of income tax returns. Rather, the clause as a whole refers to specific interference with targeted governmental tax-related proceedings, such as a particular investigation or audit.

Reversed and Remanded

Dissenting: THOMAS, J., filed a dissenting opinion, in which ALITO, J., joined.

Concurring:

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United States Supreme Court

Case Name: Ayestas aka Zelaya Corea v. Davis, Director, Texas Department of Justice

Case No.: 16-6795

Focus: Court Error – Improper Legal Standard

Petitioner Carlos Ayestas, who was convicted of murder and sentenced to death in a Texas court, argues that he was wrongfully denied funding for investigative services needed to prove his entitlement to federal habeas relief. Petitioner moved for funding under 18 U. S. C. §3599(f), which makes funds available if they are “reasonably necessary,” but petitioner’s motion was denied. We hold that the lower courts applied the wrong legal standard, and we therefore vacate the judgment below and remand for further proceedings.

Vacated and Remanded

Dissenting:

Concurring: SOTOMAYOR, J., filed a concurring opinion, in which GINSBURG, J., joined.

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