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Weekly Case Digests – March 23, 2020 – March 27, 2020

By: WISCONSIN LAW JOURNAL STAFF//March 27, 2020//

Weekly Case Digests – March 23, 2020 – March 27, 2020

By: WISCONSIN LAW JOURNAL STAFF//March 27, 2020//

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7th Circuit Digests

7th Circuit Court of Appeals

Case Name: United States of America v. Roberto Guzman-Ramirez

Case No.: 19-1960

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

Focus: Sentencing Guidelines

After Roberto Guzman-Ramirez pled guilty to conspiracy to distribute cocaine, he was sentenced to 72 months’ imprisonment. On appeal, he contends that the district court should have applied a minor-role adjustment under the Sentencing Guidelines. He also argues that—compared to his coconspirator’s sentence—his sentence is unreasonable. But the district court did not clearly err in its findings on Guzman-Ramirez’s role in the offense. And because the court was not required to consider a coconspirator’s sentence that had not yet been imposed, it did not abuse its discretion by imposing a sentence longer than the coconspirator’s. Accordingly, we affirm.

Affirmed

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7th Circuit Court of Appeals

Case Name: Charles Curry dba Get Diesel Nutrition v. Revolution Laboratories, LLC, et al.

Case No.: 17-2900

Officials: RIPPLE, ROVNER, and BARRETT, Circuit Judges.

Focus: Trademark Infringement – Personal Jurisdiction

Charles Curry brought this action pro se in the district court, alleging that Revolution Laboratories, LLC (“Revolution”), Rev Labs Management, Inc. (“Management”), and Joshua and Barry Nussbaum (collectively the “defendants”) had infringed and diluted his trademark, violated the Illinois Consumer Fraud and Deceptive Practices Act, violated the Illinois Uniform Deceptive Trade Practices Act, engaged in false advertising and cybersquatting, and filed a fraudulent trademark application.

Revolution is a limited liability company that is in the business of selling sports nutritional supplements and apparel. Management is a corporation that was formed for the sole purpose of being the manager of Revolution. According to Mr. Curry, Joshua and Barry Nussbaum co-founded Revolution and Management. Joshua Nussbaum is the President of Management and Revolution; Barry Nussbaum is the Director of Management and the Chief Executive Officer of Revolution.

The defendants moved to dismiss Mr. Curry’s suit for lack of personal jurisdiction. The district court dismissed the action, holding that it lacked personal jurisdiction. Mr. Curry timely appealed that decision to this court. We respectfully disagree with the district court’s ruling and hold that the district court did have personal jurisdiction over Revolution. Accordingly, we reverse the judgment of the district court and remand the case for further proceedings consistent with this opinion.

Reversed and remanded

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7th Circuit Court of Appeals

Case Name: United States of America v. Roy Collins

Case No.: 19-1176

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

Focus: Sentencing Guidelines

From 2011 through 2016, Roy Collins was the executive director of the Kankakee Valley Park District (“the Park District”), which is a municipal entity that serves residents of Aroma Park and Kankakee Townships, Illinois. The Park District, which is not tax-exempt, works with the Kankakee Valley Park Foundation (“the Foundation”), which does have tax-exempt status and raises funds for Park District programs. Collins served as treasurer for the Foundation. He proved to be a bad choice for both posts: eventually it came to light that he had been lining his own pockets with the Park District and Foundation’s money. Federal prosecution for mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343 followed. Collins pleaded guilty to both counts and was sentenced to concurrent terms of 42 months’ imprisonment, two-year terms of supervised release, and overall restitution of $194,383.51. On appeal he has raised several challenges to that sentence, but we are satisfied that there is no reversible error and thus affirm the district court’s judgment.

Affirmed

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7th Circuit Court of Appeals

Case Name: Whirlpool Corporation v. Wells Fargo Bank, National Association, et al.

Case No.: 18-3363

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

Focus: Bankruptcy – Reclamation Claim

This is an appeal from an adversary proceeding in a Chapter 11 bankruptcy and concerns a trade creditor’s right to reclaim goods it sold to the debtor on the eve of bankruptcy. The question is whether the seller’s reclamation claim is superior to the claims of secured lenders—more specifically, the lenders that extended debtor-inpossession financing in exchange for a priming, first-priority floating lien on existing and after-acquired inventory. The debtor is appliance retailer hhgregg, Inc. Whirlpool Corporation, a longtime supplier, delivered appliances to hhgregg during the period just before the bankruptcy filing. Wells Fargo Bank, as administrative agent for several lenders, extended operating financing to hhgregg in the years leading up to the bankruptcy. Under the prepetition credit agreement, Wells Fargo’s advances were secured by a first priority floating lien on nearly all of hhgregg’s assets, including existing and after-acquired inventory and its proceeds.

In the first 24 hours of the Chapter 11 proceeding, hhgregg sought the court’s approval for $80 million in debtor-in-possession (“DIP”) financing, with Wells Fargo now acting as administrative agent for a group of postpetition lenders. The DIP financing agreement authorized a “creeping roll-up” of the secured lenders’ prepetition debt and gave Wells Fargo a priming, first-priority floating lien on substantially all of hhgregg’s assets, including existing and after-acquired inventory and its proceeds. The bankruptcy judge approved the DIP financing that same day. Three days later Whirlpool sent a reclamation demand to hhgregg seeking the return of appliances it had delivered in the 45-day period before the bankruptcy petition. Whirlpool later filed an adversary action against Wells Fargo seeking a declaration that its reclamation claim is first in priority as to the reclaimed goods. Wells Fargo moved to dismiss. The bankruptcy judge treated the motion as one for summary judgment and entered final judgment for Wells Fargo. The district court affirmed.

We likewise affirm. Reclamation is a limited in rem remedy that permits a seller to recover possession of goods delivered to an insolvent purchaser—subject, however, to significant temporal, procedural, and substantive restrictions. It is not the same as a purchase money security interest. The remedy appears in Article 2 of the Uniform Commercial Code—not Article 9—and is codified in the relevant state’s version of U.C.C. § 2-702. Within bankruptcy a reclamation claim is governed by 11 U.S.C. § 546(c).

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA” or “the 2005 amendments”) made important changes to § 546(c). Before BAPCPA most bankruptcy courts applied a “prior lien defense” drawn from the U.C.C.’s substantive limitations on the reclamation remedy, subordinating the seller’s reclamation claim to a secured lender’s floating lien on the debtor’s inventory. The 2005 amendments adopted that norm as a federal priority rule: under BAPCPA a seller’s right to reclaim goods is “subject to the prior rights of a holder of a security interest in such goods or the proceeds thereof.” § 546(c).

Wells Fargo, as agent for the postpetition lenders, holds a priming, first-priority lien on hhgregg’s existing and after acquired inventory and its proceeds under the DIP financing agreement, approved by the court in the first 24 hours of the Chapter 11 proceeding. By operation of § 546(c), Whirlpool’s later-in-time reclamation demand is “subject to” Wells Fargo’s prior rights as a secured creditor, so its reclamation claim is subordinate to the DIP financing lien.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Randy Williams

Case No.: 18-3318

Officials: ROVNER, BRENNAN, and ST. EVE, Circuit Judges.

Focus: Due Process Violation

On July 28, 2016, two men entered a Sprint store with a gun, threatened and zip‐tied all witnesses, grabbed some merchandise, and fled the store in two vehicles. Randy Williams was one of the getaway drivers. He was caught and indicted for obstruction of commerce by robbery under 18 U.S.C. § 1951.

Williams pleaded not guilty. Judge Colin S. Bruce presided over his jury trial, and, on June 14, 2018, the jury found Williams guilty. A few months later, it became public that Judge Bruce had engaged in ex parte communications with members of the United States Attorney’s Office for the Central District of Illinois (the “Office”). As a result, all criminal cases assigned to Judge Bruce were reassigned to other judges. Williams’s case was reassigned to now Chief Judge Darrow who presided over his sentencing hearing and sentenced him to 180 months’ imprisonment.

Williams now appeals his conviction and sentence. He argues that Judge Bruce’s ex parte communications with the Office violated his due process rights and the federal recusal statute, warranting a new trial. We conclude that Judge Bruce did not violate Williams’s due process rights on the facts before us. And although Judge Bruce’s conduct created an appearance of impropriety violating the federal recusal statute, there is no evidence of actual bias in this case to justify a new trial.

As to his sentence, Williams contends that he is entitled to a new sentencing hearing because Chief Judge Darrow improperly found that he was a career offender and was subject to a firearm enhancement. Williams does not qualify as a career offender, but the district court’s finding otherwise was not plain error. Chief Judge Darrow thoroughly considered the § 3553(a) factors, made clear that she would impose the same sentence even if the career offender provision did not apply, and explained her reasons for this position. Because there was sufficient evidence regarding the use of a firearm during the crime, we also hold that the district court did not err in applying a firearm enhancement. We affirm his conviction and sentence. We also grant Williams’s unopposed motion to supplement the record on appeal.

Affirmed

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7th Circuit Court of Appeals

Case Name: Bria Health Services, LLC, et al. Theresa A. Eagleson

Case No.: 18-3076

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

Focus: Medicaid Contractors – Outstanding Bills

Plaintiffs are consultants who provide services to nursing homes and long‐term care facilities. They say they are bringing this suit on behalf of seriously ill nursing home residents receiving care under Medicaid. The residents, however, are not parties to this suit, and it seems unlikely that they would benefit at all if plaintiffs win. By all appearances, plaintiffs have brought this suit in an effort to push the State of Illinois and its Medicaid contractors to pay outstanding bills owed to the consultants’ clients.

Third parties can bring claims on behalf of others under some circumstances. Guardians, next friends, and associations, for example, can have representative standing. This case does not involve such established standing doctrines. Instead, plaintiffs rely on a Medicaid regulation. As we read that regulation, however, it does not permit authorized representatives to bring civil lawsuits on behalf of Medicaid beneficiaries. We affirm the district court’s dismissal for lack of standing and thus lack of subject matter jurisdiction.

Affirmed

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7th Circuit Court of Appeals

Case Name: DeWayne Perry v. Richard Brown, Warden, Wabash Valley Correctional Facility

Case No.: 19-1683

Officials: BAUER, EASTERBROOK, and BRENNAN, Circuit Judges.

Focus: Equitable Tolling

DeWayne Perry, serving a long sentence for murder, suffers from aphasia, which impairs his ability to speak, write, and understand words. A stroke in 2009 caused Perry’s aphasia, a condition that ranges from moderate limitations to complete disability. How limiting Perry’s aphasia is today—or was in 2016 and 2017— is a central but unresolved issue in this litigation.

Perry pursued both direct and collateral review in Indiana’s courts. A lawyer was appointed to represent him on the collateral attack, but as far as we can see the lawyer did nothing for him and eventually bailed out, leaving Perry unrepresented. Assisted in this appeal by volunteers from an esteemed law firm, Perry tells us that, after his former lawyer quit and the state judge denied his request for more time, he tried to dismiss his collateral attack without prejudice so that he could obtain assistance and mount a better challenge. Five months after dismissing the state proceeding, he refiled it, adding new legal theories. But the state judge dismissed the renewed application, ruling that the original dismissal had been with prejudice. Perry then filed in federal court a petition under 28 U.S.C. §2254, only to have it summarily dismissed.

Procedural defaults may be excused under some circumstances. A brain injury that prevents a prisoner from complying with the state’s rules for prosecuting collateral attacks may be one such circumstance. We need not decide, because ineffective assistance of counsel in pursuing an ineffective assistance claim is another, when the state funnels ineffective-assistance claims to collateral review yet does not furnish the prisoner with a second lawyer to review the first’s performance. See Martinez v. Ryan, 566 U.S. 1 (2012); Trevino v. Thaler, 569 U.S. 413 (2013). We held in Brown v. Brown, 847 F.3d 502, rehearing en banc denied, 869 F.3d 507 (7th Cir. 2017), that Indiana is such a state. The scanty record assembled to date implies that Perry received ineffective (really, no) legal aid in pursuing collateral review and therefore did not receive in state court the sort of help that would enable Indiana to use his procedural default to block federal review of an ineffective-assistance claim.

The district court needs to determine whether a brain injury caused Perry’s delay in seeking review under §2254, and if so whether circumstances as a whole justify equitable tolling. Once such a decision has been made, appellate review will be deferential, see Mayberry, 904 F.3d at 530, but we cannot act on the district judge’s behalf. Decision will depend on medical evidence that the record lacks. Because Perry’s aphasia could frustrate his ability to gather and present such evidence on his own, it is appropriate for the district court to appoint counsel to assist him. See 18 U.S.C. §3006A(a)(2)(B); Schmid, 825 F.3d at 350.

The judgment is vacated, and the case is remanded for proceedings consistent with this opinion.

Vacated and remanded

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7th Circuit Court of Appeals

Case Name: United States of America v. Grayson Enterprises, Inc.,

Case No.: 19-1367

Officials: BAUER, MANION, and ST. EVE, Circuit Judges.

Focus: Plea Colloquy

Grayson Enterprises, Inc., is a roofing company that does business under the trade name Gire Roofing. A grand jury indicted Grayson alongside its business’s namesake, Edwin Gire, on charges of visa fraud, harboring unauthorized aliens, and employing the same aliens.

On paper, though, Gire had no official relation to Grayson as a corporate entity—he was not a stockholder, officer, or even an employee of the corporation. He managed the roofing (Grayson’s sole business), as he had under the Gire Roofing name for more than twenty years. The corporate papers instead identified Grayson’s president and sole stockholder as Kimberly Young. Young—Gire’s girlfriend—incorporated and acted as president of the “new” company Grayson, after Gire’s previous roofing company went bankrupt. Gire, his retained counsel, and the government all nevertheless represented to the district court that Gire was Grayson’s president. The district court, thus, permitted Gire to plead guilty on his and Grayson’s behalf to three counts of employing unauthorized aliens and to waive his and Grayson’s rights to a jury trial on the remaining charges. Joint counsel also represented both defendants during a bench trial that resulted in their convictions on all charges and a finding that Grayson’s headquarters was forfeitable to the government because Gire had used the building to harbor aliens.

Despite obtaining separate counsel before sentencing, neither Grayson nor Young (who testified at trial) ever complained to the district court about Gire’s or prior counsel’s representations. Neither did Grayson object to the indictment, the plea colloquy, or the fact that the court found, without a separate hearing, that Grayson had used its headquarters to facilitate the harboring of unauthorized aliens. Nevertheless, Grayson now challenges all these matters, and more, on appeal. Grayson identifies some areas where this case could have gone more smoothly but no errors that warrant reversal. We therefore affirm the district court’s judgment.

Affirmed

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7th Circuit Court of Appeals

Case Name: Brandi Lutes v. United Trailers, Inc., et al.

Case No.: 19-1579

Officials: BAUER, BRENNAN, and SCUDDER, Circuit Judges.

Focus: FMLA Violation

Buddy Phillips (now deceased) injured his ribs while playing with his grandchildren. Over the next two weeks he called his employer, United Trailers, to report he would miss work. Eventually Phillips stopped calling in and did not appear for work on three consecutive days so United fired him. He sued, alleging United failed to properly notify him of his rights under the Family Medical Leave Act (“FMLA”) and that he was fired in retaliation for attempting to exercise his right to seek leave under that Act. The district court granted summary judgment for United. This appeal presents a complicated fact pattern under the FMLA in which the employee (through unreported absences) and the employer (by failing to inform the employee of requisite information about FMLA leave) may have failed to comply with the FMLA. We affirm the district court’s judgment as to Phillips’s retaliation claim but vacate the court’s judgment concerning Phillips’s interference claim and remand for further proceedings consistent with this order.

Affirmed in part. Vacated and remanded in part.

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7th Circuit Court of Appeals

Case Name: Rick E. Jacobsen v. Commissioner of Internal Revenue

Case No.: 18-3371

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

Focus: Tax Deficiency – Innocent Spouse Relief

Petitioner Rick E. Jacobsen’s former wife Tina M. Lemmens embezzled over $400,000 from her employer, income that was not reported on the couple’s jointly filed income taxes. As relevant here, after Lemmens was convicted for her embezzlement, the Internal Revenue Service (“IRS”) audited the couple’s joint tax returns for 2010 and 2011.

For those years, the IRS proposed total net adjustments attributable to omitted embezzlement income (there were other unrelated proposed adjustments) of over $300,000, with corresponding deficiencies and accuracy-related penalties of over $150,000. Jacobsen sought relief under the tax code’s “innocent spouse” provision, 26 U.S.C. § 6015(b), and equitable relief provision, § 6015(f). As relevant here, the Tax Court granted Jacobsen innocent spouse relief for 2010, but denied all relief for 2011. Jacobsen appeals, but we affirm.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Randy Williams

Case No.: 18-3318

Officials: AMY J. ST. EVE, Circuit Judge

Focus: Order Correcting Opinion

IT IS ORDERED that the motion is GRANTED. On page three of the opinion in the second full paragraph, the third sentence of the paragraph is CORRECTED to read: In those emails, Judge Bruce criticized one of the prosecutors as being “entirely unexperienced” turning a “slam-dunk” case into a “60-40” for the defendant.

Motion granted

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7th Circuit Court of Appeals

Case Name: United States of America v. Jesse J. Ballard

Case No.: 19-2103

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

Focus: Sentencing Guidelines

Jesse Ballard has an extraordinarily long history of criminal conduct, which the sentencing judge described as “probably one of the worst criminal histories [he’d] seen in 30 years” of experience. From 1985 until 2017, Ballard accrued over 30 convictions for crimes such as attempted residential burglary, kidnapping, battery, aggravated assault (amended from rape), possession of a firearm as a felon, and multiple convictions for driving with a suspended or revoked driver’s license. Ballard also accrued a multitude of parole violations and committed several infractions while in prison.

Ballard was arrested once again in December 2017 after he possessed a gun purchased by his girlfriend. Ballard pleaded guilty on May 9, 2018, to possessing a firearm as a felon, in violation of 18 U.S.C. § 922(g)(1). This was his first conviction in federal court. The court initially imposed an enhancement on Ballard as an armed career criminal under 18 U.S.C. § 924(e), resulting in a Guidelines range of 180 to 210 months’ imprisonment. At sentencing, the district court considered Ballard’s extensive criminal history, including old offenses for which the Guidelines did not assess criminal history points. The court noted this extensive history showed a pattern of lawlessness, a disrespect for the law, an inability to lead a law abiding life, and a failure of prior sentences to deter Ballard from criminal behavior. Citing the § 3553 factors of the defendant’s history and characteristics, promoting respect for the law, deterrence, and the need to protect the public from Ballard’s future crimes, the court imposed a sentence of 232 months, a 10 percent upward departure from the high end of his Guidelines range.

We conclude that the district court committed procedural error by not providing an adequate explanation for the major upward departure from the Guidelines range on resentencing. First, the district court failed to provide a justification that explains the extreme difference between the upward departure of the second sentence versus that of the original sentence. To justify a sentence that was 67 months above the Guidelines range (a 160 percent upward departure), the court referred to the history and characteristics of the defendant and the goals of promoting respect for the law, deterrence, and protecting the public from future crimes. These are appropriate factors to consider under § 3553. However, these were the same factors cited and discussed at the original sentencing, resulting in a sentence only 22 months above the original Guidelines range (a 10 percent upward departure). The court provided no explanation for why consideration of the same factors warranted a much greater departure on resentencing. The district court’s explanation of its departure from the Guidelines upon resentencing does not “articulate[] and justif[y] the magnitude of the variance” where the explanation is essentially identical to the explanation provided for a much less extreme departure in the original sentence.

Vacated and remanded

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7th Circuit Court of Appeals

Case Name: Antrim Pharmaceuticals LLC, v. Bio-Pharm, Inc.,

Case No.: 18-3434

Officials: BAUER, BRENNAN, and ST. EVE, Circuit Judges.

Focus: Jury Instructions

Antrim Pharmaceuticals LLC and Bio-Pharm, Inc. arranged to manufacture and sell a generic anti-depressant. When their plan fell apart, litigation followed. Antrim sued Bio-Pharm for breach of contract, and Bio-Pharm counterclaimed based on promissory estoppel or, in the alternative, breach of contract. Following a five-day trial, a jury found for Bio-Pharm on Antrim’s breach of contract claim and for Antrim on Bio-Pharm’s counterclaim. Neither party was awarded damages. Antrim appealed.

Antrim challenges the district court’s jury instructions, evidentiary rulings, and decision to allow Bio-Pharm to request lost profits as a remedy on its counterclaim. Bio-Pharm argues Antrim waived these arguments on appeal because Antrim agreed to a general verdict form and did not file a post-trial motion under Federal Rule of Civil Procedure 50(b). We conclude that Bio-Pharm’s waiver argument has no merit but affirm because the district court committed no reversible error.

Affirmed

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WI Court of Appeals Digests

WI Court of Appeals – District III

Case Name: State of Wisconsin v. Andre D. Stackhouse, et al.

Case No.: 2018AP819-CR

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

Focus: Ineffective Assistance of Counsel

Andre Stackhouse, who was captured on video stabbing an individual in a nightclub in front of a police officer, was convicted after a jury trial of attempted first-degree intentional homicide and aggravated battery, both with a penalty enhancer for the use of a dangerous weapon during the commission of the offense. He seeks a new trial based on over a dozen claims of ineffective assistance of counsel. We conclude that none of the claims are meritorious and affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Jacqueline A. Ziriax Anderson

Case No.: 2018AP2410-CR

Officials: STARK, P.J.

Focus: OWI – Plea Withdrawal

Jacqueline Ziriax Anderson appeals a judgment convicting her of second-offense operating a motor vehicle while intoxicated (OWI) and an order denying her postconviction motion for plea withdrawal. Ziriax Anderson argues law enforcement lacked reasonable suspicion to stop her vehicle, and the circuit court therefore erred by denying her suppression motion. She also argues the court should have granted her motion to withdraw her no-contest plea because her trial attorney was ineffective. We reject these arguments and affirm.

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WI Court of Appeals – District III

Case Name: Iron County Department of Human Services v. N.H.D.

Case No.: 2019AP1520

Officials: HRUZ, J.

Focus: Due Process Violation

Natalie appeals a circuit court order involuntarily terminating her parental rights to her son, Charlie. She asserts her due process rights were violated during the grounds phase of her termination of parental rights (TPR) proceedings. Natalie also appeals, at least in part, the denial of her post dispositional motion in which she alleged her trial counsel provided ineffective assistance during the jury trial in the grounds phase. We affirm.

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WI Court of Appeals – District IV

Case Name: State of Wisconsin ex. Rel. Michael J. Vieth v. John Tate II

Case No.: 2018AP1525

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

Focus: Court Error – Service of Process

Michael J. Vieth filed a petition in the circuit court for writ of certiorari, along with a proposed writ, challenging action taken by Wisconsin Parole Chairperson Daniel J. Gabler. On the same date of Vieth’s filing, the court electronically signed the proposed writ, and the clerk electronically filed the signed writ (referred to in this opinion as the writ). The court subsequently granted Gabler’s motion to quash the writ because Vieth failed timely to personally serve Gabler with the writ. On appeal, Vieth argues that the court erred for a number of reasons, all related to Gabler’s attorney filing a notice of appearance and registering to use the circuit court electronic filing system (referred to as “registering as a user” in this opinion consistent with the applicable statute) after the writ had been filed. Briefly stated, Vieth argues that, when Gabler’s attorney filed the notice of appearance and registered as a user, Gabler consented to accept electronic service of the writ that had been filed, relieving Vieth of the obligation to personally serve Gabler with the writ. Vieth also argues that the electronic service was timely, thereby triggering Gabler’s obligation to comply with the writ.

We reject Vieth’s arguments because he identifies no statutory language providing that a respondent registering as a user relieves a petitioner from complying with personal service requirements for the writ in the circumstances present here. Given Vieth’s concession that, if Gabler’s attorney had not registered as a user, the writ was required to be personally served, and Vieth’s concession that he never personally served Gabler with the writ, we conclude that the circuit court properly determined that Vieth failed to serve Gabler with the writ. We also conclude that the court properly quashed the writ for untimely service, based on Vieth’s additional concession that the ninety-day service deadline relied on by the court applies. Accordingly, we affirm.

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WI Court of Appeals – District IV

Case Name: Christopher Elandt v. Waupaca County, et al.         

Case No.: 2019AP217

Officials: Blanchard, Graham and Nashold, JJ.

Focus: Property – Encroachment

This case arises out of the Town of Dupont and Waupaca County reconstructing and widening a Town road that Christopher Elandt alleges encroaches on his property. Elandt sued the Town, claiming that the newly widened road interferes with his property rights in a number of respects.

The Town moved to dismiss Elandt’s action on the ground that Elandt failed to comply with the notice of claim statute, WIS. STAT. § 893.80(1d). The circuit court agreed with the Town and dismissed all of Elandt’s claims, entering judgment in favor of the Town. Elandt appeals. We affirm.

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WI Supreme Court Digests

WI Supreme Court

Case Name: City of Cedarburg v. Ries B. Hansen

Case No.: 2020 WI 11

Focus: Ordinance Interpretation – OWI

This case comes before us on bypass, pursuant to Wis. Stat. § 809.60 (2017–18), from the circuit court for Ozaukee County. In 2005, Ries B. Hansen was convicted by the Mid-Moraine Municipal Court of Operating While Intoxicated (OWI) in violation of a City of Cedarburg ordinance, based upon Hansen’s guilty plea to the alleged violation. In 2016, when he was again charged with OWI, Hansen collaterally attacked his 2005 conviction by proving that he had a 2003 OWI conviction in Florida. He contended that his 2005 OWI was factually a second offense and therefore, outside of the municipal court’s limited subject matter jurisdiction. The circuit court agreed and vacated Hansen’s 2005 conviction.

We conclude that the 2005 municipal citations invoked the municipal court’s subject matter jurisdiction, which was granted by Article VII, Section 14 of the Wisconsin Constitution. Therefore, the municipal court had power to adjudicate the allegation that Hansen operated a motor vehicle while intoxicated in violation of a municipal ordinance. And further, even if we were to agree with Hansen that Wisconsin’s statutory progressive OWI penalties were not followed in 2005, the municipal court would have lacked competence not subject matter jurisdiction. City of Eau Claire v. Booth, 2016 WI 65, ¶14, 370 Wis. 2d 595, 882 N.W.2d 738.

And finally, an objection to a court’s competence may be forfeited if it is not raised in a timely manner. Id., ¶1. Hansen was silent about his 2003 Florida OWI conviction until he was again arrested for OWI in 2016. We conclude that, by his 11 years of silence, Hansen has forfeited any competence objection that could exist. Accordingly, his 2005 and 2003 convictions were countable offenses in 2016 for purposes of Wisconsin’s statutory progressive penalty requirements, and we reverse the order of the circuit court.

Reversed

Concur: KELLY, J., filed a concurring opinion, in which REBECCA GRASSL BRADLEY, J., joined.

Dissent: HAGEDORN, J., filed a dissenting opinion, in which ANN WALSH BRADLEY and DALLET, JJ., joined.

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WI Supreme Court

Case Name: State of Wisconsin v. Carrie E. Counihan

Case No.: 2020 WI 12

Focus: Ineffective Assistance of Counsel

The petitioner, Carrie E. Counihan, seeks review of an unpublished, authored decision of the court of appeals affirming her judgment of conviction and the denial of her motion for postconviction relief. She asserts that the circuit court violated her right to due process at sentencing and, alternatively, that her trial counsel provided ineffective assistance at sentencing.

Specifically, she argues that the circuit court denied her due process at sentencing by failing to provide her with notice that it would consider previously unknown information first raised by the circuit court at sentencing. Further, Counihan contends that her trial counsel was ineffective for failing to object to the consideration of such information and for failing to seek an adjournment to allow time to investigate and review the information on which the circuit court relied.

In response, the State asserts that Counihan forfeited her direct challenge to the previously unknown information considered at sentencing because she failed to object at the sentencing hearing. It further contends that Counihan’s trial counsel was not ineffective for failing to object or seek an adjournment.

We conclude that where previously unknown information is raised by the circuit court at the sentencing hearing, a defendant does not forfeit a direct challenge to the use of the information by failing to object at the sentencing hearing. Under the facts of this case, Counihan appropriately raised the alleged error in a postconviction motion.

Further, we conclude that Counihan’s due process rights were not violated by the circuit court’s use of the previously unknown information regarding similarly situated defendants. Because there was no due process violation, we need not address Counihan’s alternative argument that her counsel provided ineffective assistance at sentencing. Accordingly, we modify the decision of the court of appeals, and as modified, affirm.

Modified, as modified, affirmed.

Concur: REBECCA GRASSL BRADLEY, J., filed a concurring opinion, in which KELLY, J., joined.

Dissent:

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WI Supreme Court

Case Name: Roger Choinsky, et al. v. Employers Insurance Company of Wausau and Wausau Business, et al.

Case No.: 2020 WI 13

Focus: Insurance – Duty to Defend

The Germantown School District Board of Education and Germantown School District (collectively, the “School District”) seek review of a court of appeals decision affirming the circuit court’s order and judgment, which denied the School District’s motion for attorney fees. The School District argues that its insurers, Employers Insurance Company of Wausau and Wausau Business Insurance Company (collectively, the “Insurer”), breached the duty to defend the School District in a lawsuit brought by retired employees; therefore, the School District claims its Insurer should pay, as a remedy for the breach, all the attorney fees incurred by the School District.

This case presents an insurance coverage duty-to-defend issue of first impression: does an insurer breach its duty to defend its insured when it denies a tendered claim and then follows the judicially preferred procedure of filing a motion to intervene and stay the underlying lawsuit pending a coverage determination, which is ultimately resolved in the insured’s favor? Additionally, we consider the insurer’s obligations in order to avoid breaching its duty to defend when the circuit court denies the motion to stay.

We conclude that when an insurer initially denies a tendered claim but promptly proceeds with one of our judicially preferred methods for determining coverage, it does not breach its duty to defend. If a circuit court denies any part of an insurer’s motion to bifurcate the coverage issue from the underlying liability lawsuit and stay the latter, causing an insured to simultaneously defend the liability suit and litigate coverage against the insurer, an insurer must defend its insured in the liability lawsuit, retroactive to the date of tender, under a reservation of rights, until a court decides the coverage issue. Because the School District’s Insurer followed this procedure, the Insurer did not breach its duty to defend and the Insurer is not responsible for any of the attorney fees the School District paid for the coverage dispute. See Newhouse v. Citizens Sec. Mut. Ins. Co., 176 Wis. 2d 824, 832-39, 501 N.W.2d 1 (1993) (when an insurer follows a judicially preferred method, the insurer “runs no risk of breaching its duty to defend”); see also Carney v. Village of Darien, 60 F.3d 1273, 1277 (7th Cir. 1995) (“[A]n insurer who properly follows the procedure recommended by the Wisconsin Supreme Court of first seeking a determination on coverage prior to the liability issue, has not breached its duty to defend.”); Reid v. Benz, 2001 WI 106, ¶¶26-28, 32-35, 245 Wis. 2d 658, 629 N.W.2d 262 (explaining an award of coverage attorney fees is limited to cases in which insurer breaches duty to defend and equity demands a fee-shifting).

In reaching this decision, we reject the School District’s claims that: (1) its Insurer’s initial outright denial of coverage followed by a delayed decision to defend under a reservation of rights constituted a breach of its duty to defend; (2) its Insurer’s delay in paying liability fees and its failure to reimburse the School District for the entire amount it paid to its liability lawyer constitutes a breach of its duty to defend; and (3) the circuit court’s assessment of whether the Insurer breached its duty to defend is subject to the four-corners rule.

We hold: (1) the Insurer’s initial denial of coverage did not breach its duty to defend because the Insurer promptly followed a judicially-approved method to resolve the coverage dispute; further, it defended the School District upon denial of the stay motion, agreeing to reimburse the School District for liability attorney fees retroactive to the date of the tender; (2) a delay in payment of liability attorney fees alone does not mean an insurer breached its duty to defend and an insurer is obligated to pay only reasonable attorney fees; and (3) the four-corners rule applies in determining whether a duty to defend exists but does not preclude a court’s consideration of whether the insurer unilaterally denied coverage or whether it chose a judicially preferred method of resolving a coverage dispute, in assessing whether an insurer breached its duty to defend. We affirm the decision of the court of appeals.

Affirmed

Concur:

Dissent: KELLY, J., filed a dissenting opinion.

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WI Supreme Court

Case Name: State of Wisconsin v. Charles L. Neil, IV,

Case No.: 2020 WI 15

Focus: OWI – Penalty Enhancers

Charles L. Neill, IV seeks review of the court of appeals decision affirming the judgment and order upholding his sentence for third-offense OWI. This appeal involves only the $4,800 fine Neill was ordered to pay. The issue presented requires the interpretation of the penalty enhancers in Wisconsin’s OWI statutes. Specifically, we consider how the penalty enhancers’ provisions requiring “doubling” and “quadrupling” of the fine for a third-offense OWI should be determined when multiple penalty enhancers apply. Neill faced two penalty enhancers: (1) having a minor passenger in his car, which requires doubling of the fine, and (2) driving with a high blood alcohol concentration, which requires quadrupling of his fine.

The court of appeals decided that the first penalty enhancer changes the “applicable minimum” fine Wis. Stat. § 346.65(2)(am)3 sets for third-offense OWI, and as a result, when applying the second penalty enhancer, a court must use this already-enhanced applicable minimum instead of the specific applicable minimum for third-offense OWI contained in § 346.65(2)(am)3.

We reject this interpretation. The statute’s text requires that each penalty enhancer use the specific “applicable minimum” contained in Wis. Stat. § 346.65(2)(am)3, which for third-offense OWI is $600. Accordingly, the court of appeals erred when it affirmed the $4,800 fine imposed by the circuit court. Because the text of § 346.65(2)(am)3 sets the minimum applicable fine at $600, both penalty enhancers must be calculated using $600 as the applicable minimum.

Neill’s first penalty enhancer for OWI with a minor passenger, Wis. Stat. § 346.65(2)(f)2, requires “the applicable fine” be doubled. Accordingly, the circuit court should have started with $600 and multiplied it by two for an enhanced fine of $1,200. Neill’s second penalty enhancer for OWI with a high BAC, Wis. Stat. § 346.65(2)(g)3, requires “the applicable fine” in § 346.65(2)(am)3 be quadrupled. Consequently, the circuit court should have started with $600 and multiplied it by four for an enhanced fine of $2,400. These two fines total $3,600, not $4,800. We reverse the decision of the court of appeals and remand with directions to amend the judgment to require Neill to pay a fine of $3,600.

Reversed and remanded

Concur:

Dissent:

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WI Supreme Court

Case Name: Town of Wilson v. City of Sheboygan

Case No.: 2020 WI 16

Focus: Court Error – Annexation Petition

Kohler Company sought to convert 247 acres of land located in the Town of Wilson into a world championship golf course. After determining that the golf course development would not come to fruition if the land remained within the Town’s boundaries, Kohler successfully petitioned for annexation to the City of Sheboygan. In response, the Town filed a declaratory judgment action alleging that the annexation was “arbitrary, capricious, non-contiguous, an abuse of discretion, and otherwise procedurally and substantively non-compliant with [the City’s] annexation authority under Chapter 66, Wis. Stats, and existing Wisconsin case law.” The City moved for partial summary judgment regarding the annexation petition’s compliance with the population certification requirement in Wis. Stat. § 66.0217(5)(a) (2017-18), which was granted. The circuit court ultimately conducted a bench trial and concluded that the annexation satisfied the statutory contiguity requirement and the “rule of reason.” The circuit court further concluded that the annexation petition fully satisfied the procedural requirements of § 66.0217. Consequently, the circuit court dismissed the action in full.

On bypass from the court of appeals, the Town asks us to review whether: (1) the annexation satisfies the statutory contiguity requirement; (2) the annexation satisfies the rule of reason; (3) the annexation petition strictly complied with the signature requirements in Wis. Stat. § 66.0217(3); and (4) the annexation petition strictly complied with the population certification requirement in § 66.0217(5)(a). We conclude that the annexation is contiguous and satisfies the rule of reason. We also conclude that the annexation petition strictly complied with §§ 66.0217(3) and (5)(a). Therefore, we affirm the circuit court.

Affirmed

Concur: REBECCA GRASSL BRADLEY, J., filed a concurring opinion, in which KELLY, J., joined. HAGEDORN, J., filed a concurring opinion.

Dissent:

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