Third Quarter Case Roundup: A Review of Wisconsin Cases

15 Oct

2021 Third Quarter Case Roundup (Through Sept. 30): A Review of Wisconsin Cases

By: Attorney Isaiah M. Richie, Schloemer Law Firm, S.C.

The third quarter has come to an end. In the Supreme Court, there was very little activity other than a handful of attorney regulation cases plus a religious school test case and two companion cases regarding DNR monitoring of groundwater involving wells and farm runoff. A number of records requests cases came through in the lower court, one involving a Freedom of Information Act/Public Records request and two more involving medical records.

Who Prevailed Anyway? Meinecke v. Thyes

In Meinecke v. Thyes a trustee filed a public records search and only received a portion of what she requested. She filed for mandamus, which was granted in part. She then moved for fees which motion was denied by the circuit court. The Court of Appeals reversed, although it noted that the circuit court had discretion to modify the amount of fees awarded. The case turned on whether Meinecke had “prevailed in substantial part”. There were no prior cases on point, so the COA examined the fee-shifting provision of Wisconsin public records laws. There it found that “the court shall award reasonable attorney fees” if the requester prevails “in whole or in substantial part”.

Furthermore, this fee shifting applies even in actions seeking “access to a record” or even “part of a record”. Finally, the COA noted that as a matter of public policy, Wisconsin courts and legislature have supported and favored access to records involving the affairs of government.

The COA ultimately held that “substantially prevailed” means whether the “requester prevailed in obtaining access to wrongfully withheld public records, and this, is eligible to recover fees” regardless of the extent to which records were properly withheld.

Key Takeaways:

Municipalities must take great care to provide access to all records the requester is entitled to and should seek legal counsel if the answer is not clear. Otherwise, the municipality may be held responsible for some or all of the requestor’s attorney fees.
Individuals making requests under the freedom of information act should be sure to check carefully whether the municipality has provided all pertinent documents.

Who Has Standing Anyway? Pagoudis v. Keidl

The COA described this case as “a run-of-the-mill fact pattern — buyer purchases house, discovers defects, and sues seller — complicated by a thorny standing issue stemming from the buyers having purchased and owned the property as three related but separate legal entities.” Ultimately the question to resolve was who, if anyone, had standing to sue the original seller.

Practically speaking the issue was whether a buyer who transfers for no consideration a home to multiple solely owned LLCs may still bring an action against the seller, and how far down the line is liability cut off. The circuit court concluded that because the original owner did not own the property and so did not have damages, and because the ultimate owner was not in privity with the seller, none of the parties had standing. The COA disagreed.

While it did not specifically adopt the Restatement (Second) of Torts § 533, the COA examined it and applied it favorably to Wisconsin’s theft-by-fraud and false advertising claims. In doing so, the COA seemed to expand potential liability of a home seller, holding that “under some circumstances, a seller may be liable to a third party for indirect misrepresentations causing pecuniary loss.” Those circumstances seem to include cases in which the seller “could have reasonably expected that [the buyer] or one in its class would rely on [seller’s] misrepresentations.”

This holding potentially expands seller liability for claims by not just an immediate buyer but claims by subsequent buyers if there is any reason to suspect reliance. This means that filling out a real estate condition report just became a much more dangerous prospect, particularly in a case in which you are selling to a party that may be flipping or transferring the home.[1]

Key Takeaways:

Sellers and realtors should be hesitant to sell property to a buyer “or assigns” if they know or have reason to believe that the buyer intends to transfer the property shortly thereafter to a third party.
Sellers should be extra careful to review the real estate condition report and complete it as accurately and broadly as possible to avoid claims of misrepresentation. When in doubt, disclose.
Sellers must take care not to give any additional warranties or make any guarantees regarding the condition of the house beyond what is required that may give a buyer a claim for misrepresentation or fraud.
Buyers who intend to place the property into an LLC should conduct a thorough inspection prior to the transfer in order to avoid potential standing issues.

Whose Law Applies Anyway? Nordstrom v. Kane

This case involves an attempt, ultimately unsuccessful, at complying with both zoning ordinances and restrictive covenants to maximize the value of a property. The owners of a parcel (Tract 54) in Door County wanted to use the parcel for three residences. When they purchased Tract 54 it contained a residence, a cottage, and a third structure which was torn down.

The owners were then caught by a sort of Catch-22. Constructing additional residences on Tract 54 as a single parcel would be allowed by the restrictive covenants but would violate Door County zoning ordinances. Alternatively, Door County would allow them to divide the large parcel into three parcels, but the restrictive covenants didn’t permit further division of the lot “so as to create any additional tracts therefrom.”

To try to get around this, the owners applied for a three-unit site condominium, which the County was willing to grant. However, some of the neighbor’s objected and sought an injunction to prevent it.

On appeal, the Court recognized that restrictive covenants are “strictly construed to favor the unencumbered use of property” and “must be expressed in clear, unambiguous, and peremptory terms” to be enforceable. The property owner argued that because Wisconsin statute defines condominium as a form of ownership, not land use, and is not a “subdivision” under the chapter, there was no division of land.

Unfortunately for the owner, the Court disagreed. First, as the Court pointed out, the definition in the statutes was limited “[f]or purposes of interpretation of this chapter.” Second, the Court noted that Door County’s Land Division Ordinance treats minor site condominiums as a division of land.

Ultimately, the Court agreed with the circuit court and upheld the declaratory judgment against the owners.

Key Takeaways:

Land use is usually governed by more than one code or statute. It is important to check all applicable regulations prior to purchasing a property to ensure you can use it as intended.
State and local law can sometimes differ, so you cannot rely on a “one size fits all” approach. The same thing that worked in one town, village, or city may not be true in another.
When drafting restrictive covenants, it is important to be clear and concise in what you intend to allow or not allow and be aware of how such restrictions may interplay with local ordinances.

Summary of Additional Opinions

Murphy v. McKinnon

In a products liability/strict liability design case the COA reversed summary judgment for one of the claims and held that there was a question of fact as to whether a reasonable person in the plaintiff’s position would have had reason to doubt the ability of both teeth of a utility pole crane prong to hold the utility pole at various angles.

Mayer v. Soik, 20AP199

The COA held that “there are circumstances in which a nonsignatory should be able to enforce an arbitration provision, but only with respect to issues that fall within its scope.”

5 Walworth, LLC v. Engerman Contracting, Inc., 21 WI App 51

The COA examined the common misconception that commercial general liability insurance policies never cover damages for replacing or repairing defective workmanship and that such polices only cover liability for “third-party” property damage. Specifically, the court pointed out that although defective workmanship is “not itself a covered accident” it might be the cause of a covered accident therefore implying coverage.

Banuelos v. University of Wisconsin Hospitals and Clinics Authority, 2020AP1582

Clarifying that Wis. Stat. § 146.83(3f) does not permit a health care provider from charging fees for electronic copies of a patient’s health care records.

Secura Supreme Insurance Company v. Estate of Huck, 2020AP1078-FT –

The COA determined that when the insured’s estate was forced to pay back a portion of worker’s compensation due to a settlement, the insurer could not reduce its underinsured motorist payment by the amount paid back.

Winzer v. Hartmann, 2019AP1540

Examining the statute of limitations for a missed diagnosis, the COA confirmed that a misdiagnosis based on a negligent omission is not in itself an actionable injury that starts the clock. Only when the misdiagnosis causes a greater harm than existed does the statute of limitations start to run.

Williams v. District Council of Madison, Inc., 21 WI App 62

When a non-profit homeless relief group removed a resident from its program, the resident sued, claiming the group failed to follow landlord-tenant eviction laws. The group argued, and the COA agreed, that eviction steps weren’t necessary because the primary purpose of the program was to provide the resident educational, counseling, and similar services, not housing, and therefore the housing was incidental to the purpose and no rental agreement was enforceable.

Conclusion

While this quarter lacked some of the blockbuster opinions we have been getting over the past year (thank you COVID), there were still a number of meaningful cases which may impact you or your clients. Land use and restrictions again seemed to be a theme which continues to develop in the appellate courts.

For more information about how any of these decisions affects you, please contact the author of this article at [email protected] or contact our office at 262-334-3471 or email us at [email protected].

[1] Schloemer Law Firm, S.C. represented one of the parties in this matter and the Court of Appeals decision has been appealed and is pending with the Wisconsin Supreme Court.

Originally published: October 15, 2021