Wisconsin Supreme Court Enforces Contractual Pre-Litigation Jury Waiver

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The Wisconsin Supreme Court issued a decision in Parsons v. Associated Banc-Corp., 2017 WI 37, upholding the enforceability of a contractual pre-litigation jury waiver.  The court also found that although the motion to strike plaintiff’s jury demand was filed almost three years after the litigation commenced, it was not untimely.  The majority decision is written by Justice Ziegler, and Justice Kelly did not participate.  As has been the case in recent Supreme Court decisions, there is a spirited dissent, in this case drafted by Justice Ann Walsh Bradley and joined by Justice Abrahamson.

The majority provides little discussion of the facts in the case, labeling them “largely unimportant” to the legal issues to be decided.  However, according to the limited facts discussed, the parties were involved in a real estate project wherein the plaintiffs, Taft Parsons, Jr. and Carol Parsons, were planning to develop their own homes and others on their block in the City of Milwaukee into row-houses.  In May 2004, Taft Parsons signed a Promissory Note to Associated Bank for a loan to finance the project, which included a jury waiver provision.  The project ultimately collapsed and the Parsons filed suit against Associated Bank in May 2011.  The Parsons eventually whittled down their claims, focusing on allegations of racketeering and negligent hiring, training and supervision.  The complaint and amended complaint both included a demand for a 12-person jury, and the Parsons paid the jury fee to the circuit court in January 2013.  Over a year later, Associated Bank filed a motion to strike the jury demand, citing the jury-waiver provision in the Promissory Note.  The Parsons countered that the motion to strike was untimely, that Associated had waived its right to object to the jury demand.  They also argued that Carol Parsons had not signed the jury waiver and therefore, did not waive her right to a jury and that the provision should not be enforced because Taft Parsons had no ability to negotiate the term out of Associated Bank’s standard promissory note agreement.

The circuit court granted the bank’s motion to strike.  It held the jury waiver was enforceable for two principal reasons: first, the clause was adequately conspicuous (in bold, capital letters set off from the rest of the agreement) and, second, Taft Parsons was an “intelligent business man who undoubtedly has experience reviewing paperwork and entering into contracts.”  Id., ¶ 11. The court rejected the Parsons’ untimeliness argument on the grounds that they provided no legal authority in support and found the language of the waiver sufficiently broad to encompass Carol Parsons, even though she had not signed the contract.

The court of appeals granted the Parsons’ petition for review of a non-final order and ultimately reversed the circuit court decision.  The court of appeals agreed that a party may waive his or her right to a jury trial.  However, it explained that Associated Bank bore the burden of proving Parsons “understood the scope of and the specific nature of the rights given up by the waiver.”  Id., ¶ 14.  Based on an affidavit filed by Taft Parsons, the court of appeals determined the waiver was not knowingly and voluntarily made.  Although unnecessary to its disposition of the case, the court of appeals also determined the waiver was invalid as procedurally and substantively unconscionable, because it believed that issue might arise on remand.  Finally, the court of appeals determined the circuit court had erred in allowing the motion to strike on the grounds that the motion was untimely, the right to object had been waived under Wis. Stat. § 805.01(3), and Associated Bank was equitably estopped from raising the issue.

The Wisconsin Supreme Court accepted Associated Bank’s petition for review, and reversed the court of appeals decision.  The court explained that a party’s right to waive a civil jury trial is “settled law,” which can be based on statutory authority or, as here, on common law by contract.  Id., ¶ 21.  Applying the general tenets of contract law, the court found the jury waiver unambiguous and concluded that there was no need for additional evidence that the waiver was made knowingly and voluntarily.  The court found the court of appeals’ determination on unconscionability was erroneous given the limited record before it.  Finally, the court rejected the Parsons’ arguments with respect to the timeliness of the motion to strike on the grounds that there was no statutory directive on the issue and that any reliance on a jury demand by the Parsons was unreasonable because Taft had signed the jury waiver.

Focusing on the constitutional nature of the right, the dissent argued that any waiver of a jury trial must be entered into knowingly and voluntarily.  It spent a great deal of time discussing the facts of the case, including many—such as the criminal conviction of one bank employee—that occurred well after the jury-waiver provision was signed.  The dissent relied on these facts to find that Parsons’ waiver was not knowingly and voluntarily made.  Finally, the dissent argued that the motion to strike should be barred by equitable estoppel.

The majority’s opinion is in line with the well-established Wisconsin case law allowing parties freedom of contract, which some may have questioned after the court of appeals’ decision in this case.  Ultimately, the golden rule of contract law remains eternal—make sure you read (and understand) everything you sign!  The case also serves as yet another example of one court with members following two glaringly different approaches to the law.

Seventh Circuit Decision Calls for Class Action Reform

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In its recent decision in Manistee Apartments, LLC. v. City of Chicago, No. 15-3113 (7th Cir. Dec. 20, 2016), a three-judge panel of the Seventh Circuit Court of Appeals upheld the district court’s dismissal of the plaintiff’s class-action complaint.  Potentially more interesting than the decision itself was the court’s express call for changes to the class-action process to avoid frivolous class actions motivated solely by attorneys seeking fees.

The claims at issue in the case arose from a default administrative judgment entered against Manistee Apartments in 2011 by the City of Chicago.  Once registered, the judgment imposed a lien against Manistee’s real estate holdings.  Manistee claims it first became aware of the lien years later, when pursuing a sale of its real estate.  In response to Manistee’s inquiry, the City provided a payoff letter detailing the outstanding amount, which included the underlying judgment of $3,540, plus $820.34 in statutory interest and $1,394.82 in collection costs and attorney fees.  Manistee disputed only the collection costs and attorney fees.  While working to resolve the City’s claim, Manistee conveyed the property to an out-of-state buyer representing the title was clear.  It also paid the total amount due to the City, but claimed to be doing so “under protest.”  Shortly thereafter, Manistee filed a class action against the City, alleging that the assessment of collection costs and attorney fees violated due process guarantees under the federal and state constitutions, as well as other provisions of Illinois state law. 

The district court granted the City’s motion to dismiss on the grounds that Manistee’s payment to the City was not made under duress, but was voluntary.  As a result, Manistee could not be deprived of a protected property interest under federal law.  Finding no federal constitutional violation, the court applied the same test to dismiss the state constitutional claims and declined to exercise supplemental jurisdiction over the remaining state-law claims.

On appeal, the Seventh Circuit employed similar reasoning in upholding the district court’s decision.  The court noted that there was a more than year-long gap between the date of sale of the property by warranty deed and the release of the lien as well as the fact that the sale price of the property was only $10, ultimately rejecting Manistee’s claim that it was coerced into paying the full amount demanded by the City.  The court easily held that there was no deprivation of any property interest by the City, and upheld the district court’s dismissal of Manistee’s claims.  Noting the extremely minimal amount at issue and the extremely limited pool of the potential class of plaintiffs in the same position as Manistee, the court went on to question the true motivation behind the class action.  The answer:  attorney fees – a fact which plaintiff’s counsel apparently admitted during oral argument.  The court explained “it is cases like the one before us that demonstrate precisely why the courts, and Congress, ought to be on the lookout for ways to correct class action abuses.” 

The court’s distain for attorney abuses of the class action and overall litigation system in this case is clear.  Unfortunately, no easy answer exists to protect defendants against the hassle and costs of such litigation, but the court has issued a clear warning to class-action counsel that it has no patience for this sort of extortion-style litigation.

Filed Under: 7th Circuit, Seventh Circuit, class action, municipal judgment, property interest, appeals

Rules for Lawyers Derail Fiancée’s Unjust Enrichment Claim Against Menard

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Watts v. Watts, 137 Wis. 2d 506, 405 N.W.2d 303 (1987) provides the legal framework for unjust enrichment or joint enterprise claims asserted by non-married, cohabitating partners when a relationship ends.  In Sands v. Menard, Case Nos. 2012AP2377 and 2015AP870, the Wisconsin Court of Appeals upheld dismissal of Watts-type claims brought by an attorney and former fiancée of John Menard, Jr., CEO of Menard’s, Inc., on the grounds that Wisconsin Supreme Court Rule 20:1.8(a) (“Rules 1.8(a)”) regulating business transactions between attorneys and clients precluded her from recovering any business interest in her former betrothed’s business.

Menard began dating Debra Sands, a licensed attorney, in late 1997.  While the two dispute whether they ever cohabitated, both agree they were engaged.  During their relationship, Sands provided services to Menard and his companies, including legal work relating to a Wisconsin Department of Natural Resources investigation and advice on a transaction involving race car driver Robby Gordon.  The parties disagree about precisely when the Sands began providing legal services to Menard.  Sands claims she did not do legal work for Menard until 2003, well after their relationship began, and alleges that a payment in 1997 classified as one for legal services relating to the DNR investigation was really a disguised gift from Menard to pay off her student loans.  It is undisputed that from 2003 onward, Sands forwarded numerous invoices to Menard, Inc. for legal services, including bills for more than $150,000 for legal work performed between April 2003 and June 2004.  Sands was paid for these services, and continued to provide legal services to Menard and his companies until their relationship ended in April 2006. 

In addition to legal work, Sands claims she provided various other services to Menard, including “managing the remodeling of three residences [and] advising on the acquisition of airplanes and their design and décor.”  Id. ¶ 5.  She contends Menard promised to compensate her for her services by awarding her an interest in his businesses. In addition, when the relationship ended, Sands submitted 190 invoices to Menard, Inc. for work performed between February 2003 and April 2006.  The invoices totaled $1,085,629.50.  The parties were unable to reach a resolution on the outstanding legal fees due Sands, at least in part because Sands refused to sign a release proffered by Menard that would have waived her right to assert any “quasi-marital claims” against Menard. 

Ultimately, Sands filed suit against Menard for unjust enrichment, breach of contract and promissory estoppel, seeking “a fair and reasonable share of the property, wealth, and increased net worth acquired by Menard through [Sands’] efforts” during the parties’ relationship, or in the alternative, the fair market value of the allegedly promised business interest.  Id. ¶ 15.  Sands lawsuit also included trusts and other entities related to Menard.  Menard counterclaimed against Sands for breach of fiduciary duty.  The circuit court granted summary judgment on all counts, dismissing all of Sands’ claims, as well as Menard’s counterclaims.  The parties cross-appealed.

The court of appeals affirmed the circuit court on all accounts, though its main focus was the effect of Rule 1.8(a) on Sands’ equitable claims to an interest in Menard’s businesses. Sands failed to challenge the circuit court finding that she did not expect to compensated for any nonlegal services provided to Menard and, therefore, the court found she was barred from such a claim on appeal.  With respect to legal services, the court held any alleged promise by Menard to provide business interest in exchange for legal services was subject to Rule 1.8(a).  The version of Rule 1.8(a) in place at the time of the parties’ relationship precluded an attorney from entering into business transactions or taking action to obtain an ownership or other interest adverse to a client unless certain requirements were met. Specifically, the attorney was required to provide written disclosure of the terms of the transaction and obtain written consent from the client.  There was no dispute that Sands violated Rule 1.8(a) as she failed to provide written disclosure of the terms of the transaction and failed to obtain Menard’s written consent, both express requirements under the rule.  Rule 1.8(a) has since been amended to provide additional safeguards for clients, including that the attorney must obtain a written, informed consent listing the essential terms of any such transaction and must disclose the benefits of the client seeking independent legal advice. 

Relying on a variety of cases, the court also rejected Sands’ argument that the Rules of Professional Conduct only apply to disciplinary proceedings, not civil matters.  Instead, the court pointed out that a party seeking to recover on an equitable claim – as Sands did here – must have clean hands.  While the misconduct necessary to bar an equitable claim need not be criminal, Sands’ failure to comply with Rule 1.8(a) constituted a violation of the standard of conduct and dirtied her hands enough to preclude recovery.

The court discussed Watts, but easily distinguished this case on the grounds that the plaintiff in Watts was not an attorney, and therefore, not subject to Rule 1.8(a).  The court noted the limited scope of its decision, stating “[w]e merely hold that an attorney cannot bring an unjust enrichment claim under Watts to recover an ownership interest in a former cohabitant’s business (or equivalent damages) as compensation for legal services, unless the attorney complied with Rule 1.8(a)”. Id. ¶ 46.  However, the court noted a variety of circumstances wherein Watts claims could still be pursued by attorneys and non-attorneys alike.

The court upheld the dismissal of Sands’ final claim for breach of contract due for failure to allege with specificity in her complaint the consideration allegedly promised by Menard, and upheld the dismissal of Menard’s counterclaim for breach of fiduciary duty as barred by the statute of limitations. 

This case reminds attorneys and non-attorneys that no matter one’s business acumen or age, the mixing of personal relationships and business can have complicated, and often expensive, repercussions.  Litigants will no doubt attempt to apply the Watts holding to different scenarios and relationships in the future, which will certainly result in interesting opinions.  However, one cannon of the legal profession will remain unchanged – always get it in writing!

Filed Under: Watts, unjust enrichment, Rules of Professional Conduct, attorney ethics, cohabitants, Supreme Court Rules, Wisconsin Court of Appeals, joint enterprise

Recent Legislative Changes Affecting Municipalities

Published by Susan Allen on | Permalink

There have been a number of changes to the current law as a result of the most recent legislative session, many of which will affect municipalities.  Summaries of these acts are provided below.

Absentee Ballots

2015 Wisconsin Act 209 clarifies that when an absentee ballot is requested prior to the 47th day before a partisan primary or general election or the 21st day before any other primary or election, the municipal clerk must send the ballot within one business day of receipt of the request.  The previous language of the statute required a response within one day, which did not accommodate for weekends or holidays.  All other timelines stated in the statute, Wis. Stat. § 7.15, remain unchanged.

Building Permits

2015 Wisconsin Act 211 requires that the building permit form issued by the Department of Safety and Professional Services (DSPS) include a space in which the municipal authority issuing the permit must insert the name of the person to whom the building permit is issued and the number and expiration date of the certificate of financial responsibility issued by DSPS to that person.  A person may not obtain a building permit without a certificate of financial responsibility from DSPS.  The Act also requires cities, villages, towns, and counties to provide an annual report to DSPS that contains the name of each person to whom the political subdivision issued a building permit for the construction of a one−family or two−family dwelling and the number and expiration date of each current credential issued by DSPS to that person.  A political subdivision that does not provide the report must refund to each person to whom a building permit was issued, an amount equal to the difference between the amount paid by that person to the political subdivision for that permit and the portion of the permit fee remitted by the political subdivision to the department, if any.

Library Delinquencies

2015 Wisconsin Act 169 provides that a library may report to a collection agency or, subject to the condition stated below, a law enforcement agency, information about delinquent accounts of any individual who borrows from the library or who uses the library’s documents, materials, resources, or services, including information about the number and types of overdue materials.  A library may report delinquent accounts to a law enforcement agency only if the delinquency is at least $50.  Under the Act, the information that may be disclosed is limited to the individual’s name, contact information, and the amount owed.

Placement of Sexually Violent Individuals

2015 Wisconsin Act 156 establishes a statewide standard for determining the placement of sexually violent individuals upon release from institutions or confinement.  The Act requires the Wisconsin Department of Health Services to consult with the Department of Corrections Office of Victim Services, the Wisconsin Department of Justice, and the county coordinator of victim and witness services in the counties of intended placement, conviction and commitment in developing its recommendations for placement after release.  The Act also prohibits municipalities from enforcing any ordinance restricting a sex offender from residing at a certain location or that prohibits an individual from providing housing to a sex offender if the offender is subject to supervised release, is in compliance with any court order and is residing in the location where he or she is ordered to reside.

Property

2015 Wisconsin Act 176 amends statutes addressing a number of topics.  Most relevant to municipalities are the provisions relating to regulation of rental units and historic properties.  The Act confirms that municipalities may establish landmark commissions and designate or establish a historic landmark or historic district.  However, before designating a historic landmark or establishing a historic district, the municipality must notify the landowner and conduct a public hearing on the matter.  A landowner affected by a decision of a landmark commission may appeal the decision to the relevant municipal board or council.  The Act also provides that municipalities may not enact ordinances requiring residential rental property owners to register or obtain certification or licenses relating to the ownership or management of residential rental property, unless such ordinances apply uniformly to all owners, including owners of owner-occupied rental properties.  In addition, a municipality may require a landlord to register if registration is limited to providing the landlord’s name and an authorized contact person including address and telephone number.

2015 Wisconsin Act 219 prohibits adverse possession and proscriptive easements against real property that is owned by the state or a political subdivision of the state. The prohibition applies retroactively to adverse possession or use where the current 20 year occupancy requirement has not been met at the time of the effective date of the bill.  In addition, the Act prohibits the state or a political subdivision of the state from acquiring real property through adverse possession.

Seized Animals

2015 Wisconsin Act 233 makes numerous changes to current law related to the treatment of an animal that is taken into custody by a local government, including when it is believed to have been used in a crime against animals.  Among the modifications are:  Authorizing a humane officer or law enforcement officer to take an animal into custody if the officer has reasonable grounds to believe that the animal has been used in any crime against animals;  authorizing a local governmental unit to withhold, or direct a person contracting with a local unit of government to withhold an animal in custody from an owner if there are reasonable grounds to believe that the owner has used the animal in any crime against animals; requiring an animal of any age that is being held in custody to be treated as an unclaimed animal if the owner of the animal is convicted of a crime against animals;  and, allowing a local governmental unit or other person with custody of an animal that is believed to have been used in, or constitutes evidence of, a crime against animals under ch. 951, Stats., to demand payment from the animal’s owner for the custody, care, and treatment of the animal that is held in custody.

Tax Incremental Districts

2015 Wisconsin Act 256 makes several technical changes to the tax incremental finance (TIF) law. Specifically, the Act specifies that the requirement that any real property within a tax increment district (TID) found suitable for industrial sites and zoned for industrial use will remain zoned for industrial use for the life of the TID only applies to an industrial TID. The Act reduced the notice required by a planning commission from a class 2 notice to a class 1 notice with regard to notices relating to a TID amendment.  For newly created TIDs, the Act extends a TID’s lifespan and allocation period of positive tax increments by one year if the municipality that creates the TID adopts the project plan for the TID after September 30 and before May 15.  The Act extends, from 30 days to 45 days, the maximum review period a Joint Review Board has to approve a municipality’s TID resolution. Finally, the Act excludes any TID value increments from a municipality’s equalized value for purposes of calculating an exemption from a municipality’s levy limit for a year in which a TID terminates.

2015 Wisconsin Act 254 allows a municipality to make any type of amendment to the project plan of a TID created under § 66.1105, or to request an extension to the TID’s maximum lifespan at any time during the life of the TID, or both, if during the life of a TID, the annual and total amount of tax increments to be generated over the life of the district are adversely impacted by statutory changes to the method of calculating equalized valuation.

2015 Wisconsin Act 255 removes the restriction that property standing vacant may not comprise more than 25% of the area in a TID for TIDs created after March 3, 2016. Additionally, for a TID created on or after March 3, 2016, the Act revises the calculation of the initial tax incremental base of the district to exclude all tax-exempt, city-owned property.

2015 Wisconsin Act 257 amends the process by which the annual reports of TIDs are reviewed, including annual reporting of industry-specific town TIDs and environmental remediation TIDs. Also, the Act repeals the process by which the Department of Revenue (DOR) may be requested to review and make a determination as to whether the money expended, or debt incurred by an industry-specific town TID in the prior year complied with current law.

Wisconsin Retirement System

2015 Wisconsin Act 174 relaxes the barriers to participation for municipalities seeking membership in the Wisconsin Retirement System (“WRS”).  The Act allows an employer who elects to be included within the provisions of WRS to elect to be a participating employer only with respect to employees hired on or after the date on which the employer elects to participate in WRS.  In addition, the Act permits a municipal employer that elects to be a participating employer on or after March 2, 2016, to choose not to include its public utility employees as WRS participants. Under current law, an employer who elects to participate in the WRS must generally include all of its employees in WRS at the time of election, regardless of occupation or date of hire. 

Zoning

2015 Wisconsin Act 178 establishes a process for certain towns to withdraw from county zoning.  The Act provides specific timing and notice requirements for a town to adopt an ordinance withdrawing from coverage of a county zoning ordinance approved under Wis. Stat. § 59.69(5)(c) and from coverage by a county development plan enacted under Wis. Stat. § 59.69(3)(a).  The Act also provides that if a county receives notice from a town under this Act, the county board may choose to repeal all of its zoning ordinances upon notice to all towns subject thereto.  This Act applies only to towns in counties with a population of at least 485,000, and therefore, effectively applies only to towns located in Dane County as there are no towns within Milwaukee County.

For more specific information regarding the effective dates of these acts and the potential implications for your municipality, contact your Stafford Rosenbaum attorney.

Top 10 Municipal Law Developments of 2015

Published by Holly Wilson on | Permalink

Stafford Rosenbaum’s Government Law and Government Relations teams continuously stay apprised of the latest developments in Wisconsin municipal law. Below, in no particular order, are the top 10 municipal law developments of 2015.

1. Sign regulation. In Reed v. Town of Gilbert, 576 U.S. __ (2015), the United States Supreme Court held unconstitutional a sign ordinance differentiating between ideological, political, and temporary directional signs. Overall, the Court’s decision provides helpful clarity to municipalities looking to establish enforceable sign ordinances. For more on this case, see here.

2. Repeal of prevailing wage law. 2015 Wisconsin Act 55, the biennial budget, repeals the prevailing wage law that applies to local government public works projects as of January 1, 2017.

3. Zoning; short-term rentals. In Heef Realty & Investments, LLP v. City of Cedarburg Board of Appeals, 2015 WI App 23, 361 Wis. 2d 185, 861 N.W.2d 797, the Wisconsin Court of Appeals held that the Cedarburg Board of Appeals erred in interpreting the city’s single-family dwelling zoning ordinances to preclude short-term rentals. Because the city’s ordinance did not create time restrictions (and instead required that only one family would use each home at a time), the court held that property owners using their homes for short-term rentals did not violate the city’s zoning ordinance. For more on this case, see here.

4. Zoning; conditional use permits. In Oneida Seven Generations Corporation v. City of Green Bay, 2015 WI 50, 362 Wis. 2d 290, 865 N.W.2d 162, the Wisconsin Supreme Court upheld the city’s decision to rescind the conditional use permit (CUP) initially granted to Oneida Seven. The court determined that the council adequately identified the basis for rescinding the CUP.  However, the court evaluated each of the claimed misrepresentations in the record in detail, ultimately finding no evidence to support a conclusion that Oneida Seven’s statements regarding emissions and hazardous materials were misrepresentations. For more on this case, see here.

5. Home Rule; preemption. In Black v. City of Milwaukee, 2015 WI App 60, 364 Wis. 2d 626, 869 N.W.2d 522, the Wisconsin Court of Appeals held that Wis. Stat. § 66.0502, which essential prohibits residency requirements in local governments, did not preempt the city’s ordinance requiring its employees to reside within the city. For more on this case, see here.

6. Special assessments. In First State Bank v. Town of Omro, 2015 WI App 99, the Wisconsin Court of Appeals held that a municipality properly used its police power to build roads and levy special assessments against the land benefitted after a developer defaulted on its obligation to build the roads. For more on this case, see here.

7. Public records. In Journal Times v. City of Racine Board of Police and Fire Commissioners, 2015 WI 56, __ Wis. 2d __, __, N.W.2d __, the Wisconsin Supreme Court determined that the Commission acted with reasonable diligence in providing the requested information to the Newspaper, even though it was not required to do so.  Because the Commission acted reasonably and the Newspaper received the requested information, the Newspaper did not substantially prevail and was not entitled to recover attorney fees and costs under the Public Records Law. For more on this case, see here.

8. Fees. In Town of Hoard v. Clark County, 2015 WI App 100, __ Wis. 2d __, __ N.W.2d __, the Wisconsin Court of Appeals upheld a town ordinance assessing a fee for fire protection on county-owned property located within the town. Because the town’s ordinance properly assessed a fee under Wis. Stat. § 60.55(2), the county had to pay for the fire protection provided to its property located within the town. For more on this case, see here.

9. Firearm regulation. In Wisconsin Carry, Inc. v. City of Madison, 2015 WI App 74, 365 Wis. 2d 71, 870 N.W.2d 675, the Wisconsin Court of Appeals upheld a rule adopted by the city transit and parking commission that prohibits riders on city buses from carrying weapons. The commission’s rule was not an ordinance or resolution, and therefore Wis. Stat. § 66.0409, which prohibits local governments from adopting ordinances and resolutions that regulate firearms, did not preempt the rule. For more on this case, see here.

10. Incorporation. In City of Kaukauna v. Village of Harrison, 2015 WI App 73, 365 Wis. 2d 181, 870 N.W.2d 680, the Wisconsin Court of Appeals held that the statutory notice requirements in § 66.0301(6) were met and found no express prohibition in the law against the village and town sharing services and agreeing to transfer territory. The court upheld as valid a § 66.0301(6) intergovernmental cooperation agreement between the newly-incorporated Village of Harrison and the Town of Harrison, under which the town agreed to transfer nearly all of its lands to the new village and share services.

Thank you to Joseph Diedrich for his assistance in drafting this post.

Filed Under: municipal law, local government, public records law, zoning, conditional use permits, Wisconsin law

Wisconsin Supreme Court Remands New Richmond Case to Court of Appeals

Published by Susan Allen on | Permalink

On December 18, 2015, the Wisconsin Supreme Court issued a decision in the case of New Richmond News v. City of New Richmond, 2015 WI 106, but the decision does not provide the clarity many in the municipal law world hoped it would.  Instead, the Court’s decision, available here, vacates its decision to accept the parties’ petition to bypass and remands the matter for proceedings at the Wisconsin Court of Appeals.

New Richmond involves the interplay between the Wisconsin Public Records Law, which generally provides for the disclosure of municipal records to the public, and the Driver’s Privacy and Protection Act (DPPA), which provides for the protection of personally identifying information in motor vehicle records. The St. Croix County Circuit Court held that the New Richmond News was entitled to unredacted records from the City of New Richmond Police Department. After receiving the circuit court decision, the parties filed a joint petition to bypass the Wisconsin Court of Appeals and move directly to review by the Wisconsin Supreme Court. The Wisconsin Supreme Court accepted the petition for review in May.  More details regarding the decision to appeal are available here.

Oral arguments were held before a full Wisconsin Supreme Court, however, Justice Patrick Crooks passed away before a decision was rendered in the case.  Justice Rebecca Bradley, was appointed to the court after the court’s decision, and did not participate.  However, the Justices were evenly split, with Justice Abrahamson, Justice Walsh Bradley and Justice Prosser voting to affirm the circuit court, and Chief Justice Roggensack, Justice Ziegler and Justice Gableman in favor of reversal.  As it has in prior cases involving a tie on a matter in the court on bypass or certification, the court determined “justice is better served in such an instance by remanding to the court of appeals for their consideration.”  Interestingly, Justice Abrahamson drafted a concurrence (Justice Walsh Bradley joining) suggesting that past practices would have allowed the justices to vote to have the case reargued so Justice Bradley could participate.

Given this matter will now be heard in the court of appeals, and will likely again make its way to the Wisconsin Supreme Court thereafter, it may be some time before clear instruction is available regarding the application of the Wisconsin Public Records Law and the DPPA.

Filed Under: municipal law, Wisconsin Supreme Court, Wisconsin municipalities, public records law, DPPA, City of New Richmond, appeals

Town’s Special Assessments for Roads Upheld

Published by Holly Wilson on | Permalink

In First State Bank v. Town of Omro, No. 2015AP403 (Wis. Ct. App. Nov. 11, 2015) (recommended for publication), the Wisconsin Court of Appeals, District II, held that a municipality may use its police powers to build roads and levy special assessments against the land benefitted after a developer defaults in its obligation to build the roads.

In 2004, the Town of Omro executed a development agreement that required the developer to construct and finance roads in a subdivision. Five years later, only a few of the lots were sold and First State Bank acquired the remaining lots through foreclosure. None of the roads in the subdivision were paved; however, three of the lots fronted existing, already-paved roads outside the subdivision. In 2013, the Town – exercising its police power –  authorized completion of the roads and specially assessed the Bank more than $200,000 for finishing the roads. The Bank challenged the Town’s special assessments. The court granted summary judgment to the Town affirming the special assessments. The Bank appealed.

The court of appeals affirmed the special assessments for the lots abutting the improved subdivision roads, but reversed and remanded the special assessments for the three lots not abutting the improved roads. The court first found that although the Town originally required the developer in the development agreement to pay for the public improvements, the agreement did not restrict the Town from exercising its police power to levy special assessments for public improvements.  Second, the court rejected the Bank’s argument that the special assessments were improper because the road work was not a public improvement. Under Wis. Stat. § 236.20(4)(c), all roads shown on a final subdivision plat are dedicated to the public unless clearly marked as private. Third, the court rejected the Bank’s claim that the Town failed to comply with the special assessment statute in passing the preliminary and final resolutions as a “hypertechnical interpretation” of the statute. Finally, the Bank contended that the three lots not abutting the improved roads were not specially benefitted by the special assessments. The court found that this evidence raised a genuine issue of fact as to whether those lots received a special benefit.  As a result, summary judgment was improper, and the court remanded the case for further proceedings on this issue.

Filed Under: municipal law, local government, Wisconsin towns, special assessments, development agreement

Court of Appeals Upholds Fire Protection Fee Ordinance

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On November 12, 2015, the Wisconsin Court of Appeals decided Town of Hoard v. Clark County, No. 2015AP678, upholding a Town of Hoard ordinance assessing a fee for fire protection on County-owned property located within the Town.

The Town of Hoard located in Clark County operates a fire department jointly with other municipalities in the area. To pay for the fire department, the Town enacted an ordinance imposing an “annual charge on properties located within the Town for the provision of fire protection according to a written schedule.” The schedule apportions the total cost of the fire department among properties based on their size and use. In 2014, the Town charged the County, which owns a medical center within the Town, $3327.68 under the ordinance. After the County did not pay, the Town sued. The trial court granted summary judgment in favor of the Town, requiring the County to pay.

On appeal, the County argued that the ordinance is invalid (at least as applied to the County) for two reasons. First, it argued that the charge is a tax rather than a fee. This matters because counties are exempt from general taxes. Second, it argued that even if the charge is a fee, the ordinance is not authorized under section 60.55(2)(b) of the Wisconsin Statutes. The Court of Appeals rejected both of the County’s arguments and upheld the Town’s ordinance.

First, the court considered whether the Town’s ordinance is a fee or a tax. “[T]he primary purpose of a tax is to obtain revenue for the government, while the primary purpose of a fee is to cover the expense of providing a service or of regulation and supervision of certain activities.” Here, the court determined that the primary purpose of the Town’s charge is “to cover the expense of providing the service or fire protection to the properties within its geographic boundaries.” Therefore, the charge is a fee—not a tax. The court said it did not matter that the Town imposed the charge in its role as a municipality rather than in the role of a public utility. Nor did it matter that non-payment of the charge results in a tax lien against the property.

Second, the court analyzed the ordinance’s validity under Wisconsin Statutes section 60.55(2), which provides that, in order to fund the cost of fire protection, a town may “[c]harge property owners a fee for the cost of fire protection provided to their property . . . according to a written schedule established by the town board.” The County argued that, based on its structure and legislative history, section 60.55(2) means that the Town may only charge for fire services “actually provided.” The court rejected this argument, deciding that a fee can be imposed for fire protection merely available, regardless of whether a property owner actually uses it. Indeed, “the presence of a fire district standing by ready to extinguish fires constitutes a fire protection service for which a fee may be assessed.” Thus, the Town “provided” the County’s property with fire protection within the meaning of section 60.55(2).

In the end, the Court of Appeals upheld the trial court’s ruling in favor of the Town. The Town’s ordinance properly assesses a fee under section 60.55(2). Therefore, the County must pay for the fire protection provided to its property located within the Town.

 

Thank you to Joseph Diedrich for his assistance in drafting this post.

Filed Under: municipal law, fire department, ordinance, Wisconsin Court of Appeals, Wisconsin towns, appeals

Governor Signs Four New Bills Impacting Municipalities and Towns Into Law

Published by Holly Wilson on | Permalink

On Wednesday, November 11 the Governor signed four bills into law relating to municipalities and towns.

2015 Wisconsin Act 79 allows municipalities that opt to post legal notices to post the notice in one public place and publish the notice on the municipality’s Internet site, instead of posting the notice in three public places.

2015 Wisconsin Act 96 permits any town authorized to create a tax incremental financing district (TID) under Wis. Stat. § 66.1105(16) or § 60.85 to participate in a multijurisdictional TID created according to Wis. Stat. § 66.1105(18). Prior to 2015 Wisconsin Act 96, towns could not participate in multijurisdictional TIDs.

2015 Wisconsin Act 105 eliminates the monetary limit on town expenditures for material and equipment for construction and maintenance of highways previously required under Wis. Stat. § 82.03(2).

2015 Wisconsin Act 113 removes the requirement under Wis. Stat. § 256.15(4) that an ambulance transporting a sick, disabled, or injured individual must contain any two emergency medical technicians (EMTs), licensed registered nurses, licensed physician assistants, physicians, a combination of those individuals, or one EMT and one individual with an EMT training permit. An ambulance transporting a sick, disabled, or injured individual may now be staffed with one EMT and one first responder.

Each of these bills go into effect Friday, November 13. If you have questions about these bills, please contact any of Stafford Rosenbaum’s Government Law or Government Relations team members.

Filed Under: Scott Walker, Wisconsin municipalities, Wisconsin towns, TIF, municipal law, municipalities

Disciplinary Process – Police and Fire Commission

Published by Paul Schwarzenbart on | Permalink

Police officers and firefighters manage difficult and often dangerous situations. Fortunately, most protective services employees are dedicated public servants, and smaller communities may see years go by without need for formal disciplinary action against an officer or firefighter. When an issue arises, the municipality must adhere to applicable procedures to reach a just resolution that will withstand judicial review.

The process for disciplining police officers and firefighters is a matter of statewide concern governed by state law. Absent agreement by the employee, a suspension, reduction in rank or termination can be imposed only after a due process hearing before a board of police and fire commissioners (“PFC”) or its equivalent. While the right to a hearing does not extend to newly-hired employees still in a probationary status, an employee promoted on a probationary basis is entitled to a hearing if a reduction in rank is based on misconduct allegations.

The disciplinary process is governed by Wis. Stat. § 62.13(5) and any administrative rules adopted by the PFC (“PFC rules”). PFC rules in some municipalities are posted online. This article provides an overview of the PFC disciplinary process.

Initiation of disciplinary proceeding.

Charges seeking discipline of a police officer or firefighter may be filed by a department chief, by a member of the PFC, the PFC as a body, or any aggrieved person. Complaints by “aggrieved persons” are also referred to as “citizen complaints.” Once charges are filed, the municipality should provide the PFC with legal counsel independent from municipal counsel to assist in managing the disciplinary process.

Upon the PFC finding “just cause,” an officer or firefighter may be “suspended, reduced in rank, suspended and reduced in rank, or removed.” For that reason, a chief will not file charges unless an unpaid suspension or greater penalty is sought.

While the PFC as a body or any member may file and prosecute charges, this is generally inadvisable. If an occasion arises where this is appropriate, the PFC should delegate its prosecutorial role to a special counsel. A PFC member who prosecutes should act solely in that capacity and should not participate in the decisional process.

The Charges.

The minimum requirements of a due process hearing include timely and adequate notice, an impartial decision-maker, and the opportunity to confront and cross examine adverse witnesses. Accordingly, disciplinary charges must contain sufficient detail to allow the respondent to prepare an adequate defense. The charges should be framed in light of the seven “just cause” standards. The charges should identify the department rule or order allegedly violated, describe any investigation of the charges, and set forth fact allegations supporting the charges.

Initial processing.

The PFC must set a date for hearing not less than 10 days nor more than 30 days after service of the charges. Most matters will not be concluded within 30 days. While it is advisable to confirm the consent of the parties to continue the hearing beyond 30 days, if necessary, there is no reported decision suggesting that “continuing” the hearing beyond the 30 days violates the statute.

Typically the PFC sets an initial hearing to be held within 30 days of filing to address issues such as scheduling, discovery and pre-hearing motion practice. Months may elapse between the filing of charges and the final resolution, partly because due process requires that the employee be given a reasonable opportunity to be heard and partly because the PFC is composed of private citizens, often requiring that hearings be conducted during evening hours. If the charges are serious enough that termination is sought, commonly the employee is placed on a paid leave status pending resolution of the process.

PFC rules may allow for dismissal of charges without an evidentiary hearing, if the charges are facially groundless or frivolous, have been resolved in a prior proceeding, or the complainant lacks standing. Although the statutes do not address it, PFC rules may provide for pre-hearing discovery. A PFC that has not adopted such rules may consider allowing some discovery to avoid a possible claim of a due process deprivation upon later judicial review. If your PFC has not formally adopted administrative rules, it may be prudent to review rules developed in other municipalities to use as guidance in managing the pre-hearing process.

Hearing and Decision.

The evidentiary hearing is a quasi-judicial administrative proceeding. It is public. Both the complainant and respondent may compel the attendance of witnesses by subpoenas to be issued by the PFC president on request. The Wisconsin Supreme Court has upheld PFC rules providing for the employment of a hearing examiner to conduct both the pre-hearing process and the evidentiary hearing, at least where the rules have provided for the hearing to be videotaped. The PFC issues its final decision based on the evidence as well as the examiner’s report.

PFC rules may specify what, if any, evidentiary rules apply at the hearing. Given that the  Wisconsin Supreme Court has described the hearing as having the elements of “fair play” fundamental to due process in an administrative law setting, following the procedures applicable in Case 3 contested hearings under Wis. Stat. ch. 227, including the rules of evidence set forth in § 227.45, should satisfy due process. Erroneous evidentiary rulings may result in a due process deprivation, which would require a new hearing.

The complainant bears the burden of proof by a preponderance of the evidence. The PFC’s deliberations on the evidence should be conducted privately with its counsel; other municipal officials should not be present. The PFC must issue its determination in writing within three days after the conclusion of the hearing. Counsel for the PFC will assist is crafting a decision that clearly states the PFC’s findings of fact and conclusions of law, as well as an order either imposing discipline or dismissing the charges. The written decision should address the seven just cause standards contained in Wis. Stat. § 62.13(5)(em). The decision and order must be filed with the secretary of the PFC.

Review.

If the PFC imposes discipline, the respondent has two avenues for judicial review: a right of statutory appeal to the circuit court under Wis. Stat. § 62.13(5)(i) and a petition to the circuit court for common law writ of certiorari. The respondent may pursue both avenues of review, and the resolution of issues on the appeal is not binding relative to issues on certiorari review, even though the issues on the two methods of review may overlap. These are the exclusive methods of review; the PFC’s decision cannot be collaterally attacked in another proceeding. A charging party can challenge the PFC decision to dismiss the charges by seeking certiorari review.

The statutory appeal focuses solely on whether there is just cause to sustain the charges. The respondent initiates an appeal by serving written notice on the PFC secretary within 10 days after PFC files its order. Service on the secretary must be in person. The secretary must certify the record to the clerk of circuit court within 5 days. Unless otherwise agreed by the parties, trial is to be scheduled not be later than 15 days after an application by either party. Trial is to the court on the record, but the court may require the return of further evidence. No costs are allowed and the municipality pays the clerk’s fees. If the PFC’s order is reversed, the respondent is reinstated and entitled to backpay. If the PFC’s order is sustained, respondent has no further no right of appeal.

Certiorari review is initiated by the respondent filing an action in circuit court and must be commenced within six months of the PFC action the respondent seeks to challenge. On certiorari, the court determines whether (1) the PFC exceeded its jurisdiction, (2) the PFC proceeded on a correct legal theory, (3) the PFC acted in an arbitrary, oppressive, or unreasonable manner that represented its will and not its judgment, and (4) whether the evidence was such that the PFC could reasonably make the determination at issue. Most allegations of error in the disciplinary process are addressed on certiorari review, given the limited scope of review on the statutory appeal. In contrast to the statutory appeal, the circuit court’s decision on certiorari review is subject to appellate review.

Summary.

Discipline of employees in protective services poses a unique challenge to municipalities. This challenge falls to the PFC, a body ordinarily comprised of citizens not trained in the law. Providing the PFC with independent legal counsel to assist it in managing the process and conducting the disciplinary hearing best insures a just resolution that will withstand judicial review.

If you have questions about the PFC disciplinary process, contact Paul Schwarzenbart. Paul is a partner with Stafford Rosenbaum LLP, has extensive experience representing boards as well as individual clients in disciplinary hearings, and he has served as a member of the Village of Waunakee Police Commission. This article was prepared with the assistance of Attorneys Jeffrey A. Mandell and Holly J. Wilson, who are also members of Stafford’s Government Law Team.

This article originally appeared in the League of Wisconsin Munipalities' publication The Municipality. 

Filed Under: municipal law, fire department, police department, municipalities, disciplinary process, PFC, due process

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