author: NETTESHEIM, J.

text:
    B.N., Plaintiff-Appellant, v. Guy N. Giese and Joann L. Giese, Defendants, Economy Preferred Insurance Company, Defendant-Respondent.
    Court of Appeals

      No. 03-2005.

      Submitted on briefs February 23, 2004.

    Decided June 2, 2004.

    2004 WI App 137
    (Also reported in 685 N.W.2d 568.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Jodi L. Habush, SB, of Habush, Habush & Rottier, of Milwaukee.
    On behalf of the defendant-respondent, the cause was submitted on the brief of Donald H. Piper, and Amy E. Wochos, of Piper & Schmidt, of Milwaukee.
    Before Brown, Nettesheim and Snyder, JJ.
   NETTESHEIM, J.

¶ 1. This is an insurance coverage dispute. The circuit court action stemmed from the 1994 sexual assault of B.N. by her uncle, Guy N. Giese, when B.N. was eleven years old. B.N. brought this action against Guy, his wife, Joann L. Giese, and Joann's homeowners insurer, Economy Preferred Insurance Company (Economy). The issue is whether the Economy policy provides coverage for B.N.'s claim alleging negligent infliction of emotional distress to B.N. by Joann. The allegation was premised on Joann's conduct towards B.N. following the sexual assault. At summary judgment, the trial court ruled that Joann's conduct was intentional and therefore excluded from coverage under the Economy policy. B.N. appeals.

¶ 2. Because Joann's actions were intentional and a person in Joann's position would have reasonably expected her actions to harm B.N., we conclude as a matter of law that Joann intended her actions to harm B.N. We therefore uphold the trial court's grant of summary judgment in favor of Economy.

BACKGROUND

¶ 3. The underlying facts are undisputed. During October 1995, a jury found Guy guilty of two counts of first-degree sexual assault of his niece, B.N. The criminal court sentenced Guy to ten years in prison. B.N. was eleven years old at the time of the assault.

¶ 4. B.N. commenced this civil action on August 23, 2002. In an amended complaint, B.N. alleges that Guy engaged in intentional acts of intimate sexual contact with her while she was in bed with Guy and his wife, Joann. Later, B.N. told her parents about the incident, and they arranged for B.N. and the family to meet with a psychologist who then reported the allegations to the police. With respect to the claim of negligent infliction of emotional distress against Joann, the complaint alleges:

Following said disclosure, the defendant Joann L. Giese, previously a person that [B.N.] had loved, admired and trusted, engaged in thoughtless and needlessly cruel conduct in disregard of the plaintiffs young age and emotional state, including efforts to alienate the plaintiff from her extended family and her denial of conversations she had previously had with [B.N.], including those concerning her husband's drinking problem.
The defendant Joann L. Giese's inappropriate conduct directed against a then eleven year old child directly and proximately caused the plaintiff to suffer emotional distress, including a sense of betrayal as well as extreme guilt and sadness over the breakup of her family, which has resulted in psychological injuries permanent in nature and which include expenses for medical and psychological treatment relating to the plaintiffs subsequent suicide attempts, hospitalizations and counseling needs.

¶ 5. In its answer to B.N.'s amended complaint, Economy affirmatively defended on the grounds that its policy did not afford liability coverage to Joann. Economy followed with a motion for summary and declaratory judgment contending that Joann's acts were precluded by the intentional acts exclusion provision of the policy.

¶ 6. At a motion hearing on May 27, 2003, the trial court granted Economy's motion for summary judgment. The trial court entered an order for summary and declaratory judgment in favor of Economy on June 18, 2003.

¶ 7. B.N. appeals.

DISCUSSION

¶ 8. Our standard of review is de novo on two levels. First, when reviewing a summary judgment, we perform the same function as the trial court and our review is de novo. See Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 401 N.W.2d 816 (1987). On summary judgment, the inferences to be drawn from the underlying facts contained in the moving party's material should be viewed in the light most favorable to the party opposing the motion. Grams v. Boss, 97 Wis. 2d 332, 338-39, 294 N.W.2d 473 (1980). "If the material presented on the motion is subject to conflicting interpretations or reasonable people might differ as to its significance, it would be improper to grant summary judgment." Id. at 339.

¶ 9. Second, the interpretation and application of an insurance policy provision to undisputed facts is a question of law, which also presents a de novo standard of review. Steven G. v. Herget, 178 Wis. 2d 674, 684, 505 N.W.2d 422 (Ct. App. 1993). When construing or applying an insurance policy, the policy must be "interpreted from the standpoint of what a reasonable person in the position of the insured would have understood." Id. (citation omitted).

¶ 10. Economy does not dispute that its policy providing coverage to Joann was in effect at the time of Guy's sexual assault of B.N. However, Economy denied coverage under the "intentional-acts" exclusion which bars coverage for bodily injury or property damage "which may reasonably be expected to result from the intentional or criminal acts of an insured person, or which are in fact expected, anticipated, or intended by an insured person." As noted, the trial court concluded that Joann's actions were intentional as a matter of law and thus excluded from coverage.

¶ 11. In Wisconsin, an "intentional-acts" exclusion precludes coverage only where the insured acts intentionally and intends some harm or injury to follow from the act. Loveridge v. Chartier, 161 Wis. 2d 150, 168, 468 N.W.2d 146 (1991) (citing Raby v. Moe, 153 Wis. 2d 101, 110, 450 N.W.2d 452 (1990)).

An insured intends to injure or harm another if he "intend[s] the consequences of his act, or believe[s] that they are substantially certain to follow." In other words, intent may be actual (a subjective standard) or inferred by the nature of the insured's intentional act (an objective standard). Therefore, an intentional-acts exclusion precludes insurance coverage where an intentional act is substantially certain to produce injury even if the insured asserts, honestly or dishonestly, that he did not intend any harm.

Loveridge, 161 Wis. 2d at 168 (citations omitted). This "intentional-acts" exclusion precludes coverage even if the harm that occurs is different in character or magnitude from that intended by the insured. Id. at 169.

¶ 12. B.N. contends that the trial court erred in granting summary judgment because the issue of intent is ordinarily a question of fact to be reserved for a jury. See id. "However, a court may infer that an insured intended to injure or harm as a matter of law (an objective standard): 'if the degree of certainty that the conduct will cause injury is sufficiently great to justify inferring intent to injure as a matter of law.'" Id. (citation omitted). There is no bright-line rule to determine when intent should be inferred as matter of law; each set of facts must be considered on a case-by-case basis — the more likely harm is to result from certain intentional conduct, the more likely intent to harm may be inferred as a matter of law. Id. at 169-70.

¶ 13. Here, B.N. alleges that Joann "engaged in thoughtless and needlessly cruel.conduct in disregard of the plaintiffs young age and emotional state, including efforts to alienate the plaintiff from her extended family and her denial of conversations she had previously had with [B.N.], including those concerning her husband's drinking problem." In arguing for coverage, B.N. points out that these allegations do not say that Joann intended to cause injury to B.N. or that Joann's actions were substantially certain to produce injury. Rather, B.N. argues that Joann's actions, as pled, "were perhaps irresponsible or not properly mindful of the plaintiffs young age and fragile emotional state but were not meant to cause harm to her."

¶ 14. However, as we have noted, a court may infer that the insured intended to injure or harm as matter of law if the facts, viewed objectively, demonstrate a sufficient degree of certainty that the insured's conduct will cause injury or harm. Id. at 169. Therefore, the mere fact that B.N. does not allege that Joann intended the harm or that Joann's conduct was not substantially certain to produce the harm does not control the question. Rather, we look to the core conduct itself and then objectively determine whether the conduct satisfies the test.

¶ 15. B.N. argues that Joann's conduct in this case does not allow for the requisite degree of certainty to allow for an inference of Joann's intent to harm as a matter of law. In support, B.N. relies on the holdings of Gouger v. Hardtke, 167 Wis. 2d 504, 514-15, 517-18, 482 N.W.2d 84 (1992), and Loveridge, 161 Wis. 2d at 161-62, where the reviewing courts held that intent could not be inferred as a matter of law. However, the nature of the conduct in those cases was much more ambiguous than Joann's alleged conduct in this case.

¶ 16. In Gouger, the injury occurred when two high school friends engaged in "hassling and teasing one another in a welding shop class." Gouger, 167 Wis. 2d at 508. At one point, Gouger threw a piece of soapstone at his friend, Hardtke, striking him in the head. Id. Hardtke then turned, saw Gouger laughing, and picked up a piece of soapstone and threw it back at Gouger. The soapstone struck Gouger in the eye, damaging his cornea. Id. The trial court granted summary judgment based on its finding that Hardtke's conduct in throwing the soapstone was substantially certain to result in some injury and that it could infer intent as a matter of law. Id. at 509-10.

¶ 17. The supreme court in Gouger reversed the trial court's ruling that the conduct was intentional as a matter of law, stating:

The facts in this case do not warrant inferring as a matter of law that Hardtke intended to injure Gouger. The conduct of throwing a piece of soapstone at another person, even with the intent of hitting that person, is not so substantially certain to cause injury that a court may infer an intent to injure. Indeed, in light of the fact that Hardtke and Gouger were friends, it is equally or perhaps more reasonable to infer that Hardtke did not intend to injure Gouger.
In this case, the "horseplay" nature of the conduct in question, the fact that Gouger and Hardtke were friends at the time, and Hardtke's inconsistent pleading stating that he did not act intentionally cast sufficient doubt on Hardtke's credibility to create a genuine issue of material fact.

Id. at 514-15, 517-18.

¶ 18. Likewise, in Loveridge, the relationship between the plaintiff and the defendant undermined a finding of intentional conduct as a matter of law. In Loveridge, the plaintiff, Loveridge, and the defendant, Chartier, had engaged in consensual sexual contact including cunnilingus. Loveridge, 161 Wis. 2d at 162. Loveridge was later diagnosed as having the herpes simplex virus. Id. at 163. Chartier had a histoiy of cold sores and had one on his mouth at least one of the times he performed cunnilingus on Loveridge. Id. The insurer argued that Chartier intended to injure Loveridge as a matter of law, notwithstanding her consent, because she was a minor at the time of the contact and thus Chartier's conduct violated the criminal law. Id. at 167. The supreme court rejected the insurer's coverage defense because: (1) intent to injure was not an element of the crimes committed by Chartier, and (2) consensual sexual intercourse between an adult and a sixteen- or seventeen-year-old does not create a "substantial risk of injury or death." Id. at 174 (citation omitted).

¶ 19. We reject B.N.'s attempts to liken this case to Gouger and Loveridge. Unlike Gouger, Joann's actions toward B.N. were not the result of "horseplay" between friends. See Gouger, 167 Wis. 2d at 517. To the contrary, B.N.'s allegations demonstrate that the trusting relationship between Joann and B.N. had turned hostile. And, unlike Loveridge, Joann's "thoughtless and needlessly cruel conduct in disregard of B.N.'s young age and emotional state" was not conduct to which B.N. had consented. See Loveridge, 161 Wis. 2d at 162.

¶ 20. Objectively viewed, Joann's alleged actions toward B.N., an eleven-year-old niece, are such that a reasonable person would have expected such conduct to result in some kind of injury or harm to B.N. Under the objective standard, there is no ambiguity as to Joann's intent. That the harm to B.N. may have been different in character or magnitude from that expected by Joann does not bar application of the intentional acts exclusion. See id. at 169.

CONCLUSION

¶ 21. We hold that Joann's conduct was intentional as a matter of law and, as such, falls under the "intentional-acts" exclusion. We uphold the trial court's grant of summary judgment in favor of Economy.

By the Court. — Judgment affirmed.

       Economy additionally defended on the grounds that Joann's conduct was not an "occurrence" under the policy and that B.N.'s claims were also precluded by the exclusion for bodily injury and property damage "arising out of... mental abuse, or any sexual act, including but not limited to molestation, incest or rape." Economy renews these additional coverage defenses on appeal. Because we conclude that Joann's actions were intentional as a matter of law and therefore not covered by the Economy policy, we need not reach these additional arguments.


source: Caselaw Access Project

license: Public Domain

text:
    In re the Marriage of: Karmin M. Maritato, Petitioner-Respondent, v. Mario B. Maritato, Respondent-Appellant.
    Court of Appeals

      No. 03-2074.

      Submitted on briefs April 8, 2004.

    Decided June 2, 2004.

    2004 WI App 138
    (Also reported in 685 N.W.2d 379.)

      On behalf of the respondent-appellant, the cause was submitted on the brief of Thomas W. Anderson, Jr., of Anderson & Anderson, of Kenosha.

      On behalf of the petitioner-respondent, the cause was submitted on the brief of Thomas W St. John, and Jennifer I. Bolger, of Friebert, Finerty & St. John, of Milwaukee.
    Before Anderson, EJ., Brown and Nettesheim, JJ.
   NETTESHEIM, J.

¶ 1. Mario B. Maritato appeals from the child support and property division provisions of a judgment of divorce. The judgment orders Mario to pay child support to his former wife, Karmin M. Mari-tato, in the amount of $1583.36 per month, based on his placement time with their two children of 43% under the shared-time payer guidelines. Mario contends that the trial court erred in failing to find an equal placement arrangement based on overnight equivalent care. We disagree and affirm this portion of the judgment. Alternatively, Mario argues that the trial court erred in failing to deviate from the child support percentage guidelines on the basis of unfairness. We reverse and remand this portion of the judgment because the trial court failed to address this argument on the merits. Mario additionally contends that the trial court erred in the valuation and division of Karmin's stock options and in the inclusion of the parties' 2001 income tax refund in the marital estate. We reject these arguments and affirm this portion of the judgment.

BACKGROUND

¶ 2. On April 4, 2001, Karmin petitioned for a divorce from Mario. The parties married in June 1990 and had been married just under eleven years at the commencement of the action. The parties have two minor children who were ages eight and six at the time of the divorce.

¶ 3. During the pendency of the divorce, the parties entered into a stipulation as to the legal custody and physical placement of their minor children. The stipulation, which was approved by the court and granted as a partial judgment on January 3, 2002, provides:

[T]he respondent [Mario] shall have placement of the children on Tuesdays and Wednesdays including overnights, returning the children to the child care provider on Thursday mornings, and on alternating weekends from Friday until Sunday at 7:30 p.m. The petitioner [Karmin] shall have placement of the children at all other times and hours.

The parties' shared placement arrangement resulted in Mario having placement with the children 43% of the time and Karmin having placement with the children 57% of the time.

¶ 4. On May 13, 2002, the trial court entered a temporary order requiring Mario to pay child support in the amount of $1821 per month based on the shared placement formula and the parties' respective incomes. The order followed a motion hearing at which Mario requested that his Sunday placement constituted an overnight for purposes of calculating percentage placement. The trial court temporarily denied Mario's request but reserved the issue for trial.

¶ 5. The matter proceeded to trial on January 16, 2003. Although the parties had entered into written and oral stipulations regarding certain marital assets prior to trial, issues remained regarding the division of Karmin's stock options, distribution of the parties' 2001 tax refund and the determination of child support. Both Karmin and Mario testified as to these issues at trial. In addition, Mario presented the testimony of an accountant on the issues of child support and the tax refund.

¶ 6. On May 8, 2003, the trial court entered its written judgment of divorce, findings of fact and conclusions of law. With respect to Karmin's stock options, the trial court declined to include Karmin's unvested stock options in the marital estate but did include a portion of her vested options with an assigned value of $1440. Contrary to Mario's request, the trial court divided the parties' 2001 income tax refund equally. With respect to child support, the trial court denied Mario's request to find his Sunday placement equivalent to overnight care and additionally denied his request to deviate from the child support guidelines.

¶ 7. Mario appeals the trial court rulings.

DISCUSSION

¶ 8. The division of marital property and the calculation of child support are matters generally left to the sound discretion of the trial court. Cook v. Cook, 208 Wis. 2d 166, 171, 560 N.W.2d 246 (1997). The discretionary decision of the trial court is not erroneous if the decision reflects "a reasoning process dependent on facts in, or reasonable inferences from, the record and a conclusion based on proper legal standards." Abitz v. Abitz, 155 Wis. 2d 161, 174, 455 N.W.2d 609 (1990) (citation omitted).

1. Child Support

¶ 9. Mario contends that the trial court erred in denying his request to find his Sunday placement to be the equivalent of overnight care pursuant to Wis. Admin. Code § DWD 40.02(25) (2003) or, in the alternative, failing to deviate from the application of the shared-time payer formula set forth in the child support guidelines on grounds of unfairness.

¶ 10. Mario's first argument is based on a Note to the Wis. Admin. Code § DWD 40.02(25). Section DWD 40.02(25) defines a shared-time payer as follows:

(25) "Shared-time payer" means a payer who provides overnight child care or equivalent care beyond the threshold and assumes all variable child care costs in proportion to the number of days he or she cares for the child under the shared-time arrangement.

The Note to § DWD 40.02(25) provides:

Note: There are physical placement arrangements in which the payer provides child care beyond the threshold and incurs additional cost in proportion to the time he or she provides care, but because of the physical placement arrangement he or she does not provide overnight care (e.g., payer provides day care while the payee is working). Upon request of one of the parties the court may determine that the physical placement arrangement other than overnight care is the equivalent of overnight care.

Mario contends that if his Sunday placement until 7:30 p.m. had been considered equivalent to overnight care,

his child support would have been based on an equal allocation of placement.

¶ 11. Mario argued to the trial court that the time he spends with the children on Sunday until 7:30 p.m., including providing them with dinner, is equivalent care. The trial court disagreed, finding that Karmin had duties and care of the children after they were returned on Sunday evenings and that Mario's care on Sunday evening did not rise to the level of overnight equivalent care. The court stated:

The fact the respondent may have provided another meal between noon and when he returned the children is not the equivalent of the "overnight" concept employed by the department to set the percentage standard formula. If the department wanted to determine the percentage standard based on the number of hours in a 24r-hour period a person has a child, it could have done so. As the department's note to subsection 25 demonstrates, the "equivalent care" concept must be something of substance.

¶ 12. Mario contends that the Note to Wis. Admin. Code § DWD 40.02(25) does not indicate that the placement must be something of substance, as the trial court had found. However, the example of equivalent care recited in the Note is, in fact, one in which a parent, not otherwise receiving credit, is providing a substantial am mint, of additional care. Here, when Mario has a Saturday overnight, he spends Sunday with the parties' two children, provides them with dinner and returns them to Karmin at 7:30 p.m. We agree with the trial court that there is nothing about Mario's Sunday placement that would make it substantially different than any other day of placement following an overnight for which the parent has already been credited.

¶ 13. We conclude that the trial court properly exercised its discretion in denying Mario's request to consider his Sunday placement equivalent to overnight care.

¶ 14. That brings us to Mario's second argument. Mario requested the trial court to deviate from the shared-time formula under the percentage guidelines on grounds of fairness. The court declined.

¶ 15. Wisconsin Stat. § 767.25(lj) provides that in an action for divorce, a trial court "shall determine child support payments by using the percentage standard established by the department under [Wis. Stat. §] 49.22(9)" except as provided under subsec. (lm). Section 767.25(lm) provides:

Upon request by a party, the court may modify the amount of child support payments determined under sub. (lj) if, after considering the following factors, the court finds by the greater weight of the credible evidence that use of the percentage standard is unfair to the child or to any of the parties:
(a) The financial resources of the child.
(b) The financial resources of both parents.
(bj) Maintenance received by either party.
(bp) The needs of each party in order to support himself or herself at a level equal to or greater than that established under 42 U.S.C. § 9902(2).
(bz) The needs of any person, other than the child, whom either party is legally obligated to support.
(c) If the parties were married, the standard of living the child would have enjoyed had the marriage not ended in annulment, divorce or legal separation.
(d) The desirability that the custodian remain in the home as a full-time parent.
(e) The cost of day care if the custodian works outside the home, or the value of custodial services performed by the custodian if the custodian remains in the home.
(ej) The award of substantial periods of physical placement to both parents.
(em) Extraordinary travel expenses incurred in exercising the right to periods of physical placement under s. 767.24.
(f) The physical, mental and emotional health needs of the child, including any costs for health insurance as provided for under sub. (4m).
(g) The child's educational needs.
(h) The tax consequences to each party.
(hm) The best interests of the child.
(hs) The earning capacity of each parent, based on each parent's education, training and work experience and the availability of work in or near the parent's community.
(i) Any other factors which the court in each case determines are relevant.

In challenging the application of the child support standards, the burden falls on Mario to establish that application of the standards would be unfair. See Raz v. Brown, 213 Wis. 2d 296, 304, 570 N.W.2d 605 (Ct. App. 1997).

¶ 16. The trial court rejected Mario's "fairness" argument in a footnote, stating:

Although [Mario] cites sec. 767.25(lm), Stats., for this proposition, he does not do an analysis based on the factors to be considered under that section and therefore neither will this court. [Mario] simply claims the percentage standard is unfair based on the fact the party's disposable net income is different. The sole fact the parties may have different disposable incomes in and of itself does not make the application of the percentage standard unfair to one of the parties. Luciani v. Montemurro-Luciani, 199 Wis. 2d 280, [544 N.W.2d 561] (1996).

¶ 17. We agree with the trial court that a disparity-in disposable incomes does not in and of itself make the application of the percentage standards unfair to one of the parties. See id. at 305-06. However, under the facts of this case, we conclude that this principle of law did not excuse the trial court from conducting an analysis of the relevant statutory factors set out in Wxs. Stat. § 767.25(lm).

¶ 18. Moreover, we disagree with the trial court's statement that Mario's "fairness" argument was limited solely to an alleged disparity in the parties' postsupport disposable incomes. To the contrary, Mario further argued that the needs of the children did not warrant the level of support produced by application of the guidelines. As such, Mario additionally argued that the support award, in part, constituted disguised maintenance.

¶ 19. In Luciani, the supreme court instructed:

When presented with a party's challenge to application of the percentage standards, circuit court judges in exercising their discretion, are to consider the statutory factors set forth by the legislature in Wis. Stat. § 767.25(lm), and articulate the basis for their decision to either remain within the guidelines or allow a modification. The circuit court's articulation of its reasoning process is essential in reaching a reasonable determination and to aid this court in reviewing the discretionary decision.

Luciani, 199 Wis. 2d at 295. In a footnote to the above quote, the supreme court criticized the court of appeals for implying in an earlier case that such an analysis is not necessary where the trial court chose to not deviate from the guidelines. Id. at n.ll.

¶ 20. In the instant case, Mario presented a challenge to the application of the percentage standards on fairness grounds and presented a developed argument based on certain of the evidence in support of that challenge. Under Luciani, we conclude that the trial court was required to perform the analysis of the relevant statutory factors in answer to that challenge. We reverse this portion of the judgment and remand for further consideration of the issue.

2. Property Division

Stock Options

¶ 21. On three separate occasions during the marriage, Karmin received stock options from her employer, Abbot Laboratories. At the time of trial, some of these stock options were vested while others remained unvested. The trial court declined to divide the entire unvested portion of the stock options and divided only a portion of the vested options. Mario argues that the trial court should have divided all the stock options.

¶ 22. A stock option is the ability to buy stock at a future date at a specific value, usually the value on the date of granting the option. Gregg Herman, Stock Options In Divorce, 19 Wis. J. Fam. L. 61, 61 (1999). Generally, stock options are given to key employees to motivate them to remain as employees and to increase efficiency and performance. Chen v. Chen, 142 Wis. 2d 7, 12, 416 N.W.2d 661 (Ct. App. 1987). A stock option contract, like an unvested pension, is not a mere gratuity, hut an enforceable contract right. Id. It is an economic resource, comparable to pensions and other employee benefits, and thus a form of property. Id.

¶ 23. We begin by observing that the issue in this case is not whether certain portions of Karmin's stock options were included or excluded from the marital estate — an issue which would present a question of law. See id. at 12. The trial court's written decision correctly recognized under Chen that both vested and unvested stock options are properly included a marital estate. Like the trial court, we quote from Chen:

Generally, all of the parties' property at the date of divorce, except that derived through gift or inheritance, is subject to division. Whether the asset is characterized as vested, unvested, or a future interest is a factor to be considered in the property division. The mere fact that the interest in the asset is contingent does not mean that it may be ignored.
The trial court properly included the stock options, both accrued and non-accrued, in the marital estate. Although certain stock options are not exercisable until after the time of the divorce, they are nonetheless an economic resource acquired during the marriage .... A stock option contract, like an unvested pension, is not a mere gratuity, but an enforceable contract right. It is an economic resource, comparable to pensions and other employee benefits, and thus a form of property. Although Steve's stock options are unassignable and unsalable, these are factors that relate to the issues of valuation and division.

Id. (citations omitted).

¶ 24. Instead, the question in this case deals with the trial court's ruling that even though Karmin's stock options were included in the marital estate, only those portions that carried a current value were subject to property division. The division of a marital estate, as opposed to the composition of the marital estate, is addressed to the trial court's discretion. Id. at 14.

¶ 25. Having identified the proper issue and the proper standard of review, we now turn to the specifics of Karmin's stock options. The following is a listing of the dates Karmin received her stock options, the number of shares awarded, the exercise prices of the options, the deadline for exercising the opinions, and the vested and unvested status of those options as of the date of trial, January 16, 2003:

1. March 1999 — 600 shares with an exercise price of $47.50 per share to be exercised by March 31, 2009; all shares vested at the time of trial;
2. February 2000 — 400 shares with an exercise price of $34.70 per share to be exercised by February 11, 2010; 267 shares initially vested; remaining shares scheduled to vest in February 2003.
3. February 2001 — 3500 shares with an exercise price of $48.36 per share to be exercised by February 9, 2011; 1167 shares initially vested; another 1167 options scheduled to vest in February 2003; remaining shares scheduled to vest in February 2004.

¶ 26. In its property division ruling, the trial court first determined that the unvested portion of Karmin's February 2001 stock options would not be divided. In support, the court noted that while these options represented an "economic resource" under Chen, they had been awarded to Karmin just two months prior to the commencement of the action and that the parties had offered no evidence as to the present value, if any, of these options.

¶ 27. The trial court next determined that vested portions of the March 1999 and February 2001 stock options would not be divided because the exercise prices ($47.50 and $48.36 per share respectively) exceeded the current market value of the stock ($39.20), and therefore had no present value.

¶ 28. Finally, the trial court did divide the February 2000 options since the exercise price ($34.70 per share) was less than the market price of the stock ($39.20), but the court limited the present value to the difference between the two values ($4.50 per share). After taking a 20% tax consideration into account, the court assigned a net value of $1440 to these vested options.

¶ 29. Generally, marital assets are valued as of the date of divorce. See Wikel v. Wikel, 168 Wis. 2d 278, 286, 483 N.W.2d 292 (Ct. App. 1992). Here, as noted, neither party presented evidence as to the present value, if any, of the stock options as of the time of trial. However, it is undisputed that as of the time of trial, January 16, 2003, the market price of Abbot Laboratories stock was $39.20 per share.

¶ 30. Relying on Chen, Mario argues that the trial court should have included all of Karmin's stock options in the marital estate. There, Steve Chen's stock options were acquired during the marriage, but were not exercisable until after the divorce. Chen, 142 Wis. 2d at 11. The trial court included the options in the marital estate, requiring Steve to pay his former wife one-half of the net profit resulting from any future exercise of the options. Id. at 10-11. Noting the trial court's "broad discretion in the division of the marital estate," id. at 14, the court of appeals upheld the trial court's ruling. However, the court also added a note of caution:

'The formula for division derives from the facts of the individual case.' In an exercise of discretion, a trial court may reasonably reach a conclusion another judge may not reach. When the trial court has made no factual error, has applied the proper law, and has reached a reasoned decision, we sustain its discretionary determination.

Id. (citations omitted).

¶ 31. Later, in Wikel, the court of appeals upheld the exclusion of the stock options that were not exer-ciseable as of the time of trial. Wikel, 168 Wis. 2d at 285-87. Finding no legal or factual error, the court upheld the trial court's discretionary ruling. Id. However, Wikel did not cite to, or address, Chen.

¶ 32. We find no conflict between Chen and Wikel. We take note that both cases rest on the discretion afforded to a trial court in the matter of property division generally, and stock options in particular. Chen, 142 Wis. 2d at 14; Wikel, 168 Wis. 2d at 286. We also find it telling that Chen recognized that its holding did not establish a bright line rule: "While critics may claim this results in inconsistency, we believe the strength of the judicial system is enhanced when the judiciary possesses the ability in family law cases to tailor a remedy to fit the circumstances of the individual litigants before the court." Chen, 142 Wis. 2d at 18 (citation omitted).

¶ 33. Moreover, in his commentary on "Stock Options In Divorce," Attorney Gregg Herman has noted that the two cases can be read "as harmonious if one keeps in mind the general rule that property accumulated after the divorce is not divisible." Herman, supra at 66. Attorney Herman observes:

Thus, in Wikel, if the option vests after the divorce, the "value" which is appreciation of the stock is "earned" after the divorce and is thus not divisible .... Thus, if the trial court found that the option was close to vesting and the employee spouse was likely to continue working. .. until the vesting was complete, it would not be a misuse of discretion to include the option in the marital estate. On the other hand, if, as in Wikel, there was a lengthy time before vesting, it would make more sense to exclude the option as property since it would he primarily "earned" postdivorce.

Herman, supra at 66.

¶ 34. We acknowledge that the scheduled vesting of the unvested portion of Karmin's stock options was not in the distant future at the time of trial — a factor that might augur for including those options in the marital estate. But Mario does not cite to any evidence bearing on the other considerations — particularly whether Karmin's employment at Abbott Laboratories would endure until the unvested options become vested or until the 2009, 2010 and 2011 deadlines for exercising the options. Instead, Mario argued that all of Karmin's stock options should be divided as a matter of law under Chen. However, as we have already noted, Chen itself observed that its holding was not absolute for all cases.

¶ 35. We further hold that the trial court did not misuse its discretion by declining to divide those vested stock options that had an exercise price in excess of the current market value of the stock. As such, these "underwater" options had no present value, but rather only potential value that might be earned in the future, depending on market conditions. Attorney Herman's commentary agrees: "If the exercise price is less than the market value, of course it has no value." Herman, supra at 66.

¶ 36. Finally, we hold that the trial court did not misuse its discretion in valuing the vested portion of Karmin's 2000 stock options at the difference between the market value of the stock and the exercise value. Again, we cite to Attorney Herman's commentary with approval:

If the stock is publicly traded and the option is fully vested, the value is the difference between the market value and the exercise value, reduced for taxes and any costs associated with exercising the option.

Herman, supra at 66.

¶ 37. We will sustain a trial court's exercise of discretion if the court has examined the relevant facts, applied the proper standard of law, and engaged in a rational decision-making process. Schultz v. Darlington Mut. Ins. Co., 181 Wis. 2d 646, 656, 511 N.W.2d 879 (1994). The trial court's decision regarding the vested and unvested portions of Karmin's stock options complies with this test. We uphold the court's discretionary ruling.

2001 Tax Refund

¶ 38. Mario contends that the trial court erred in denying his request for an unequal distribution of the parties' 2001 tax refund in the amount of $20,192. The trial court divided the refund equally stating:

[Mario] asks for an unequal distribution of the parties' 2001 income tax refund in trust. The basis of this argument is that the refund was due primarily to [Mario's] overpayment of estimated taxes and that this occurred during the time the parties were separated. The court rejects this argument for an unequal division. The income being earned by the respondent was not an individual asset of his alone. His income, like that of [Karmin's], was marital income to which each was equally entitled to.

¶ 39. A joint tax refund is a marital asset subject to division. See, e.g., Forester v. Forester, 174 Wis. 2d 78, 94-95, 496 N.W.2d 771 (Ct. App. 1993); LaRocque v. LaRocque, 139 Wis. 2d 23, 29, 406 N.W.2d 736 (1987). Mario argues that the division should be unequal because he withheld $60,683 in estimated taxes while Karmin withheld $37,188. However, $9180 of the approximate $20,000 difference in withholdings was carried over from the parties' 2000 tax refund. Given that the refund was the product of both parties' significant earnings that were not markedly disparate, and given that both parties made significant contributions to the refund, we uphold the court's determination that the parties should share the refund equally. We uphold the trial court's discretionary ruling.

CONCLUSION

¶ 40. We conclude that the trial court did not erroneously exercise its discretion in rejecting Mario's request that his Sunday placement constitutes overnight equivalent care. However, we conclude that the trial court erred by failing to fully address Mario's "fairness" argument against application of the guidelines on the merits. We reverse this portion of the judgment and remand for further proceedings on this issue. Finally, we conclude that the trial court properly exercised its discretion when dividing Karmin's stock options and the parties' 2001 tax refund.

¶ 41. No costs to either party.

By the Court. — Judgment affirmed in part; reversed in part and cause remanded.

       We observe that Wis. Admin. Code § DWD 40.02(25) (2003) has been revised and renumbered, effective January 1, 2004. The current definition for "shared-time payer" is in § DWD 40.02(26), and has been renamed "shared-placement payer;" the definition itself has been changed and, most significantly, the note to § DWD 40.02(25) has been completely eliminated.
      All references to Wis. AdmiN. Code § DWD 40.02(25) are to the 2003 version.

       Karmin disputes this assertion on grounds that she cares for the children occasionally during Mario's placement periods when he is on vacation or unable to care for the children for other reasons. Karmin asserts that even considering Mario's Sunday to be equivalent care, she would still have placement with the children 57% of the time because of these schedule adjustments. The trial court did not reach this issue based on its finding that Mario's Sunday placement did not constitute equivalent care.

       Karmin testified that she then generally provides them with additional food and has them brush their teeth before bed.

       We note that the use of the words "day care" suggests that the department envisioned a situation in which the nonplacement parent provides care, or the financial cost of such care, for the children while the placement parent is at work.

         Our reversal and remand on this issue in no way implies that the trial court must accept Mario's argument. A trial court is not mandated to deviate from the percentage guidelines, but may do so if it finds that the great weight of the credible evidence demonstrates that the application of the guidelines would be unfair. See Wis. Stat. § 767.25(lm). Instead, we simply require the trial court to address Mario's fairness argument on the merits.
      Our holding also dispenses with the need for us to address Mario's related argument that the support order, in part, constitutes disguised maintenance since that argument is a subset of Mario's fairness challenge to the application of the guidelines.

       WISCONSIN Stat. § 767.255, which sets out the factors bearing on a property division, is to the same effect. Section 767.255(3)(j) instructs the trial court to consider "[o]ther economic circumstances of each party, including pension benefits vested or unvested, and future interests."

       Although a portion of Karmin's February 2000 stock options were not vested as of the time of trial, these options had vested by the time of the trial court's written decision. The court therefore treated all of these stock options as vested.

       We make no determination whether stock options can be presently valued. In Chen v. Chen, 142 Wis. 2d 7, 11, 416 N.W.2d 661 (Ct. App. 1987), the court of appeals observed that certain of the expert testimony opined that it was impossible to determine the present value of stock options. In addition, the court noted that the trial court had rejected other expert testimony opining as to the present value. Id.

       The Chen court further held that this method of division was proper under the third method approved in Bloomer v. Bloomer, 84 Wis. 2d 124, 135, 267 N.W.2d 235 (1978). Chen, 142 Wis. 2d at 15.

       The record reflects that Mario's adjusted gross income in 2001 was approximately $133,000 while Karmin's was approximately $101,000.

       Mario also argues that since the temporary order allowed him to use his income for living purposes, the trial court should have awarded the bulk of the refund to him. We do not find it remarkable that the parties funded their living expenses from their earnings. Most parties to a divorce action would do so without a temporary order to that effect. The existence of such an order does not alter the basic fact that the parties' tax refund existed as an asset to be divided. Nor does the order bear on the question of how the refund should be divided.
      We also reject Mario's attempt to liken this case to Long v. Long, 196 Wis. 2d 691, 697, 539 N.W2.d 462 (Ct. App. 1995), in which the trial court included bonus income earned by the husband in the marital estate when that income had not been converted to tangible assets or other property. Contrary to Mario's suggestion that the money in Long remained in the husband's checking account, the facts of that case reflect that the income had been used by the husband to pay attorney fees and living expenses and was not used to acquire any tangible assets. Id. at 696. Thus, unlike the Maritates' 2001 tax refund held in trust, there was no asset in Long to be divided.


text:
    In the Matter of Disciplinary Proceedings Against Anthony Irby Moree, Attorney at Law: Office of Lawyer Regulation, Complainant, v. Anthony Irby Moree, Respondent.
    Supreme Court

      No. 04-1284-D.

      Decided August 2, 2004.

    2004 WI 118
    (Also reported in 684 N.W.2d 667.)
   The Court entered the following order on this date:

The Office of Lawyer Regulation (OLR) and Attorney Anthony Irby Moree have stipulated, pursuant to SCR 22.12, for reciprocal discipline under SCR 22.22.

Attorney Moree was admitted to the practice of law in Wisconsin in 1982. His Wisconsin law license was suspended in 1992 for failure to pay annual bar dues. His license remains suspended.

Attorney Moree was admitted to practice law in Illinois in 1985. Pursuant to a January 20, 2004 order of the Illinois Supreme Court, Attorney Moree's Illinois license to practice law was suspended for misconduct consisting of (a) conversion; (b) entering into an agreement with a client or former client limiting or purporting to limit the right of the client or former client to file or pursue any complaint before the Attorney Registration and Disciplinary Commission, in violation of Rule 1.8(h) of the Illinois Rules of Professional Conduct; (c) failure to deposit funds of a third person in a separate and identifiable trust account, in violation of Rule 1.15(a) of the Illinois Rules of Professional Conduct; (d) failure to promptly pay or deliver to a client or third person funds that the client or third person was entitled to receive, in violation of Rule 1.15(b) of the Illinois Rules of Professional Conduct; (e) conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct; (f) conduct that is prejudicial to the administration of justice, in violation of Rule 8.14(a)(5) of the Illinois Rules of Professional Conduct; and (g) conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, in violation of Illinois Supreme Court Rule 771.

The Illinois Supreme Court suspended Attorney Moree's Illinois law license for 18 months, with all but the first three months of suspension stayed by a two-year period of probation, subject to conditions.

SCR 22.22(3) provides that this court shall impose the identical discipline or license suspension unless the procedure in the other jurisdiction was so lacking in notice or opportunity to be heard as to constitute a due process violation; there was such an infirmity of proof establishing the misconduct that this court could not accept as final the misconduct findings; or the misconduct justifies substantially different discipline here. Neither the OLR nor Attorney Moree contend, nor does this court find, that any of these three exceptions exist. The OLR and Attorney Moree note that the discipline imposed by the Illinois Supreme Court includes elements not generally imposed in Wisconsin disciplinary proceedings, including the stay of all but three months of the imposed suspension and placing Attorney Moree on probation. The OLR and Attorney Moree request and stipulate that as reciprocal discipline this court impose a three-month suspension of Attorney Moree's license to practice law in Wisconsin and order him to comply with the terms and conditions established by the Illinois Supreme Court. We conclude that this proposal does effectuate "identical discipline" under the terms of SCR 22.22(3) because it replicates the practical effect of the Illinois Supreme Court's disciplinary order which is to bar Attorney Moree from the practice of law for three months as long as he complies with the requirements of probation.

IT IS ORDERED that the license of Attorney Anthony Irby Moree to practice law in Wisconsin is suspended for three months, effective the date of this order, and until the further order of this court;

IT IS FURTHER ORDERED that Attorney Moree shall comply with the terms and conditions of probation set forth in the Illinois Supreme Court's order of January 20, 2004.

Bradley, J., dissents.


text:
    In the Matter of Disciplinary Proceedings Against Larry W. Rader, Attorney at Law: Office of Lawyer Regulation, Complainant, v. Larry W. Rader, Respondent.
    Supreme Court

      No. 03-0484-D.

      Decided August 24, 2004.

    2004 WI 121
    (Also reported in 685 N.W.2d 524.)
   The Court entered the following order on this date:

On June 11, 2004, Referee John E. Shannon, Jr. filed a report and recommendation, advising the court that he has determined, based on a stipulation executed by the parties and following a hearing on the matter, that Attorney Larry W Rader is medically incapacitated within the meaning of SCR 22.16(4); this court ordered Attorney Rader to show cause, in writing, by July 12, 2004 why his license should not be suspended; Attorney Rader has filed no response;

IT IS ORDERED that Attorney Larry W Rader's license to practice law is temporarily suspended as of the date of this order and until reinstated by this court. He shall further comply with the requirements of SCR 22.26 relating to license suspension.


author: PER CURIAM.

text:
    In the Matter of Disciplinary Proceedings Against Paul A. Henningsen, Attorney at Law: Office of Lawyer Regulation, Complainant, v. Paul A. Henningsen, Respondent.
    Supreme Court

      No. 04-1133-D.

      Decided August 24, 2004.

    2004 WI 119
    (Also reported in 685 N.W.2d 523.)
   PER CURIAM.

¶ 1. We review the stipulation filed by Attorney Paul A. Henningsen and the Office of Lawyer Regulation (OLR) pursuant to SCR 22.12 concerning Attorney Henningsen's professional misconduct that resulted in his conviction in federal court for four counts of mail fraud, in violation of 18 U.S.C. § 1341. The parties stipulated that the appropriate discipline to impose for that professional misconduct is the suspension of Attorney Henningsen's license to practice law for two years, retroactive to the date on which his license to practice law was summarily suspended based on his criminal conviction.

¶ 2. We approve the stipulation and adopt the stipulated facts and conclusions of law. We agree that the seriousness of Attorney Henningsen's misconduct warrants the suspension of his license to practice law. We accept the parties' stipulation that a two-year suspension is appropriate discipline for this offense. We further agree that it is appropriate to make the suspension retroactive to the date Attorney Henningsen's license was summarily suspended based on his criminal conviction.

¶ 3. Attorney Henningsen was admitted to practice law in Wisconsin in 1976. In January 2003 he was indicted by a federal grand jury on one count of extortion and four counts of mail fraud. In June 2003 a federal court jury acquitted him of the extortion charge but found him guilty on all four mail fraud counts. He was sentenced to 33 months in prison, ordered to pay a $2500 fine and ordered to make restitution of $7370. He is serving his sentence at a federal prison camp in South Dakota. On March 2, 2004, this court summarily suspended Attorney Henningsen's license based on his criminal convictions.

¶ 4. Attorney Henningsen and the OLR have stipulated that by engaging in conduct resulting in his conviction for four counts of mail fraud he committed criminal acts that reflect adversely on his honesty, trustworthiness or fitness as a lawyer in other respects, in violation of SCR 20:8.4(b).

¶ 5. We adopt the findings of fact and conclusions of law to which the parties have stipulated concerning Attorney Henningsen's professional misconduct. We determine that the seriousness of the misconduct warrants the suspension of his license to practice law for two years.

¶ 6. IT IS ORDERED that the license of Paul A. Henningsen to practice law in Wisconsin is suspended for a period of two years, retroactive to March 2, 2004.

¶ 7. IT IS FURTHER ORDERED that, if he has not already done so, Attorney Henningsen comply with the provisions of SCR 22.26 concerning the duties of a person whose license to practice law in Wisconsin has been suspended.

       SCR 22.12 provides: Stipulation.
      (1) The director may file with the complaint a stipulation of the director and the respondent to the facts, conclusions of law regarding misconduct, and discipline to be imposed. The supreme court may consider the complaint and stipulation without the appointment of a referee.
      (2) If the supreme court approves a stipulation, it shall adopt the stipulated facts and conclusions of law and impose the stipulated discipline.
      (3) If the supreme court rejects the stipulation, a referee shall be appointed and the matter shall proceed as a complaint filed without a stipulation.
      ' (4) A stipulation rejected by the supreme court has no evidentiary value and is without prejudice to the respondent's defense of the proceeding or the prosecution of the complaint.

       SCR 20:8.4(b) provides: "Misconduct. It is professional misconduct for a lawyer to: (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects."


text:
    In the Matter of Disciplinary Proceedings Against Kate A. Christnot, Attorney at Law: Office of Lawyer Regulation, Complainant, v. Kate A. Christnot, Respondent.
    Supreme Court

      No. 04-0481-D.

      Decided August 27, 2004.

    2004 WI 120
    (Also reported in 685 N.W.2d 788.)
   PER CURIAM.

¶ 1. We review the referee's recommendation that Attorney Kate Christnot's license to practice law in Wisconsin be suspended for a period of six months for professional misconduct. The referee also recommended that the suspension be imposed retroactive to March 13, 2003, to coincide with the date she was temporarily suspended, that she be required to pay restitution to an injured client, and that she pay the costs of this proceeding. Attorney Christnot did not appeal the report and recommendation.

¶ 2. We adopt the referee's findings of fact and conclusions of law and agree that the seriousness of Attorney Christnot's professional misconduct warrants the suspension of her license to practice law in Wisconsin for a period of six months. We further agree that the suspension should be imposed retroactive to the date of her temporary suspension. We further agree that restitution and payment of costs is an appropriate part of the sanction to be imposed in this case.

¶ 3. Attorney Christnot was admitted to practice in Wisconsin in 1993. She currently practices in the Washington, D.C. area. Her license to practice law in Wisconsin was suspended on March 13, 2003, for failure to respond to or otherwise cooperate with this disciplinary investigation.

¶ 4. On February 16, 2004, the Office of Lawyer Regulation (OLR) filed a complaint against her alleging several counts of misconduct committed in connection with two client matters. She failed to answer the complaint and was served with a Notice of Default on April 5, 2004. She did not appear at the ensuing hearing; the default motion was granted on April 15, 2004.

¶ 5. The complaint alleged that in 1999 Attorney Christnot was retained to represent L.K. in a divorce proceeding. L.K. paid a $1500 retainer. At the final divorce hearing in May 1999 L.K. was awarded a one-half interest in his former wife's retirement/pension plan. Attorney Christnot was directed to prepare a Qualified Domestic Relations Order (QDRO). She never prepared the QDRO and never refunded the unused portion of the retainer. L.K. attempted to contact Attorney Christnot by telephone some 20 times between September 1999 and September 2001. He tried to visit her at her office approximately four times, and also sent correspondence to her office, asking about the status of the matter. Attorney Christnot never responded to any of his efforts to communicate with her.

¶ 6. L.K. eventually filed a grievance in March 2002. It is undisputed that Attorney Christnot received notice of the grievance from the OLR, because she signed the certified mail receipt personally, but she failed to respond to the OLR's requests for information about the matter.

¶ 7. On March 13, 2003, this court temporarily suspended Attorney Christnot's license to practice law for her failure to cooperate with the OLR. Subsequent efforts by the OLR to contact her about the matter followed the same pattern.

¶ 8. The complaint eventually filed against Attorney Christnot alleged that by failing to timely prepare a QDRO on behalf of her client, Attorney Christnot failed to act with reasonable diligence and promptness in representing a client, in violation of SCR 20:1.3. In addition, by failing to respond to L.K.'s numerous efforts to contact her, Attorney Christnot failed to keep a client reasonably informed about the status of a matter and failed to promptly comply with reasonablerequests for information, in violation of SCR 20:1.4(a). By failing to refund the unused portion of the retainer, she failed to take steps to the extent reasonably practicable to protect a client's interest, in violation of SCR 20:1.16(d). And, by failing to respond to multiple requests for information from OLR staff and an OLR district committee investigator, Attorney Christnot failed to cooperate with an OLR investigation and with a district committee, in violation of SCR 21.15(4), 22.03(2) and 22.04(1).

¶ 9. In addition, the complaint alleged that Attorney Christnot committed misconduct in her representation of another client, R.M. Attorney Christnot did not adequately respond to communications or requests for information from the OLR regarding the grievance filed by R.M. As such, the OLR charged that Attorney Christnot failed to cooperate with an OLR investigation and with the district committee, in violation of SCR 21.15(4), SCR 22.03(2) and SCR 22.04(1).

¶ 10. The matter was submitted to a referee and, on April 5, 2004, the OLR moved for a default judgment, attaching an e-mail message received from Attorney Christnot that indicated she did not intend to oppose the proceeding. Based on Attorney Christnot's nonappearance the referee granted the motion for default judgment and found that Attorney Christnot had committed each of the violations alleged in the complaint and described herein.

¶ 11. The referee recommended that Attorney Christnot's license to practice law in Wisconsin be suspended for a period of six months, retroactive to March 13, 2003, the date of her temporary suspension. The referee recommended further that she be required to pay restitution to L.K. in the amount of $699.75, plus interest at 5 percent per annum from June 1999 until paid, and that she he ordered to pay the costs of the disciplinary proceeding, which total $736.02.

¶ 12. We adopt the referee's report and recommendations. We agree that the seriousness of Attorney Christnot's misconduct with respect to her mishandling of these client matters warrants the retroactive suspension of her license to practice law in Wisconsin for a period of six months. We further agree that restitution to the client, L.K., is warranted, and that Attorney Christnot should pay the costs of the disciplinary proceeding.

¶ 13. IT IS ORDERED that the license of Attorney Kate Christnot to practice law in Wisconsin is suspended for a period of six months, effective March 13, 2003, and until further order of this court;

¶ 14. IT IS FURTHER ORDERED that Attorney Kate Christnot shall comply, if she has not already done so, with the requirements of SCR 22.26 pertaining to activities following suspension;

¶ 15. IT IS FURTHER ORDERED that within 60 days of the date of this order Attorney Christnot shall refund to the client involved in this matter the unearned retainer of $699.75, plus interest at a rate of 5 percent per annum from June 1999 until paid;

¶ 16. IT IS FURTHER ORDERED that within 60 days of the date of this order Attorney Kate Christnot shall pay to the Office of Lawyer Regulation the costs of this proceeding; and

¶ 17. IT IS FURTHER ORDERED that if the restitution and costs are not paid within the time specified, and absent a showing to the court of an inability to pay the restitution and costs within this time, the license of Attorney Christnot to practice law shall remain suspended until further order of the court. See In re Disciplinary Proceedings Against Gilbert (holding that client shall be paid first), 2002 WI 102, ¶ 11, 255 Wis. 2d 311, 647 N.W.2d 845.

¶ 18. LOUIS B. BUTLER, JR., J., did not participate.

       SCR 20:1.3 provides: "Diligence. A lawyer shall act with reasonable diligence and promptness in representing a client."

       SCR 20:1.4(a) provides: "(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information."

       SCR 20:1.16(d) provides:
      (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by other law.

       SCR 21.15(4) provides:
      (4) Every attorney shall cooperate with the office of lawyer regulation in the investigation, prosecution and disposition of grievances, complaints filed with or by the director, and petitions for reinstatement. An attorney's wilful failure to cooperate with the office of lawyer regulation constitutes violation of the rules of professional conduct for attorneys.

       SCR 22.03(2) provides:
      (2) Upon commencing an investigation, the director shall notify the respondent of the matter being investigated unless in the opinion of the director the investigation of the matter requires otherwise. The respondent shall fully and fairly disclose all facts and circumstances pertaining to the alleged misconduct within 20 days after being served by ordinary mail a request for a written response. The director may allow additional time to respond. Following receipt of the response, the director may conduct further investigation and may compel the respondent to answer questions, furnish documents, and present any information deemed relevant to the investigation.

       SCR 22.04(1) provides:
      (1) The director may refer a matter to a district committee for assistance in the investigation. A respondent has the duty to cooperate specified in SCR 21.15(4) and 22.03(2) in respect to the district committee. The committee may subpoena and compel the production of documents specified in SCR 22.03(8) and 22.42.


author: FINE, J. WEDEMEYER, EJ.

text:
    Milwaukee Police Association, Local 21, IUPA, AFL-CIO, Matthew Grauberger, Milwaukee Police Supervisors' Organization, Plaintiffs-Respondents, v. Nannette H. Hegerty, Chief of Police for the City of Milwaukee, and City of Milwaukee, Defendants-Appellants.
    Court of Appeals

      No. 03-3081.

      Submitted on briefs May 4, 2004.

    Decided June 2, 2004.

    2004 WI App 148
    (Also reported in 685 N.W.2d 864.)

      On behalf of the defendants-appellants, the cause was submitted on the briefs of Grant F. Langley, city attorney and Donald L. Schriefer, assistant city attorney, Milwaukee.
    On behalf of the plaintiffs-respondents Milwaukee Police Association and Matthew Grauberger, the cause was submitted on the joint brief of Jonathan Cermele of Eggert & Cermele, S.C., Milwaukee and on behalf of the plaintiff-respondent Milwaukee Police Supervisors' Organization, by John Fuchs of Fuchs, Destefanis & Boyle, S.C., Milwaukee.
    Before Wedemeyer, PJ., Fine and Curley, JJ.

       Petition to review filed.

       When this action was filed, Arthur Jones was the Chief of Police for the City of Milwaukee. His term has expired and Nannette H. Hegerty is now the Chief of Police. Accordingly, pursuant to Wis. Stat. Rule 803.10(4), Chief Hegerty is automatically substituted as a party in this action.

   FINE, J.

¶ 1. Nannette H. Hegerty, Chief of Police for the City of Milwaukee, and the City of Milwaukee appeal the trial court's determination that the City must remit to police officer Matthew Grauberger and other members of the Milwaukee Police Association and the Milwaukee Police Supervisors' Organization overtime compensation within twelve days after that overtime compensation is earned, rather than within the thirty-one day window required by Wis. Stat. § 109.03(1).

¶ 2. This appeal presents a straight-forward issue of statutory application, which is subject to our de novo review. Truttschel v. Martin, 208 Wis. 2d 361, 364-365, 560 N.W.2d 315, 317 (Ct. App. 1997). If the language of a statute is clear on its face, we need not look any further than the statutory text to determine the statute's meaning. State v. Peters, 2003 WI 88, ¶ 14, 263 Wis. 2d 475, 481-482, 665 N.W.2d 171, 174.

¶ 3. The legislature has established a general rule that sets the time within which compensation to employees must be paid: "Eveiy employer shall as often as monthly pay to every employee engaged in the employer's business ... all wages earned by the employee to a day not more than 31 days prior to the date of payment." Wis. Stat. § 109.03(1). This "required frequency of wage payments" does not apply, however, to "[e]mployees covered under a valid collective bargaining agreement establishing a different frequency for wage payments." § 109.03(l)(a). No one disputes that all payments of overtime compensation, as material to this appeal, were made within thirty-one days after that overtime compensation was earned. The police officers and supervisors contend, however, that the "collective bargaining agreement" between the City and each union established "a different frequency for wage payments." We disagree.

¶ 4. As material here, the collective-bargaining agreements between the unions and the City have the following similar clauses:

The Milwaukee Police Association: "In the event that the provisions of this Agreement or application of this Agreement conflicts with the legislative authority which devolves upon the Common Council of the City of Milwaukee as more fully set forth in the provisions of the Milwaukee City Charter, Section 62.50, Wisconsin Statutes, 1977, and amendments thereto, pertaining to the powers, duties and responsibilities of the Chief of Police and the Board of Fire and Police Commissioners or the Municipal Budget Law, Chapter 65, Wisconsin Statutes, 1971, or other applicable laws or statutes, this Agreement shall be subject to such provisions."
The Milwaukee Police Supervisors' Organization: "In the event that the provisions of this Agreement or its application conflicts with the legislative authority delegated to the City Common Council, the Chief of Police and Fire and Police Commission (which authority being set forth more fully by: The Milwaukee City Charter; the statutory duties, responsibilities and obligations of the Chief of Police and the Fire and Police Commission as they are provided for in Section 62.50 of the Wisconsin Statutes; the Municipal Budget Law, which is set forth in Chapter 65 of the Wisconsin Statutes; or other applicable laws or statutes); then this Agreement shall be subordinate to such authority."

Both collective-bargaining agreements have the standard integration clause: "This Agreement constitutes the full and complete agreement of the parties and there are no others, oral or written, except as herein contained." See Matthew v. American Family Mut. Ins. Co., 54 Wis. 2d 336, 341-342, 195 N.W.2d 611, 613-614 (1972) (giving effect to integration clause).

¶ 5. No one disputes that neither collective-bargaining agreement, in haec verba, "establishes] a different frequency for wage payments" than the thirty-one day window mandated by Wis. Stat. § 109.03(1). The police officers and supervisors contend, however, that the quoted language from the collective-bargaining agreements incorporates Milwaukee, Wis., City Charter Ordinance § 5-06, that § 5-06 "establishes] a different frequency for wage payments," and thus, by virtue of § 109.03(l)(a), the thirty-one day window in § 109.03(1) does not apply. We disagree.

¶ 6. Nothing in the quoted language from the collective-bargaining agreements relied on by the police officers and supervisors purports to incorporate anything; all it provides is that if the collective-bargaining agreement "conflicts" with anything in the Milwaukee City Charter or related specified legislation, the collective-bargaining agreement is "subordinate" or "subject" to that legislation. But "subordinate to" and "subject to" are not words of incorporation — saying that X is subject or subordinate to Y does not incorporate Y into X, it means that Y trumps X, and governs if there is a conflict. Moreover, there is no conflict, in words or application, between the collective-bargaining agreements and Milwaukee, Wis., City Charter Ordinance § 5-06 because nothing in either the collective-bargaining agreements or in § 5-06 says how soon overtime compensation must be paid after it is earned.

¶ 7. Milwaukee, Wis., City Charter Ordinance § 5-06 provides, as material here: "Officers and employes [sic] of the city of Milwaukee shall be paid bi-weekly." No one disputes that the police officers and supervisors received their paychecks "bi-weekly." They argue, however, that this "bi-weekly" paycheck should include all overtime earned within the twelve days preceding issuance of that "bi-weekly" check, and cobble together various scraps of alleged practice and subjective interpretations that they contend support their interpretation. But, as noted, the collective-bargaining agreements are integrated documents — external evidence of claimed ancillary agreements is immaterial. See Matthew, 54 Wis. 2d at 341-342, 195 N.W.2d at 613-614 (giving effect to integration clause). Additionally, "paid bi-weekly" as it appears in § 5-06 is not ambiguous; it means that employees must receive their paychecks (whatever period those paychecks cover) every two weeks. Significantly, the section used to read: "Officers and employes [sic] of the city of Milwaukee shall be paid bi-weekly on the second Friday following the completion of the work period." This language was changed to the current version in 1972, and if still extant might provide support for the position of the police officers and supervisors. But that language has long-since receded into the archives.

¶ 8. It is settled that in any conflict between a statute and an ordinance, the statute governs. Welter v. City of Milwaukee, 214 Wis. 2d 485, 492, 571 N.W.2d 459, 463 (Ct. App. 1997). But there is no conflict between Milwaukee, Wis., City Charter Ordinance § 5-06 and Wis. Stat. § 109.03(1). The former mandates the issuance of "bi-weekly" paychecks; the latter requires that all payroll checks, whatever their period of issuance, include compensation for "all wages earned by the employee to a day not more than 31 days prior to the date of payment."

¶ 9. The police officers and supervisors have pointed to nothing in the collective-bargaining agreements that would trigger an exemption under Wis. Stat. § 109.03(l)(a) from the thirty-one-day-window default provision in § 109.03(1). Simply put, there is nothing in their collective-bargaining agreements that, in the words of § 109.03(l)(a), can be read as "establishing a different frequency for wage payments" than the thirty-one day period mandated by § 109.03(1). Accordingly, their complaint seeking judicial override of the governing law must be dismissed.

By the Court — Order reversed.

WEDEMEYER, EJ.

¶ 10. (dissenting). I respectfully dissent from the majority opinion because I would affirm the trial court's decision. The analysis is quite simple. The Wis. Stat. § 109.03(1) thirty-one day payment rule does not apply when employees are "covered under a valid collective bargaining agreement establishing a different frequency for wage payments ...." Wis. Stat. § 109.03(l)(a).

¶ 11. It is undisputed here that the employees are covered under valid collective bargaining agreements. The question then is whether the collective bargaining agreements establish a different frequency for wage payments. The City contends that collective bargaining agreements do not establish a time different than the thirty-one day rule in chapter 109 and, the unions conversely argue that the collective bargaining units impose a shorter payment frequency.

¶ 12. Resolution of this conflict is not complicated. Both collective bargaining units involved here contain a provision which states: "In the event that the provisions of this Agreement or application... conflict[] with the ... provisions of the Milwaukee City Charter... this Agreement shall be subject to such provisions." The Milwaukee, Wis., City Charter Ordinance § 5-06 provides: "Officers and employes of the city of Milwaukee shall be paid bi-weekly."

¶ 13. These two provisions working together result in the logical conclusion that § 5-06 controls the frequency of wage payments for the employees, and requires that all wages must be paid twelve days after the end of the period in which such wages are earned. Let me explain.

¶ 14. The unions collectively bargained for agreements which included a provision stating that the Milwaukee City Charter Ordinances applied if any conflict in the collective bargaining agreement, or in the application of the collective bargaining agreement, occurred. This case presents a conflict in the application of the collective bargaining agreements. The conflict is that the City contends the collective bargaining agreements do not have to comply with § 5-06, requiring all wages to be paid bi-weekly. The City, in essence, then is applying the collective bargaining agreements to permit overtime wages to be paid within thirty-one days or monthly. When there is a conflict in application of the collective bargaining agreements, the Milwaukee City Charter Ordinance trumps the collective bargaining agreement.

¶ 15. That brings us directly to the language of § 5-06 — wages shall be paid bi-weekly. The ordinance does not distinguish between base pay, straight pay, or overtime pay. Rather, it says that the employees shall be paid bi-weekly. Payment can only be interpreted to include all wages the employee earned in the period to which that bi-weekly check applies. Based on this analysis, I conclude that the thirty-one day provision of chapter 109 was collectively bargained away by the City. The error in the majority's reasoning lies in its failure to recognize or acknowledge that a party who otherwise is enabled to enforce a statutory right may relinquish that power by contract, which is what happened in this case. See Faust v. Ladysmith-Hawkins Sch. Sys., 88 Wis. 2d 525, 532, 277 N.W.2d 303 (1979). In fact, chapter 109 acknowledges an employee's right under a collective bargaining agreement to establish a different frequency for payments other than the thirty-one days set forth in the statute. Wis. Stat. § 109.03(l)(a). If the result of collective bargaining has produced an effect that lacks- wisdom, the proper forum for corrective action is not this court but, instead, the next collective bargaining agreement or the legislature.

¶ 16. The position in this dissent is further supported by customary practice. With the exception of occasional mistake, error, or computer glitches, the City's past practice has been to pay overtime to the union employees in the pay period immediately following the period in which it was earned. It has been the customary practice to make overtime payments on the twelfth day in accord with the bi-weekly language of § 5-06, rather than the thirty-one day rule of chapter 109. The United States Supreme Court and the Wisconsin Supreme Court have both recognized the principle of incorporating past practice into a negotiated collective bargaining agreement. See United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578-81 (1960); Milwaukee Prof'l Firefighters, Local 215 v. City of Milwaukee, 78 Wis. 2d 1, 22-24, 253 N.W.2d 481 (1977).

¶ 17. Here, the record clearly reflects that the past practice was to pay overtime bi-weekly in the pay period immediately following the period in which it was earned. The City acknowledged this fact during the summary judgment hearing. Inevitably, there are exceptions to the customary practice, such as when employees make mistakes on the time slips, when the data technicians enter the data erroneously, or when the computer malfunctions. Nevertheless, the exceptions cannot operate to supplant the general rule that overtime has customarily been paid consistent with the bi-weekly requirements of § 5-06.

¶ 18. In sum, then, I conclude that the trial court's analysis was correct. I would affirm.

       The omitted language, designated by the ellipsis, concerns "employees engaged in logging operations and farm labor."

       Milwaukee, Wis., City CHARTER ORDINANCE § 350-108 similarly provides: "The salaries and wages of all city officers and employes [sic] shall be paid biweekly."

      It is clear that the ordinance includes all payments and is not limited to straight time for two reasons. First, as noted, the ordinance refers in general to an employee's pay. It does not exclude overtime. Second, wages are defined by statute to include all types of payment, including overtime. See Wis. Stat. § 109.01(3).