author: HOOVER, EJ.

text:
    Jeanette A. Goetsch, Plaintiff-Appellant, v. State of Wisconsin Department of Workforce Development, Labor and Industry Review Commission, and Fort James Operating Company, Defendants-Respondents.
    Court of Appeals

      No. 01-2777.

      Submitted on briefs March 18, 2002.

    Decided April 16, 2002.

    2002 WI App 128
    (Also reported in 646 N.W.2d 389.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Roy Traynor of Wausau. ■

      On behalf of the defendants-respondents, the cause was submitted on the brief of William Cassel of Madison.
    Before Cane, C.J., Hoover, EJ., and Peterson, J.
   HOOVER, EJ.

¶ 1. Jeanette Goetsch appeals a judgment affirming the Labor and Industry Review Commission's unemployment insurance decision that she was not entitled to benefits because Fort James Operating Company terminated her for misconduct. Goetsch argues that (1) the trial court should have taken judicial notice of a related worker's compensation decision, (2) the decision in a specific worker's compensation proceeding should take precedence over the decision in a more general unemployment insurance proceeding and (3) the unemployment insurance administrative law judge (ALJ) lacked expertise and subject matter jurisdiction over her claims.

¶ 2. We conclude that worker's compensation and unemployment insurance are independent of one another. We further conclude that no law or facts support the contention that one ALJ was better suited to decide Goetsch's claim than the other, and that substantial evidence supports the commission's unemployment insurance decision. We therefore affirm the judgment.

Background

¶ 3. Goetsch worked at Fort James and its predecessors for over fifteen years. In early 1997, she filed a worker's compensation claim for alleged work injuries. After a bifurcated hearing in June 1998 and June 1999, ALJ Janine Smiley issued a decision on July 9, 1999, finding that one of Goetsch's injuries was work related and that the other was not.

¶ 4. On July 16, 1999, Fort James terminated Goetsch's employment for lying at the June 1999 worker's compensation hearing. Goetsch had testified that the alleged injury to her neck occurred while she was working on roll tray machines on Friday, September 20, 1996. However, production records demonstrated that those machines had not been in operation during Goetsch's shift on September 20, 1996, and that she had actually operated a different machine for her entire shift that day. Also, Goetsch told Dr. Tim Jessick on Monday, September 23, 1996, that she awoke the previous morning with neck pain and denied any history of trauma or injury. Goetsch also signed and completed an application for sickness and accident benefits on September 30, 1996, indicating that her neck trouble was not related to her employment. Not until sometime early in 1997, after an MRI revealed a cervical disc problem, did Goetsch change her neck claim from a nonwork claim to a work-related claim.

¶ 5. The union contacted Fort James about rehiring Goetsch approximately' one month after her discharge. On August 19, 1999, Fort James drafted an offer of reinstatement with stringent conditions as "one final chance" for Goetsch. Goetsch rejected the offer in a written response on the same date.

¶ 6. Goetsch had filed an unemployment insurance claim after her discharge. On November 27, 1999, the Department of Workforce Development issued its initial determination. It found that Fort James discharged Goetsch, but not for misconduct within the meaning of Wis. Stat. § 108.04(5). The department allowed Goetsch's claim for unemployment insurance benefits.

¶ 7. Fort James appealed, and ALJ David Jenkins held a hearing. On June 2, 2000, Jenkins issued a decision reversing the initial determination and finding that Goetsch was required to repay the unemployment benefits she erroneously received. Goetsch filed a petition for review with the commission. On September 13, 2000, the commission issued a decision affirming the Jenkins decision.

¶ 8. Goetsch appealed the commission's decision to the trial court. She tried to supplement the trial court's record with a copy of a worker's compensation decision issued by Smiley on January 12, 2001. Smiley's decision made factual findings concerning Goetsch's behavior that were at odds with findings Jenkins made in his June 2, 2000, unemployment insurance decision. The trial court refused to supplement the record and, on July 31, 2001, affirmed the commission's decision. Goetsch now appeals.

STANDARD OF REVIEW

¶ 9. We review the decision of the commission rather than that of the trial court. Secor v. LIRC, 2000 WI App 11, ¶ 8, 232 Wis. 2d 519, 606 N.W.2d 175. Whether an action constitutes "misconduct" sufficient to render an employee ineligible for unemployment benefits is a question of law. Bernhardt v. LIRC, 207 Wis. 2d 292, 302-03, 558 N.W.2d 874 (Ct. App. 1996). Because the commission has been administering unemployment insurance for many years, and because the legal question of misconduct is intertwined with factual and policy determinations, we give great weight to the commission's legal interpretation. Charette v. LIRC, 196 Wis. 2d 956, 960, 540 N.W.2d 239 (Ct. App. 1995).

¶ 10. Further, the interpretation of a statute and its application to a set of facts are questions of law we review de novo. Reyes v. Greatway Ins. Co., 227 Wis. 2d 357, 364-65, 597 N.W.2d 687 (1999). "The purpose of statutory interpretation is to discern the intent of the legislature," and we resort to judicial construction only if the plain language of the statute renders legislative intent ambiguous. Id. at 365.

Discussion

¶ 11. Goetsch argues that the trial court should have taken judicial notice of the worker's compensation ALJ decision. We disagree. Unemployment insurance proceedings are statutorily independent of worker's compensation proceedings. Wisconsin Stat. § 108.101(4) concerning unemployment insurance proceedings provides:

No finding of fact or law, determination, decision or judgment in any action or administrative or judicial proceeding in law or equity not arising under this chapter made with respect to the rights or liabilities of a party to an action or proceeding under this chapter is binding in an action or proceeding under this chapter.

This statute is unambiguous. Reyes, 227 Wis. 2d at 364-65. No ALJ decision made under a chapter other than Wis. Stat. ch. 108 is binding on an unemployment insurance claim. Therefore, a worker's compensation decision does not bind an ALJ hearing an unemployment insurance claim or the commission reviewing it.

¶ 12. Also, we review the commission's decision, not the trial court's. Secor, 2000 WI App 11 at ¶ 8. As a result, we are limited to the record before the commission. It was physically and temporally impossible for the commission to take judicial notice of the January 12, 2001, worker's compensation ALJ decision in the course of its review of Goetsch's unemployment insurance claim. The commission issued its decision affirming Jenkins on September 13, 2000, four months before Smiley issued her worker's compensation decision on January 12, 2001.

¶ 13. In Amsoil, Inc. v. LIRC, 173 Wis. 2d 154, 166-67, 496 N.W.2d 150 (Ct. App. 1992), we concluded that the commission erred when it took administrative notice of an unemployment insurance file when it was considering a worker's compensation claim for the same employee. The legislature did not, either expressly or implicitly, grant the commission the power to take administrative notice of its own files. Id. at 167. The commission is limited to the record before the hearing examiner, and it does not have statutory authority to take administrative notice of its own different, though related, files. Id. at 158, 167.

¶ 14. Gbetsch also claims that the unemployment insurance ALJ lacked expertise and subject matter jurisdiction. However, there it no support in law or fact for Goetsch's claim that the worker's compensation ALJ had superior expertise to decide Goetsch's "claim." She did not have "a claim." She had two claims.

¶ 15. Here, each ALJ had jurisdiction over the particular claim before him or her. Pursuant to Wis. Stat. § 108.09(3), Jenkins had jurisdiction over the adjudication of Goetsch's unemployment insurance claim. And pursuant to Wis. Stat. § 102.18(1), Smiley had jurisdiction over Goetsch's worker's compensation claims. They are independent and one cannot consider the findings of the other. See Amsoil, 173 Wis. 2d at 167.

¶ 16. Further, to the extent that Goetsch may be challenging the sufficiency of the evidence to support the unemployment insurance decision, substantial evidence supports the commission's decision.

By the Court. — Judgment affirmed.

       Because worker's compensation and unemployment insurance claims are independent of each other, we need not apply rules of statutory construction to determine which section "trumps" the other. See Jones v. State, 226 Wis. 2d 565, 576, 594 N.W.2d 738 (1999).

       At the time, Goetsch was working under a "last chance" agreement she signed with Fort James in October 1998. The agreement resulted from a grievance Goetsch filed during the fall of 1998. She alleged an injury that she said occurred because she was unable to leave her work station for four straight hours. However, a video tape revealed that Goetsch left the plant twice to have a cigarette during that time. Fort James was going to fire Goetsch, but the union intervened and Goetsch and Fort James executed a "Last Chance to Return to Work Agreement." The agreement provided that Goetsch would be suspended without pay for a time, and then subject to termination for any violation of the Personal Conduct Rules outlined in the collective bargaining agreement for a probation period. Therefore, when Goetsch testified falsely at the June 1999 hearing, she violated a rule and was terminated.

       All statutory references are to the 1999-2000 Wisconsin Statutes unless otherwise noted.

       Smiley's decision was issued in response to Goetsch's worker's compensation claim that Fort James unreasonably discharged her on July 16, 1999, in violation of Wis. Stat. § 102.35(3). Fort James appealed the decision, and it is currently under review by the commission.

       Goetsch's argument rests on nothing more than self-serving characterizations. We will never know if she would have made the opposite arguments if Jenkins had granted her unemployment insurance claim and Smiley had denied her worker's compensation claim.

       Both Jenkins and the commission found that Fort James discharged Goetsch for misconduct, as defined by Wis. Stat. § 108.04(5). Sufficient evidence supports those decisions. For example, the commission found that "there were so many contradictions and inconsistencies with the employe's claim ... that deliberate falsification is the only reasonable explanation for it." We may not substitute our judgment for that of the agency as to the weight and credibility of the evidence on any finding of fact. Wis. Stat. § 227.57(6).


source: Caselaw Access Project

author: NETTESHEIM, EJ.

license: Public Domain

text:
    State of Wisconsin, Plaintiff-Respondent, v. William L. Brockett, Defendant-Appellant.

    Court of Appeals

      No. 01-1295-CR.

      Submitted on briefs February 21, 2002.—

      Decided April 17, 2002.

    2002 WI App 115
    (Also reported in 647 N.W.2d 357.)

      On behalf of the defendant-appellant, the cause was submitted on the brief of Hans P. Koesser of Koesser Law Office, S.C. of Kenosha.

      On behalf of the plaintiff-respondent, the cause was submitted on the brief of James E. Doyle, attorney-general, and Jeffrey J. Kassel, assistant attorney general.
    Before Nettesheim, EJ., Brown and Anderson, JJ.

       Petition to review denied 7-26-02.

   NETTESHEIM, EJ.

¶ 1. William L. Brockett appeals from a judgment of conviction for party to the crime of burglary as a habitual offender contrary to Wis. Stat. §§ 943.10(2)(b) and 939.62 (1999-2000) and theft of a firearm contrary to Wis. Stat. § 943.20(l)(a) and (3)(d)5. Brockett additionally appeals from a trial court order denying him postconviction relief and granting the State's motion for reconsideration. We affirm the judgment and order.

¶ 2. In its reconsideration ruling, the trial court reversed a prior order granting Brockett a new trial based on the ineffective assistance of Brockett's original trial counsel. On appeal, Brockett argues that the trial court did not have the authority to hear the State's reconsideration motion. Alternatively, Brockett argues that the trial court erred by not requiring his presence at the reconsideration proceeding. We reject both arguments and affirm the judgment and order.

FACTS

¶ 3. On December 9, 1999, the State charged Brockett as a habitual offender with two counts of party to the crime of burglary while armed with a dangerous weapon and two counts of theft. Frior to trial, the State offered, and Brockett rejected, a plea offer for thirteen years' imprisonment. Brockett proceeded to trial following which he was convicted on all counts. On May 1, 2000, the trial court entered a judgment of conviction sentencing Brockett to a total of thirty-five years in prison followed by a consecutive stayed sentence of twenty-five years pending ten years of probation.

¶ 4. On November 3, 2000, Brockett moved the trial court for postconviction relief arguing that his trial counsel, William Campion, had failed to communicate a plea offer which Brockett would have accepted had he known about it. In support of his motion, Brockett attached a facsimile transmittal sheet addressed to his trial counsel from assistant district attorney, Sharon Riek, stating, "10 year offer is revoked." The fax is dated February 28, 2000, the day before trial, and was received at Campion's office at 5:46 p.m.

¶ 5. The trial court held a hearing on Brockett's motion on December 14, 2000. Brockett appeared at the hearing via telephone and, prior to commencing the hearing, the court obtained Brockett's waiver of personal appearance. Campion testified that the only offer he recalled was a "13 year offer" and that a formal ten-year offer had not been made. Although Campion remembered having some conversations with Riek on February 28, 2000, he did not recall a ten-year offer being made. He did, however, recall that Riek indicated that she wanted to discuss Brockett's case with a prosecutor in Walworth county who was also handling a burglary allegation against Brockett. Campion testified that he did not receive Riek's fax until the morning of trial at which time he informed Brockett of Riek's facsimile transmittal. Campion also informed Brockett that he was unaware that a ten-year offer had been made. Prior to the commencement of the trial, Campion informed the court that he believed the State's offer to be thirteen years, but he had also advised the court about the facsimile transmittal revoking a ten-year offer. Brockett testified at the motion hearing that had he been informed of the ten-year offer, he would have accepted it.

¶ 6. At the close of the hearing, the trial court found that a ten-year offer had been made, the offer was not communicated to Brockett, and Brockett would have accepted the offer had he known of it. As a result, the court found Campion's performance to be deficient and the court granted Brockett's motion for a new trial.

¶ 7. On January 25,2001, the State filed a motion for reconsideration of the trial court's decision. The State attached an affidavit by Riek stating that a thirteen-year offer had been made and that "no other offer was conveyed by the State." Riek stated that Campion had approached her on a number of occasions the day before trial, February 28, 2000, to discuss a plea offer. While Riek and Campion had discussed a hypothetical ten-year offer, Riek stated in her affidavit:

[Bjefore that offer was actually extended [Riek] needed to speak to the prosecutor from Walworth County, obtain copies of the reports involving the Walworth County burglary as well as a number of other things.... In speaking to [Campion], it was [Riek's] understanding that he understood that no offer for 10 years was being extended at that time but may, at some point in time in the future be formally extended ....

Because Riek needed time to confer with the Walworth county prosecutor, she had filed a motion to adjourn the jury trial which was scheduled for the following day. Riek advised Campion that if Brockett opposed the State's motion to adjourn the trial, she would not have the opportunity to conduct the additional investigation and "the 13 year offer would be the last offer on the table." Despite this warning, Campion opposed the State's motion to adjourn the jury trial, and the trial court denied the requested adjournment. Riek then returned to her office and faxed the message to Cam-pion revoking the ten-year offer. Riek indicated that she wrote that the ten-year offer was revoked "in case there ever had been a 10 year offer in the mind of Attorney Campion despite the earlier conversations."

¶ 8. The trial court held hearings on the State's motion to reconsider on February 1, 5 and 6, 2001. At the commencement of the February 1 hearing, Brockett's attorney indicated that Brockett's presence might be required if the court decided to hold an evidentiary hearing. Relying on the supreme court's decision in State v. Vennemann, 180 Wis. 2d 81, 508 N.W.2d 404 (1993), the court ruled that Brockett's presence was not required because the matters to be reviewed at the hearing did not pertain to substantial issues of fact as to the events in which the defendant participated. Brockett appeared at the hearing by speaker phone.

¶ 9. Brockett opposed the State's motion for reconsideration. He challenged the trial court's competency to conduct the hearing. Specifically, Brockett argued that the State had had ample opportunity to present its version of the facts at the previous postcon-viction motion hearing and that the State's remedy was to appeal the court's ruling granting Brockett a new trial. The court rejected Brockett's argument. The court proceeded to hear testimony from Riek and Campion regarding the circumstances surrounding the ten-year plea offer. The court additionally heard testimony from Brockett and Campion regarding whether Campion had discussed the State's motion for an adjournment of the trial and whether Brockett was opposed to the adjournment.

¶ 10. At the close of the hearing on February 6, 2001, the trial court found that "there was not a definite, certain, clear and unambiguous [ten-year] offer because the conditions underlying the offer really were never met and were really outside the control of the parties." Therefore, the court reversed its prior ruling granting Brockett a new trial. Brockett appeals.

DISCUSSION

¶ 11. Brockett first argues that the trial court erred in hearing the State's motion for reconsideration. He relies on Wis. Stat. § 974.05, which governs appeals by the State in criminal cases. Brockett argues that this statute provided the exclusive means by which the State could have obtained relief from the trial court's order granting Brockett a new trial. As a result, Brock-ett concludes that the trial court was not compentent to hear the State's motion for reconsideration.

¶ 12. Whether the trial court properly heard the State's motion for reconsideration is a question of statutory construction which we review de novo. State v. Murdock, 2000 WI App 170, ¶ 18, 238 Wis. 2d 301, 617 N.W.2d 175. In addition, whether the trial court lacked competency to hear the State's motion is a question of law which we review de novo. See State v. Schroeder, 224 Wis. 2d 706, 711, 593 N.W.2d 76 (Ct. App. 1999).

¶ 13. Wisconsin Stat. § 974.05 governs appeals by the State in criminal cases. It provides that "an appeal may be taken by the state from any... [f]inal order or judgment adverse to the state, whether following a trial or a plea of guilty or no contest [or] [o]rder granting postconviction relief under s. 974.02 or 974.06." Sec. 974.05(a), (b).

¶ 14. While Wis. Stat. § 974.05 sets forth those rulings from which the State may appeal, there is nothing in the language of the statute prohibiting the trial court from hearing a motion to reconsider. As the State correctly points out, a trial court has inherent power to vacate or modify an order pursuant to Wis. Stat. § 807.03. State v. Castillo, 205 Wis. 2d 599, 606, 556 N.W.2d 425 (Ct. App. 1996).

¶ 15. The State further argues that it could not appeal the trial court's December 14, 2000 decision pursuant to Wis. Stat. § 974.05 because it had not yet been reduced to a written order. We agree. A postcon-viction order must be reduced to writing and filed with the clerk of court before this court has jurisdiction to review the ruling. State v. Malone, 136 Wis. 2d 250, 257-58, 401 N.W.2d 563 (1987). Even when the trial court has signed an order, in appeals under statutes other than Wis. Stat. Rule 809.30, the court retains the power to act on all issues until the record has been transmitted to the court of appeals. Wis. Stat. § 808.075(3). In appeals under Rule 809.30, the circuit court retains the power to act until the notice of appeal is filed. Sec. 808.075(2). Therefore, regardless of whether the order had been reduced to writing, the court retained the authority to hear a motion for reconsideration because the notice of appeal had not yet been filed.

¶ 16. For the reasons stated above, we reject Brockett's argument that the State's only remedy was to appeal the trial court's order. In doing so, we note that public policy favors the trial court's reconsideration of a decision.

Motions for reconsideration pending appeal serve an important function. First, a trial court's reconsideration may obviate the necessity for an appeal. If so, the parties are not only spared unnecessary expense, but the interests of judicial economy are served as well. Second, even if an appeal is not avoided, a motion for reconsideration that challenges the trial court's decision can hone its analysis, and thus assist appellate review.

Metro. Greyhound Mgmt. Corp. v. Wis. Racing Bd., 157 Wis. 2d 678, 698, 460 N.W.2d 802 (Ct. App. 1990). We additionally said in Village of Thiensville v. Olsen, 223 Wis. 2d 256, 262, 588 N.W.2d 394 (Ct. App. 1998):

A judge's job is to do justice. A judge endeavors to come to the right result. The law gives a judge the right to change his or her mind, so long as it is done in a timely fashion and the parties are given a fair chance to be heard.... A judge should not have to live with the consequences of a decision that he or she, upon reflection, believes to be wrong.

This is especially so when, as here, the trial court's decision may have been based on an erroneous understanding of the facts underlying the court's original ruling.

¶ 17. Brockett next argues that the trial court's order granting the State's motion for reconsideration must be reversed pursuant to Vennemann because he was not present at the reconsideration hearing and substantial issues of fact were presented pertaining to events in which he participated.

¶ 18. We will not overturn the trial court's determination as to whether Brockett's presence was required at the hearing on the State's motion for reconsideration absent an erroneous exercise of discretion. Vennemann, 180 Wis. 2d at 88, 94 n.10. An erroneous exercise of discretion occurs if the record demonstrates that the facts do not support the trial court's decision or that the trial court applied the wrong legal standard. Carl v. Spickler Enters., Ltd., 165 Wis. 2d 611, 622-23, 478 N.W.2d 48 (Ct. App. 1991).

¶ 19. Our supreme court has ruled that a defendant does not have a statutory right to be present at all postconviction evidentiary hearings. Vennemann, 180 Wis. 2d at 86. Instead, the court has limited the defendant's right to be present to those postconviction evidentiary hearings that raise substantial issues of fact as to events in which the defendant participated. Id. at 87.

¶ 20. In determining whether a prisoner should be physically produced for a postconviction evidentiary hearing, the trial court applies the following test: (1) upon the filing of a motion to produce a prisoner for a postconviction hearing, the court must review the motion papers to determine whether there are substantial issues of fact as to events in which the prisoner participated; and (2) the trial court must then ascertain that those issues are supported by more than mere allegations. Id. at 94-95. If both prongs are satisfied, the court must order the defendant physically produced for the hearing. Id. at 95.

¶ 21. As to the first prong, the trial court found that the matters at issue did not pertain to substantial issues of fact regarding events in which Brockett participated. Therefore, the court determined that Brockett's presence was not required. Brockett disagrees with this ruling. He contends that his conversations with Campion regarding the State's motion for an adjournment were at issue and that his testimony conflicted with Campion's testimony on this issue.

¶ 22. We agree that the record reflects a dispute between Campion and Brockett as to whether Brockett wanted to oppose the State's motion for an adjournment. The trial court similarly recognized this tension but noted that those issues were "side matters." We agree. The core issue raised by Brockett's motion for postconviction relief was whether the State had made a ten-year offer and, if so, whether that offer had been communicated to Brockett. It is undisputed that Brock-ett was not present during any discussions between Riek and Campion pertaining to a ten-year offer. In fact, the core of Brockett's complaint in his postconviction motion was that he knew nothing about this matter and that Campion had failed to communicate with him about the supposed offer. The first question the trial court had to decide was whether such an offer had actually been tendered to Campion by Riek. The evidence as to that question did not implicate Brockett in any manner. Therefore, the substantial issue of fact on this question did not relate to events in which Brockett participated. We conclude that the trial court did not erroneously exercise its discretion in failing to require Brockett's presence at the hearing on the State's motion for reconsideration.

¶ 23. Brockett additionally contends that the trial court's ruling was erroneously based on its finding that he had failed to file a motion to produce. We disagree. Although the trial court referenced the absence of a motion to produce, the court's ruling clearly focused on whether the State's motion raised substantial issues of fact as to events in which Brockett participated. The trial court concluded that it did not.

CONCLUSION

¶ 24. We conclude that the trial court properly heard the State's motion for reconsideration. We further conclude that the trial court properly exercised its discretion in determining that Brockett's physical presence at the hearing on the State's motion for reconsideration was not required under Vennemann.

By the Court. — Judgment and order affirmed.

       All references to the Wisconsin Statutes are to the 1999-2000 version.

       Brockett filed an additional motion for postconviction relief on the grounds that his sentence was unduly harsh. The trial court denied that motion and that ruling is not a subject of this appeal.

       Wisconsin Stat. § 807.03 provides:
      An order made out of court without notice may be vacated or modified without notice by the judge who made it. An order made upon notice shall not be modified or vacated except by the court upon notice, but the presiding judge may suspend the order, in whole or in part, during the pendency of a motion to the court to modify or vacate the order.


author: NETTESHEIM, PJ. ANDERSON, J.

text:
    Jeffrey Schwigel and Classic Tool & Machine Co., Plaintiffs-Respondents, v. David J. Kohlmann, Jane Kohlmann and Kohlmann Tool & Design, Inc., Defendants-Appellants.

    Court of Appeals

      01-1918.

      Submitted on briefs February 21, 2002.

    Decided April 17, 2002.

      2002 WI App 121
    (Also reported in 647 N.W.2d 362.)

      On behalf of the defendants-appellants, the cause was submitted on the briefs of Paul A. Piaskoski, SBN and Benjamin J. Harris, SBN of Piaskoski & Associates, S.C. of Bayside.
    On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Daniel W. Stevens of Stevens & Kroening LLC of Menomonee Falls.
    Before Nettesheim, PJ., Anderson and Snyder, JJ.

       Petition to review denied 9-26-02.

   NETTESHEIM, PJ.

¶ 1. David J. Kohlmann, his wife Jane, and their corporation, Kohlmann Tool & Design, Inc. (Kohlmann), appeal from a judgment confirming a jury verdict awarding Jeffrey Schwigel and his corporation, Classic Tool & Machine, Co. (Schwigel), a total of $562,000 in compensatory and punitive damages. Kohlmann argues that the form of the verdict was improper because it asked a single damage question relating to Schwigel's multiple claims based on breach of contract, negligent misrepresentation, and unjust enrichment. Kohlmann makes no challenge to that portion of the judgment confirming the jury's further award of $12,000 compensatory damages on Schwigel's conversion claim.

¶ 2. We agree with Kohlmann that the verdict improperly asked a single damage question on Schwigel's breach of contract, negligent misrepresentation and unjust enrichment claims. We reverse this portion of the judgment and remand for a new trial on Schwigel's compensatory claims relating to these three causes of action and on his punitive damage claim. We affirm that portion of the judgment relating to Schwigel's conversion claim. We also affirm the liability portions of the judgment as to Jane Kohlmann. As to Kohlmann's remaining issues, we either summarily affirm the judgment or deem the issues moot in light of our order for a new damage trial.

FACTS AND PROCEDURAL HISTORY

¶ 3. Our recitation of the facts is presented in a light most favorable to Schwigel since the jury has found Kohlmann liable on all of the claims at issue, and we do not disturb those findings on appeal. Kohlmann and Schwigel were both tool and die makers. In 1998, Kohlmann was operating his business out of a shop he owned in Cedarburg, Wisconsin. After Kohlmann and Schwigel became acquainted, Kohlmann asked Schwi-gel to move his business to Kohlmann's shop. Schwigel declined. During October 1999, Kohlmann told Schwi-gel that he had located a prospective and lucrative motor shaft production job. Since Schwigel had the expertise and machinery to handle the job, Kohlmann again asked Schwigel to relocate to his shop and to take over the prospective job. Schwigel again declined, but the parties continued to talk. In the meantime, Schwi-gel investigated the prospective job and determined that it provided an opportunity to make a good profit.

. ¶ 4. The talks eventually produced a verbal agreement whereby Schwigel would share production space in Kohlmann's shop at the cost of $700 per month. The motor shaft production job was a substantial factor in Schwigel's decision to relocate. Schwigel moved into Kohlmann's shop on or about November 3, 1999. Because of limited space, Schwigel stored some of his equipment in another building owned by Jack Dunfee, a business associate of Kohlmann. Dunfee did not charge Kohlmann for storing Schwigel's equipment, and Kohlmann had the only key to the storage area.

¶ 5. On November 19,1999, Kohlmann received a purchase order from the manufacturer for the immediate production of the shafts. After receiving the purchase order, Schwigel and Kohlmann went to Illinois to look into purchasing a machine to mass produce the shaft job. On December 2, 1999, Schwigel received approval from his bank to purchase the mass-production machine. That same day, Kohlmann offered to buy the machine for Schwigel and allow Schwigel to make payments to him. However, two days later, Kohl-mann told Schwigel that he was going to buy the machine for himself in order to produce the shafts and keep the shaft job for himself.

¶ 6. Thereafter, the relationship between Schwi-gel and Kohlmann deteriorated, and on December 28, 1999, Kohlmann told Schwigel to get out. Without notice to Schwigel, Kohlmann changed the locks on the shop, prohibiting Schwigel from gaining access to his equipment and performing work for his customers. After numerous attempts to get access to the shop, Schwigel contacted the Cedarburg police to help him get his equipment back. On January 18 and 19, 2000, the police supervised as Schwigel moved his equipment out of Kohlmann's shop. At that time, Schwigel also asked to remove his other equipment that had been stored in the building owned by Dunfee. Neither Dun-fee nor Kohlmann would allow Schwigel access to the storage building, and the police told Schwigel that if he attempted to access the building he would be charged ■with trespassing.

¶ 7. By July 2000, Schwigel had lost all of his customers and he was out of business. Four months later, in November 2000, Schwigel received a phone call from Dunfee who told him to come and get his equipment from the storage building. When Schwigel went to remove his equipment from the storage building, he found that certain items were missing.

¶ 8. This lawsuit ensued. By amended complaint, Schwigel alleged claims of breach of contract, negligent misrepresentation, unjust enrichment, promissory es-toppel and conversion against Kohlmann. Schwigel sought compensatory and punitive damages. The jury trial lasted four days. When discussing the form of the verdict at the close of the evidence, the trial court proposed separate damage questions for each of Schwigel's claims. Kohlmann supported this approach. Schwigel objected and instead asked for a single question as to the breach of contract, negligent misrepresentation, unjust enrichment and promissory estoppel claims. After much discussion, Schwigel persuaded the court to change its mind. As a result, the special verdict asked a single compensatory damage question as to Schwigel's breach of contract, negligent misrepresentation, unjust enrichment and promissory estoppel claims. However, the verdict did ask a separate damage question as to Schwigel's conversion claim.

¶ 9. The jury found in favor of Schwigel on all his claims, save promissory estoppel. In answer to the single question addressing Schwigel's breach of contract, negligent misrepresentation and unjust enrichment claims, the jury awarded Schwigel a lump sum of $250,000. In answer to the separate damage question on Schwigel's conversion claim, the jury awarded $12,000. In addition, the jury awarded Schwigel punitive damages in the amount of $300,000. Post verdict, the trial court upheld the verdict. Kohlmann appeals.

SPECIAL VERDICT DAMAGE QUESTION

¶ 10. We accord substantial deference to the manner in which a trial court frames a special verdict. Runjo v. St. Paul Fire & Marine Ins., Co., 197 Wis. 2d 594, 602, 541 N.W.2d 173 (Ct. App. 1995). However, we must reverse when a special verdict question does not fairly represent the material issue of fact to the jury. See id. In performing our review, we do not view the special verdict in a vacuum. Instead, we also look to the accompanying instructions given to the jury. "This court has frequently stated that the form of the special verdict rests in the discretion of the trial court, and the court's chosen form will not be rejected unless the inquiry, taken with the applicable instruction, does not fairly present the material issues of fact to the jury for determination." Topp v. Cont'l Ins. Co., 83 Wis. 2d 780, 785, 266 N.W.2d 397 (1978) (emphasis added). A practice treatise also captures this thought:

A special verdict must also be formulated to complement the court's instructions to the jury. In framing the verdict, the court must ensure that the verdict, when taken in conjunction with the applicable instructions, fairly presents all material issues of fact to the jury for determination. The instructions and special verdict are adequate as long as together they cover the law applicable to the facts of the case.

R. George Burnett et al., Wisconsin Trial Practice § 12.10, at 9 (1999) (citations omitted).

¶ 11. The problem with the special verdict in this case lies not only in the form of the verdict, but also in the accompanying instructions. Breach of contract, negligent misrepresentation and unjust enrichment are discrete causes of action with different elements. More importantly, the law states the measure of damages for these claims differently. For a breach of contract, the measure of damages is the "amount that will reasonably compensate the injured person for all losses that are the natural and probable results of the breach." Wis JI— Civil 3710. For negligent misrepresentation, the measure of damages is the "sum of money [that] will fairly and reasonably compensate [the plaintiff] for (his) (her) out-of-pocket loss." Wis JI — Civil 2403 (suggested special verdict question 7). For unjust enrichment, the measure of damages is the "reasonable value" of the benefit conferred. Wis JI — Civil 3028.

¶ 12. In this case, the trial court instructed the jury under the measure of damages for breach of contract, and then additionally told the jury, "The same measure of damages applies to the other claims made by the plaintiff." While it may be debatable whether the measure of damages for a breach of contract (reasonable compensation for the losses caused by the breach) and for negligent misrepresentation (out-of-pocket loss) is the same, this certainly cannot be said as to the measure of damages for unjust enrichment (reasonable value of the benefit conferred). Thus, at a minimum, the special verdict and the accompanying instructions misstated the law of damages as to unjust enrichment. And that misstatement presented the prospect of dupli-cative damage awards or a windfall to Schwigel.

¶ 13. Schwigel argues this error is of no consequence because "[t]he special verdict did not ask the jury to put a dollar amount on the benefits unjustly conferred upon the Kohlmann's." This argument is a nonstarter. The special verdict expressly told the jury to address compensatory damages if the jury had found for Schwigel on "any one or more" of his various claims. The jury found for Schwigel on three of his claims, including unjust enrichment. In light of that finding, any reasonable jury would see the need to consider damages on the unjust enrichment claim, as well as on the accompanying claims. We presume a jury follows the trial court's instructions. State v. Deer, 125 Wis. 2d 357, 364, 372 N.W.2d 176 (Ct. App. 1985).

¶ 14. In an effort to salvage the verdict, we have examined whether the jury instructions cautioned the jury to not duplicate or overlap the damages awarded in the single question based on the three separate claims. The trial court came close on this question, but not close enough. The court instructed the jury:

You may be required to answer a number of questions on damages that relate to the various claims. In answering, make sure that the amount of money you fill in for damages, if any, is not influenced or affected by your answers to previous questions in the verdict.

If this instruction had cautioned the jury to make sure that it was not awarding duplicate damages on the multiple claims when considering the single damage question, perhaps we could salvage the verdict. But the instruction refers to other damage questions on the verdict, not to the risk that the jury might award duplicate damages to the single question pertaining to the three claims at issue. Thus, this instruction only assured that the conversion damage award of $12,000 was not duplicated in the lump sum award of $250,000 on the three other merged claims. It did not assure that the lump sum award did not include duplicative damages on the three claims the jury was considering in the single damage question.

¶ 15. Schwigel also argues that a special verdict with separate damage questions would have posed the same prospect of duplicate damages. But, as with the preceding issue, that risk could also have been addressed by a properly worded jury instruction cautioning the jury to not duplicate damages on the three claims. Moreover, if it appeared that the jury had ignored such an instruction and awarded duplicate damages when answering the separate damage questions, the court could invoke the excessive verdict procedures set out in Wis. Stat. § 805.15(6) (1999-2000) and reduce the damages to the levels permitted by the evidence. That option is not available in this case where the jury was not asked to allocate damages amongst the various claims.

¶ 16. In summary, we reverse those portions of the judgment awarding $250,000 for compensatory damages on the breach of contract, negligent misrepresentation and unjust enrichment claims. We remand for a new trial on those claims. We affirm the portion of the judgment awarding $12,000 compensatory damages on Schwigel's conversion claim.

PUNITIVE DAMAGES

¶ 17. Having overturned the jury's $250,000 compensatory damage award, we also conclude that the jury's $300,000 punitive damage award cannot stand. One of the factors that a jury may take into consideration when awarding punitive damages is the "actual damage" incurred by the victim. Wis JI — Civil 1707.1. Again, we presume that the jury follows the trial court's instructions. Deer, 125 Wis. 2d at 364. So it is fair to conclude that the jury's punitive damage award was premised, at least in part, on the substantial compensatory damage award of $250,000. Having struck down that award, it follows that the jury's punitive damage award cannot stand.

¶ 18. In an attempt to salvage the punitive damage award, Schwigel points to the trial court's postver-dict ruling that the punitive damage award was supported by the jury's $12,000 damage award on the conversion claim. However, there is a fundamental defect in this argument. The jury did not award $300,000 in punitive damages based on a $12,000 compensatory damage award. Instead, the jury award awarded $300,000 in punitive damages based upon a $262,000 compensatory damage award. Schwigel's argument and the trial court's ruling overlook the premise upon which the jury made its punitive damage award.

¶ 19. If the issue before us were limited to the trial court's approval of a punitive damage award premised solely upon the jury's compensatory damage award of $12,000, we perhaps could uphold the trial court's ruling. But those are not the facts. Per the jury instructions, the jury's punitive damage award was premised, at least in part, upon Schwigel's "actual damage," which the jury determined to be $262,000. To surmise that the jury would have made the same punitive damage award based upon a $12,000 compensatory damage award is rank speculation. We decline to perpetuate that speculation.

¶ 20. We reverse the punitive damage award and remand for a new trial on that claim as well. We stress that we are not disturbing the jury's determination that Kohlmann acted maliciously or in intentional disregard of Schwigel's rights. The evidence abundantly supports that determination and that question shall not be submitted to the new jury. The trial on remand is limited only to the question of damages. However, this does not mean that evidence of Kohlmann's offending conduct is not relevant on the question of the amount of punitive damages in the further trial. Since the purpose of punitive damages is to punish, see Wis JI — Civil 1707, it follows that the jury determining punitive damages must be apprised of the offending conduct.

MISCELLANEOUS ISSUES

1. Issues as to Jane Kohlmann

¶ 21. Jane Kohlmann argues that the verdict was defective because it did not discriminate between her conduct and that of David, her husband. Instead, the verdict consistently referred to "the defendants." However, Jane has waived this issue. She did not propose her own special verdict and she never asked that the special verdict make this distinction. Moreover, this is not a matter of waiver by stealth or silence. To the contrary, during the jury instruction conference, Schwi-gel expressly proposed that the verdict consistently refer to the defendants in the plural. Jane offered no objection and the trial court adopted Schwigel's proposal.

¶ 22. Based on the same reasoning, we need not address Jane's further arguments that David's conduct was improperly imputed to her and that the evidence was insufficient as to all of Schwigel's claims. To preserve this argument, Jane was duty bound to assure that the verdict made separate inquiries as to her. She did not. Instead, in an apparent strategic decision, she joined in with David's theory of defense, and the two presented a united force against Schwigel's claims.

2. Sufficiency of Evidence as to Negligent Misrepresentation

¶ 23. Kohlmann argues that the trial court erred by denying his motion to dismiss Schwigel's negligent misrepresentation claim at the close of the evidence. We summarily reject this argument. "A motion challenging the sufficiency of the evidence as a matter of law should not be granted 'unless the court is satisfied that, considering all credible evidence and reasonable inferences therefrom in the light most favorable to the party against whom the motion is made, there is no credible evidence to sustain a finding in favor of such party.'" Beacon Bowl, Inc. v. Wis. Elec. Power Co., 176 Wis. 2d 740, 788, 501 N.W.2d 788 (1993) (citation omitted); see also Wis. Stat. § 805.14(1).

¶ 24. As we have noted, Kohlmann does not challenge the jury's liability findings as to the breach of contract and unjust enrichment claims. We have previously set out the facts supporting those claims. Those facts, viewed in a light most favorable to Schwigel, also abundantly supported Schwigel's negligent misrepresentation claim. The trial court properly denied Kohlmann's motion to dismiss at the close of the evidence.

3. Moot Issues

¶ 25. Kohlmann claims that the punitive damage award cannot stand in light of the $12,000 compensatory damage award on Schwigel's conversion claim. However, we have already reversed the punitive damage award on other grounds. This issue is moot. Kohl-mann also argues that a document pertaining to damages, and not produced during discovery, was improperly admitted into evidence in an altered condition. However, any surprise or prejudice attached to this evidence is rendered moot by our grant of a new trial. This is also true as to Kohlmann's argument that a written "wish list" of Schwigel's damages, not admitted into evidence, improperly found its way into the jury room.

CONCLUSION

¶ 26. We reverse and remand for a new damage trial on Schwigel's claims for breach of contract, negligent misrepresentation and unjust enrichment. We also remand for a new trial on Schwigel's claim for punitive damages. In all other respects we affirm the judgment.

¶ 27. Costs are not awarded to either party.

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

ANDERSON, J.

¶ 28. (concurring in part; dissenting in part). I differ with the majority's conclusion that the trial court engaged in "rank speculation," Majority at ¶ 19, when it determined that the jury's award of punitive damages was supported by the compensatory damages awarded for conversion. As I understand the majority's position, the punitive damages award must be reversed because it may be based, in part, on the jury being instructed that it may take into consideration the "actual damage" incurred by Schwi-gel. The reversal of the punitive damages award and remand for a new trial on punitive damages is unnecessary and overburdens scarce judicial resources.

¶ 29. Trial courts in Wisconsin have significant authority to decide whether a jury verdict of punitive damages is proper in a particular case. Fahrenberg v. Tengel, 96 Wis. 2d 211, 229, 291 N.W.2d 516 (1980). The trial court may either approve the amount awarded or reduce what the court believes are excessive punitive damages to a reasonable amount. Id. at 232 n.12. This authority is necessary because it is within the jury's discretion to determine the proper amount of punitive damages to award, Reyes v. Greatway Insurance Company, 220 Wis. 2d 285, 302, 582 N.W.2d 480 (Ct. App. 1998), aff'd, 227 Wis. 2d 357, 597 N.W.2d 687 (1999), and because punitive damages rest upon a "vague and immeasurable basis." Malco, Inc. v. Midwest Aluminum Sales, Inc., 14 Wis. 2d 57, 64, 109 N.W.2d 516 (1961). In exercising this authority, the court serves as a guard against punitive damages awards that are a product of a jury's passions and prejudices. Trinity Evangelical Lutheran Church v. Tower Ins. Co., 2002 WI App 46, ¶ 37, No. 01-1201.

¶ 30. In determining whether the punitive damages are excessive, the court begins with the premise that the purpose of punitive damages is to punish and deter, not to compensate the plaintiff for any loss. Reyes, 220 Wis. 2d at 303. The court must

consider the reasonableness of the award in light of the case facts. Other factors [that the court] should consider are: the grievousness of the acts, the degree of malicious intent, whether the award bears a reasonable relationship to the award of compensatory damages, the potential damage that might have been caused by the acts, the ratio of the award to civil or criminal penalties that could be imposed for comparable misconduct, and the wealth of the wrongdoer. [The court] also consider[s] the defendant's ability to satisfy a punitive award. Further, one mitigating factor the jury may consider is the severity of any criminal penalty already imposed.

Id. (citations omitted). Given that the court is asked to exercise its discretion, it is free.to pick and choose what factors it will consider and the weight it will assign to those factors. The trial court's approval of the amount of punitive damages is independent of the jury's award of punitive damages.

¶ 31. In this case, Kohlmann invoked the trial court's authority to review the punitive damages and either approve them or reduce them to what the court believed would be a fair and reasonable amount. In denying the motion, the trial court explained:

As far as the amount of the punitive damages, which relates to the jury's finding with respect to conversion, they found $12,000 in compensatory damages. I believe that would support the punitive damage judgment alone. While it is a substantial multiple the conversion was testified to — to be one substantial reason, a cause, if you will, that the plaintiff went out of the business he had been in previously because he didn't have the availability of his machine tools. Now there were other reasons, financial losses and problems incurred by the other aspects of the case, but I don't find those disproportionate in light of an understanding while withholding the machine tools in terms of compensatory damage on one level would be the rental value of the machine tools supposedly where a business is put in a situation without their machine tools or readily availability to replace them, and from the testimony it seemed obvious you couldn't just walk into some other shop and say, do you have these 55 machine tools or ten machine tools so I can go right back into business tomorrow, that you would have a business interruption.

The trial court found the punitive damages reasonable because Kohlmann's conversion of Schwigel's machine tools was the primary cause of Schwigel going out of business.

¶ 32. When the trial court approves or reduces the punitive damages and provides an analysis of the evidence supporting the award, its action will only be set aside where there is an evident abuse of discretion. Badger Bearing, Inc. v. Drives & Bearings, Inc., 111 Wis. 2d 659, 670, 331 N.W.2d 847 (Ct. App. 1983).

The test to determine abuse is whether, if the trial court had been sitting as the sole finder of fact and had fixed the plaintiffs damages in the disputed amount, this court would still disturb the finding. If there is a reasonable basis for the trial court's determination as to the proper amount, it will be sustained.

Lutz v. Shelby Mut. Ins. Co., 70 Wis. 2d 743, 759, 235 N.W.2d 426 (1975) (footnotes omitted). Under these tests, the trial court's finding that the punitive damages are reasonable solely because of conversion would pass muster. It does not matter if the jury awarded the punitive damages on any of the other claims Schwigel pursued because the trial court found that Kohlmann's conduct in the conversion claim was so egregious and outrageous that it was deserving of punishment.

¶ 33. I would affirm the trial court's approval of the punitive damages because it is based upon conduct that is separate from that encompassed by the omnibus damages question — breach of contract, negligent misrepresentation, unjust enrichment and promissory es-toppel. In finding that the amount of punitive damages was reasonable because of the conversion of Schwigel's tools, the trial court was not engaging in "rank speculation" that the jury would have awarded the same amount of punitive damages if it had found only conversion damages of $12,000. Rather, the trial court was exercising the discretionary authority it has to review the punitive damages award. It was reasonable for the trial court to conclude that Kohlmann's refusal to return the tools to Schwigel, after he demanded their return, was responsible for Schwigel going out of business and, independent of any other conduct, was deserving of punishment by the assessment of punitive damages.

       The damage question asked, "What sum of money will compensate the plaintiffs for any losses caused by the defendant?"

       As to the negligent misrepresentation claim, the jury found that Kohlmann was eighty percent negligent and Schwi-gel was twenty percent contributorily negligent.

       Schwigel then undertakes to explain how the evidence supports the $250,000 award under his breach of contract or negligence claims.

       This instruction was the functional equivalent of Wis JI — Civil 1700 cautioning that "[i]n answering the damage question(s), be careful not to include or duplicate in any answer amounts included in any other answer made by you or [by the court]."

       From our reading of the record, it appears that this argument is what prompted the trial court to change its mind and to restructure the verdict with a single damage question as requested by Schwigel.

       All statutory references are to the 1999-2000 version.

       The election of remedies doctrine can also assist in avoiding double recovery. See Tuchalski v. Moczynski, 152 Wis. 2d 517, 520, 449 N.W.2d 292 (Ct. App. 1989). The parties do not address this doctrine and we make no judgment whether this is an appropriate case for application of the doctrine. The parties or the trial court may take this question up on remand if they see fit.

       The dissent is similarly flawed.

       Kohlmann does not offer any argument as to how the "wish list" tainted the jury's damage award on Schwigel's conversion claim. As noted, we do not read Kohlmann's appeal to challenge the conversion award.

       The jury was instructed that in considering whether to award punitive damages it may take into account the actual damages. Wis JI — Civil 1707.1. I do not place the same importance on this instruction as does the majority. While the law requires that there be a reasonable relationship between the actual damages and the punitive damages award, it does not require an arithmetic relationship. Tucker v. Marcus, 142 Wis. 2d 425, 447, 418 N.W.2d 818 (1988). Rather, the actual damages are only one of many factors relevant to the proper amount of punitive damages. Id. Also, the jury is not required to consider the ratio between compensatory and punitive damages; it is told that it may consider "the potential damage which may have been done by such acts as well as the actual damage."

       There is no procedural requirement that mandates a new trial on all damages awarded when a new trial is ordered only on compensatory damages. Punitive damages and compensatory damages are "entirely separable" and the interests of justice are best served by limiting a new trial on damages to those that are suspect because of error. See Badger Bearing, Inc. v. Drives & Bearings, Inc., 111 Wis. 2d 659, 673-74, 331 N.W.2d 847 (Ct. App. 1983).

       We defer to the trial court's discretion because it had the opportunity to hear the testimony, view the demeanor and body language of the witnesses. The trial court heard the emphasis, volume alterations and intonations of each witness. As a result, the trial court is in a better position to judge the credibility of each witness and the persuasiveness of each side's presentations.


author: BROWN, J.

text:
    Heritage Mutual Insurance Company, Plaintiff-Respondent, v. Galina Graser, Defendant-Appellant, Valera Smokvin, Defendant.
    Court of Appeals

      No. 01-2168.

      Submitted on briefs March 7, 2002.

    Decided April 17, 2002.

    2002 WI App 125
    (Also reported in 647 N.W.2d 385.)

      On behalf of the defendant-appellant, the cause was submitted on the briefs of Willard P. Techmeier and David J. McCormick of the Techmeier McCormick Group S.C. of Milwaukee.
    On behalf of the plaintiff-respondent, the cause was submitted on the brief of Arthur P. Simpson and Gary D. Lippow of Simpson & Deardorff S.C. of Milwaukee.
    Before Brown, Anderson and Snyder, JJ.
   BROWN, J.

¶ 1. Galina Graser and her minor son, Valera Smokvin, appeal from an order granting summary judgment to Graser's underinsured motorist insurance (UIM) carrier, Heritage Mutual Insurance Company. At the center of the controversy is approximately $45,000 in medical expenses that Wisconsin Health Organization (WHO) paid out for injuries Valera suffered when he was struck by a car. WHO has waived its right to subrogation against Heritage for those medical expenses; Graser now contends that the collateral source rule allows her to recover those expenses under her UIM policy. We affirm- the decision of the circuit court on the basis that the collateral source rule, which finds its genesis in tort law, is inapplicable to claims made by an insured under his or her UIM policy.

¶ 2. Graser also appeals from the circuit court's denial of her motion for reconsideration based upon the recent decision in Koffman v. Leichtfuss, 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 201. We agree with the circuit court that Koffman is inapplicable to the facts in this case and affirm its decision to deny the motion.

¶ 3. Valera suffered injuries in a June 22, 1994 accident when his bicycle was struck by a vehicle operated by Jean Fisher. Graser reached a settlement with Prudential, Fisher's liability insurer, for the policy limit of $100,000. WHO accepted $20,000 from Prudential in satisfaction of its subrogation interest for medical expenses.

¶ 4. Graser then filed a claim under her UIM policy issued by Heritage and which carried a limit of $300,000. After an arbitration hearing on January 19, 2001, the panel made the following ruling:

The award in this matter is the policy limit of $200,000. This is in addition to the $100,000 already paid by the insurance company for the tort-feasor. We also- find that the medical expenses of $79,983.57 to be reasonable and related to the injuries of the claimant. The balance of the award is for the past, present, and future pain and suffering, and future medical expenses. (Footnote added.)

¶ 5. The parties do not dispute that WHO's sub-rogation interest was $45,217.52. WHO did not appear at the arbitration proceeding and later communicated to Graser by letter its intent to waive its subrogation claim. On February 26, 2001, Heritage paid Graser $154,782.48 representing payment in full of the arbitration award less the disputed amount of $45,217.52. Graser then claimed that Heritage had improperly withheld a portion of the arbitration award, arguing that WHO's medical expenses claim reverted to Graser as the insured.

¶ 6. On May 11, 2001, Heritage moved for summary judgment, seeking an order confirming that its payment of $154,782.48 satisfied its obligation under the arbitration award. Graser filed a motion for confirmation of a $200,000 arbitration award. On June 27, 2001, the circuit court issued an order granting summary judgment in favor of Heritage and denying Graser's motion for confirmation of the $200,000 arbitration award. Subsequently, Graser moved for reconsideration on the grounds that the supreme court's decision in Koffman merited a reversal or modification of the circuit court's order. The circuit court denied the motion and Graser appeals from both the final order and the order denying reconsideration.

¶ 7. We review the grant or denial of a summary judgment motion de novo, using the same methodology as the circuit court. M&I First Nat'l Bank v. Episcopal Homes Mgmt., Inc., 195 Wis. 2d 485, 496, 536 N.W.2d 175 (Ct. App. 1995). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2) (1999-2000).

¶ 8. We begin our discussion by reviewing the collateral source rule and the concept of subrogation. Koffman contains the supreme court's most recent description of the collateral source rule and its underlying policy:

Under the collateral source rule a plaintiffs recovery cannot be reduced by payments or benefits from other sources. The collateral source rule prevents any payments made on the plaintiffs behalf or gratuitous benefits received by the plaintiff from inuring to the benefit of a defendant-tortfeasor. The rule is grounded in the long-standing policy decision that should a windfall arise as a consequence of an outside payment, the party to profit from that collateral source is "the person who has been injured, not the one whose wrongful acts caused the injury."

Koffman, 2001 WI 111 at ¶ 29 (citations omitted). In other words, the policy basis for the collateral source rule is that the legally responsible tortfeasor should not be relieved of his or her obligation to the victim simply because the victim had the foresight to arrange benefits from a collateral source for injuries and expenses. Id.

¶ 9. The collateral source rule and the principle of subrogation frequently interact in personal injury actions. "By virtue and to the extent of payments made on behalf of another, a subrogated party obtains a right of recovery in an action against a third-party tortfeasor and is a necessary party in an action against such a tortfeasor." Id. at ¶ 33. In a personal injury action, the purpose of subrogation is to ensure that the loss is ultimately placed with the wrongdoer and to prevent the insured plaintiff from becoming unjustly enriched through a double recovery, i.e., a recovery from the insurer and the liable third party. Id.

¶ 10. The collateral source rule and the principle of subrogation are complementary legal concepts that can be applied together to further the goals of both rules. The collateral source rule prevents payments made by the insurer from inuring to the benefit of the defendant, and the insurer's subrogation rights prevent a double recovery on the part of the plaintiff. Id. at ¶ 40.

¶ 11. Graser asserts that she is entitled to recover $45,217.52 from Heritage under its UIM coverage on grounds that (1) WHO has waived its subrogated interest in the claim, and (2) in Anderson v. Garber, 160 Wis. 2d 389, 402, 466 N.W.2d 221 (Ct. App. 1991), we stated that medical expenses paid by an insurer are properly awarded where the insurer either waives or properly exercises its subrogation right. In addition, in a footnote we added that "[w]here an insurer waives its subrogation rights... no subrogation exists, and the collateral source rule applies." Id. at 402 n.5. Alternatively, Graser claims that she is entitled to recover $34,766.05 under the UIM policy pursuant to the supreme court's recent decision in Koffman.

¶ 12. Heritage responds that Anderson and Koff-man are inapplicable because they involved negligence actions against tortfeasors rather than claims under UIM policies. Heritage maintains that the policies underlying the award of medical expenses to the plaintiffs in those cases do not apply in this instance because the need to deter or punish a wrongdoer is not an issue under the UIM policy. As we explain below, we agree with Heritage that the collateral source rule cannot be applied to allow WHO's claim to revert to Graser under her UIM policy.

¶ 13. In Anderson, the trial court eliminated the jury award for medical expenses paid by the plaintiffs health insurers. Anderson, 160 Wis. 2d at 392. We reinstated the jury award because under the facts of that case, application of the collateral source rule ensured that the negligent actor did not reap the benefit of the health insurance payments made on behalf of the plaintiff. We also noted that the negligent actor was not exposed to multiple obligations because the health insurers' claims had either been assigned, waived or satisfied by the judgment. Id. at 401 n.5. In other words, in Anderson the collateral source rule served its primary purpose to deter negligent conduct by placing the full cost of the wrongful conduct on the tortfeasor.

¶ 14. More recently, in Koffman the supreme court considered the scope of recoverable medical expenses under the collateral source rule. In Koffman, the plaintiffs health and automobile insurance carriers paid for his medical expenses arising from an automobile collision. Koffman, 2001 WI 111. at ¶¶ 4, 5. The tortfeasor and his insurance carriers argued that the plaintiffs insurers' subrogation rights trumped the collateral source rule, thereby limiting the medical expense damages to the amounts actually paid. Id. at ¶ 1. The court in Koffman rejected that argument, holding that where the insurers' rights to subrogation were intact, the risk for double recovery on the part of the plaintiff-insured does not exist and "there is no justification for nullifying the collateral source rule." Id. at ¶ 40. Moreover, the plaintiff was entitled to recover the reasonable value of the medical services rendered without limitation to the amounts actually paid by the insurers on his behalf. Again, application of the collateral source rule ensured that the defendant-tortfeasor did not receive the benefit of the discounted rates paid and that any benefit of reduced payments would inure solely to the plaintiff. Id. at ¶ 30.

¶ 15. As our discussion of the case law makes clear, the collateral source rule operates where subro-gation exists as. a means to hold the tortfeasor entirely responsible for the damages caused by his or her conduct. Anderson and Koffman, which applied the rule to allow awards of medical expenses, must be read in the context in which that public policy arises, namely, personal injury actions.

¶ 16. The case before us is not a negligence action. There is no tortfeasor (or tortfeasor's insurer) before us to hold accountable or who stands to benefit from the medical payments made by WHO on behalf of Graser. Not surprisingly, our research has uncovered no case law, and Graser cites to none, that holds an insurer's subrogated claim can revert to the plaintiff-insured in an action to recover under a UIM policy. Therefore, we concur with Heritage's position that the policy of deterrence is not furthered by allowing Graser to recover medical expenses under her UIM policy. The UIM carrier's contract is not with Fisher and would have no penal effect on her. Graser fails to overcome the proposition that there is no reason to invoke the collateral source rule to "punish" an underinsured motorist carrier. Instead, the $154,782.48 payment covers exactly what she contracted for with Heritage — compensation for actual damages without any consideration to the collateral source rule.

¶ 17. Because we affirm the order for summary judgment in favor of Heritage, we do not reach Graser's counterclaims regarding bad faith and twelve percent interest. Heritage requests that we reverse the circuit court's denial of actual costs and attorney's fees for its defense of Graser's counterclaims. Because Heritage has not cross-appealed on this issue, we decline to address it. See State v. Huff, 123 Wis. 2d 397, 407-08, 367 N.W.2d 226 (Ct. App. 1985) (respondent seeking modification of an order must file cross-appeal).

By the Court. — Orders affirmed.

       The Heritage policy had a reducing clause that lowered the available coverage from $300,000 to $200,000, based on the $100,000 provided by Prudential.

       All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

       This figure is the difference between the $79,983.57 medical expenses portion of the arbitration award and the $45,217.52 in medical expenses actually paid by WHO.

       In Koffman, health care providers billed out $187,931.78 in medical expenses. Koffman v. Leichtfuss, 2001 WI 111, ¶ 3, 246 Wis. 2d 31, 630 N.W.2d 201. The primary health insurer was able to satisfy its liability at a reduced contract rate of $62,324. Id. at ¶ 4. The court observed that even if the insurer was barred from recouping its payments, the plaintiffs recovery of the reasonable value of medical expenses would simply be reduced by the amounts paid on his behalf in order to prevent a double recovery. Id. at ¶ 41.

       Where subrogation does not exist, the risk of double recovery may defeat application of the collateral source rule. In Lambert v. Wrensch, 135 Wis. 2d 105, 399 N.W.2d 369 (1987), the subrogated insurer paid the entirety of the medical expenses that the plaintiff sought from the defendant. Because the statute of limitations had expired, however, the insurer was unable to exercise its subrogation rights. Id. at 117. The Lambert court concluded that the subrogated insurer's inability to recoup the amounts paid presented the potential for double recoveiy. Id. at 118-19. Therefore, the defendant was entitled to a credit for payments received by the plaintiff from the collateral source.

       The parties cite to Gurney v. Heritage Mutual Insurance Co., 183 Wis. 2d 270, 515 N.W.2d 526 (Ct. App. 1994), as a UIM case on point. The Gurneys argued the collateral source rule allowed them to recover medical expenses from their UIM carrier. Id. at 280. The court rejected their argument holding that their health insurance carrier, which had paid the medical expenses, was subrogated to the claim against the UIM carrier, which effectively barred any claim by the Gurneys. Id. at 280-81. Graser asserts that Gurney is limited to situations where the subrogated insurer actively pursues its subrogation rights, which is not the case in this appeal. This was not the holding of Gurney, however, and we do not agree that an "active pursuit" rule is a "logical extension" of its reasoning.
      A more relevant case is Reed v. Bradley, 2000 WI App 165, 238 Wis. 2d 439, 616 N.W.2d 916, review denied, 2001 WI 114, 246 Wis. 2d 173, 634 N.W.2d 319 (Wis. Aug. 27, 2001) (No. 00-0455). The Reeds were injured in an automobile accident. Id. at ¶ 1. Their medical expenses, approximately $2978, were paid by their automobile insurer, State Farm. Id. Prior to trial, State Farm settled with the other driver's insurer, American Family, for $2246. Id. The jury returned a verdict of $22,978, which included the medical expenses of $2978. Id. at ¶ 2. The Reeds agreed that American Family was entitled to a credit for $2246 it had paid to State Farm. Id. They maintained, and the court agreed, that the difference between the settlement amount and the medical expense award — about $731 — should revert to them by operation of the collateral source rule. Id. at ¶ 3. Significantly, the amount that reverted to the Reeds came from the tortfeasor's insurer, not their own. This is another instance where application of the collateral source rule ensured that the defendant and her insurer would be responsible for the full value of damages caused by the tortfeasor's conduct.


text:
    State of Wisconsin ex rel. Ira Lee Anderson II, Petitioner-Appellant, v. Jane Gamble, Respondent-Respondent.
    Court of Appeals

      No. 01-2917.

      Submitted on briefs March 21, 2002.

    Decided April 17, 2002.

    2002 WI App 131 (Also reported in 647 N.W.2d 402.)

      On behalf of the petitioner-appellant, the cause was submitted on the briefs of Ira Lee Anderson-El II, pro se.
    On behalf of the respondent-respondent, the cause was submitted on the brief of James E. Doyle, attorney general, and John J. Glinski, assistant attorney general.
    Before Nettesheim, PJ., Brown and Snyder, JJ.

       Petition to review dismissed 6-26-02.

   BROWN, J.

¶ 1. Ira Lee Anderson-El, II (Anderson-El) appeals from an order of the circuit court dismissing his petition for a writ of certiorari arising out of a prison disciplinary action. On appeal, Anderson-El contends that because he did not receive notice of his second hearing from the hearing officer, as required by then Wis. Admin. Code § DOC 303.81(9), he is entitled to a new disciplinary hearing. We hold that Anderson-El's receipt of his second hearing notice from the wrong person does not mandate a new hearing because that agency mistake did not involve a basic, fundamental right. Accordingly, we affirm the order of the circuit court.

¶ 2. In response to a prison conduct report, Anderson-El brought an inmate complaint, which he appealed within the prison system. The procedures of then Wis. Admin. Code §§ DOC 303.64 through 303.84 were evidently complied with, except that Anderson-El received the second written notice of his hearing from his advocate rather than from the hearing officer, as required by then Wis. Admin. Code § DOC 303.81(9).

¶ 3. Anderson-El and the State agree that the written notice of the second hearing was deficient under then Wis. Admin. Code § DOC 303.81(9) in that it was signed and provided to Anderson-El by his advocate, rather than by the hearing officer, as required. The State, however, argues that the failure to fully comply with this code provision constituted harmless error. We agree.

¶ 4. Anderson-El argues that State ex rel. Anderson-El, II v. Cooke, 2000 WI 40, 234 Wis. 2d 626, 610 N.W.2d 821, and Bergmann v. McCaughtry, 211 Wis. 2d 1, 564 N.W.2d 712 (1997), both compel reversal here. We disagree because, unlike the case at bar, each of those cases concerned a basic or fundamental right, namely, the written notice itself.

¶ 5 Bergmann concerned the complete failure to provide Bergmann with the second written notice. See Bergmann, 211 Wis. 2d at 5-7. Our supreme court held that "[t]his defect in notice of proceedings was never rectified and the Department's failure to comply with its own regulations providing a basic procedural right such as notice invalidates the proceedings conducted in the present case." Id. at 9 (emphasis added). Similarly, Anderson-El involved the failure of the Department to provide the second written notice, a fact that our supreme court called "most significant^."Anderson-El, 2000 WI 40 at ¶ 7. Again, the supreme court held that "when the Department does not notify an inmate of the proceedings against him or her, in violation of the Department's own regulations, then those proceedings must be invalidated for failure to provide a fundamental procedural right." Id. at ¶ 2 (emphasis added).

¶ 6. Each of those cases, then, concerned the failure to provide written notice of a hearing, which notice is a procedural due process requirement and a basic procedural right. See id. at ¶ 24. The case before us, however, does not involve such a basic, fundamental right. Here, Anderson-El received notice of the hearing; he simply did not get that notice from the correct person.

¶ 7. Anderson-El argues that Bergmann and Anderson-El impose a blanket rule that a departmental violation of its own regulations invariably invalidates the disciplinary proceedings. We acknowledge that certain language in Anderson-El lends some support to such a contention: "Very simply, the Department did not comply with its own notice requirement under § DOC 303.81. Because it failed to abide by its own regulations, the proceedings are rendered invalid." Anderson-El, 2000 WI 40 at ¶ 20. Nevertheless, we are unconvinced that the supreme court has, in Anderson-El, created the blanket rule that Anderson-El would have us impose here because the court's above statement conditions its application upon the word "notice" and because Anderson-El concerned the failure to provide that written notice altogether.

¶ 8. We further acknowledge that Anderson-El rejected the State's harmless error argument. Id. at ¶¶ 21-22. Yet even that rejection is similarly conditioned: "In this case, the Department's error was not harmless because the error substantially affected Anderson-El's fundamental right to adequate notice." Id. at ¶ 24 (emphasis added).

¶ 9. The case at bar does not present a question of whether Anderson-El received written notice; he did. It presents only the question of whether a disciplinary proceeding must be invalidated when that written notice comes from other than the hearing officer, as then specified by Wis. Admin. Code § DOC 303.81(9). We conclude that under Bergmann and Anderson-El, a violation of such a nonfundamental right does not mandate that the disciplinary proceedings be invalidated. We therefore affirm the order of the circuit court dismissing Anderson-El's petition for a writ of certio-rari.

¶ 10. Having ruled as we have, however, we must express our frustration with the way some employees of the Department continue to ignore the Department's own rules. And, although it would be presumptuous of us to speak for the supreme court, our reading of Anderson-El indicates to us that the supreme court is similarly frustrated. Certainly, as is shown in the instant case, many of the failures are harmless. Still, that does not excuse those employees. The laxity evident in some of the Department's employees causes an understaffed and undér funded attorney general's office to spend countless hours defending those employees' actions and wastes precious judicial resources that could be put to better use. Taxpayer dollars are needlessly expended as a result. The Department may respond that human error is unavoidable. We do not buy it. The Department made the rules it did so that its employees could act pursuant to them and the inmates could count on those rules being followed. Maybe it is time for the Department to explain to its employees that continued inattention to unambiguous and clear-cut rules will not be tolerated as simply "human error." Certainly, in the private sector, inattention to detail is not acceptable. There is no reason why it should be acceptable in the public sector.

By the Court. — Order affirmed.

       WISCONSIN Admin. Code § DOC 303.81 was repealed and recreated without subsection 9 effective August 1, 2000.

       Subsection (9) of the provision applicable to this case read as follows: "The hearing officer shall prepare notice of the hearing and give it to the accused, the advocate (if any), the committee and all witnesses, including the staff member who wrote the conduct report." Wis. Admin. Code § DOC 303.81(9).