author: N. PATRICK CROOKS, J. LOUIS B. BUTLER, JR., J. ANN WALSH BRADLEY, J.

text:
    Paul J. Everson and Michelle J. Everson, Plaintiffs, Pekin Insurance Company, Intervening Plaintiff-Respondent, v. Richard J. Lorenz and Lorenz Land Development, Inc., Defendants-Third-Party Plaintiffs-Appellants, Sharon Jeanquart, individually, and d/b/a Jeanquart Realty and ACE American Insurance Company, Third-Party Defendants.
    Supreme Court

      No. 2003AP1331.

      Oral argument January 14, 2005.

    Decided April 22, 2005.

    2005 WI 51
    (Also reported in 695 N.W.2d 298.)

      For the defendants-third-party plaintiffs-appellants there was a brief by Mark S. Des Rockers and Lawrence & Des Rockers, S.C., St. Nazianz, and oral argument by Mark S. Des Rockers.

    For the intervening plaintiff-respondent there was a brief by Monte E. Weiss and Weiss Law Office, S.C., Milwaukee, and oral argument by Monte E. Weiss.

      An amicus curiae brief was filed by Troy D. Thompson, Jonathan M. Ward and Axley Brynelson, LLP, Madison, on behalf of Civil Trial Counsel of Wisconsin and Wisconsin Insurance Alliance.
   N. PATRICK CROOKS, J.

¶ 1. This case comes before us on certification from the court of appeals pursuant to Wis. Stat. § (Rule) 809.61 (2001-02). Richard Lorenz and Lorenz Land Development, Inc. (Lorenz) seek review of an order of the Circuit Court for Calumet County, Donald A. Poppy, Judge, granting Intervenor Pekin Insurance Company's (Pekin) motion for summary judgment. This case presents the issue of whether Pekin's insurance policy provides coverage to its insured, Lorenz, for strict responsibility misrepresentation and/or negligent misrepresentation claims filed against it by Paul and Michelle Everson (Everson).

¶ 2. The court of appeals certified three questions to this court: (1) Does an alleged strict responsibility misrepresentation and/or negligent misrepresentation in a real estate transaction constitute an "occurrence" for the purpose of a commercial general liability insurance policy such that the insurer's duty to defend the insured is triggered?; (2) What allegations must a complaint contain to plead sufficiently "loss of use" within the meaning of a commercial general liability insurance policy?; and (3) Under what circumstances does a misrepresentation, negligent or strict responsibility, cause the "loss of use" of property such that a "causation nexus" is established?

¶ 3. We conclude that since there is no coverage based on Everson's complaint and the language of the Pekin insurance policy, Pekin has no duty to defend and no duty to indemnify Lorenz against Everson's claims for strict responsibility and/or negligent misrepresentation. The alleged misrepresentation was not an "occurrence" within the meaning of the policy. We hold that Everson must plead more than "damages" in relation to the misrepresentation claims to plead sufficiently a "loss of use" under the policy. We further conclude that since the complaint fails to allege "property damage," in that there is no allegation of an "occurrence," and no allegation of "loss of use," there clearly is not a sufficient allegation of "causation nexus." The "property damage" was caused by defects in the property, not by any misrepresentations of Lorenz.

I. FACTS

¶ 4. For the purposes of this review, the facts of this case are undisputed. Lorenz, a real estate developer, purchased vacant land in Brillion, Wisconsin in 1997. This property eventually became the subdivision known as Deer Run Estates. Everson bought a parcel in the subdivision from Lorenz, Lot 31, for the purpose of constructing a single family home. Everson accepted the offer on June 29, 2000.

¶ 5. After the transaction was completed, Everson determined that a portion of Lot 31 was located within a 100-year flood plain. As a result, Everson filed a complaint against Lorenz on March 18, 2002. The claims alleged in the complaint were as follows: (1) negligent misrepresentation; (2) strict responsibility misrepresentation; (3) intentional misrepresentation; and (4) breach of contract. Specifically, Everson alleged that Lorenz represented that no portion of the property (Lot 31) lay within a 100-year flood plain. As a result, the construction of the home would not be possible in the location that Everson wished to build. Everson's complaint alleged that the property was "un-buildable," and asked for damages in the amount of $37,000.

¶ 6. At the time of the purchase, Pekin insured Lorenz under a commercial general liability policy. Following the initiation of suit by Everson, Lorenz tendered its defense to Pekin. Pekin has since moved to intervene, bifurcate the insurance coverage issues from the liability and damage issues, and stay all liability and damage issues until the insurance coverage issues have been decided. The circuit court granted this motion, and Pekin subsequently hired counsel to represent Lorenz on the merits of the pending action against Everson.

¶ 7. On February li, 2003, Pekin filed a motion for summary judgment on the issues of insurance coverage, including the duty to defend and indemnify. The circuit court, the Honorable Donald A. Poppy presiding, granted Pekin's summary judgment motion in a written order as follows: (1) No coverage exists under Pekin's policy of insurance, for the complaint and causes of action of Everson in the present matter; (2) no duty exists on behalf of Pekin-to defend Lorenz for the complaint filed by Everson in the present matter; (3) no duty exists on behalf of Pekin to indemnify Lorenz for the complaint filed by Everson in this matter; and (4) the stay of discovery memorialized in the court's order dated August 8, 2002 is hereby dissolved.

¶ 8. Lorenz appealed the circuit court's grant of summary judgment. The court of appeals certified the case to this court. We accepted certification and now affirm the order of the circuit court.

II. STANDARD OF REVIEW

¶ 9. We review a circuit court's grant of summary judgment de novo, applying the same methodology as the circuit court, and benefiting from its analysis. Atkins v. Swimwest Family Fitness Center, 2005 WI 4, ¶ 11, 277 Wis. 2d 303, 691 N.W.2d 334. According to Wis. Stat. § 802.08(2), summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

¶ 10. We also address issues regarding the interpretation of an insurance contract. Such interpretation, we have held, presents a question of law which we review de novo. Lambert v. Wrensch, 135 Wis. 2d 105, 115, 399 N.W.2d 369 (1987).

III. ANALYSIS

¶ 11. The determinative issue presented in this case is whether Pekin's insurance policy provides coverage to Lorenz for the strict responsibility and/or negligent misrepresentation claims filed by Everson. We have held that an insurer's duty to defend its insured is triggered by comparing the allegations of the complaint to the terms of the insurance policy. See Smith v. Katz, 226 Wis. 2d 798, 806, 595 N.W.2d 345 (1999)." 'These allegations must state or claim a cause of action for the liability insured against or for which indemnity is paid in order for the suit to come within any defense coverage of the policy.... '" Qualman v. Bruckmoser, 163 Wis. 2d 361, 364, 471 N.W.2d 282 (Ct. App. 1991) (quoting Grieb v. Citizens Casualty Co., 33 Wis. 2d 552, 557, 148 N.W.2d 103 (1967).

¶ 12. Since Pekin's duty to defend is determined by the language in both the policy provisions and the complaint, we set forth the relevant portions of each. The insurance policy states in part:

SECTION 1- COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY
DAMAGE LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages. We may at our discretion investigate any "occurrence" and settle any claim or suit that may result. ...
b. This insurance applies to . . . "property damage" only if:
(1) The ... "property damage" is caused by an "occurrence" that takes place in the "coverage territory;" and
(2) The ... "property damage" occurs during the policy period.
SECTION V - DEFINITIONS
12. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
15. "Property damage" means:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. ...

(Emphasis added.)

¶ 13. As previously stated, the four claims that Everson alleges against Lorenz are strict responsibility misrepresentation, negligent misrepresentation, intentional misrepresentation, and breach of contract. The relevant allegation of the complaint is as follows:

7. Subsequently, the Plaintiffs discovered that a substantial portion of Lot 31 lay within the 100 year flood plain making the construction of the home which they wished to construct on the property impossible in the location in which the Plaintiffs wished to build based upon the pre-sale representations of LORENZ, rendering the property unbuildable for the Plaintiffs and causing the Plaintiffs to incur damages as a result in excess of $37,000.00.

¶ 14. In looking at the four corners of the complaint and the insurance policy, we recognize that "[o]ur objective is to further the insured's reasonable expectations of coverage while meeting the intent of both parties to the contract." Benjamin v. Dohm, 189 Wis. 2d 352, 359, 525 N.W.2d 371 (Ct. App. 1994) (citation omitted). Accordingly, we must not rewrite the insurance policy to bind an insurer to a risk which the insurer did not contemplate and for which it has not been paid. Id. at 365.

A. "OCCURRENCE"

¶ 15. Pekin's insurance policy would cover liability for "property damage" if it resulted from an "occurrence." In the policy, "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Although the term "accident" was not defined by the policy, this court has often relied on dictionary definitions for assistance. See Am. Fam. Mut. Ins. Co. v. American Girl, Inc., 2004 WI 2, ¶ 37, 268 Wis. 2d 16, 673 N.W.2d 65; Doyle v. Engelke, 219 Wis. 2d 277, 289, 580 N.W.2d 245 (1998). Black's Law Dictionary defines "accident" as "[a]n unintended and unforeseen injurious occurrence; something that does not occur in the usual course of events or that could not be reasonably anticipated." Black's Law Dictionary 15 (7th ed. 1999). Additionally, we have defined accident to mean " '[a]n unexpected, undesirable event'" or " 'an unforeseen incident'" which is characterized by a " lack of intention.' " Doyle, 219 Wis. 2d at 289 (quoting The American Heritage Dictionary of the English Language 11 (3d ed. 1992)).

¶ 16. Lorenz, in relying on these definitions, argues that the misrepresentation was an "accident." It contends that a reasonable insured would expect that the Pekin policy definition of "occurrence" as an "accident" would cover the typographical error relied upon by Everson in the pre-sale representation. In support of this claim, Lorenz cites a Maryland Court of Appeals case, Sheets v. Brethren Mutual Insurance Co., 679 A.2d 540 (Md. 1996), where the court held that negligent misrepresentation cam be considered an "accident." In Sheets, the insureds sold their farmhouse. After the transaction, the buyers claimed that the insureds intentionally and negligently misrepresented that the septic system at their farmhouse was in "good working condition." Id. at 541. The buyers alleged that the septic system began leaking and flooding, which required it to be replaced. The court acknowledged that "negligent misrepresentation is a form of negligence," and that "an act of negligence constitutes an 'accident' under a liability insurance policy when the resulting damage was 'an event that takes place without [the insured's] foresight or expectation.' " Id. at 548 (quoting Harlyesville v. Harris & Brooks, 235 A.2d 556, 559 (Md. 1967)).

¶ 17. Lorenz insists that our negligence analysis in Doyle, a case involving allegations of negligent supervision of employees, is "strikingly similar" to the analysis in Sheets. See Smith, 226 Wis. 2d at 822. In Doyle, we held that an insurance policy using the term "event" covered negligent acts. The policy defined "event" the same as this policy defines "occurrence," as " 'an accident, including continuous or repeated exposure to substantially the same general harmful conditions.' " Doyle, 219 Wis. 2d at 289. The court then held that both the definition for "negligence" and "accident" "center on an unintentional occurrence leading to undesirable results." Id. at 290. As a result, the court found that a reasonable person would expect the policy provision using the term "event" to cover negligent acts. Id. at 289-90. Lorenz asks this court to extend that holding to acts involving negligent misrepresentation.

¶ 18. This court has never specifically held that strict responsibility and/or negligent misrepresentation are similar to other kinds of negligence so as to categorize them as "accidents." See Smith, 226 Wis. 2d at 822. We specifically left the question open in Smith, to determine if "these torts are sufficiently different from other kinds of negligence to preclude their categorization as 'accidents'" in insurance liability policies. Id. We now conclude that Lorenz's misrepresentation cannot be considered an "accident" for the purpose of Pekin's liability insurance coverage.

¶ 19. Lorenz's misrepresentation can be defined as an "act of making a false or misleading statement about something. .. ." Black's Law Dictionary 1016 (7th ed. 1999). To be liable, Lorenz must have asserted a false statement, and such an assertion requires a degree of volition inconsistent with the term accident. See Sheets, 679 A.2d at 552-53 (Karwacki, J., dissenting). Although this assertion may be prompted by negligence, it is nevertheless devoid of any suggestion of accident. See C.Y. Thomason Co. v. Lumbermens Mut. Cas. Co., 183 F.2d 729 (4th Cir. 1950). More specifically: "Injury that is caused by negligence must be distinguished from injury that is caused by a deliberate and contemplated act initiated at least in part by the actor's negligence at some earlier point." GATX Leasing Corp. v. Nat'l Union Fire Ins. Co., 64 F.3d 1112, 1118 (7th Cir. 1995).

¶ 20. This interpretation is distinguishable from our previous discussion of the terms "event," "negligence," and "accident" which, in Doyle, centered on an unintentional, rather than volitional, act. See Doyle, 219 Wis. 2d at 289. Accordingly, in this case, we do not determine that injury or damage prompted from a negligent misrepresentation is ipso facto caused by "accident," within the meaning of commercial general liability policies. See J.E Ludington, Annotation, Liability Insurance: Accident or "Accidental" as Including Loss Resulting from Ordinary Negligence of Insured or His Agent, 7 A.L.R. 3d 1262, § 4 (1966). We conclude instead that where there is a volitional act involved in such a misrepresentation, that act removes it from coverage as an "occurrence" under the liability insurance policy.

¶ 21. This holding is similar to a case decided by the Seventh Circuit, Red Ball Leasing, Inc. v. Hartford Accident & Indemnity Co., 915 F.2d 306 (7th Cir. 1990). There, the insured financed the sale of four trucks to a lessee. The insured later repossessed the trucks based on the mistaken belief that the lessee had defaulted on his payments. The insured was sued and claimed that it should be defended and reimbursed under the terms of its insurance policy. The insurance company refused to defend, arguing that the conversion was not an "accident" triggering such a duty. The court held that coverage was not required for the conversion because it was an intentional act, and intentional acts are not "accidents" under the terms of the policy. See Mindis Metals, Inc. v. Transp. Ins. Co., 209 F.3d 1296 (11th Cir. 2000). Specifically, the court held:

A volitional act does not become an accident simply because the insured prompted the act. Injury that is caused directly by negligence must be distinguished from injury that is caused by a deliberate and contemplated act initiated at least in part by the actor's negligence at some earlier point. The former injury may be an accident. ... However, the latter injury, because it is intended and the negligence is attenuated from the volitional act, is not an accident.

Red Ball Leasing, 915 F.2d at 311 (citations and footnote omitted). Since this determination in Red Ball, several courts have cited this holding positively. See Mindis Metals, Inc., 209 F.3d at 1301 (Plaintiff intended to damage railcars and use them for scrap metal. This action may have been prompted by a mistake as to ownership, but there was nothing "accidental" about it.); City of Jasper v. Employers Ins. of Wausau, 987 F.2d 453 (7th Cir. 1993) (finding that an insurance company had no duty to defend the City of Jasper against a suit alleging that the City negligently issued two permits, because issuing the permits was an intentional act and thus not an "accident"); Massachusetts Bay Ins. Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116, 1125 (7th Cir. 1998) ("(Defendant's) (wrongful) repossession of the automobile, like that in Red Ball, certainly was an intentional and affirmative act... it cannot be construed an 'accident' under the terms of the policy"); Allstate Ins. Co v. Norris, 795 F. Supp. 272 (S.D. Ind. 1992) (no "accident" where the insured fired several shots in an attempt to "pin down" an unidentified man, but instead struck a passerby).

¶ 22. Likewise, Lorenz may have made a mistake of fact and/or error in judgment, but it later acted with volition. It is clear that Lorenz intended to give Everson information as to whether the property was within the 100-year flood plain. See Red Ball, 915 F.2d at 311. What happened here, stripped to its essentials, is that an "action," not an "accident," of Lorenz gave Everson the misleading information. See City of Jasper, 987 F.2d at 457. Even if there was a mistake made in filling out the Real Estate Condition Report, and that mistake induced reliance, the decision to give Everson the report is not an "accident" within the meaning of the policy. See Red Ball, 915 F.2d at 311.

B. "LOSS OF USE"

¶ 23. The next question we address is whether Everson's complaint contains allegations of "property damage." As stated, the terms of Pekin's policy define "property damage" as "[pjhysical injury to tangible property, including... loss of use of that property." Both parties agree that there were no acts or omissions that resulted in physical injury to the property involved here. Accordingly, our analysis is confined to whether Everson's complaint alleges a "loss of use."

¶ 24. Lorenz asserts that Everson's complaint sufficiently pleads a claim for "property damage." Lorenz argues that because Everson's complaint mentions damages that resulted from the misrepresentation, the claim falls within Pekin's insurance policy. For support of this claim, Lorenz relies on the court of appeals' decision in Western Casualty & Surety Co. v. Budrus, 112 Wis. 2d 348, 332 N.W.2d 837 (Ct. App. 1983). There, a farmer purchased seed from Budrus, a feed mill operator insured by Western. Budrus mistakenly gave the farmer the wrong seed, which was subsequently planted. The farmer sued for negligence, and Budrus counterclaimed against Western demanding Western defend him on the claim. The court held that because pleadings are to be liberally construed, the farmer's claim, although not artfully worded, included a claim for loss of use, and therefore created a duty for Western to defend. See id. at 352. Lorenz argues that this court, like the court in Budrus, should interpret Everson's complaint liberally, and find that the damages claimed plead sufficiently "loss of use."

¶ 25. While we agree with Lorenz that we are to construe pleadings liberally, we disagree that Everson has sufficiently pleaded "loss of use" and thus "property damage." The relief that Everson demands in his complaint falls within the court of appeals' holding in Qualman and this court's holding in Smith. In Qualman, a homeowner was sued by the buyer of his property for breach of contract and misrepresentation concerning structural defects. In the complaint, the plaintiff pled each misrepresentation count with the allegation of having sustained "damages." The court held: "The damages for such claims, if proven, would be the difference between the market value of the property at the time of purchase and the amount actually paid. Therefore, the damages alleged by the Qualmans are pecuniary in nature and do not constitute property damage as defined by the insurance policy." Qualman, 163 Wis. 2d at 366 (citation omitted). Accordingly, the court held that when analyzing the insurance policy against the allegations in the complaint, "[p]roperty damage within the meaning of the policy was not alleged." Id.

¶ 26. More recently, in Smith, the insured had sold a vacant lot to the plaintiffs. During construction of a house, the plaintiffs uncovered the existence of underground springs. These springs allegedly caused the foundation to collapse on multiple occasions. When the plaintiffs filed suit, the complaint never alleged property damage. Instead, the complaint merely stated that the " 'plaintiffs have sustained damages.'" Smith, 226 Wis. 2d at 812. As a result, the court decided that the complaint did not give the insurer fair notice that the claims, based on the alleged misrepresentations, involved "property damage." Id. at 816. The court concluded that "a complaint claiming strict responsibility misrepresentation or negligent misrepresentation must contain some statement about physical injury to tangible property, some reference to loss of use', or some demand for relief beyond money damages if the complaint is to satisfy the requirement that 'property damage' be alleged within the four corners of the complaint." Id. at 817 (footnote omitted).

¶ 27. Similarly, in Everson's complaint, there is no mention of "property damage." As stated, the complaint simply alleges that the property was "unbuildable" for the plaintiffs and that they were forced to incur "damages" as a result. Like the complaints in Qualman and Smith, Everson's complaint only mentions "damages" as a result of the alleged misrepresentation. We give this language its plain meaning and conclude that Everson's complaint did not trigger insurance coverage for Lorenz and thus a duty for Pekin to defend Lorenz. Without explicitly alleging that Lorenz's misrepresentation caused "property damage," Pekin was not on notice that this claim falls within the scope of the policy. See Smith, 226 Wis. 2d at 817. Just as in Smith, however, a differently worded complaint, one that would provide fair notice that the misrepresentation claims caused a "loss of use," might have yielded a different result. Id. at 817-18.

¶ 28. Our holding here is bolstered by the insufficiency of evidence to support a claim for "loss of use." Therefore, even if we decided that "loss of use" was properly pled, it is clear from our review of the record that such a claim could not be supported. Particularly, in Everson's deposition, he makes no allegation that his damages constituted a "loss of use":

Q It was eventually determined that the foundation that was poured on your lot did not have to be moved or altered, that it was in compliance. Correct?
A Correct.
Q And you could have built the home you intended to build on that foundation. Correct?
A Correct.
Q Why is it that you decided that it was no longer workable to build that home.
A The lot that we purchased was not the lot that we ended up with. It was represented inaccurately. And our plans for the backyard for landscaping, it would have affected what we wanted to do.
Q What plans specifically would you not have been able to do.
A We were going to do some landscaping along the back lot line that would have created a berm-type thing with some flowers, graded, slowly graded the back of the house away.

At most, Everson has stated that the existence of the flood plain has caused him inconvenience. By his explanation that the heart of the complaint is that the landscaping plans must be altered, it becomes quite clear that there is no claim of "loss of use."

¶ 29. In Wisconsin, a sufficient claim for "loss of use" requires that the property be rendered useless. See Wisconsin Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶ 50, 233 Wis. 2d 314, 607 N.W.2d 276; Sola Basic Indus., Inc. v. U.S. Fid. & Guar. Co., 90 Wis. 2d 641, 654, 280 N.W.2d 211 (1979). For support, we look to our decision in Sola Basic. There, the insured negligently repaired a transformer it had sold to the buyer, which resulted in its removal from the buyer's facility and required that it be completely rebuilt. This court held that damage to tangible property can constitute a "loss of use" if the property is made useless. Id. Accordingly, the court determined that the damage and removal of the transformer constituted a "loss of use," because the plaintiff could no longer operate the furnace until the transformer was replaced.

¶ 30. This "uselessness" requirement that originated in Sola Basic has been accepted in similar cases. In McDowell-Wellman Engineering Co. v. Hartford Accident & Indemnity Co., 711 F.2d 521 (3d Cir. 1983), the Third Circuit discussed the collapse of an ore bridge and a claim by a steel company that the collapse resulted in property damage to its blast furnace, which used the bridge for shipment of raw materials. The court held that the owner of the blast furnace did not suffer a "loss of use" because the collapse of the ore bridge did not impair the operation of the blast furnace or make it useless. To the contrary, the collapse of the ore bridge only resulted in the "loss of use" of the ore bridge. See Hartzell Indus., Inc. v. Fed. Ins. Co., 168 F. Supp. 2d 789 (S.D. Ohio 2001). The court in this case did not find liability, and thus distinguished Sola Basic, because the removal of the transformer in Sola Basic "rendered Thunder Bay's furnaces inoperable until the transformer was replaced. Here the collapse of the ore bridge did not so affect [the plaintiffs] blast furnaces which not only remained operable but actually continued to be operated by [the plaintiff] without interruption." McDowell-Wellman Engineering Co., 711 F.2d at 526. Therefore, because the blast furnace was not rendered "useless," no "loss of use" damages to the blast furnace were covered under the policy.

¶ 31. The "uselessness" requirement was recently reaffirmed in Wisconsin Label. In that case, there were damage claims against the insured that resulted from the lost profits of packages that were sold at the wrong price and the cost of handling and relabeling the unsold packages. Wisconsin Label, 233 Wis. 2d, ¶¶ 8-10; see Arnold P. Anderson, Wisconsin Insurance Law, § 5.54 (4th ed. 1998). We held that there was no coverage, and that for damages to constitute the "loss of use" they must be "rendered useless." Wisconsin Label, 233 Wis. 2d, ¶ 50; (citing Sola Basic, 90 Wis. 2d at 654).

¶ 32. Here, Everson's claim does not amount to anything approaching the uselessness of the property, as is required to satisfy Pekin's insurance policy provisions. There must be a loss of use, such as the loss of use of a transformer. See Sola Basic, 90 Wis. 2d at 654. In this case, Everson testified that his house could have been built where the foundation was already poured, only the landscaping he desired was affected. While Everson's property may now be less useful, aesthetic concerns and landscaping problems do not render the property useless.

C. CAUSATION NEXUS

¶ 33. The next certified question asks us to determine under what circumstances a misrepresentation causes the Toss of use" of property such that a "causation nexus" exists between the alleged misconduct and the damage claimed. "Without such a 'causation nexus,' the alleged occurrence cannot cause property damage." Smith, 226 Wis. 2d at 823. We conclude that the misrepresentation alleged in the complaint is not sufficient to establish a "causation nexus" within the terms of Pekin's policy.

¶ 34. Lorenz argues that the complaint's language clearly shows causation: "construction of the home which they wished to construct on the property [was] impossible in the location in which the Plaintiffs wished to build based upon the pre-sale representations of LORENZ...." Lorenz also argues that, unlike Smith, there is an unbroken chain of causation presented between the "occurrence" and the "property damage." In Smith, we concluded that there were "too many 'interruptions' between the 'occurrence' and the 'property damage' — too many decisions and actions by other people — to show an unbroken chain of causation under the policies." Id. at 824. Lorenz claims that in a situation like the claim alleged here, this court should find that there was a sufficient allegation of "causation nexus."

¶ 35. For support of this argument, Lorenz relies on the court of appeals' decision in Jares v. Ullrich, 2003 WI App 156, 266 Wis. 2d 322, 667 N.W.2d 843. This case involved the alleged misrepresentations surrounding the sale of property. The buyer's complaint stated that the property was infested with raccoons, other animals, and animal debris, and that the seller-insured failed to disclose that information. The court of appeals held that the "complaint sufficiently alleged a nexus between the alleged misrepresentation and the ensuing loss." Id., ¶ 24.

¶ 36. In Jares, the insurance policy at issue defined "property damage" as " 'physical injury to or destruction of tangible property, including loss of use....'" Id., ¶ 12. There, the court interpreted the definition of "property damage" as "loss of use" damages that flowed from the destruction of tangible property. Because the complaint alleged that the plaintiffs incurred repair and restoration costs, the court of appeals concluded that the "physical injury to . . . tangible property" requirement of "property damage" was met. The court also held that since the complaint alleged that the seller-insured's misrepresentations resulted in the loss of use of the property, the court determined that there was a sufficient allegation of "causation nexus."

¶ 37. In this case, we have already concluded that the alleged misrepresentation was not an "occurrence" within the provisions of the insurance policy and that the complaint does not allege a "loss of use." We conclude, for the reasons set forth herein, that under such circumstances, "causation nexus" is not sufficiently alleged.

¶ 38. In Qualman, the court of appeals held that the pre-sale misrepresentation involving the structural defects did not constitute "property damage." Rather, the preexisting structural defects caused the damage. The court concluded that "[t]here is no question that the defective condition of the house is an element of the Qualman's complaint. Nevertheless, those defects cannot be considered the cause of the Qualman's damages, even when interpreting both the complaint and the policy broadly." Qualman, 163 Wis. 2d at 367-68. Similarly, in Benjamin, the court of appeals held that there was no "causation nexus" between the misrepresentation claims against the insured and the damages sustained. In that case, the seller-insured sold a property that was on a landfill and, prior to closing, the buildings began to settle. The court of appeals relied on Qualman, and held that any "property damage" and resulting "loss of use" suffered were caused by the structural defects, not by the alleged misrepresentations. Id. at 363.

¶ 39. We relied on both Qualman and Benjamin when we decided that there was no "causation nexus" in Smith. In Smith, we held that "[t]here is no 'causation nexus' in the Smiths' complaint because negligent misrepresentations do not cause ground water pressure or cracks in concrete foundations...." Smith, 226 Wis. 2d at 824. Like the courts' holdings in Qualman, Benjamin, and Smith, we conclude that the "property damage" in this case was caused by the preexisting 100-year flood plain, not by any presale misrepresentation of Lorenz. Since the complaint fails to allege "property damage" in that there is no allegation of an "occurrence," and no allegation of "loss of use," there is clearly not a sufficient allegation of a "causation nexus."

D. EXCLUSIONS

¶ 40. Lastly, although we decide this case on other grounds, we address briefly the insurance policy's exclusionary provisions. Pekin contends that even if the complaint contains allegations sufficient to trigger coverage, and thus its duty to defend in accord with the general coverage sections of its insurance policy, this court should still hold that there is no such duty because certain policy exclusions are applicable. Since there is no need to address the exclusionary provisions further, we merely acknowledge that Pekin has presented extensive arguments, citing Wisconsin and federal court cases, in support of its position that two exclusions apply here.

IV CONCLUSION

¶ 41. In sum, we conclude that since there is no coverage based on Everson's complaint and the language of the Pekin insurance policy, Pekin has no duty to defend and no duty to indemnify Lorenz against Everson's claims for strict responsibility and/or negligent misrepresentation. The alleged misrepresentation was not an "occurrence" within the meaning of the policy. We hold that Everson must plead more than "damages" in relation to the misrepresentation claims to plead sufficiently a "loss of use" under the policy. We further conclude that since the complaint fails to allege "property damage," in that there is no allegation of an "occurrence," and no allegation of "loss of use," there clearly is not a sufficient allegation of "causation nexus." The "property damage" was caused by defects in the property, not by any misrepresentations of Lorenz.

By the Court. — The judgment of the circuit court is affirmed.

LOUIS B. BUTLER, JR., J.

¶ 42. (concurring). While I agree with Part II of Justice Bradley's dissent (that a negligent misrepresentation can constitute an "occurrence" under Pekin's insurance policy), I agree with the majority that the misrepresentation alleged in the complaint is insufficient to establish a "causation nexus" within the terms of that insurance policy. Majority op., ¶ 33. The preexisting 100 — year flood plain in this case caused any "property damage," not Lorenz's presale misrepresentation. Majority op., ¶ 39. Accordingly, I join parts I, II and III(C) of the majority opinion. I therefore respectfully concur.

ANN WALSH BRADLEY, J.

¶ 43. (dissenting). In Smith v. Katz, 226 Wis. 2d 798, 822, 595 N.W.2d 345 (1999), this court left open the question of whether a negligent misrepresentation can constitute an "occurrence" or "accident" for purposes of general liability insurance. Today, the majority seemingly resolves this matter, but does so by skewing the focus of the inquiry and ignoring the "negligent" component of the negligent misrepresentation. Because I conclude that the alleged negligent misrepresentation in this case can constitute an "occurrence," and because the Eversons' complaint sufficiently alleges the remaining elements necessary to trigger a duty to defend, "loss of use" and "causation," I respectfully dissent.

I

¶ 44. The majority concludes that "where there is a volitional act involved in such a misrepresentation, that act removes it from coverage as an 'occurrence' under the liability insurance policy." Majority op., ¶ 20. The problem with the majority opinion lies not with this conclusion. Rather, the problem arises when in identifying the relevant act, the majority shifts focus from a specific non-volitional act to a more general volitional act. Of course, if the level of generality is extended far enough, a volitional act can always be found somewhere down the line.

¶ 45. As in many cases, the relevant facts here drive the analysis. Lorenz gave the Eversons a Real Estate Condition Report that contained a typographical error, mistaking Lot 21 for Lot 31. The parties agree that the Eversons' Lot 31 has a portion of the property in the flood plain, but the Real Estate Condition Report failed to disclose that fact. Instead, the report erroneously listed Lot 21 as part of the flood plain.

¶ 46. The Eversons attached to the complaint the Real Estate Condition Report which stated, "[s]ome lots as shown on Exhibit A attached have as part of their back lots land that lies within the approximate 100[-]year flood plain. On lots 14-22 this area falls in the wooded ravine area and for lots 23-27, 21 & 32 it falls within the grassland area on the back of the lots." (Emphasis added.)

¶ 47. According to the complaint, the Eversons received the Real Estate Condition Report, which provided that "no portion of Lot 31 lay within the 100[-]year flood plain." When they purchased Lot 31, the Eversons received a Warranty Deed, incorporating by reference the representations contained in the report. After the transaction was completed, the Ever-sons discovered that a substantial portion of Lot 31 was located within a 100-year flood plain. They alleged that the flood plain made "the construction of the home which they wished to construct on the property impossible in the location in which the Plaintiffs wished to build based upon the pre-sale representations of LORENZ." As a result, they sustained damages having already paid for items that they could no longer use.

¶ 48. The majority, however, tucks away in a footnote the relevant facts of the negligent misrepresentation claim. Id., ¶ 5, n. 3. In doing so, it shifts the focus away from the accidental typographical error contained in the report and instead focuses in the text on the general action that Lorenz gave the report to Everson. Id., ¶ 22. Consequently, the majority then opines that there is no accident here at all because the decision to give Everson the report is not an "accident." Id. Accordingly, the majority concludes that because there is no accident, there is no coverage under the policy.

¶ 49. No one asserts that the "act" of giving the report was an accident. Of course it was volitional or intentional. As part of the real estate transaction, Lorenz needed to provide the Real Estate Condition Report.

¶ 50. Stripped to its essentials, the majority here determines that an accidental act (a typographical error) is not an accident. How can it arrive at such an anomalous conclusion? Only by skewing the focus as described above and ignoring the "negligent" component of a negligent misrepresentation claim.

II

¶ 51. As noted, the question left open by Smith, 226 Wis. 2d 798, and that we address today is whether the alleged negligent misrepresentation of Lorenz can constitute an "occurrence" under Pekin's insurance policy. In the policy, "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Because the policy does not elaborate on the term "accident," the majority proffers two definitions for guidance: (1) "[a]n unintended and unforeseen injurious occurrence; something that does not occur in the usual course of events or that could not be reasonably anticipated;" and (2) " '[a]n unexpected, undesirable event'" or " 'an unforeseen incident'" which is characterized by a " 'lack of intention.'" Majority op., ¶ 15 (citations omitted).

¶ 52. Both of the definitions cited by the majority center on an unintentional and unforeseeable event leading to undesirable results. In this case, the alleged negligent misrepresentation of Lorenz meets these criteria. However, in its efforts to convince the reader that there was no accident, the majority emphasizes only "misrepresentation" and ignores the "negligent" component of the negligent misrepresentation claim. It defines Lorenz's misrepresentation as an " 'act of making a false or misleading statement about something Id., ¶ 19 (citing Black's Law Dictionary 1016 (7th ed. 1999)). This characterization in itself is a "false and misleading statement," for the conduct at issue is Lorenz's alleged negligent misrepresentation.

¶ 53. Negligent misrepresentation is defined as "[a] careless or inadvertent false statement in circumstances where care should have been taken." Black's Law Dictionary 1016 (7th ed. 1999). Unlike the majority, I have little trouble concluding that a reasonable insured would expect the term "accident" to include a "careless or inadvertent false statement." On this matter, I find the case of Sheets v. Brethren Mut. Ins. Co., 679 A.2d 540 (Md. 1996), instructive.

¶ 54. In Sheets, the Maryland court of appeals was confronted with whether negligent misrepresentation constituted an "occurrence" under a general liability insurance policy. Ultimately, the court was persuaded by a number of cases recognizing that negligent misrepresentation can be considered an "occurrence" or "accident." Id. at 550 (citing SL Industries v. American Motorists Ins. Co., 607 A.2d 1266, 1276-77 (N.J. 1992) ("Courts generally have held that although the insurer must defend an insured who is accused of reckless, negligent, or innocent misrepresentations, no defense is required when the insured is accused of intentional misrepresentations."); Universal Underwriters v. Youngblood, 549 So.2d 76, 78, 79 (Ala. 1989) ("[t]he term 'accident' does not exclude events that occur through negligence," and that "[a]ctions for innocent or reckless misrepresentation have held to be covered"); First Newton Nat. Bank v. Gen. Casualty Co., 426 N.W.2d 618, 625-26 (Iowa 1988) ("[t]he very definition of 'negligent misrepresentation' connotes negligent rather than intentional conduct.... '[W]here a complaint is framed in terms of an insured's negligence ... there is a duty to defend.'")).

¶ 55. As this court stated in Smith, 226 Wis. 2d at 822, the decision in Sheets is "strikingly similar" to our negligence analysis in Doyle v. Engelke, 219 Wis. 2d 277, 580 N.W.2d 245 (1998). In Doyle, we held that an insurance policy using the term "event" covered negligent acts. 219 Wis. 2d at 290. The policy at issue in that case defined "event" the same as this policy defines "occurrence," as " 'an accident, including continuous or repeated exposure to substantially the same general harmful conditions.'" Id. at 289. We observed that both the definition for "negligence" and "accident" "center on an unintentional occurrence leading to undesirable results." Id. at 290. Thus, we concluded that a reasonable insured would expect the policy provision using the term "event" to cover negligent acts. Id. Because the conduct in this case also involves a negligent act, Doyle cannot be meaningfully distinguished.

¶ 56. Accordingly, I would conclude that a negligent misrepresentation can constitute an "occurrence" or "accident" for purposes of general liability insurance. After all, language in an insurance policy must be construed as understood by a reasonable person in the position of an insured. Frost v. Whitbeck, 2002 WI 129, ¶ 20, 257 Wis. 2d 80, 654 N.W.2d 225 (citing Kremers-Urban Co. v. Am. Employers Ins., 119 Wis. 2d 722, 735, 351 N.W.2d 156 (1984)). In this case, a reasonable person would not split the legal hair advanced by the majority. See majority op., ¶ 20. Rather, a reasonable person would expect that the policy would cover the typological error relied upon by Everson in the pre-sale representation.

I-H I — I h — H

¶ 57. Having determined that the alleged negligent misrepresentation can constitute an "occurrence," I consider next whether the Eversons' complaint sufficiently alleges the remaining elements necessary to trigger a duty to defend, "loss of use" and "causation." Again, the majority opinion blurs the inquiry by focusing much of its discussion on the sufficiency of the evidence or the underlying merits of the claim rather than on the four corners of the complaint and the terms of the insurance policy. Id., ¶¶ 28-32. However, "[t]he duty to defend focuses on the nature of the claim and has nothing to do with the merits of the claim." Smith, 226 Wis. 2d at 806 (citing Grieb v. Citizens Casualty Co., 33 Wis. 2d 552, 558, 148 N.W.2d 103 (1967)) (emphasis added). Accordingly, the fact that the Eversons' claim may not amount to anything approaching the standard of "uselessness" is irrelevant.

¶ 58. The question in this case is whether Pekin's insurance policy provides coverage to Lorenz for the negligent misrepresentation claim filed by Everson. The answer to this question lies in comparing the allegations of the claim set forth in the complaint to the terms of the insurance policy. Id. (citing School Dist. of Shorewood v. Wausau Ins. Co., 170 Wis. 2d 347, 364-65, 488 N.W.2d 82 (1992)).

¶ 59. When focusing on the nature of the claim, courts must liberally construe the allegations in the complaint and assume all reasonable inferences. Doyle, 219 Wis. 2d at 284. While the majority mouths this standard, it fails to apply it here. Majority op., ¶ 25. The relevant allegation is set forth in paragraph seven of the complaint. It states:

7. Subsequently, the Plaintiffs discovered that a substantial portion of Lot 31 lay within the 100[-] year flood plain making the construction of the home which they wished to construct on the property impossible in the location in which the Plaintiffs wished to build based upon the pre-sale representations of LORENZ, rendering the property unbuildable for the Plaintiffs and causing the Plaintiffs to incur damages as a result in excess of $37,000.

¶ 60. Although this paragraph does not use the "magic words" the majority apparently seeks, it should not have to do so. See Smith, 226 Wis. 2d at 817 (a complaint claiming negligent misrepresentation need only "contain some statement about physical injury to tangible property, some reference to loss of use, or some demand for relief beyond money damages ..."). Here, the allegations are tantamount to a claim for "loss of use" under a liberal construction. The plaintiffs allege that a substantial portion of their property lay within the 100-year flood plain, making the construction of the home impossible in the location in which they wanted to build. They seek compensation based on Lorenz's negligent misrepresentation for out-of-pocket expenses, which are now useless to them. Accordingly, one can reasonably infer the "loss of use" of various items relating to that failed construction (e.g., excavation, concrete foundation, house plans, permits, etc.).

¶ 61. Likewise, I am satisfied that the complaint sufficiently alleges "causation" under a liberal construction. Again, the relevant language is found in paragraph seven: "Construction of the home which they wished to construct on the property [was] impossible in the location in which the Plaintiffs wished to build based upon the pre-sale representations of LORENZ ...." The majority dismisses this language, concluding that the " 'property damage' in this case was caused by the preexisting 100-year flood plain, not by any presale misrepresentation of Lorenz." Majority op., ¶ 39. However, for purposes of summary judgment, I believe it can be reasonably inferred that reliance on Lorenz's pre-sale representations caused the Eversons' damage. Accordingly, for the foregoing reasons I respectfully dissent.

¶ 62. I am authorized to state that CHIEF JUSTICE SHIRLEY S. ABRAHAMSON joins this dissent.

       Unless otherwise indicated all references to Wisconsin Statutes are to the 2001-02 edition.
      Wisconsin Stat. § (Rule) 809.61 states, in relevant part: "The supreme court may take jurisdiction of an appeal or other proceeding in the court of appeals upon certification by the court of appeals or upon the supreme court's own motion."

       The original complaint was filed on March 18, 2002, in Outagamie County Circuit Court. However, the parties stipulated that because the plaintiffs and defendants reside in Calumet County, and the land in question is in Calumet County, that it would be appropriate for the venue to be changed. The Outagamie County Circuit Court, John A. Des Jardins, Judge, ordered that the case be transferred to Calumet County on May 13, 2002.

       Everson attached to the complaint a Real Estate Condition Report that was completed by Lorenz prior to the purchase. In the report, Lorenz affirmatively states that "[s]ome lots as shown on Exhibit A attached have as part of their back lots land that lies within the approximate 100 year flood plain. On lots 14-22 this area falls in the wooded ravine area and for lots 23-27, 21 & 32 it falls within the grassland area on the back of the lots." (Emphasis added.)

       The damages that Everson claimed were, for the most part, damages incurred during the preparation for construction, such as building plans, permits, foundation, windows, etc.

       The relevant claims for this coverage inquiry are strict responsibility misrepresentation and negligent misrepresentation. The claims for intentional misrepresentation and breach of contract are excluded from coverage under the terms of Pekin's insurance policy.

       The court in Sheets v. Brethren Mutual Insurance Co., 679 A.2d 540, 551 (Md. 1996), recognized that jurisdictions split on whether a negligent misrepresentation can constitute an "occurrence." The court stated:
      We prefer to follow those cases that treat negligent misrepresentation like other forms of negligence, which are covered as accidents if the insured did not expect or foresee the resulting damage. In accordance with our own precedent outlined above, the ultimate inquiry is whether the resulting damage is "an event that takes place without one's foresight or expectation."

        Id. (citation omitted).

       We also decline to accept the argument that damages for "loss of use" were implicitly alleged in the complaint. Such allegations would not put an insurance company on notice that Everson sustained "property damage." We will not rewrite a complaint that does not clearly identify that coverage is warranted.

       In Sola Basic Industries, Inc. v. U.S. Fidelity & Guaranty Co., 90 Wis. 2d 641, 654, 280 N.W.2d 211 (1979), this court examined precedent from other jurisdictions and derived four basic principles pertaining to CGL policies. For the purposes of our review, the fourth principle is most relevant. It states: " 'tangible property may be damaged in that it is diminished in value or made useless, irrespective of actual physical injury to the tangible property.'" See Wisconsin Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶ 44, 233 Wis. 2d 314, 607 N.W.2d 276.
      Since these principles were developed in Sola Basic, we held in Wisconsin Label that use of the phrase "diminution in value" must be read in its proper context. Specifically, we held: .
      Sola Basic was interpreting the 1966 definition of "property damage," which omitted any requirement that an injury be "physical" in order to trigger coverage. As Hauenstein held, the broad 1966 definition therefore could encompass "diminution in value" of tangible property, even without any physical injury.
      The 1966 policy form was the standard in the insurance industry until a new form was promulgated in 1973. The post-1973 forms define "property damage" much more specifically than the 1966 form. The first part of the 1973 definition explicitly requires "physical" injury; the second part requires "loss of use" of tangible property that is not physically injured. Unlike the 1966 definition, neither part of the later definition is broad enough to encompass mere "diminution of value" of a product in the absence of physical injury or loss of use.

        Id., ¶¶ 46-47 (citations omitted).
      Our ultimate holding in Wisconsin Label, with respect to Sola Basic, was as follows;
      [a]ny suggestion in Sola Basic that CGL policies provide coverage for diminution in value that is not caused by physical injury or loss of use is inconsistent with the definition of "property damage" in post-1973 policies. We therefore conclude that the Policy provides no coverage for diminution in value in the absence of physical injury or loss of use.

        Id., ¶ 48.

       The other case Lorenz argues that supports the claimed "causation nexus" is Wood v. Safeco Insurance Co. of America,
        980 S.W.2d 43 (Mo. App. E.D. 1998). There, a Missouri court of appeals held that there was a "causation nexus" in a claim that is similar to the issue before us. The insured, Wood, sold property to a buyer and represented that the property was not in a flood plain. After the transaction, the property flooded and the buyer alleged negligent misrepresentation. The buyer argued that if he had been advised of the existence of the flood plain, he would not have bought the property. The court held: "[w]hether or not the flooding damage is causally related to the misrepresentations should have been pursued by Insurer on behalf of Insured in Buyer's litigation, rather than against Insured in this litigation." Id. at 53 (citing Sheets, 679 A.2d at 544-45).

       The court of appeals distinguished Smith v. Katz, 226 Wis. 2d 798, 595 N.W.2d 345 (1999), by finding that in Jares v. Ullrich, 2003 WI App 156, 266 Wis. 2d 322, 667 N.W.2d 843, the property damage was discovered shortly after the residence was purchased, the defendant-sellers remained in full-ownership and control until closing, the residence already existed at the time of closing, and there was no allegation of intervening negligent acts by a third party. The court also held that Qualman v. Bruckmoser, 163 Wis. 2d 361, 471 N.W.2d 282 (Ct. App. 1991) and Benjamin v. Dohm, 189 Wis. 2d 352, 525 N.W.2d 371 (Ct. App. 1994), were not controlling, because the references to causation in those cases were dicta.

       Lorenz also argues that the "property damage" includes materials such as foundation, windows, building plans, and permits. Because the damages resulting from the purchase of those items were not alleged in the complaint, we decline to address them here.

       Alternatively, I note that to the extent the term "accident" is ambiguous, it must be construed against an insurer and in favor of coverage. Frost v. Whitbeck, 2002 WI 129, ¶ 19, 257 Wis. 2d 80, 654 N.W.2d 225 (citing Danbeck v. Am. Family Mut. Ins. Co., 2001 WI 91, ¶ 10, 245 Wis. 2d 186, 629 N.W.2d 150).


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

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

      No. 2003AP2647-D.

      Decided April 22, 2005.

    2005 WI 50
    (Also reported in 695 N.W.2d 291.)
   PER CURIAM.

¶ 1. We review the stipulation filed by Attorney Jenelle Glasbrenner and the Office of Lawyer Regulation (OLR) concerning Attorney Glasbrenner's professional misconduct consisting of over billing the Office of the Wisconsin State Public Defender (SPD) for work she had performed for them. The parties' stipulation was reached after a two-day hearing before Referee John R. Decker. Referee Decker reviewed the stipulation and issued a report recommending the level of discipline to which the parties stipulated, a six-month suspension of Attorney Glasbrenner's license to practice law in Wisconsin. In addition, the referee recommended that Attorney Glasbrenner be ordered to pay the costs of this disciplinary proceeding.

¶ 2. We conclude that the referee's findings of fact are supported by satisfactory and convincing evidence. We also agree with the referee's conclusions of law that Attorney Glasbrenner engaged in professional misconduct and further agree that the seriousness of that misconduct warrants a six-month suspension of Attorney Glasbrenner's license to practice law in Wisconsin.

¶ 3. Attorney Glasbrenner was admitted to practice law in Wisconsin in 1999. She has not previously been disciplined. Her first employment as an attorney was working as an associate in a law firm that focused on criminal defense matters. Attorney Glasbrenner was paid a salary by the law firm and was not involved in bilhng clients. In May 2000, Attorney Glasbrenner was hired by a law firm that later became known as Johnson, Danz & Lettenberger (JD&L). A large portion of Attorney Glasbrenner's caseload at JD&L consisted of appointments by the SPD. Attorney Glasbrenner immediately had a large caseload and was confronted with many deadlines.

¶ 4. Attorney Glasbrenner received minimal instruction in billing from more experienced attorneys at the law firm. Attorney Glasbrenner was advised by the firm's more experienced attorneys that she could bill as a unit for certain tasks that she performed as an SPD attorney. In fact this advice was erroneous. Attorney Glasbrenner's billing practices were sloppy. She did not always bill her time contemporaneously, and she would prepare her bills on a case-by-case basis after the cases had been concluded.

¶ 5. The OLR presented evidence that between May 2000 and December 2001, Attorney Glasbrenner over billed the SPD. She submitted bills to the SPD for approximately 2789 hours in 2000 and 4413 hours in 2001. The bills did not always reflect the actual time she had spent on the matters for which she requested payment. At times the bills were excessive and unreasonable.

¶ 6. In early 2002, the SPD advised Attorney Glas-brenner that it was auditing her billings and it removed her from the appointment list. Attorney Glasbrenner cooperated with the SPD in its audit. On May 30, 2002, Attorney Glasbrenner met with the head of the SPD's assigned counsel division, who advised her of the results of the audit. The SPD official's impression was that Attorney Glasbrenner was quite surprised at the number of irregular claims that had been submitted, and she immediately apologized. During that meeting, the SPD presented Attorney Glasbrenner with a proposed agreement. She signed the agreement within four days without making changes or negotiating the amount. Under the agreement Attorney Glasbrenner agreed to pay $40,000 to the SPD within one month of signing the agreement; she agreed not to submit any additional claims for SPD work, even though she had already completed the work; she agreed to relinquish those claims that she had already submitted to the SPD for which she had not yet been paid; and she agreed to complete her work on a number of SPD cases at no cost to the SPD.

¶ 7. SPD officials assigned to the matter testified at the hearing before the referee that Attorney Glasbren-ner met all of the terms of the agreement. SPD officials also testified that Attorney Glasbrenner fully repaid the SPD and, if anything, she overpaid them. Two SPD officials assigned to the matter testified that they believed Attorney Glasbrenner did not intend to over bill the SPD.

¶ 8. Attorney Glasbrenner testified at the hearing before the referee that she did not intend to over bill the SPD. She admitted she had sloppy billing habits and had received minimal instruction as a new attorney, but she said she took full responsibility for her acts. Other attorneys testified that Attorney Glasbrenner was an outstanding attorney who worked long hours as a vigorous advocate for her clients. There was also testimony that she had an excellent professional reputation and character.

¶ 9. Based on her over billing to the SPD, Attorney Glasbrenner was charged with one count of misdemeanor theft by fraud. She entered an Alford plea to the charge and was ordered to pay a fine of $5000 plus costs, which she did.

¶ 10. Since the time of the SPD audit Attorney Glasbrenner said she has changed her billing practices and consults with at least one more experienced mentor when billing issues are presented. There was no evidence that Attorney Glasbrenner's billing impacted the representation of her clients.

¶ 11. Attorney Glasbrenner and the OLR stipulated that her conduct violated SCR 20:8.4(c) in that on multiple occasions, she engaged in conduct involving dishonesty, fraud, deceit or misrepresentation. The parties also stipulated that Attorney Glasbrenner's conduct violated SCR 20:1.5(a) in that on multiple occasions she billed and sought payment for attorney's fees that were unreasonable. The parties further stipulated that an appropriate level of discipline to impose upon Attorney Glasbrenner was a six-month suspension of her license to practice law in Wisconsin so that if she wishes to pursue reinstatement she will be required to prove her fitness to licensure in a formal reinstatement proceeding.

¶ 12. The referee's report adopted the parties' findings of fact. The referee also concluded, as a matter of law, that Attorney Glasbrenner's conduct violated SCR 20:8.4(c) and SCR 20:1.5(a). The referee also came to the independent conclusion that a six-month suspension of Attorney Glasbrenner's license to practice law in Wisconsin was an appropriate sanction for her misconduct.

¶ 13. The referee noted that Attorney Glasbrenner had only limited experience in law practice at the times in question, and she received little guidance from more experienced attorneys with respect to timekeeping and billing. The referee said to Attorney Glasbrenner's credit, she did not seek to excuse her misconduct on the basis of improper guidance from more senior attorneys. The referee also commented there was no showing that Attorney Glasbrenner was afflicted by greed for money and it appeared "that a strong competitive drive urged her on to an excessive zeal in expenditure of time and the piling up of billable hours."

¶ 14. The referee further noted that Attorney Glasbrenner immediately returned or forfeited to the SPD the entire amount the SPD contended had been over billed, using assumptions most favorable to the SPD. The referee said:

The evidence demonstrated that Attorney Glasbren-ner was and is energetic, competent, driven, mature and extremely self-confident. This self-confidence proved her undoing when it crossed the line into hubris. Hubris produced an evident attitude that the rules didn't apply to her, and thus an indifference to them. This I view as a form of character flaw which the respondent can and must demonstrate she has corrected.

¶ 15. A referee's findings of fact are to be affirmed unless they are clearly erroneous. In re Disciplinary Proceedings Against Sosnay, 209 Wis. 2d 241, 243, 562 N.W.2d 137 (1997). We review conclusions of law de novo. In re Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶ 29, 248 Wis. 2d 662, 636 N.W.2d 718. The record supports the referee's findings of fact and conclusions of law and we adopt them. We determine that the seriousness of Attorney Glasbrenner's misconduct warrants the suspension of her license to practice law for a period of six months. We further agree that Attorney Glasbrenner should be required to pay the costs of the proceeding, which are $12,876.70 as of February 16, 2005.

¶ 16. IT IS ORDERED that the license of Jenelle Glasbrenner to practice law in Wisconsin is suspended for a period of six months, effective the date of this order.

¶ 17. IT IS FURTHER ORDERED that Attorney Glasbrenner comply with the provisions of SCR 22.26 concerning the duties of a person whose license to practice law in Wisconsin has been suspended.

¶ 18. IT IS FURTHER ORDERED that within 60 days of the date of this order Attorney Jenelle Glasbren-ner pay to the Office of Lawyer Regulation the costs of this proceeding, provided that if the costs are not paid within the time specified and absent a showing to this court of her inability to pay those costs within that time, the license of Attorney Jenelle Glasbrenner to practice law in Wisconsin shall remain suspended until further order of the court.

¶ 19. N. PATRICK CROOKS, J, did not participate.

        North Carolina v. Alford, 400 U.S. 25 (1970).

       SCR 20:8.4(c) provides: "It is professional misconduct for a lawyer to: (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation."

       SCR 20:1.5(a) provides: "(a) A lawyer's fee shall be reasonable...."


text:
    In the Matter of Disciplinary Proceedings Against Mark S. Brown, Attorney at Law: Office of Lawyer Regulation, Complainant, v. Mark S. Brown, Respondent.
    Supreme Court

      No. 2005AP205-D.

      Decided April 22, 2005.

    2005 WI 49
    (Also reported in 695 N.W.2d 295.)
   PER CURIAM.

¶ 1. We review the stipulation filed by Attorney Mark S. Brown and the Office of Lawyer Regulation (OLR) pursuant to . SCR 22.12 concerning Attorney Brown's professional misconduct in converting fees belonging to his law firm to his personal use. The parties stipulated that the appropriate discipline to impose for that professional misconduct is the suspension of Attorney Brown's license to practice law in Wisconsin for 18 months.

¶ 2. We approve the stipulation and adopt the stipulated facts and conclusions of law. We agree that the seriousness of Attorney Brown's misconduct warrants the suspension of his license to practice law. We also accept the parties' stipulation that an 18-month suspension is appropriate discipline.

¶ 3. Attorney Brown was admitted to practice law in Wisconsin in 1998. He currently resides in South Carolina. He has not previously been disciplined. In June 1998, Attorney Brown began working as an independent contractor for the Wessel Law Firm. Attorney Brown's pay was based on a percentage of the fees he collected. He was not permitted to have independent clients, and he was required to turn over all earned legal fees to the Wessel Law Office.

¶ 4. In 2002, Attorney Brown and Attorney Keith Wessel formed Wessel, Brown & Associates LLC. All earned legal fees were to be processed through the law firm. In June 2004, Attorney Brown approached Wessel with a $2000 cashier's check, alleging the check had mistakenly been made payable to the law firm rather than to Attorney Brown personally. Attorney Brown asked Wessel to deposit the check into the firm's operating account and issue Brown a $2000 check. Wessel declined to do this. Several weeks later, Attorney Brown approached Kelly Mueller, one of the law firm's associates, who did the firm's bookkeeping. Attorney Brown gave Mueller the same $2000 cashier's check with instructions to deposit it to the firm's operating account. Attorney Brown represented to Mueller that the check was in payment of a $2000 retainer fee from a client. Attorney Brown told Mueller that the client had paid the retainer fee in cash and in lieu of the cash Attorney Brown was giving the law firm the cashier's check that the bank had mistakenly made payable to the law firm rather than to Brown personally.

¶ 5. The law firm subsequently discovered that the client's retainer fee was actually $1000, rather than $2000 and that the client had paid the amount not in cash but via a check payable to Attorney Brown. Attorney Brown altered the firm's copy of the client's signed fee agreement to make it appear that the retainer had been $2000. The $2000 cashier's check actually represented fees paid by another client who had paid a $2000 flat fee retainer to the law firm about one month earlier. Attorney Brown had misrepresented to the firm that he was taking that case pro bono.

¶ 6. In early July 2004, Wessel wrote Attorney Brown a memo advising Brown that he was compelled to report to the OLR concerning Brown's diversion of client funds. Wessel further advised Brown that he wished to dissolve their partnership. Brown informed Wessel he would self-report his conduct to the OLR.

¶ 7. On July 14, 2004, Brown addressed a letter to the OLR stating that between May 2003 and June 2004, he had taken approximately six fee payments, totaling approximately $6180 that belonged to the law firm. He also reported that he had recently received two retainers totaling $3000 that he attempted to personally negotiate. Both retainers were eventually turned over to the law firm.

¶ 8. OLR staff asked Attorney Brown for additional information. In late August 2004, Brown, through his counsel, indicated that all the funds had been taken between June 2003 and June 2004, and he identified seven clients whose fees he had personally kept. Those fees totaled $8180. Attorney Brown explained the discrepancy between that figure and the $6180 he had previously reported by saying that when he sent his initial letter to the OLR he had forgotten to include a $2000 payment he received in February 2004. Brown informed the OLR he was totally forthcoming about the fees he had taken once he was confronted about his conduct. He acknowledged he had not reported the fees he had personally taken in 2003 on his state and federal income tax returns and that he would need to file amended returns.

¶ 9. Attorney Brown explained his actions by saying that he had developed a gambling problem that caused financial problems. He acknowledged full responsibility for his actions and said he had been attending weekly meetings of Gamblers Anonymous.

¶ 10. OLR staff contacted Attorney Wessel and inquired whether Wessel was satisfied that the seven clients Brown had identified were the only clients whose fees Brown had taken from the law firm. Despite Brown's assertion that he had been forthcoming about all fees he had taken after Wessel confronted him, Wessel indicated the letter from OLR staff was the first itemization he had received naming the clients and the amounts Brown had taken.

¶ 11. In late September 2004, Attorney Brown sent a memo to Wessel and Mueller stating he believed the total amount of funds he had diverted from the law firm was $8180. Through a review of payment records, Mueller identified other potential misappropriations, some dating back to 1998. Attorney Brown subsequently acknowledged 11 additional misappropriations that he had not previously reported to the OLR or the law firm. Brown then said he believed the total amount he had diverted was about $16,967.92. Some of the acknowledged misappropriations occurred in 1998, 1999 and 2000.

¶ 12. Brown and Wessel entered into a dissolution agreement on November 1, 2004. As part of the agreement, Wessel received credit for the fees Brown had taken from the firm, plus an additional $7500 in damages. Attorney Brown still owes the law firm approximately $2500 in restitution and damages.

¶ 13. Attorney Brown and the OLR have stipulated that by converting over $16,000 in fees belonging to his law firm to his personal use, by attempting to convert another $3000 in fees from two other clients, by failing to report fee income on his personal income tax returns, by altering the retainer amount on his firm's copy of a previously-signed retainer agreement, and by making multiple misrepresentations to his law firm partner and associate, Attorney Brown violated SCR 20:8.4(c).

¶ 14. The parties further stipulated that by misrepresenting the amount of fees that he misappropriated from his law firm in two letters addressed to the OLR, by failing to disclose a number of misappropriations in response to a direct inquiry from OLR staff, and by misrepresenting in response to the OLR's inquiry that he had been fully forthcoming about all fees he had taken when confronted by his partner, Attorney Brown violated SCR 22.03(6).

¶ 15. The stipulation states that the terms were not bargained for or negotiated between the parties. Attorney Brown represents that he fully understands the misconduct allegations, he fully understands the ramifications should the court impose the stipulated level of discipline, he fully understands his right to contest the matter, he has consulted with and retained counsel, and he entered into the stipulation knowingly and voluntarily. The stipulation also notes that the parties agree that an appropriate level of discipline to impose in response to Attorney Brown's misconduct is an 18-month suspension of his license to practice law in Wisconsin.

¶ 16. We adopt the findings of fact and conclusions of law to which the parties have stipulated concerning Attorney Brown's professional misconduct. We determine that the seriousness of the misconduct warrants the suspension of Attorney Brown's license to practice law for 18 months.

¶ 17. IT IS ORDERED that the license of MarkS. Brown to practice law in Wisconsin is suspended for a period of 18 months, effective the date of this order.

¶ 18. IT IS FURTHER ORDERED that Attorney Brown 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 he 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(c) provides: "It is professional misconduct for a lawyer to: (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation."

       SCR 22.03(6) provides: "(6) In the course of the investigation, the respondent's wilful failure to provide relevant information, to answer questions fully, or to furnish documents and the respondent's misrepresentation in a disclosure are misconduct, regardless of the merits of the matters asserted in the grievance."


author: PATIENCE DRAKE ROGGENSACK, J.

text:
    State of Wisconsin, Plaintiff-Respondent, v. Michael A. DeLain, Defendant-Appellant-Petitioner.
    Supreme Court

      No. 2003AP1253-CR.

      Oral argument December 6, 2004.

      Decided April 26, 2005.

    2005 WI 52
    (Also reported in 695 N.W.2d 484.)

      For the defendant-appellant-petitioner there were briefs by Robert R. Henak and Henak Law Office, S.C., Milwaukee, and oral argument by Robert R. Henak.

    For the plaintiff-respondent the cause was argued by Christopher G. Wren, assistant attorney general, with whom on the brief was Peggy A. Lautenschlager, attorney general.
   PATIENCE DRAKE ROGGENSACK, J.

¶ 1. Michael A. DeLain requests review of a published decision of the court of appeals, State v. DeLain, 2004 WI App 79, 272 Wis. 2d 356, 679 N.W.2d 562. The court of appeals affirmed a judgment of conviction, as well as an order denying post-conviction relief, of the circuit court for Brown County, the Honorable Richard J. Dietz presiding. We review whether the evidence presented to the jury was sufficient to sustain a conviction for sexual exploitation by a therapist, contrary to Wis. Stat. § 940.22(2) (2001-02), and in particular, whether a finding that there was "an ongoing therapist-patient.. . relationship" during a therapy session is precluded if the victim was secretly recording that session in cooperation with police.

¶ 2. We conclude that, for the purpose of establishing criminal liability under Wis. Stat. § 940.22(2), whether there is an ongoing therapist-patient relationship is determined by examining the totality of the circumstances. We also conclude that J.F.'s assisting the police by recording her therapy session is not sufficient to preclude a finding that a therapist-patient relationship was ongoing. Further, based on the totality of the circumstances, which in this case included a stipulation that DeLain provided therapy to J.F. on all her visits, a rational trier of fact could have found beyond a reasonable doubt that an ongoing therapist-patient relationship existed on May 2, 2001. We therefore affirm the decision of the court of appeals, although on different grounds.

I. BACKGROUND

¶ 3. J.F., a 16-year old, had five psychotherapy sessions with Dr. Michael DeLain in April and May 2001. After the fourth session, on April 25, 2001, she told her family that she did not want to see DeLain again because he had sexually assaulted her during therapy. J.F. and her parents then went to the police. At law enforcement's request, J.F. returned for a final session with DeLain on May 2, 2001, to surreptitiously audio- and video-record the session. DeLain was subsequently charged with multiple criminal counts, including a count of sexual exploitation by a therapist under Wis. Stat. § 940.22(2) based on the allegation that DeLain had sexual contact with J.F. during the May 2, 2001 session.

¶ 4. A jury trial was conducted, wherein DeLain and the State stipulated to the following: "In April and May, 2001, Dr. Michael DeLain was a psychologist who performed psychotherapy on patients, including [J.F.]."

¶ 5. At trial, DeLain testified to the method of therapy he used to treat J.F., his diagnosis of J.F. and his efforts to assist J.F. He denied any sexual contact with J.F. and addressed specific acts that were alleged to have occurred. He also testified that when he told J.F. he would be reporting her sexual relationship with an adult to authorities, she became angry and threatened to make accusations against him. DeLain also called others to testify on his behalf, including social service agency employees, who testified that DeLain had made a report that J.F. was having sex with an adult, and other witnesses who testified to DeLain's nonexploit-ative character.

¶ 6. In closing argument, the State asserted that it was stipulated to and agreed upon that J.F. and DeLain had a therapist-patient relationship during the time period relevant to the conduct alleged to be criminal. In DeLain's closing argument, he did not disagree, but instead argued to the jury that no sexual contact occurred. The jury convicted DeLain of the count at issue in this review, as well as two of the other counts charged.

¶ 7. In a post-conviction motion, DeLain requested the circuit court to vacate the conviction for sexual exploitation by a therapist that resulted from the May 2, 2001 session because the evidence was insufficient to establish that the alleged sexual contact took place during an "ongoing therapist-patient relationship," as required by Wis. Stat. § 940.22(2). The circuit court denied DeLain's motion. The court of appeals affirmed, and we subsequently granted DeLain's petition for review.

II. DISCUSSION

¶ 8. Wisconsin Stat. § 940.22(2) prohibits sexual contact between a therapist and a patient or client. The statute states:

Sexual contact prohibited. Any person who is or who holds himself or herself out to be a therapist and who intentionally has sexual contact with a patient or client during any ongoing therapist-patient or therapist-client relationship, regardless of whether it occurs during any treatment, consultation, interview or examination, is guilty of a Class F felony. Consent is not an issue in an action under this subsection.

Section 940.22(2).

¶ 9. To obtain a conviction for a violation of Wis. Stat. § 940.22(2), the State must prove three elements beyond a reasonable doubt: (1) that the defendant was or held himself or herself out to be a therapist; (2) that the defendant had intentional sexual contact with a patient or client; and (3) that the sexual contact occurred during an ongoing therapist-patient or therapist-client relationship. State v. Miller, 2002 WI App 197, ¶ 17 n.5, 257 Wis. 2d 124, 650 N.W.2d 850; see also State v. Ambrose, 196 Wis. 2d 768, 777, 540 N.W.2d 208 (Ct. App. 1995) (holding that the actor and the complainant "must be engaged in a professional therapist-patient/client relationship").

¶ 10. DeLain contends there was not sufficient evidence to find the third element, that sexual contact occurred during an ongoing therapist-patient or therapist-client relationship, beyond a reasonable doubt. Our review of DeLain's contention, in light of actual trial testimony, presents us with a limited record because DeLain's defense was that sexual contact did not occur, not that there was no ongoing therapist-patient relationship. Rather than try the third element of Wis. Stat. § 940.22(2), DeLain stipulated that he was performing psychotherapy on J.F. during May 2001.

A. Standard of Review

¶ 11. Notwithstanding the way in which this case was tried, we have been asked to determine when evidence is sufficient to prove that an ongoing therapist-patient relationship existed, as that phrase is used in Wis. Stat. § 940.22(2). This requires interpretation of § 940.22(2). Interpretation of a statute is a question of law that we review de novo. Johnson v. ABC Ins. Co., 193 Wis. 2d 35, 43, 532 N.W.2d 130 (1995). Additionally, when we review the sufficiency of evidence to support a conviction, we view the evidence in the light most favorable to the verdict and determine whether "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Ambrose, 196 Wis. 2d at 772 (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)).

B. Wisconsin Stat. § 940.22(2)

¶ 12. To interpret the phrase "during any ongoing therapist-patient... relationship" in Wis. Stat. § 940.22(2), we begin by examining the plain meaning of the statutory language, in context, as is required by State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶ 46, 271 Wis. 2d 633, 681 N.W.2d 110. " [Statutory language is interpreted in the context in which it is used; not in isolation but as part of a whole ... and reasonably, to avoid absurd or unreasonable results." Id.

¶ 13. In interpreting the meaning of "during any ongoing therapist-patient... relationship," the court of appeals decision drew on Wis. Stat. § 939.23(3) to conclude that whether there was an ongoing therapist-patient relationship turned solely on DeLain's subjective belief. DeLain, 272 Wis. 2d 356, ¶¶ 10-12. The court of appeals explained, "[Bjecause the undisputed evidence is that DeLain believed the specific fact existed, namely that [J.F.] was a patient and this was part of the ongoing therapist-patient relationship, any acts that occurred during this session were during an ongoing therapist-patient relationship as those terms are used in the statute." Id., ¶ 12.

¶ 14. DeLain disagrees with the court of appeals, arguing that the therapist's belief that a therapist-patient relationship is ongoing does not establish that the relationship is actually ongoing in fact. The State also disagrees with the court of appeals' reasoning, conceding that the factual question of whether a therapist-patient relationship is ongoing does not turn solely on what the therapist knows. For reasons discussed at length below, we accept the State's concession.

¶ 15. DeLain further argues that the term "relationship," in the phrase "ongoing therapist-patient... relationship," requires a "two-way street," with both the therapist and the patient consenting to the continuing relationship. He asserts that the relationship "may be terminated, inter alia, by mutual consent of the parties, or by the unilateral action of the patient." As such, he argues that a patient who goes to the police to complain of sexual contact made by a therapist and agrees to cooperate in a criminal investigation during a subsequent therapy session has acted unilaterally to withdraw from the therapist-patient relationship and continues as only a "feigned" patient. He urges this court to conclude that based on that one circumstance he and J.E did not have an ongoing therapist-patient relationship on May 2, 2001.

¶ 16. The State argues that, even if we accept its concession regarding the court of appeals' reasoning, we should nevertheless affirm the court of appeals decision. The State asserts that a therapist-patient relationship continues to exist as a matter of law "until one of the parties explicitly and openly advises the other party that the relationship has terminated." The State further counters that it would be inconsistent with the strict obligation that Wis. Stat. § 940.22(2) imposes on therapists to conclude that a patient's secret cooperation with law enforcement terminates an ongoing therapist-patient relationship.

¶ 17. The parties present competing standards for establishing the "ongoing therapist-patient relationship" element of Wis. Stat. § 940.22(2). We need to decide whether those interpretations are reasonable in order to determine whether the statute is ambiguous. Kalal, 271 Wis. 2d 633, ¶ 47. "Relationship" is not defined in the statute. Wisconsin Stat. § 990.01(1) instructs that words that are neither defined by statute nor technical in nature shall be defined according to common and approved usage. Webster's New Collegiate Dictionary defines "relationship" as "a state of affairs existing between those having relations or dealings." Webster's New Collegiate Dictionary 975 (1977) (emphasis added); see also FH Healthcare Dev., Inc. v. City of Wauwatosa, 2004 WI App 182, ¶ 20, 276 Wis. 2d 243, 687 N.W.2d 532 (concluding that common and approved usage of undefined words may be ascertained from their dictionary definitions). That a relationship exists "between" those having dealings indicates that both parties may have to consent for the relationship to continue. See id. Therefore, DeLain's interpretation, that an ongoing therapist-patient relationship requires continuing mutual consent, appears reasonable based on the plain meaning of the statutory language in question.

¶ 18. However, examining the language under review in the context of the statute as a whole, Kalal, 271 Wis. 2d 633, ¶ 46, we also note that the statute's scope is broad, as it includes one who simply "holds himself or herself out to be a therapist." Wis. Stat. § 940.22(2). Stated another way, one who is only pretending to be a therapist is within the scope of those whose behavior comes within the statutory prohibition. Accordingly, the types of relationships in which sexual contact is criminalized are broader than those relationships that are between a therapist in fact and a patient or client. As the statute covers relationships where the interaction may not actually involve the delivery or the receipt of therapy, the State's interpretation that a "relationship" may continue, even if one party is secretly cooperating in a criminal investigation of the therapist, also appears reasonable. Therefore, because both DeLain and the State have set out reasonable interpretations of § 940.22(2), we conclude that this statutory language is ambiguous. Stated another way, it has been "understood by reasonably well-informed persons in two or more senses." Kalal, 271 Wis. 2d 633, ¶ 47.

¶ 19. To resolve this dispute, we turn to the legislative history of Wis. Stat. § 940.22(2) for evidence of the legislature's intent. See Kalal, 271 Wis. 2d 633, ¶ 51 ("[Legislative history need not be and is not consulted except to resolve an ambiguity in the statutory language, although [it] is sometimes consulted to confirm or verify a plain-meaning interpretation.").

¶ 20. Before 1986, Wis. Stat. § 940.22(2) read in relevant part: "Any person who is or who holds himself or herself out to be a therapist and who intentionally has sexual contact with a patient or client during any treatment, consultation, interview or examination is guilty." Wis. Stat. § 940.22(2) (1983-84). However, in 1986, the legislature added the language we are examining here, making a therapist culpable for having sexual contact with a patient "during any ongoing therapist-patient or therapist-client relationship, regardless of whether it occurs during any treatment, consultation, interview or examination." Legislative Reference Bureau Drafting File for 1985 Wis. Act. 275, § 6. As the Legislative Reference Bureau Analysis published with the bill that created 1985 Wis. Act. 275 explains, "[T]he bill expands the crime's coverage to apply to sexual contact with a client while there is an ongoing therapist-client relationship, regardless of whether the sexual contact occurs during treatment or examination." 1985 A.B. 776. Further, notes from a meeting with Representative James Rutkowski, who introduced the bill, state that the statute was to be changed to "[r]evise [the] scope of [the] crime to the ongoing period during which treatment occur[s], [e].g. if being treated on a regular outpatient basis, they can't engage in sex outside the office." Legislative Reference Bureau Drafting File for 1985 Wis. Act 275, § 6. This change was made so that the therapist would be criminally liable for sexual contact with a patient, regardless of where that sexual contact took place.

¶ 21. The same legislative act also added the statute's final sentence: "Consent is not an issue in an action under this subsection." 1985 Wis. Act. 275, § 6. This change explicitly removed the patient's consent to the sexual contact as a defense, see id., again broadening the protection afforded to the public.

¶ 22. These two changes recognize the vulnerabilities of a person seeking therapy and the ways in which a therapist, or someone posing as a therapist, may prey upon such a person. While neither of these changes specifically addresses the issue presented here, they do indicate the legislature's intent to give broad protection to the public under Wis. Stat. § 940.22(2).

¶ 23. The State contends that the court of appeals erred in its interpretation of the word "knowledge" in Wis. Stat. § 939.23(3). According to the State, the meaning of the word "knowledge" in the definition of "intentionally" does not derive from or depend on the definition of "know" in § 939.23(2). We note that a therapist-patient relationship is necessarily a trust relationship, see Ande v. Rock, 2002 WI App 136, ¶ 10, 256 Wis. 2d 365, 647 N.W.2d 265, and as such, an individual seeking therapy is particularly vulnerable to the influence of the therapist. For a defendant's subjective intent to be the sole determinant of whether an ongoing therapist-patient relationship exists, as held by the court of appeals, would permit a therapist to prey upon a patient who relies on that relationship for help. We conclude that is too narrow a construction of the statute.

¶ 24. Accordingly, we disavow the court of appeals discussion of "intentionally." DeLain, 272 Wis. 2d 356, ¶¶ 10-11. Instead, we conclude that it is the totality of the circumstances, which in this case included a stipulation that DeLain provided therapy to J.F. on all her visits, that determines whether there was an ongoing therapist-patient relationship when sexual contact occurred. A defendant's state of mind is one factor in this totality of the circumstances analysis. Further, a secret unilateral action of a patient may also be a factor, although not necessarily the decisive factor, as urged by DeLain. Similarly, the explicit remarks of one party to the other regarding the status of the relationship may he a factor, but not necessarily the dispositive factor, as proposed by the State. Other factors that may appropriately enter into the analysis include, but are not limited to: how much time has gone by since the last therapy session; how close together the therapy sessions had been to each other; the age of the patient; the particular vulnerabilities experienced by the patient as a result of his or her mental health issues; and the ethical obligations of the therapist's profession. Only upon consideration of all the circumstances that are relevant in a given case may we fully address the legislature's concern for protecting the public.

C. Sufficiency of the Evidence

¶ 25. We now apply the totality of the circumstances standard to the May 2, 2001 session. The testimony was undisputed that DeLain was a licensed psychologist who had provided therapy to J.E on April 25, one week prior to the sexual contact at issue here; that J.F. was only 16 years of age; that DeLain knew that J.F. had problems with intimate relationships; that DeLain intended to provide therapy; that during the May 2 therapy session J.F. was wearing a recording device; that J.F. never formally withdrew from therapy; and that the parties stipulated that DeLain was performing psychotherapy on J.F. in May 2001. Based on the totality of these circumstances, we conclude that a rational trier of fact could have found beyond a reasonable doubt that the sexual contact occurred during an ongoing therapist-patient relationship.

III. CONCLUSION

¶ 26. In sum, we conclude that, for the purpose of establishing criminal liability under Wis. Stat. § 940.22(2), whether there was an ongoing therapist-patient relationship at the time of the sexual contact is determined by examining the totality of the circumstances. We also conclude that J.F.'s assisting the police by recording her therapy session is not sufficient to preclude a finding that a therapist-patient relationship was ongoing during that session. Further, based on the totality of the circumstances, which in this case included a stipulation that DeLain provided therapy to J.F. on all her visits, a rational trier of fact could have found beyond a reasonable doubt that an ongoing therapist-patient relationship existed on May 2, 2001. We therefore affirm the decision of the court of appeals, although on different grounds.

By the Court. — The decision of the court of appeals is affirmed.

       All further references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

       We note that the pattern jury instructions open by stating, "Sexual exploitation by a therapist, as defined in § 940.22 ... is committed by one who is or holds himself out to be a therapist and who intentionally has sexual contact with a patient or client during any ongoing therapist-patient or therapist-client relationship," Wis JI — Criminal 1248 (emphasis added). This opening statement appropriately includes intent. However, in stating that the second element of the crime is the defendant's sexual contact with the victim during the relationship, and in describing this second element, the instructions fail to include intent. See id. (stating, "Second, that the defendant had sexual contact with (name of victim)," and later stating, "The second element requires that the defendant had sexual contact with (name of victim)."). We therefore suggest review of these instructions.

       The only time DeLain and J.F. saw one another in May 2001 was May 2, 2001, when the sexual contact that forms the basis for the criminal conviction at issue here was alleged to have occurred.

       Wisconsin Stat. § 939.23(3) states:
      "Intentionally" means that the actor either has a purpose to do the thing or cause the result specified, or is aware that his or her conduct is practically certain to cause that result. In addition, except as provided in sub. (6), the actor must have knowledge of those facts which are necessary to make his or her conduct criminal and which are set forth after the word "intentionally."

       For example, rules regarding how a patient or client relationship should he terminated in the therapist's profession may be a factor in this totality of the circumstances analysis. See Wis. Admin. Code § Psy 5.01(31) (requiring psychologists to notify clients when service will be interrupted or terminated); Wis. Admin. Code § MPSW 20.02(21) (requiring marriage and family therapists, counselors, and social workers to make reasonable efforts to notify a client or a client's authorized representative when the professional will be terminating services); see also McManus v. Donlin, 23 Wis. 2d 289, 300, 127 N.W.2d 22 (1964) (stating that a physician or surgeon's "obligation of continuing attention can be terminated only by the cessation of the necessity which gave rise to the relationship, or by the discharge of the physician by the patient, or by the withdrawal from the case by the physician after giving the patient reasonable notice so as to enable the patient to secure other medical attention").
      Further, the administrative rules of professional conduct for some professions explicitly address sexual contact with clients or patients, and such rules may provide useful factors in evaluating the totality of the circumstances. For example, psychologists are prohibited from engaging in sexual contact with a client or a former client within two years of the termination of professional services. Wis. Admin. Code § Psy 5.01(14), (14)(a)-(b). In determining whether sexual contact is prohibited with a former client more than two years after professional services have terminated, the psychologist must demonstrate that "there has been no exploitation of the former client" and that "the former client is not vulnerable by reason of emotional or cognitive disorder to exploitive influence by the psychologist." Wis. Admin. Code § Psy 5.01(14)(c). This determination is to be made "in light of all relevant factors," id., including the following:
      1. The length of time which had passed between the termination of professional services and the conduct.
      2. The nature and duration of the professional services.
      3. The circumstances of termination.
      4. The client's personal history.
      5. The client's mental status at the time the conduct took place.
      6. The likelihood of adverse impact on the client or others.
      7. Statements or actions made by the licensee during the course of professional services suggesting or inviting the possibility of a post-termination sexual or romantic relationship with the client.
      Wis. Admin. Code § Psy 5.01(14)(c)1-7.