New Laws and Near Misses: Legislative Update

WDC Journal Edition: Summer 2009
By: Andrew Cook and Jim Hough, The Hamilton Consulting Group

Introduction

The 2009-10 legislative session is shaping up to be extremely active for Wisconsin’s civil justice system. The most notable – and controversial – proposed changes to date were contained in Governor Jim Doyle’s original 2009-11budget bill.[1] The budget bill contained numerous provisions attempting to undo reforms made during the 1990s and further enhance plaintiffs’ ability to win lawsuits and recover higher damages. Although the provisions ultimately were removed from the budget, it is likely that the same proposals will be resurrected as separate pieces of legislation. Moreover, despite the success in removing the comparative negligence provisions, the final budget bill contained a number of changes to Wisconsin’s insurance laws.

Apart from the budget bill, the Legislature recently passed two bills that directly affect Wisconsin’s civil justice system. The first, Senate Bill 9[2], overturned a Wisconsin Supreme Court decision that barred, based on the economic loss doctrine, common law claims for intentional misrepresentation that occur in the context of residential real estate transactions. The second, Senate Bill 20[3], provides for recovery of punitive and compensatory damages, among other changes, in employment discrimination cases under Wisconsin’s Fair Employment Act.

In addition, the Assembly Judiciary Committee recently held a public hearing on Assembly Bill 291, which would allow recovery of damages for loss of society and companionship in medical malpractice wrongful death cases between adult children and their parents.

Below is a discussion of each bill.

Joint and Several Liability and Contributory Negligence Provisions Removed from Budget

On June 29, 2009, Governor Doyle officially signed into law Assembly Bill 75[4]. The original bill contained sweeping provisions to modify Wisconsin’s contributory negligence statute. Specifically, the Governor’s original proposal would have amended Wisconsin’s joint and several liability law by forcing co-defendants as little as one percent at fault to potentially be responsible for 100 percent of the damages. Under current law, a co-defendant can only be held joint and severally liable if he or she is 51 percent or more at fault.[5]

Second, the bill would have allowed a person or business that is less at fault than the plaintiff to be sued so long as the combined fault of all the persons sued is equal to or greater than that of the plaintiff. Existing law requires the plaintiff to be less at fault than each defendant he or she is suing.[6]

Third, the bill would have mandated a jury instruction in civil cases involving comparative negligence informing the jury of the effect of its verdict. Wisconsin has long-adhered to the following principle: “[t]he fundamental rule in this state is that it is reversible error for either the court or counsel to inform the jury of the effect of their answer on the ultimate result of their verdict.”[7] Under the original budget bill language, in cases involving comparative negligence, courts would have been required to explain to the jury the effect its allocation of fault would have on the plaintiff’s ultimate award of damages.

Over 70 associations and businesses, led by Wisconsin Defense Counsel (WDC) and the Wisconsin Civil Justice Council, eventually applied enough pressure to convince legislators in the Assembly and Senate that, at the very least, these provisions proposed by Governor Doyle did not belong in a budget bill. While WDC and others were successful in having these provisions removed from the budget, individual bills addressing the same issues will more than likely be reintroduced this legislative session.

Insurance Provisions Enacted in the Budget

The plaintiffs’ bar was successful in advocating for changes in Wisconsin law relating to motor vehicle insurance, medical records, and recovery of health care costs. Below are a few of the provisions enacted by the Legislature that will take effect in the coming months and years:

  • Wisconsin Statutes § 344.62 will now require all vehicle owners to have auto insurance.
  • Wisconsin Statutes § 632.32(4) will making underinsured motorist coverage mandatory.
  • Wisconsin Statutes § 344.01(2) and § 344.11(1)-(2) will increase “minimum liability limits” on auto insurance policies to $50,000 for bodily injury or death of one person in any one accident, subject to such limit for one person, $100,000 for bodily injury or death of two or more persons in any one accident, and $15,000 for injury to or destruction of property of others in any one accident. The budget also created five-year indexing of minimum liability limits.
  • Wisconsin Statutes § 632.32(4)(a)1 will set minimum coverage limits for uninsured motorist and underinsured coverage at $100,000 per person (increased from $25,000) and $300,000 per accident (increased from $50,000).
  • Wisconsin Statutes § 632.32(4)(a)3m will increase minimum coverage for medical payments from $1,000 to $10,000 per person.
  • Wisconsin Statutes § 632.32(5)(d) will prohibit anti-stacking language in policies. The bill was amended to limit the stacking of underinsured and uninsured policies to three vehicles.
  • Wisconsin Statutes § 632.32(6)(g) will prohibit reducing clauses.
  • Wisconsin Statutes § 146.81(4) will make numerous changes to patient medical records laws.
  • Wisconsin Statutes § 632.32(4) will mandate that “[a]ny party attempting to rebut the presumption of the reasonable value of the health care services provided may not present evidence of payments made or benefits conferred by collateral sources.”

Creating a Tort Action for Intentional Misrepresentation in Real Estate Transactions
(Senate Bill 9)
[8]

Senate Bill 9 was introduced early in the 2009-10 legislative session to overturn the Wisconsin Supreme Court’s decision, Below v. Norton.[9] In Below, the court held that the economic loss doctrine bars common law claims for intentional misrepresentation that occur in the context of residential real estate transactions.[10] The decision was the latest by the court in a string of cases involving the economic loss doctrine.[11]

Below involved the sale of a home that contained a structural defect.[12] The buyer brought a tort claim for intentional misrepresentation after defects were discovered with the sewer line running between the house and the street.[13] The sellers stated in the statutorily required property condition report that they were not aware of any defects with the house’s plumbing.[14]

Upon discovering the defect, the purchaser brought a claim under Wis. Stat. § 110.18, which provides protection to buyers for false advertising in the sale of real estate.[15] However, the trial court dismissed the
§ 100.18 claim.[16] In addition to the statutory claim, the purchaser also brought intentional, negligent, and strict responsibility misrepresentation claims. (Notably, the buyer did not originally include a breach of contract claim in the complaint. The buyer filed an amended complaint containing the breach of contract claim, but failed to properly serve the parties and thus was dismissed by the court.)[17]

The Wisconsin Supreme Court upheld the lower court and ruled that the economic loss doctrine bars a common law misrepresentation claim.[18] The court, however, reversed the lower court’s dismissal of the buyer’s § 100.18 claim and remanded the case to the lower court to allow the buyers to prove their statutory claim.[19] In reaching its decision, the court noted that by dismissing the intentional misrepresentation claim that the buyers were not without a remedy.[20] For example, the court explained that § 100.18 allows buyers to recover their “pecuniary loss, together with costs, including reasonable attorney fees…”[21] In addition, the court noted that buyers also have a contractual claim.[22]

Sen. Jon Erpenbach (D-Waunakee) introduced Senate Bill 9 to undo the court’s decision and to add a tort claim for intentional misrepresentation. The bill passed the Assembly and Senate and was signed into law.[23]

The new law provides that “[i]n addition to any other remedies available under law, a transferee in a residential real estate transaction may maintain an action in tort against the real estate transferor for fraud committed, or an intentional misrepresentation made, by the transferor in the residential real estate transaction.”[24] The law also defines “residential real estate transaction” as “a real estate transfer to which s. 709.01(1) applies.”[25]

The law went into effect on April 22, 2009.

Adding Compensatory and Punitive Damages in Discrimination Cases under the Wisconsin Fair Employment Act (Senate Bill 20) [26]

Senate Bill 20, introduced by Senator Dave Hansen (D-Green Bay), adds compensatory and punitive damages in employment discrimination cases under the Wisconsin Fair Employment Act (WFEA).

Prior to enactment of Senate Bill 20, a person alleging a violation of the WFEA could file a complaint with the Department of Workforce Development (DWD). If a hearing examiner found a violation, the examiner could order that the employee be reinstated as well as receive back pay, attorney fees, and costs. The WFEA did not allow an employee to seek compensatory and punitive damages.

As enacted, Senate Bill 20[27] provides that a certified copy of a determination by a DWD hearing examiner or the Labor and Industry Review Commission (LIRC) that an employer has engaged in discrimination, unfair genetic testing, or unfair honesty testing must be served on the complainant.[28] In addition, the employee must be provided a notice advising that after completion of the administrative proceedings, he or she may bring an action in circuit court to recover compensatory and punitive damages.[29] The notice must also advise the employee of the time within which the action must be commenced.[30]

In addition, the newly amended law provides that after completion of the administrative proceedings the DWD or the employee discriminated against may bring an action in circuit court against an employer, labor organization, or employment agency to recover compensatory damages, punitive damages, reasonable costs, and attorneys fee under Wisconsin Statutes § 895.043.[31] These damages are recoverable in addition to any back pay or other amount awarded in the administrative proceedings.[32]

The new changes further prohibit any action against an employer, local government, labor organization, or employment agency employing fewer than 15 individuals for each working day in each of 20 or more calendar weeks in the current or proceeding year.[33]

Originally, Senate Bill 20 did not contain a limit on the amount of punitive damages. However, the bill was amended to reference § 895.043 after objections were raised by its opponents, particularly WDC. Under the new law, the cap on the amount of compensatory damages for future economic losses, pain and suffering, emotional distress, mental anguish, loss of enjoyment of life, other noneconomic losses, and punitive damages are as follows:

  • $50,000 for a defendant that employs 100 or fewer employees for each working day in each of 20 or more calendar weeks in the current or proceeding year.
  • $100,000 for a defendant that employs 201 employees.
  • $200,000 for a defendant that employs 200 but fewer than 501 employees.
  • $300,000 for a defendant that employs more than 500 employees.[34]

The bill further provides the statutory time frame for commencing a civil action in circuit court. An action must be brought within 60 days after mailing of the final decision of the hearing examiner to the last-known address of the complainant or, if that decision is reviewed by LIRC, within 60 days after a copy of LIRC’s final decision is mailed.[35] Finally, if a petition for judicial review of the findings and order of LIRC regarding the same violation is filed, the court must consolidate the proceeding for judicial review and the civil action.[36]

Loss of Society and Companionship for Adult Children and Parents in Medical Malpractice Cases (Assembly Bill 291/Senate Bill 203)

Under current law, parents of adult children do not have the right to recover for the loss of society and companionship for injuries or death due to medical malpractice. Nor can adult children recover such damages for their parents. (However, parents can recover damages for the loss of society and companionship for minor children, and minors can recover for loss of society and companionship for their parents.)

The Wisconsin Supreme Court has addressed the issue of adult children and their parents recovering damages for loss of society and companionship in the context of medical malpractice. In Estate of Wells v. Mt. Sinai Medical Center,[37] the court held that a parent does not have the right to recover for the loss of society and companionship of an adult child whose injuries were the result of medical malpractice. Similarly, in Czapinski v. St. Francis Hospital, Inc.,[38] the court ruled that adult children do not have the right to recover for the loss of society and companionship of a parent who dies as the result of medical malpractice.

Assembly Bill 291, introduced by Representative Jon Richards (D-Milwaukee), and Senate Bill 203, introduced by Senator Jeff Plale (D-South Milwaukee) would essentially reverse these two decisions. The bill adds a new section (Wisconsin Statutes § 655.018) allowing adult children recover for damages for the loss of society and companionship “against the person who committed the medical malpractice.” The bill also would allow a parent of an adult child to recover damages against the person who committed medical malpractice. The bill also amends Wis. Stat. § 655.007 by adding the words “adult or minor” child.

Conclusion

Just seven months into the 2009-10 legislative session, the Wisconsin Legislature has been extremely busy addressing Wisconsin’s civil justice system. Although those committed to the defense of Wisconsin citizens and businesses have been successful in defeating provisions that would dramatically alter Wisconsin’s comparative negligence laws, the plaintiffs’ bar has been successful in enacting other bills. Moreover, it is extremely early in the biennium, which means that more legislation will likely be introduced to repeal the positive civil justice reforms enacted during the 1990s.

For continuing updates throughout the legislative session, please see The Hamilton Consulting Group’s Web site (www.hamilton-consulting.com).


[1] Assembly Bill 75, 2009 Wis. Act 28.

[2] 2009 Wis. Act 4

[3] 2009 Wis. Act 20

[4] 2009 Wis. Act 28

[5] Wis. Stat. § 895.045(1).

[6] Id.

[7] See McGowan v. Story, 70 Wis. 2d 189, 234 N.W.2d 325 (1975)

[8] 2009 Wis. Act 4

[9] 2008 WI 77, 310 Wis. 2d 713, 751 N.W.2d 351 (2008).

[10] Id. ¶ 23

[11] See also Linden v. Cascade Stone Co., 2005 WI 113, ¶ 32, 283 Wis. 2d 606, 699 N.W.2d 189 (2005) (applying the economic loss doctrine to bar a tort suit against a subcontractor who worked on the construction of the plaintiff’s home); Wickenhauser v. Lehtinen, 2007 WI 82, ¶¶ 39-44, 302 Wis. 2d 41, 734 N.W.2d 855 (2007) (applying the economic loss doctrine to the sale of farmland).

[12] 2008 WI 77, ¶¶ 2-17.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id. ¶¶ 23-40.

[19] Id. ¶ 44.

[20] Id. ¶ 41.

[21] Id. ¶ 43; Wis. Stat. § 100.18(11)(b)2.

[22] Id. ¶ 42.

[23] Wis. Stat. § 895.10(2); 2009 Wis. Act 4.

[24] Id.

[25] Id.

[26] 2009 Wis. Act 20

[27] 2009 Wis. Act 20.

[28] See Wis. Stat. § 111.39(4)(d), § 111.39(5)(d).

[29] Id.

[30] Id.

[31] See Wis. Stat. § 111.397(1)(a).

[32] Id.

[33] Id.

[34] See Wis. Stat. § 111.397(2)(a)1-4.

[35] See Wis. Stat. § 111.397(1)(b).

[36] See Wis. Stat. § 111.397(1)(c).

[37] 183 Wis. 2d 677, 515 N.W.2d 705 (1994).

[38] 2000 WI 80, 236 Wis. 2d 316, 613 N.W.2d 120 (2000).