Is There a Constitutional Right to 12% Interest?

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Central bankers have been the bane of a saver’s return for awhile now, but Wisconsin’s court of appeals appears to have carved out a place for litigants to earn a market-beating return. In a decision issued by District II (written by Chief Judge Brown and joined by Judges Reilly and Gundrum), the court recently decided that it was unconstitutional for the legislature to change, retroactively, the rate of pre-judgment interest that applies to offers of settlement. Johnson v. Cintas Corp. No. 2, 13AP2323 (Wis. Ct. App. Jan. 14, 2015).

An offer of settlement” is a statutory cost-shifting procedure in Wisconsin designed to encourage settlement. Under Wis. Stat. § 807.01, a party can serve an “offer of settlement” on an adverse party, and, if the offeree accepts within 10 days, the court enters judgment in the amount of the offer. The case is over. If the offeree does not accept, however, it makes that choice at its own peril, for the statute shifts litigation costs to that party if it fails to secure a judgment more favorable than the offer. When a plaintiff is the offeror, § 807.01 also tacks on pre-judgment interest, calculated based on the final amount of the judgment and running from the time of the offer until the time that the judgment is paid.

Pre-judgment interest became part of the statute in 1980 and was set at 12% annual interest—a nominal amount in the days of the Volcker Fed and its battle against stagflation, but a rate of return that Wall Streeters lust after now. That rate remained at 12% until 2011, when the legislature changed it to 1% plus the prime interest rate in effect at the time the judgment is entered.

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No Diagnosis, No “Damages”: Wisconsin’s Construction Statute of Repose in Asbestos Cases

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How to apply Wisconsin’s construction statute of repose, Wis. Stat. § 893.89, in asbestos cases has recently been a hot topic dividing trial courts. The statute bars a broad category of claims if they are brought more than 10 years after the date of substantial completion of an improvement to real property. Many corporate defendants argue that their involvement in past real property improvements entitles them to the protection of the statute and bars asbestos plaintiffs’ claims. One of the key debates involves the meaning of the exception from the statute’s protection for claims for “[d]amages that were sustained before April 29, 1994.” § 893.89(4)(d). Plaintiffs, some of whom first worked with asbestos-containing products more than 50 years ago, often contend that this exception applies to their claims, making the statutory bar inapplicable.

Last week, in Peter v. Sprinkmann Sons Corp., 2014AP923, the Wisconsin Court of Appeals, District I, held the exception inapplicable to claims made by the estate of the deceased, Mr. Peter. The crux of the issue was the meaning of the phrase “damages that were sustained.” Did “damages” refer to legal damages, as in a legal cause of action that accrues when a cancer diagnosis is made (here, in 2012), as the defendant urged? Or did “damages” mean physical damage, as the plaintiff estate contended, submitting expert testimony that physical damage occurs upon asbestos exposure, which here may have been as far back as 1959. The court agreed with the defendant, for four reasons.

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A Reminder from the Seventh Circuit To Proofread the Form of the Judgment

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The Seventh Circuit’s docket appears to be rife with cases involving little errors that turn out to have not-so-little effects. Last month we wrote about the perils of typos in security agreements; this month the Seventh Circuit issued an opinion that serves as a good reminder that parties must look carefully at the form of the judgment entered by the district court. Article III insulates the judicial branch from the “diminish[ment]” of judges’ “compensation . . . during their continuance in office”; but, alas, it does nothing to insulate the third branch from the sort of typographical errors that plague the rest of us mere mortals—a fact to which the district judge in Dual-Temp of Illinois, Inc. v. Hench Control, Inc., Nos. 14-3393 & 14-3394 (7th Cir. Jan. 23, 2015), now can attest.

In a three-page decision (issued per curiam by Judges Ripple, Manion, and Williams), the court dismissed two consolidated appeals for lack of jurisdiction after the district judge conceded that she had checked the wrong box on the judgment form, indicating that she was not awarding prejudgment interest when she in fact intended to do so. The underlying dispute was a breach-of-contract case.

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In Need of a Tune Up: Wisconsin’s Court of Appeals Considers Personal Jurisdiction in the Internet Age

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Last year, we wrote about the Seventh Circuit’s interpretation of the emerging issue of personal jurisdiction in the context of internet activity. Courts understandably have been wary of subjecting businesses to broad jurisdiction in all 50 states based solely on an internet presence. The Wisconsin Court of Appeals continued this trend with its decision last week in Carlson v. Fidelity Motor Group, LLC, No. 2014AP695 (Jan. 14, 2015), a decision written by Judge Gundrum.

Eric Carlson, a Wisconsin resident, saw an advertisement for a used BMW from Fidelity Motor Group on the cars.com website, called Fidelity and discussed the car briefly, and Fidelity followed up with another call. The same day, Carlson traveled to the Fidelity dealership in Illinois and bought the car. He later sued Fidelity, claiming the car sustained damage due to Fidelity’s failure to change the car’s oil as he and his wife had requested.

Carlson filed his suit in Ozaukee County, Wisconsin. He submitted screenshots of Fidelity’s website and its advertisements on 14 other websites (including cars.com), along with evidence of the phone calls. For its part, Fidelity averred undisputed facts as to its lack of any other business in or contacts with Wisconsin, “except to the extent that [Fidelity’s] website is accessible to Wisconsin residents.” The circuit court dismissed the suit for lack of personal jurisdiction.

The Court of Appeals, District II, affirmed. It found that it was “clear” that due process was not satisfied under the analysis for minimum contacts and thus skipped any consideration of Wisconsin’s long-arm statute (Wis. Stat. § 801.05).

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The Seventh Circuit Interprets Wisconsin Exemption Law on College Savings Accounts and Retirement Annuities, but Did It Have Jurisdiction? (Part 2 of 2)

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As we explained in a post yesterday, the Seventh Circuit in In re Bronk (Cirilli v. Bronk), No. 13-1123 (7th Cir. Jan. 5, 2015), made some new law on Wisconsin’s college savings account (Edvest) and annuity exemptions for debtors.

But in deciding that it had jurisdiction to decide the annuity issue on the merits, despite the trustee’s failure to cross-appeal the bankruptcy court’s decision in the debtor’s favor to the district court, the Seventh Circuit seems to have missed the jurisdictional boat. As we noted, the court relied entirely, slip op. at 7 n.2, on its decision in Luevano v. Wal-Mart Stores, Inc., 722 F.3d 1014 (7th Cir. 2013), an employment discrimination case under Title VII, not a bankruptcy case.

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