Wisconsin Business Law Blog : Waukesha, New Berlin, Oconomowoc Corporate & Real Estate Lawyer & Attorney

About a year ago I posted on fired Kentucky coach Billy Gillespie’s claims against the school related to their alleged failure to honor a letter of intent. Now, former UK coach Tubby Smith is on the losing end of a lawsuit involving somewhat similar legal theories.    Apparently, the plaintiff quit his job based on representations by Mr. Smith that Mr. Smith would hire him as an assistant coach at Minnesota. Unfortunately for the plaintiff, the job never materialized. Unfortunately for Mr. Smith (or more likely the University through insurance) the jury found for the plaintiff and awarded him $1.25 Million. As with the Gillespie matter, the legal lesson to be learned form this former UK hoops coach is that it is wise to clarify in some form of writing whether something is a “binding agreement/offer” or simply a “letter of intent.” Otherwise, someone else will make the decision for you.

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The following was posted by Thomas Kertschner of the Journal Sentinel on July 5, 2010:

Oak Creek - The Common Council, which was hit by a storm of denunciation after it considered using eminent domain to acquire a 94-year-old farmer's property, will be asked Tuesday to pay the man's $9,081 legal bill.

The request comes from Michael Schober, the attorney who represents Earl Giefer.

Giefer's family has said it has no interest in selling the farm at 10523 S. Howell Ave., which has been in family since the 1800s.

City officials had argued that the 25-acre property would impede plans for a business park nearby and believe the farm qualifies as blighted.

The council decided June 1 to stop discussions of the possible use of eminent domain.

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In Roehl Transport v. Liberty Mutual, 2010 WI 49, the Wisconsin Supreme Court significantly expanded the tort of bad faith as it applies against insurance companies.  Insurers can engage in bad faith when improperly handling an insured's claim or a third party claim against an insured in certain circumstances.  In the past, the bad faith doctrine has been applied in situations where an insured is liable for an excess judgment (one beyond policy limits) due to such mishandling. 

The doctrine has now been extended to circumstances where an insured is forced to forfeit a large deductible.  In Roehl Transport, the deductible was very substantial--$500,000.00.  The insurer settled the matter within its policy limits, but in an amount in excess of the deductible.

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A recent Wisconsin Supreme Court opinion filed June 25, 2010, Ehlinger v. Hauser and Evald Moulding, Inc., 2010 WI 54, is a candid reminder that co-owners of a business should not only take the important step of entering into a written Buy/Sell Agreement to determine how important issues such as death, disability, divorce, bankruptcy, etc. will be dealt with between them, but also in doing so, should take the important steps of discussing fully the ramifications of their agreement so that they have a clear understanding of its key terms and conditions.

In Ehlinger, the Wisconsin Supreme Court upheld the lower courts' rulings that, among other things, a Buy/Sell Agreement between the co-owners of a Wisconsin Corporation was unenforceable because the court determined that the undefined term "book value" rendered it so.  The buyout agreement stated that if one of the shareholders becomes totally disabled, the non-disabled shareholder is entitled to purchase his shares at "book value."  In this case, the contract did not define "book value" and because the records of the corporation were so deficient that a special magistrate skilled in accounting could not determine a value which accurately reflected the corporation's assets and liabilities.  From the court record, the Supreme Court noted that not only was "book value" not defined and not determinable due to deficient corporate records, but it was also clear that the parties did not really understand each other when they entered into the buyout agreement as to what "book value" would actually mean should one of them become totally disabled.  Ultimately, this decision, after over seven (7) years of protracted litigation, resulted in the appointment of a receiver for the assets of the business.

Ehlinger again highlights the need for  co-owners of a business to take the time to ask each other the hard questions with the guidance of their accounting and legal professionals and come to a well considered agreement among themselves before moving ahead too far with the business operations.

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Wisconsin recently adopted a law which makes it unlawful for an employer to discriminate against an employee for "declining to attend a meeting or to participate in any communication about religious matters or political matters."  2010 Wisconsin Act 290, the law in question, was enacted on May 12, 2010.

The Act fails to define "religious matters" or "political matters", nor does it indicate what constitutes a "meeting" or "communication."  It may be anticipated that courts will use dictionary definitions in interpreting the law; therefore, the potential is that it may have broad application.  Encouraging employees to attend meetings or join in communications regarding political or religious issues would therefore appear unwise, as those who attend or join may be perceived as recipients of employment favoritism.  Employers may even want to exercise care in broadcasting their political or religious views at their places of business in light of this law.  It is an interesting question whether it may be claimed that this results in a "hostile workplace."

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The Patient Protection and Affordable Care Act of 2010 became law on March 23. It was immediately followed by the Health Care and Education Tax Credits Reconciliation Act of 2010. These two laws make up what is now known as "Health Care Reform." In a series of articles, I intend to acquaint you with the most significant provisions of these acts which cover well over 2,000 pages. Each will be a snippet of what the laws contain.

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The Wisconsin Legislature recently adopted a law which prohibits municipalities from considering the proposed use of property in reviewing requests for land divisions within their extraterritorial authority.  The result is that where a business intends to acquire property outside of a city or village but within 3 miles of its limits, the city or village cannot refuse to accept a certified survey map or other land division because the intent is to use the property for commercial or industrial purposes.

Many municipalities have not gone through the procedures required to zone property outside of their boundaries, but have extraterritorial platting authority, giving them approval authority regarding land divisions within 3 miles of their incorporated boundaries.  Recent court decisions have indicated that the proposed use of the property being divided may be taken into consideration in deciding whether the land division should be approved.  The new law is apparently in response to those court decisions.

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My good friend, Ed DeFrance, at Baird, just sent me an article Baird puts out about the new health care law and a new tax which will affect high income filers. It seems that if you have household income over $250,000, starting in 2013, a new Medicare Tax of 3.8% will apply to interest, dividends, capital gains, rents and royalty income. This is in addition to

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Buying residential real estate in Wisconsin almost always entails using an "Offer to Purchase," also known as form WB-11. In a recent article written for the March issue of the Wisconsin Lawyer magazine, entitled "Using the New, Flawed Residential Offer Form," Richard J. Staff criticized the current draft of the form which requires mandatory use by real estate licensees in Wisconsin after March 1, 2010.

Staff points out problems with the new form that relate to:

• closing prorations
• financing contingencies
• the "gap" endorsement
• conveyance of title

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