Jeff THOMPSON, Plaintiff-Respondent and Cross-Appellant, v. VILLAGE OF HALES CORNERS, a municipal corporation, Defendant-Appellant and Cross-Respondent, WALTER NOWICKI, INC., a Wisconsin corporation, Defendant and Cross-Respondent.
No. 82-488
Supreme Court of Wisconsin
November 30, 1983
115 Wis. 2d 289 | 340 N.W.2d 704
By the Court. — The judgment of the trial court is affirmed.
For the plaintiff-respondent and cross-appellant there were briefs by Mark J. Rogers, Milwaukee, and oral argument by Mr. Rogers.
DAY, J. This is an appeal from a judgment of the Milwaukee County Circuit Court, Honorable Michael T. Sullivan, Reserve Judge, presiding, awarding damages and attorney‘s fees to the plaintiff, Jeff Thompson (Thompson), against the Village of Hales Corners (Village) for violation of his civil rights under
In the fall of 1977, Thompson began investigating the possibility of opening a combination sandwich shop and amusement arcade in the Hales Corners area. In January of 1978, he reached an agreement with a representative of Nowicki on the terms of a lease in the Postal Plaza Shopping Center and began making improvements in anticipation of opening sometime in the spring. The shop, known as “Pinnochios,” opened on May 1, 1978. It consisted of one room where food was served and a second smaller room that contained from eight to twelve coin operated amusement devices—pinball machines, pool tables and electronic video gаmes. Though Pinnochios’ clientele included people of all ages, the restaurant was directed toward and attracted a large number of young people.
Pinnochios did its best business during the first months of operation. Sales fell off sharply in the late summer and into the fall. On December 23, 1978, Mr. Thompson closed Pinnochios.
Throughout 1978 and at all other times relevant to this lawsuit, the Village had an ordinance forbidding minors to play coin operated amusement devices unless accompanied by a parent or adult guardian.1 Thompson
Thompson testified that he made an effort to comply with the law. He posted a sign in the game room, checked patrons’ identification cards, and refused to allow several known minors to play the games.
On May 12, the village commissioner sent Thompson a letter which noted his failure to license some of his games and warned against violations of sec. 11.06. There was testimony that police presence in and around Pinnochios increased over the course of the operation of the business. On May 14, an officer for the village police department observed minors playing games and reported the violation to Pinnochios’ manager. Policemen entered the premises on a number of occasions to check identification cards of patrons in the game room.
Police patrols outside Pinnochios also increased. One employee testified to observing as many as three to five police cars per hour. Others reported seeing police cars two or three times an hour. One witness reported seeing policemen in parked cars watching what was going on inside the restaurant with binoculars.
There was testimony that the police presence made customers uneasy and caused some to leave or stay away. Mr. Thompson claimed that as the police presence increased, business declined. By December, the operation was no longer profitable and was closed.
On November 15, 1978, Thompson filed suit in the Milwaukee County Circuit Court. His complaint alleged four separate causes of action. The first was for tortious misrepresentation. Thompson alleged that both the village and Nowicki falsely represented that there were no legal impediments to operating the business. The second claim, for negligence, was dismissed on motion of the plaintiff before trial. The third claim sought rescission of the lease with Nowicki on the grounds of mutual mistake of fact, and the fourth was for violation of Thompson‘s civil rights under
The matter was tried before a jury in October of 1981 which found in favor of the Village and Nowicki on the misrepresentation claim. A verdict for Thompson on the mutual mistake claim was overturned by the trial court. On the civil rights claim, the jury found for Thompson and awarded $88,000 in damages consisting of $38,000 for capital and operational losses and $50,000 for lost profits. The court also made a finding and award of attorney‘s fees as authorized by federal law. The jury found for Nowicki in its counterclaim and the court
The first issue concerns the enforceability of an $88,000 damage award against a municipality in a
“Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thеreof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.”
United States Supreme Court cases construing
The United States Supreme Court made an analysis of tort liability under
The United States Supreme Court noted that state common law damages rules may not providе a suitable model for
The Village emphasizes that the defendant in this action is a municipal corporation. Although the United States Supreme Court made it clear in Monell v. New York City Dept. of Social Services, 436 U.S. 658 (1978) that municipalities do not enjoy an absolute immunity from suit under
The Supreme Court had occasion to consider the question оf qualified immunities in Owen v. City of Independence, Missouri, 445 U.S. 622 (1980). In that case, the City of Independence asserted as a defense to a suit under
The United States Supreme Court applied the guidelines set forth in Owen but found a qualified immunity in the case of Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981) where the city claimed immunity from punitive damages in
Applying the analysis used by the Supreme Court in Owen to the present case we conclude that limiting liability is not permitted. It is true that at the time the Civil Rights Act of 1871 was passed, municipal corporations were afforded protection from tort liability under two different doctrines. The first distinguished between a municipality‘s “governmental” and “proprietary” functions. When a municipality was performing governmental functions, it was immune. When performing proprietary functions, it was held to the same standards of liability as any private corporation. The second doctrine immunized a municipality for “discretionary” or
The United States Supreme Court held in Owen that while both grounds for immunity were recognized at the time the Civil Rights Act of 1871 was passed, neither could serve as a basis for immunity under
The Supreme Court also explained why the rationale underlying the common law immunity for “discretionary” functions cannot serve as the foundation for immunity under
If the common law immunities discussed above could not have been the basis for municipal immunity under
The Village directs our attention to
In this case there is clearly articulated federal case law regarding damages and therefore no necessity of resorting to state law. As noted above, the United States Supreme Court held in Carey that damages in
Even if there were no federal law of damages for
State law cаnnot be used where its application would frustrate federal policies. The policy behind The second question is attorney‘s fees. The provision of The determination of what is a reasonable fee under In its calculation of what it deemed a reasonable fee, the trial court adopted the formula suggested by the Third Circuit in Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3rd Cir. 1973). Under the Lindy Bros. approach, the court begins by computing the number of hours devoted to the case by each attorney and then multiplying that figure by a reasonable hourly In applying the Lindy Bros. rules to this case, the trial court began by calculating a basic fee for each of the three attorneys for the plaintiff by multiplying the number of hours spent on the case by an hourly rate appropriate to the skill and experience of the particular attorney. The basic fee for Attorney Rogers was then enhanced by a factor of fifty percent based on the court‘s evaluation of the contingency factor. It justified the increase on three grounds: “(i) His compensation was contingent on recovery; (ii) Difficulty of proving [the] case; (iii) Preclusion of other employmеnt in the relatively brief time (one year, nearly 200 hours of work) from employment to the time of trial.” The fee was further enhanced by a factor of thirty percent based on the quality of Rogers work. The court felt this increase was warranted because of “(i) Reputation, experience and background of Rogers; (ii) Result obtained; (iii) Preparation of jury instructions relied on by the court to a substantial extent.” The court made no enhancement of the basic fee of the other two attorneys. Based on these calculations, the court found that a reasonable attorneys’ fee was $23,180.80. The Village attacks the reasonableness of this finding on a number of grounds. First, it contends that it was error for the court to make its determination based on criteria used in the Third Circuit rather than the standards used in the Seventh Circuit. The argument rests on the assumption that the pronouncements of the sev- “Of course the construction of the bankruptcy act finally rests with the federal courts and at last with the supreme court of the United States. If there were no difference of opinion among those courts, or indeed if the supreme court had finally spoken on that subject, we should of course be guided by such utterance. But where variant views are entertained it is the duty of this court to decide for itself.” Stuart v. Farmer‘s Bank of Cuba City, 137 Wis. 66, 75, 117 N.W. 820 (1908). Likewise, the Seventh Circuit denied that its decisions were binding on state courts in Wisconsin or anywhere else. In United States ex rel. Lawrence v. Woods, 432 F.2d 1072, 1075-1076 (7th Cir. 1970), that court said: “The Supreme Court of the United States has appellate jurisdiction over federal questions arising either in state or federal proceedings, and by reason of the supremacy clause the decisions of that court on national law have binding effect on all lower courts whether state or federal. On the other hand, because lower federal courts exercise no appellate jurisdiction over state tribunals, decisions of lower federal courts are not conclusive on state courts.” The Supreme Court discussed the question of awarding attorney‘s fees under The Village advances a number of other grounds for finding $23,180.80 unreasonable. It argues that the court should have used a different hourly rate for “in court” and “out of court” time, and that it was improper to allow compensation for time spent preparing materials on the attorneys’ fees issue. We disagree with both contentions. Although there is authority for compensating the various tasks attorneys perform at different hourly rates,6 “[m]ost courts . . . continue to apply to lawyers In conclusion, we hold that the trial court did not abuse its discretion in finding attorneys’ fees reasonable at $23,180.80. After having made its determination that $23,180.80 was reasonable compensation for legal services performed on behalf of Thompson, the trial court decided to assess only one-half that amount аgainst the Village and require that the balance be made up from the damages award. In support of its decision, the court cited Harris v. Harvey, 453 F. Supp. 886 (E.D. Wis. 1978) and stated that it was reducing the award “because plaintiff represented no class or group.” Thompson in his cross appeal challenges this reduction. What is the essential policy underlying an award of attorney‘s fees under The First Circuit came to a different conclusion in Sargeant v. Sharp, 579 F.2d 645 (1st Cir. 1978). There the court noted that the case under consideration was “atypical of civil rights actions” in that it had been brought on a contingent fee basis. 579 F.2d at 648. However, the court said that “the economic factors relevant to the decision as to whether fee shifting . . . would be unjust” must be considered in light of Congress’ intent “to encourage the private enforcement of civil rights laws in order to fully vindicate the federal laws involved.” 579 F.2d at 648. The court concluded: “[W]e reiterate that a fee agreement is irrelevant to the issue of entitlement and should not enter into the determination of the amount of a reasonable fee. A private fee arrangement is not in itself ‘special circumstances which would render an award unjust,’ and unless the court finds such circumstances, it may not deny fees in this case. If the court sets the fee amount and determines that counsel has already received remuneration equal to or above that amount and that the award The Tenth Circuit considered the effect of a contingent fеe agreement on the award of attorney‘s fees under ”Hensley provides an efficient and analytically sound approach to section 1988 attorney‘s fee awards. The opinion contains no suggestion that a different approach should be followed in cases where the prevailing party and his attorney have executed a contingent fee agreement. Indeed, we believe that the goals of section 1988 are advanced by following the framework set forth in Hensley, regardless of the fee arrangements made by the attorney and his client.” Cooper v. Singer II, 719 F.2d at 1501. The court specifically rejected the “bright prospects” rule of Zarcone noting that it finds no support in the legislative history of “It instructs a lawyer to critically evaluate the prospects for success in each potential civil rights claim, and it encourages the lawyer to proceed only with those claims that are indeed meritorious. The lawyer can go forward with difficult arguments, confident that the client‘s fee award will reflect the obstacles that the attorney overcomes. The lawyer can go forward with nonmonetary claims, secure in the knowledge that the fee award will not be diminished on account of the absence of damages.” Slip op. at 14. Our reading of the legislative history of We also conclude that the individual nature of the suit is not grounds for reducing the award. In legislating to The Village next challenges the sufficiency of the evidence in support of the jury‘s verdict. At the outset, we reiterate the scope of our review. The jury‘s verdict will not be upset on appeal if there is any credible evi In order to prevail under The facts recounted earlier in this opinion amply demonstrate that sec. 11.06 was enforced against Thompson. The facts recited above also support the jury finding that the conspicuous and intimidating police presence was the primary cause of the decline and eventual failure of Pinnochios. In order to prevail, a plaintiff must further prove that the ordinance was enforced “with an evil eye and an unequal hand,” Yick Wo v. Hopkins, 118 U.S. 356, 373-374 (1886). There must be a showing of an intentional and systematic discrimination. Thompson adduced evidence at trial that enforcement of sec. 11.06 against other establishments with coin operated amusement devices was virtually nonexistent. Several witnesses testified that unaccompanied minors were allowed to play pinball and other games unmolested at the Moreway Store and the Hales Corners Bowl. Witnesses observed Hales Corners’ police at both locations when such occurred and nothing was done by the The Village also challenges the form of the special verdict question given to the jury on the The source of the error in the Village‘s argument lies in its misapprehension of what constitutes enforcement. The Village insists that because there was never a completed prosecution—because Thompson was never convicted of violation of the ordinance and never paid any fines—the ordinance was not enforced. In that contention, the Village is simply wrong. Any official action Finally, the Village seeks reversal on the grounds that the trial court erroneously struck from the record certain testimony given by witness Frank Migliano. Mr. Migliano operated a retail pharmacy in the Postal Plaza Shopping Center during the time Pinnochios was in operation. In a pretrial ruling on a motion in limine, the court had ruled that Migliano‘s testimony was admissible for rebuttal purposes but not for the purpose of establishing an affirmative defense. At the conclusion of Mr. Migliano‘s testimony, the court, pursuant to a request from counsel for Thompson, admonished the jury that they were not to consider Migliano‘s testimony concerning the presence of beer cans in the Postal Plaza parking lot, a profanity that had been painted across the window of the pharmacy, Thompson‘s agreement to regulate young people outside the restaurant and alleged harassment of women patrons of the drug store. Though the court‘s reasons for striking the particular testimony it did are not clear, we conclude that the error, if there was any, was not prejudicial. Evidence of the presence of beer cans in the parking lot was properly presented to the jury by other witnesses. Insofar as the purpose of presenting Mr. Migliano‘s testimony was to establish a reason for the police presence other than enforcement of the ordinance, that purpose was more directly served by testimony of the witness Migli Mr. Thompson also cross appeals from the court‘s decision on its claim against Nowicki. Thompson first challenges the jury‘s verdict on its misrepresentation claim. He contends that the jury‘s finding is unsupported by the evidence and must be upset. The only evidence adduced in support of the misrepresentation claim was Thompson‘s uncorroborated testimony concerning statements supposedly made by Mr. Roscoe Fancher, leasing agent for Nowicki. Thompson testified that Fancher told him he had spoken with the village assessor and building inspector and with members of the village police department concerning the proposed business, all of whom had expressed general approval. Mr. Fancher did not testify. The assessor and building inspector, Mr. Andrew Pushnig, denied having ever spoken to Fancher about Thompson‘s plans. Likewise none of the police officers who testified mentioned having approved a game room to Fancher. On cross-examination by counsel for Nowicki, Thompson was less clear about the particulars of his conversation with Fancher. He was uncertain whether it was the police department or some other Village official Fancher said he had spoken to. Thompson argues that the only reasonable conclusion that can be drawn from all the testimony is that Fancher misrepresented having spoken with the Village officials. Obviously, the jury could also choose not to credit Thompson‘s testimony concerning his conversation with Fancher. The testimony concerned an incident that took place more than three years earlier. Thompson was not certain of the circumstances of the conversation but said The credibility of the witnesses and the weight to be given to their testimony is left to the judgment of the jury. Where the evidence is susceptible of more than one reasonable inference, the reviewing court will accept the inference drawn by the jury. Meurer v. ITT General Controls, 90 Wis. 2d 438, 280 N.W.2d 156 (1979). Finally, Thompson appeals from the trial court‘s decision on its claim against Nowicki for rescission of the lease on the grounds of mutual mistake of fact. Question number thirteen of the special verdict asked: “Did Plaintiff and Nowicki enter into the lease under a mutual mistake of fact?” The jury returned an answer of “yes.” The court changed the answer to “no.” The alleged mistake concerned the existence of village ordinance number 11.06. Thompson contends that the existence of the ordinance so frustrated the intention of the parties in entering into the lease as to constitute grounds for avoidance. We conclude that Thompson is not entitled to rescission on the grounds that, even if the lease is voidable for mistake, Thompson waived his right by his subsequent acts of affirmance. In January of 1978, Thompson and Nowicki formalized their agreement on the terms of a lease on the building in the Postal Plaza Shopping Center in a document characterized as a “letter of lease.” Thompson occupied the premises and began making improvements shortly thereafter. He was made unequivocally aware of ordinance Ordinarily questions of waiver are questions of fact for the jury. However, this court has held that where the facts relating to the conduct of the parties after discovery of the fraud or mistake are “practically undisputed,” the question of waiver is one of law. Weinhagen v. Hayes, 174 Wis. 233, 249, 178 N.W. 780 (1920). Although the trial court did not expressly find waiver, it noted that Thompson “did not assert a mistake, nor take any action to terminate the lease, or offer to surrender occupancy” until long after he learned of the mistake. A party‘s right to rescind for fraud or mistake is waived if he unreasonably delays in asserting thаt right or affirms the agreement after learning of the fraud or mistake giving rise to the right of rescission. Restatement of Restitution sections 64, 68 (1937); Weinhagen v. Hayes, 174 Wis. at 249. In this case, Thompson‘s failure to assert his rights for more than six months together with his affirmance of the lease as evidenced by the July 20 document constitute a waiver of any right to rescind. Therefore, there was no error in the trial court‘s changing the jury‘s special verdict answer on the mutual mistake claim. By the Court.—Affirmed in part, reversed in part and remanded to the circuit court for proceedings not inconsistent with this opinion. STEINMETZ, J. (dissenting). On the issue of a municipality‘s limited liability for actions of its employees and officers, I disagree with the majority. The holding in Monell at 694, was: “We conclude, therefore, that a local government may not be sued under However, Monell left open the limits of local governmental liability. It said at 695: “[W]e have no occasion to address, and do not address, what the full contours of municipal liability under “[W]e express no views on the scope of any municipal immunity beyond holding that municipal bodies sued under In Carey v. Piphus, 435 U.S. 247 (1978), the Supreme Court recognized that rights, constitutional and otherwise, do not exist in a vacuum. In Carey at 258, the Court spoke of the difficulty of adopting the common law of compensation for deprivation of constitutional rights but that the task would have to be undertaken. Robertson v. Wegmann, 436 U.S. 584, 590 (1978), held: “In resolving questions of inconsistency between state and federal law raised under In Robertson, at 593, the Court stated: “But In Robertson, the dissent criticized the majority opinion for first looking to the state law and its effect on the Owen v. City of Independence, 445 U.S. 622, 640 (1980), held that local governments are subject to liability for acts of individuals when the act done is by express authority of the municipal corporation, where they [the individuals] are empowered to act for the government “‘upon the subject to which the particular act relates; and for any act which, after it has been done, has been lawfully ratified by the corporation,‘” citing Shearman, T. and Redfield, A., A Treatise on the Law of Negligence, sec. 120 at 139 (1869). In Owen, at 655, the Court stated: “Thus, even where some constitutional development could not have been foreseen by municipal officials, it is fairer to allocate any resulting financial loss to the inevitable costs of government borne by all the taxpayers, than to allow its impact to be felt solely by those whose rights, albeit newly recognized, have been violated.” The foregoing is a statement of a benevolent, deep pocket philosophy; however, its true meaning will be known when the court is presented, as here, with a governmental unit of taxpayers the size of South Milwaukee and not a state governmental unit or a municipality the size of Independence, Washington, D.C. or larger. It is incomprehensible that there would be insurance coverage to protect municipal governments for policies or acts of its employees where liability may be established in “newly recognized” violation of previously unknown rights. No insurance company could issue such policy since the premium would not have any certainty nor be based on any predictable experience. If issued, the premiums would by necessity be prohibitive. In Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981), the Supreme Court denied punitive damages against a municipal corporation in a It is incongruous and incomprehensible that the Supreme Court would hold that taxpayers are not subject through their local governmental units for punitive damages for official and intentional policies of their local governments and yet be held to unlimited compensatory damages. Certainly, when the Supreme Court considers the issue of local governments, through state laws limiting their liability, it will display awareness of local governments by nature varying in size and numbers of taxpayers and recognizing the need to limit liability at a reasonable level. Under the decision of the majority, a victim of a Either the Sambs case result should be reexamined since insurance protection is available to local governmental units for such predictable torts and resulting injuries, or the majority in the instant case has created an unacceptable dichotomy. If the government acts with evil intent in its policy, punitive damаges are not recoverable. If government has a policy but it is otherwise innocent except for its application, then damages are wide open and unlimited. If the government causes severe injury through the negligence of its officers or employees, its liability is limited to $25,000 (now $50,000) even though it is protected by a greater limit in an insurance policy. This is an area of inconsistencies partly created by the majority‘s decision in the instant case. The majority does not state directly who is to receive the attorney fees granted; however, by citing As the majority holds, the attorney will only receive his contingent fee. The greater amount over that recoverable under the majority ruling will go to the plaintiff in addition to his recoverable damages of $88,000. I cannot see how that will encourage attorneys in the future to accept cases in the untrammeled In the instant case, I disagree with the rationale of the majority only, not the result as to the attorney fees. The majority‘s ruling as to unlimited liability exposure for the municipality results in upholding the $88,000 damage award. One-third of $88,000 is $29,333, one-fourth of $88,000 is $22,000, one-half of $88,000 is $44,000, so whatever the contingent fee arrangement is, the majority‘s award of $23,180 to the plaintiff for attorney fees does not unjustly enrich the plaintiff. However, the reasoning of the majority in adopting the rule as to attorney fees can lead to punishment of defendants for defending rather than reimbursing plaintiffs for initiating the action. I would reverse the trial court.
Notes
“(3) The amount recoverable by any person for any damages, injuries or death in any action founded on tort against any volunteer fire company organized under ch. 213, political corporation, governmental subdivision or agency thereof and against their officers, officials, agents or employees for acts done in their official capacity or in the course of their agency or employment whether proceeded against jointly or severally, shall not exceed $25,000. No punitive damages may be allowed or recoverable in any such action.”
The recovery limit was raised to $50,000 by ch. 63, Laws of 1981.“It hardly seems unjust to require a municipal defendant which has violated a citizen‘s constitutional rights to compensate him for the injury suffered thereby. Indeed, Congress enacted sec. 1983 precisely to provide a remedy for such abuses of official power. See Monroe v. Pape, 365 U.S. at 171-172. Elemental notions of fairness dictate that one who causes a loss should bear the loss.
“It has been argued, however, that revenue raised by taxation for public use should not be diverted to the benefit of a single or discrete group of taxpayers, particularly where the municipality has at all times acted in good faith. On the contrary, the accepted view is that stated in Thayer v. Boston—‘that the city, in its corporate capacity, should be liable to make good the damage sustained by an [unlucky] individual, in consequence of the acts thus done.’ 36 Mass. at 515. After all, it is the public at large which enjoys the benefits of the government‘s activities, and it is the public аt large which is ultimately responsible for its administration.” 445 U.S. at 654-655.