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Quarles & Brady Appellate Year in Review – 2018

King Poor, Charles Harper, James Goldschmidt

Arborists will tell you that sometimes trees need to be pruned. And when a case is on appeal that too may be time for pruning. Whether our clients are on the winning side in the trial court, the losing side, or somewhere in between, an appeal is a time to pause and ask what’s worth keeping and what can be let go.

Deciding what to keep and what to cut calls for a team. We value drawing on a team of those who have known the case from the beginning in the trial court and those who will provide fresh insights on appeal. Such collaboration between trial and appellate counsel helps our clients work through each stage of the appeal process and answer questions such as how long will an appeal take and how much will it cost? Can the case be settled? What claims or issues deserve more focus? What deserve less?

In 2018, as we have for many years before, Quarles & Brady lawyers have represented our clients in appeals in federal and state courts across the country in a wide variety of cases. The sampling below of our work over the past year shows that variety: creditors’ rights, franchising, health care, indemnity and choice of law, intellectual property, labor and employment, product liability and toxic torts, trusts and estates, and warranty claims. Whatever the area of law or wherever the court, we are committed to teamwork and to finding the right path for our clients on each appeal. And that means working together to question, test, and to prune.


Employment and Discrimination

Rao v. Rusch, 715 Fed. Appx. 551 (7th Cir. 2018)

Our clients, a state medical college and two deans of the college were sued by a medical researcher for constructive discharge and to contest the college's findings of research misconduct. After the college was dismissed on summary judgment and a jury then ruled in favor of the two deans, the trial court entered judgment in favor of all defendants. On appeal, the Seventh Circuit affirmed. In doing so, it rejected the researcher’s arguments that (1) he was discriminated against as part of a favored class, (2) the trial court should have allowed certain state of mind evidence, and (3) the jury instructions on due process were improper.


Franchising: Wine Not Covered By Dealership Law

Winebow, Inc. v. Capitol-Husting, Inc., 381 Wis. 2d 732 (2018)

Does Wisconsin Fair Dealership Law apply to the distribution of wine? As a distributor and importer of wines, our client brought suit against wholesalers in federal court seeking a declaration that the Dealership Law did not apply to wine. The trial court agreed, but on appeal, the Seventh Circuit certified the question to the Wisconsin Supreme Court. Focusing on the statute’s definition of “intoxicating liquor” after the governor’s amendatory veto from 1999, the Supreme Court concluded that it excluded wine and therefore wine distributors were not dealers covered by the law.


Guaranties: Valuing Credits

Horizon Bank, N.A. v. Marshalls Point Retreat LLC, 380 Wis. 2d 60 (2018)

If a guarantor is sued as part of a foreclosure sale, must the guarantor’s debt be reduced only by the amount of any credit bid received at a sheriff’s sale? Ruling for our client, the guarantor, the Supreme Court answered that question “no.” The court concluded that because a guarantor’s obligations arise only from its own contract, and not the agreement between the underlying debtor and creditor, the value of any credit due the guarantor may be determined separately from any sheriff’s sale.    


Health Care Facilities: Constitutionality of Moratorium

Mainstreet Prop. Grp., LLC v. Pontones, 97 N.E.3d 238 (Ind. Ct. App. 2018)

Did Indiana’s moratorium on licensing additional health care facilities violate the Contracts Clause of the United States or Indiana Constitutions, or Indiana’s vested rights doctrine? Representing our client, a state health care association as an amicus, we argued that the moratorium did not violate any of these rights. The Court of Appeals agreed and held that the moratorium did not impair a developer’s existing contractual or vested rights.  


Indemnification and Choice of Law

American Family Mut. Ins. Co. v. Cintas Corp. 383 Wis. 2d 63 (2018)

Does Wisconsin’s interpretive principle requiring indemnity contracts to be strictly construed defeat the parties’ choice of law? Arguing for our client, a contractor that inspected a fire-suppression system, we maintained that the parties’ choice of Ohio law governed and required our client to be indemnified, even for its own alleged negligence. The Wisconsin Supreme Court ruled in our client’s favor and held that the principle favoring a strict construction of indemnity contracts was not a public policy important enough to override the parties’ own choice of law.


Intellectual Property: Patent Judgment Reinstated

Ultratec, Inc. v. CaptionCall, LLC, 733 Fed. Appx. 535 (Fed. Cir. 2018)

After a jury awarded our clients $5.4 million in patent damages, the district court granted a defense motion for judgment as a matter of law, holding that the patent claims were invalid as obvious.  The court did, however, deny alternative motions for judgment as a matter of law or for a new trial on damages.  On appeal, the Federal Circuit reversed the ruling on the invalidity of the patents and upheld the damages award, holding that the jury's verdicts were supported by substantial evidence. On remand, the district court has since granted our motion for an injunction barring the defendants from engaging in any further infringement of the patents.


Mortgages: Statutes of Limitation

U.S. Bank, N.A., v. Western Homes, LLC, 245 So. 3d 1011 (Fla. 3d DCA 2018)

Our lender client’s foreclosure case was dismissed as untimely. The trial court granted summary judgment for the borrower, ruling that the statute of limitations for enforcing the loan had expired because the lender had sought to accelerate the loan more than five years before the case was filed. The appellate court reversed, following recent Florida Supreme Court precedent issued while the appeal was pending, and held that the statute of limitations did not bar the lender’s claims as long as its lawsuit included defaults within the limitations period.

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Andra R. Miller Designs LLC v. US Bank N.A., 244 Ariz. 265 (Ct. App. 2018)

When a statute of limitations was triggered after a lender accelerated a debt and then recorded a notice of a trustee's sale, what notice must a lender provide to “de-accelerate” the debt to reset the statute of limitations? Our lender client argued that recording a notice cancelling the trustee's sale and revoking the acceleration gave sufficient notice to the debtor and any third party investigating title to the property. The court of appeals agreed and reversed the trial court's contrary ruling.


Product Liability - Toxic Torts

Custer v. Cerro Flow Products, Inc. 2018 IL App (5th) 160161

Over 11,500 plaintiffs sued our client, a recycler of copper products, alleging toxic torts from pollution at its southern Illinois facility. A co-defendant settled and moved for a “good-faith finding” that would bar any contribution claims by our client. The trial court made a finding of good faith and granted the motion to bar any contribution claims.

On appeal, the Illinois Appellate Court vacated the good-faith finding and remanded, holding that that the settling parties had failed to adequately disclose the basic terms of the settlement, including the total amount to be paid or how it would be distributed among the plaintiffs. The court also ruled that the settling parties had failed to establish that all the plaintiffs had given their “informed consent” as required by the rules of professional responsibility.


Service Contracts

CNH Industrial America v. Jones Lang LaSalle Americas, Inc., 882 F.3d 692 (7th Cir. 2018)

Our client, a manufacturer of farming and construction equipment, brought suit against a company that managed a sign replacement program for our client’s dealers. The trial court awarded damages in favor of our client and found that the manager had not adequately supervised the sign replacement program, including negotiating the proper warranties for the signs. The Seventh Circuit affirmed holding that the manager of the program had breached its service agreement and the damages awarded were not excessive.


Trusts and Estates and Conflicts of Interest

In re Estate of Bowler, 2018 IL App (1st) 171936-U

In a will contest, the trial court denied an attempt to disqualify our client’s counsel under the advocate-as-witness rule. The Illinois Appellate Court affirmed and held that the advocate-witness rule did not apply to a lawyer providing evidence on uncontested issues. Further, the court rejected an argument that our client’s counsel had a conflict of interest because the plaintiff claimed to be a beneficiary under the will and that the lawyer’s only duty was to the estate.


Uniform Commercial Code and Warranties

Tankstar USA Inc. v. Navistar, Inc., 2019 WI App 1 (Ct. App. 2018)

Dismissal of design defect claims against our client, a manufacturer of semi-tractor trucks, was upheld on appeal. The court of appeals rejected, among things, a Uniform Commercial Code warranty claim because even numerous repairs did not mean the manufacturer’s warranty had failed of its essential purpose, particularly as the evidence showed the manufacturer had carefully honored its warranty and the buyer had heavily used the trucks despite the alleged defects.