Paige K.B. ex rel. Peterson v. Steven G.B.

• Decision Date: 28 May 1999
• Docket Number: No. 97-0873,97-0873
• Citation: 226 Wis.2d 210,594 N.W.2d 370
• Parties: PAIGE K.B. and Kaitlin I.B., minors by their Guardian ad Litem, Mark A. PETERSON and Lauralie H.B., Plaintiffs-Respondents, v. STEVEN G.B. Defendant, General Casualty Company of Wisconsin, a domestic insurance corporation, Milwaukee Guardian Insurance Inc., a domestic insurance corporation, Richard B. and Esther B., Defendants-Appellants.
• Court: Wisconsin Supreme Court

Page 370

594 N.W.2d 370

226 Wis.2d 210

PAIGE K.B. and Kaitlin I.B., minors by their Guardian ad Litem, Mark A. PETERSON and Lauralie H.B. Plaintiffs-Respondents, v. STEVEN G.B. Defendant General Casualty Company of Wisconsin, a domestic insurance corporation, Milwaukee Guardian Insurance Inc., a domestic insurance corporation, Richard B. and Esther B., Defendants-Appellants.

No. 97-0873.

Supreme Court of Wisconsin.

Argued Feb. 11, 1999.

Decided May 28, 1999.

For the defendants-appellants, Milwaukee Guardian Insurance, Richard B. Esther B., there were briefs by John P. Runde and Terwilliger, Wakeen, Piehler & Conway, S.C., Wausau and oral argument by John P. Runde.

For the defendant-appellant, General Casualty Company of Wisconsin, there were briefs by Keith W. Kostecke and Menn, Nelson, Sharratt, Teetaert & Beisenstein, Ltd., Appleton.

For the plaintiffs-respondents there was a brief by Mark A. Peterson, John F. Maloney, Robert K. Bultman, David W. Maas and McNally, Maloney & Peterson, S.C., Milwaukee and oral argument by Mark A. Peterson and John F. Maloney.

¶1 WILLIAM A. BABLITCH, J

Richard and Esther B. and their insurers, Milwaukee Guardian Insurance, Inc. and General Casualty Company of Wisconsin (collectively the "defendants"), appeal two orders of the circuit court. The first precluded them from litigating an issue that had previously been litigated in a criminal proceeding against their son. The second granted protective orders to limit discovery of plaintiffs Paige K.B. and Kaitlin I.B. We conclude that because Richard and Esther were not in privity nor did they have a sufficient identity of interest with their son in his criminal conviction, their due process rights were violated by applying issue preclusion to them. Accordingly, we reverse the order of the circuit court giving conclusive effect to the criminal conviction as applied against Richard and Esther and their insurers. Also, because the circuit court's orders limiting discovery were based, at least in part, on its earlier order applying issue preclusion to Richard and Esther, an order we have reversed, we also reverse the orders limiting discovery and remand for further consideration in light of our decision. We also clarify, pursuant to the court of appeals' certification, the standard for reviewing circuit court decisions on issue preclusion.

¶2 The facts are these. In February 1991, Steven B. (Steven) and Lauralie B. (Lauralie) were divorced. Lauralie and Steven had two children, Paige K.B. and Kaitlin I.B. Following the judgment of divorce which awarded Steven primary physical placement of the children, Lauralie absconded with the children. She returned to Wisconsin with the children on May 24, 1991, and appeared on a felony complaint charging her with interference with Steven's custody rights. As she had done throughout the divorce proceedings, Lauralie continued to accuse Steven of sexually assaulting the children. Accordingly, as a condition of Lauralie's bond on the felony charge, the court ordered that she "take steps to see to it that the children are with the father's parents [Richard and Esther] during the pendency of these proceedings unless otherwise ordered by a Court of Competent Jurisdiction." The children went to the home of Richard and Esther, their paternal grandparents.

¶3 An investigation regarding Lauralie's accusations of sexual assault ensued. Ultimately, petitions for Children in Need of Protection or Services (CHIPS) were filed on behalf of both children. The petitions alleged that Steven sexually assaulted them. Paige K.B. and Kaitlin I.B. were then removed from Richard and Esther's home and placed in a foster care home, and criminal charges were filed against Steven.

¶4 On July 16, 1992, Steven was criminally convicted of first degree sexual assault of both children, such acts occurring between June 1, 1991, and August 1, 1991. Steven pursued several avenues of relief from his criminal conviction including challenging the assistance of his counsel, appealing to the Wisconsin Court of Appeals and this court, and filing a writ of certiorari with the United States Supreme Court, all to no avail.

¶5 On October 12, 1993, Paige K.B. and Kaitlin I. B., by their guardian ad litem, and Lauralie (collectively, "the plaintiffs"), filed this civil complaint against Steven and his parents, Richard and Esther, and their insurers. The cause of action against Steven alleged battery and intentional infliction of emotional distress. The cause of action against Richard and Esther and their insurers alleged negligence and negligent infliction of emotional distress for failing to properly supervise Steven's contact with the children while the children were staying in Richard and Esther's home, between May 24, 1991, and July 24, 1991. (Plaintiffs later orally amended the time frame alleged in their civil suit to June 1, 1991 to August 1, 1991, mirroring the dates charged in the criminal complaint against Steven.) Paige K.B. and Kaitlin I.B. assert that Richard and Esther's negligence resulted in them being sexually assaulted by Steven. The plaintiffs seek to recover for damages they had suffered.

¶6 During the course of litigation in this civil suit, Richard and Esther's attorney sought to depose Paige K.B. and Kaitlin I.B. In response, the plaintiffs filed a motion for a protective order, requesting that the court preclude Richard and Esther and their insurers from asking questions about the nature of the sexual assault or litigating the issue of Steven's criminal conviction. On February 24, 1997, the Portage County Circuit Court, Judge Virginia A. Wolfe presiding, granted plaintiffs' motion thereby precluding the defendants from litigating this issue.

¶7 Plaintiffs also filed a motion to limit the scope of Richard and Esther's discovery regarding the children. The circuit court granted the motion, and pursuant to Wis. Stat. § 804.01(3) (1989-90), ¹ limited the scope, length and manner of the children's depositions in the following ways: limiting the length of the depositions to one hour for Kaitlin I.B. and one and one-half hours for Paige K. B.; allowing only one deposition of each child; requiring only one attorney to question the children on behalf of the defendants; precluding Steven from asking the children any questions except through selected legal counsel; requiring all questions to be submitted to the court in advance; disallowing questions directed to the children regarding what Steven did to them; and directing the defendants to make no gestures or comments toward the children. Furthermore, the circuit court ordered that the defendants' experts not question the children regarding what was done to them by Steven.

¶8 The court of appeals granted Richard and Esther's petition for leave to appeal from the circuit court's non-final orders. Steven, who had been appearing pro se throughout this civil action, did not appeal. ² The court of appeals certified the case to this court pursuant to Wis. Stat. § (Rule) 809.61.

¶9 The primary issues presented by this case, as certified by the court of appeals, are 1) whether an issue fully litigated in a criminal proceeding is conclusive in a subsequent civil proceeding against the defendant's parents; and 2) whether the circuit court properly exercised its discretion in this case in granting a protective order to limit the scope of discovery. We also clarify the standard for reviewing circuit court decisions on issue preclusion.

¶10 Issue preclusion, formerly known as collateral estoppel, Northern States Power Co. v. Bugher, 189 Wis.2d 541, 549, 525 N.W.2d 723 (1995), "is designed to limit the relitigation of issues that have been actually litigated in a previous action." Lindas v. Cady, 183 Wis.2d 547, 558, 515 N.W.2d 458 (1994). See also Jensen v. Milwaukee Mut. Ins. Co., 204 Wis.2d 231, 235, 554 N.W.2d 232 (Ct.App.1996). The party asserting issue preclusion carries the burden to establish that it should be applied. State ex rel. Flowers v. H & SS Department, 81 Wis.2d 376, 389, 260 N.W.2d 727 (1978). "[O]nce an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation." Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) (citations omitted).

¶11 Before reaching the primary issues, we must first clarify the appropriate standard of review for circuit court determinations regarding issue preclusion. The plaintiffs, relying on Michelle T. v. Crozier, 173 Wis.2d 681, 495 N.W.2d 327 (1993), argue that the standard of review is whether the circuit court erroneously exercised its discretion in applying issue preclusion to Richard and Esther and their insurers. They argue that whether issue preclusion applies is a question of fundamental fairness--a question left to the discretion of the circuit court.

¶12 Richard and Esther and their insurers, relying on Lindas and Ambrose v. Continental Ins. Co., 208 Wis.2d 346, 560 N.W.2d 309 (Ct.App.1997), rev. denied 211 Wis.2d 532, 568 N.W.2d 299, assert that the standard of review is de novo to determine whether, as a matter of law, issue preclusion can be applied to them. They assert that the circuit court must first determine whether applying issue preclusion would violate their due process rights. If a circuit court determines that issue preclusion would not violate their due process rights, only then can the court exercise its discretion to determine whether applying it in the particular case is fundamentally fair.

¶13 In Michelle T., the plaintiff commenced a civil action against Crozier, a man who had earlier been criminally convicted of second degree sexual assault for two acts of sexually touching her. Michelle T., 173 Wis.2d at 684, 495 N.W.2d 327. During opening statements before the jury in the civil action, Crozier's counsel...