Opinion ID: 1649623
Heading Depth: 2
Heading Rank: 2

Heading: Mrozek's Claims

Text: ¶ 16. Mallery argues that Mrozek's guilty pleas and subsequent criminal convictions preclude her from proving that the firm's alleged negligence caused her to violate the law, which resulted in her prosecution, conviction and damages. Mallery agrees with the court of appeals decision that issue preclusion bars Mrozek's claims and that judicial estoppel also precludes her claims.
¶ 17. Issue preclusion addresses the effect of a prior judgment on the ability to re-litigate an identical issue of law or fact in a subsequent action. Northern States Power Co. v. Bugher, 189 Wis. 2d 541, 550-51, 525 N.W.2d 723 (1995). In order for issue preclusion to be a potential limit on subsequent litigation, the question of fact or law that is sought to be precluded actually must have been litigated in a previous action and be necessary to the judgment. Town of Delafield v. Winkelman, 2004 WI 17, ¶ 34, 269 Wis. 2d 109, 675 N.W.2d 470; Michelle T. v. Crozier, 173 Wis. 2d 681, 687, 495 N.W.2d 327 (1993). If the issue actually has been litigated and is necessary to the judgment, the circuit court must then conduct a fairness analysis to determine whether it is fundamentally fair to employ issue preclusion given the circumstances of the particular case at hand. Paige K.B., 226 Wis. 2d at 220-21. For this analysis, the circuit court considers any of the following factors that are relevant to its decision: (1) whether the party against whom preclusion is sought could have obtained review of the judgment; (2) whether the question is one of law that involves two distinct claims or intervening contextual shifts in the law; (3) whether there are apt to be significant differences in the quality or extensiveness of the two proceedings such that relitigation of the issue is warranted; (4) whether the burden of persuasion has shifted such that the party seeking preclusion had a lower burden of persuasion in the first trial than in the second; and (5) whether matters of public policy or individual circumstances would render the application of issue preclusion fundamentally unfair, including whether the party against whom preclusion is sought had an inadequate opportunity or incentive to obtain a full and fair adjudication of the issue in the initial litigation. Michelle T., 173 Wis. 2d at 688-89 (citing Restatement (Second) of Judgments § 28 (1980)). Some of these factors are decided as questions of law, e.g., factors 1, 2 and 4. Paige K.B., 226 Wis. 2d at 223-24. Other factors require the circuit court to exercise its discretion, for example, factors 3 and 5. Id. at 225. ¶ 18. In this case, Mallery contends that Mrozek's guilty pleas fulfill the requirement that the issue of whether Mallery provided satisfactory legal advice for tasks relating to the construction and financing of the motel actually has been litigated. We have never squarely confronted the question whether issue preclusion may apply as a consequence of a guilty plea. [7] However, after reviewing a wide range of authorities, we conclude that issue preclusion is not available based on Mrozek's guilty pleas. ¶ 19. There is conflict among jurisdictions on the effect a guilty plea has on the availability of issue preclusion. The court of appeals relied on decisions from Iowa and Missouri in concluding that issue preclusion could apply following a guilty plea. See James v. Paul, 49 S.W.3d 678, 686-88 (Mo. 2001) (observing that jurisdictions have split fairly evenly, the recent trend being to apply [issue preclusion] defensively in a civil proceeding following a plea of guilty); see also Ideal Mut. Ins. Co. v. Winker, 319 N.W.2d 289, 294-96 (Iowa 1982). The reasoning behind this view is that before a guilty plea is accepted, the circuit court must ascertain that there is a factual basis for the plea. See, e.g., State v. Bangert, 131 Wis. 2d 246, 266-67, 389 N.W.2d 12 (1986). Wisconsin statutes also require that a criminal court undertake this analysis. Wisconsin Stat. § 971.08(1) provides in part: (1) Before the court accepts a plea of guilty or no contest, it shall do all of the following: (a) Address the defendant personally and determine that the plea is made voluntarily with understanding of the nature of the charge and the potential punishment if convicted. (b) Make such inquiry as satisfies it that the defendant in fact committed the crime charged. ¶ 20. However, many states hold the opposite view, that a plea agreement is qualitatively different from a conviction following a trial. See, e.g., Rawling v. City of New Haven, 537 A.2d 439 (Conn. 1988); Prudential Prop. & Cas. Ins. Co. v. Kollar, 578 A.2d 1238, 1240-41 (N.J. Super. Ct. App. Div. 1990). These states are supported by the Restatement (Second) of Judgments § 85 cmt. b, which states: b. Actual adjudication. The rule of this Section presupposes that the issue in question was actually litigated in the criminal prosecution. See § 27, Comment e. Accordingly, the rule of this Section does not apply where the criminal judgment was based on a plea of nolo contendere or a plea of guilty. A plea of nolo contendere by definition obviates actual adjudication and under prevailing interpretation is not an admission. A defendant who pleads guilty may be held to be estopped in subsequent civil litigation from contesting facts representing the elements of the offense. However, under the terms of this Restatement such an estoppel is not a matter of issue preclusion, because the issue has not actually been litigated, but is a matter of the law of evidence beyond the scope of this Restatement. Also, 18B C. Wright & A. Miller, Federal Practice & Procedure, § 4474.1 (3d ed. 2002) states: The desire to avoid a civil adjudication that is inconsistent with a plea-based conviction should not, in principle, go beyond use in evidence or judicial estoppel to reach issue preclusion. The conviction does not rest on actual adjudication or determination of any issue. Just as issue preclusion should not rest on civil judgments by consent, stipulation, or default, so it should not rest on a plea of guilty. ¶ 21. Ultimately, our determination depends not on the number of jurisdictions or authorities supporting a view, but rather on the persuasiveness of each position. We conclude that the following statement from the New Jersey Superior Court properly explains why applying issue preclusion should not be available based on a guilty plea: [A guilty plea] represents the decision of the defendant to forego such litigation and usually for reasons having little or nothing to do with the nature of the issues. . . . The motives for the State and a criminal defendant to make a plea agreement are many. The State may be seeking to conserve its scarce resources by avoiding a trial and a defendant may be attempting to secure his freedom or at least a reduced term of incarceration. Such reasons have little or nothing to do with the determination of the issues in the [later action]. Kollar, 578 A.2d at 1240-41. While a Wisconsin circuit court must make an inquiry sufficient to satisfy it that the defendant committed the crime before accepting the plea, such an inquiry is not the same as a fully litigated trial between adversarial parties resulting in the fact-finder determining that the facts prove the defendant committed the crime. For example, a circuit court may satisfy its obligation of inquiry under Wis. Stat. § 971.08(1)(b) by incorporating by reference the facts adduced at the preliminary hearing. State v. Duychak, 133 Wis. 2d 307, 315, 395 N.W.2d 795 (Ct. App. 1986). Furthermore, a defendant who pleads guilty need not admit the facts of a crime that has been charged as a precondition to a court accepting his or her plea. State v. Thomas, 2000 WI 13, ¶ 18, 232 Wis. 2d 714, 605 N.W.2d 836. Therefore, we conclude that Mrozek's guilty pleas do not fulfill the actually litigated requirement for issue preclusion.
¶ 22. Alternatively, Mallery urges us to conclude that Mrozek's negligence claim is barred by judicial estoppel or by public policy. The equitable doctrine of judicial estoppel, as traditionally applied in this state, is intended `to protect against a litigant playing `fast and loose with the courts' by asserting inconsistent positions.' State v. Petty, 201 Wis. 2d 337, 347, 548 N.W.2d 817 (1996) (citations omitted). Judicial estoppel precludes a party from asserting one position in a legal proceeding and then subsequently asserting an inconsistent position. Id. Judicial estoppel may be invoked where (1) the later position is clearly inconsistent with the earlier position; (2) the facts at issue are the same in both cases; and (3) the party to be estopped convinced the first court to adopt its position. Riccitelli v. Broekhuizen, 227 Wis. 2d 100, 111-12, 595 N.W.2d 392 (1999). ¶ 23. We decline to apply judicial estoppel here. It is not clear Mrozek is trying to play fast and loose with the judicial system; as we noted earlier, a criminal defendant has many potential reasons to enter into a plea agreement, some of which would not be inconsistent with alleging Mallery negligently represented Mrozek. For example, Mrozek may have pled to the charges in order to accept a lesser penalty than the maximum exposure she would have had if convicted after a trial. ¶ 24. Mallery also argues Mrozek's claims should be barred on public policy grounds because her convictions bring her within the doctrine of in pari delicto, under which doctrine it has been said that no court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. Evans v. Cameron, 121 Wis. 2d 421, 427, 360 N.W.2d 25 (1985) (citations omitted). In Evans, we upheld the dismissal of a complaint for the negligent provision of legal services, where the complainant committed perjury at a bankruptcy hearing, allegedly upon receiving advice from her attorney to do so. Id. at 424-25. We stated, A court should not encourage others to commit illegal acts upon their lawyer's advice by allowing the perpetrators to believe that a suit against the attorney will allow them to obtain relief from any damage they might suffer if caught. Id. at 428. ¶ 25. We decline to bar Mrozek's malpractice claim under this doctrine. In Evans, the act of perjury was so clearly wrongful that even without the advice of attorneys, Evans would have understood her actions were illegal. Id. at 427-28. We also note that Mallery's position before the Securities Commissioner was that Mrozek's actions were not illegal. Furthermore, as we explained in our discussion of guilty pleas and issue preclusion, supra, ¶ 21, her admission of guilt for plea agreement purposes is not conclusively determinative of the facts. ¶ 26. Because we decide that issue preclusion does not apply to a guilty plea and that neither judicial estoppel nor public policy bars a claim for the negligent provision of legal services, we conclude that the circuit court erred in granting summary judgment to Mallery.