2nd judge rules in favor of UWO Foundation

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Dane County Circuit Court Judge Richard Niess ruled on Nov. 6 that the UW System Board of Regents incorrectly interpreted the state law regarding the financial assistance promised by the University and the agreements between the UW Oshkosh Foundation and UW Oshkosh.

Neiss became the second judge, behind U.S. Bankruptcy Judge Susan Kelley, to support the Foundation’s arguments.

The case involved First Business Bank, which financed one of the University’s biodigestor projects, and Bank First National, which financed the construction of the Alumni Welcome and Conference Center on the UWO campus.

Deadlines were set for the filing of summary judgments during a telephone conference on Nov. 28 with Niess and attorneys Michael Morris, Kendall Harrison and Dean Laing.

A motion hearing occurred on Oct. 25 in Dane County between attorneys Morris and Michael Murphy on behalf of the UW System Board of Regents, attorneys Harrison and Linda Susan on behalf of the First Business Financial Services Inc. and attorneys Laing and Gregory Lyons representing Bank First National.

During the motion hearing, Niess overall agreed with Kelley’s previous decision that the state owes the Foundation millions of dollars. However, Niess pointed out several areas where he strongly disagreed.

According to the Oct. 25 oral argument transcript, Morris argued that Article VIII, section 3 comes into play only under the exception in Article VIII, section 3 , i.e., and only where the state’s credit is given or loaned “in aid of any individual, association or corporation.”

Under the Wisconsin Constitution, except as provided in section 7 (2) (a), the credit of the state shall never be given, or loaned, in aid of any individual, association or corporation.

“This isn’t public debt under Chapter 18 because it doesn’t meet any of the requirements in the definition,” Morris said. “It’s not an unconditional promise. That’s one of the things that Judge Kelley got wrong. That’s one of the things the banks get wrong, too.”

According to court documents obtained by The Examiner, the decision and order denying the Board of Regents’ motion to dismiss the banks’ contracts states, “The Board of Regents’ argument is not particularly well-developed nor self-evident in its initial brief, which does not even identify which of the many provisions in the very meaty Article VIII, section 7 is the basis for the motion.”

The Board of Regents moved to dismiss the counterclaims of defendant First Business Bank and the intervention complaint of Bank First National on multiple grounds, including sovereign immunity, various other constitutional grounds and the unavailability of offensive issue preclusion against the state.

Attorney Raymond Dall’Osto, who represents former Chancellor Richard Wells, said one of the most important things Niess did in the oral argument was talk about a number of Wisconsin Supreme Court decisions going back to the 1954 Thomson case, which states “that the primary, if not the sole purpose of the contracts and issue is the public good.”

“This becomes the touchstone specifically to benefit UWO,” Dall’Osto said, noting that Wells and former Vice Chancellor Thomas Sonnleitner took these actions for the public good. “That’s quite significant.”

Niess also asked Morris during the oral argument whether he felt the actions taken by Wells and Sonnleitner were “overwhelmingly for the the public good.” Morris said yes.

Niess closed the oral argument on a lighter note, stating he intends to wrap up the case as soon as possible.

“I do not intend to let moss grow under my feet,” Niess said. “This case has been pending long enough. You folks are looking for answers. I wouldn’t hold oral argument if I knew all the answers, and you’ve given me things to think about. There’s no point shooting from the hip on this one.”