BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION


In the matter of the
unemployment benefit claims of

LINN ANDERSON, Employe

and

LAWRENCE W SHIMEK, Employe

Involving the account of

CITY OF MANITOWOC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 89-401750 MNG


The Department Deputy's Initial Determinations held that in week 23 of 1989, the employes were discharged for misconduct connected with their employment. As a result, benefits were denied.

The employes timely appealed the Initial Determinations, and a hearing was held on July 25, 1989 before Administrative Law Judge Jo Ellen Rehbein, acting as an Appeal Tribunal of the Wisconsin Department of Industry, Labor and Human Relations. The Appeal Tribunal Decision, issued on August 3, 1989, reversed the Initial Determination, and found the employes eligible for benefits.

The employer timely petitioned for review by the Wisconsin Labor and Industry Review Commission. The Commission thereafter directed that additional testimony be taken before Administrative Law Judge Rehbein, and such additional testimony was taken on August 28, 1990. Based on the evidence and applicable law, having considered the positions of the parties, and having consulted with the Aadministrative Law Judge concerning her impressions as to the credibility of witnesses, the Commission now reverses the Administrative Law Judge and makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In 1973 the City of Manitowoc adopted an ordinance which required that all employes of the city reside within the city limits. The ordinance provided that an employe not a resident of the city after the effective date of the ordinance would be subject to immediate discharge.

Linn Anderson and Lawrence Shimek were hired as employes of the city in the 1970's. at the time, each was married to someone else, and both resided within the City of Manitowoc.

In 1981 Shimek was divorced, and in connection with the divorce settlement the residence in which he and his wife had lived, located at 1105 South 39th Street in the City of Manitowoc (hereinafter, "39th Street"), was sold to one of his sons, Jeff.

Anderson was also divorced at some point prior to 1986, and in that year she and Shimek married. After their marriage they resided together in a rented apartment located on North 14th Street in the City of Manitowoc.

In March 1987, Shimek and Anderson purchased a piece of property on English Lake, outside of the limits of the City of Manitowoc. They took out a mortgage of $45,000.00 to finance this purchase. The property has some type of cottage or cabin on it at the time. However, Shimek and Anderson decided to replace that structure, and in the summer of 1987 they destroyed it and took out another mortgage on the property, in the amount of $54,000.00, expressly as a construction mortgage to finance the construction of a new structure (hereinafter, the "lake house"). The new structure, referred to by the employes as their "cottage," had two bedrooms. The employes have not disputed, and nothing in the record contradicts, the finding of the arbitrator who ruled on the employes' discharge grievance that the lake house was a one story ranch-style dwelling with a full basement, five rooms including two bedrooms, one and one-half baths, and electric baseboard and wood stove heat which was adequate to keep the pipes from freezing in the winter and, when the stove was adequately stoke, adequate to keep the building at a comfortable temperature during the winter.

The employes have not disputed, and the Commission infers from the evidence, that they were both aware of the city's residency requirement and of the fact that the English Lake property was outside of the city limits, when they bought that property, demolished the existing structure on it, and replaced it with another structure adequate to serve as a year-round residence.

At around the time of the employes' purchase and development of the lake property in 1987, they moved out of their apartment on North 14th Street and, ostensibly, moved into the second floor of the former Shimek residence on 39th Street. The second floor consisted of three rooms. Bathroom and cooking facilities had to be shared with Shimek's son, who lived on the first floor. The employes paid appropriately $40.00 to $45.00 a month toward the utility bills (which were in the son's name) and spent a similar amount to buy wood for heating, but they paid no rent. They had a separate telephone, but they also had a telephone installed at the lake house, and they had a "call forwarding" service which could automatically forward calls coming into the 39th Street address to the lake house.

In the fall of 1987, questions arose concerning the employes' compliance with the residency requirement. In 1988, after hearing the results of an investigation by the city attorney, the City Council personnel committee concluded that the employes resided at the lake house and thus were not in compliance with the residency requirement, and it made plans to hold a hearing in late 1988 to consider the discharge of the employes, as called for by the residency ordinance. These plans were postponed, however, when the employes entered into a written agreement with the city whereby they made certain promises to achieve compliance with the residency requirement. Specifically, the employes agreed to become residents of the city by February 1, 1989, to establish their residency "by purchasing or renting a dwelling unit in the City of Manitowoc", and to actually live as residents of the city. The agreement stated that it was understood that the employes would not be simply sharing living facilities with a relative.

Despite this agreement, the only step the employes took to comply with the residency requirement was to rent a room at the "Clipper City Motel" in Manitowoc, beginning effective February 1, 1989. This was a single motel room with bathroom, it had no cooking facilities, and its telephone could only receive calls placed to and relayed through the motel office. The rate for this room was $125.00 a month; the employes paid for two months in advance.

In late March 1989 Shimek's supervisor asked him to provide a home address. Subsequently, the city attorney also contacted the employe's attorney with the same request. The employes' attorney then provided the city with the information that the employes' residence for purposes of compliance with the agreement was the "Clipper City Motel." The employes discussed the possibility that there could be another hearing on residency scheduled by the city, and sometime in early April they abandoned their purported residence at the "Clipper City Motel" and resumed their purported residence at 39th Street.

As the employes had anticipated would happen, the city concluded that the employes' "residence" at the "Clipper City Motel" was a sham and was not in compliance with the agreement that had been entered into in late 1988. Plans were therefore again made to hold a hearing to consider termination of the employes for non-compliance with the residency requirement. An effort to resolve the matter in early May 1989 by way of an agreement that the employes would purchase and move into a home in Manitowoc on or before June 23, 1989 failed when the employes would not agree. A second effort to resolve the matter was made on the evening of the scheduled hearing, May 24, 1989, when the city proposed an agreement whereby the employes would purchase a residence in the city by October 31, 1989, entering into a non-contingent offer for such a purchase by June 9 of 1989, and the employes would move into rental quarters in the city, other than the son's house, by June 9, 1989. The agreement would have required the employes to "grant to city supervisory personnel the right to visit and view these living quarters to verify that they are suitable as a bona fide principal residence." The employes would not accept this agreement, and a hearing was therefore held on the question of the employes compliance with the residency requirement. Following the hearing, the City Council voted on June 5, 1989 (week 23) to terminate the employes for non-compliance with the residency requirement.

The first issue for decision is whether the employes were discharged or constructively quit their own employment. This requires consideration of the question of whether the employes knowingly violated the residency requirement.

From August 1988 through May 1989 the employes placed 26 long distance phone calls from the telephone at the lake house, while placing no long distance calls from the phone at 39th Street. Many of the calls were made at times and days that did not fall within the "weekend." While the employes maintained certain indicia of city residence, such as driver's licenses showing a city address and voter registration in the city, the employes' state tax returns for 1987 and 1988 showed the address of the employes' lake house as the taxpayers' address. On the 1988 return, the employes showed themselves as living in the township of Newton (as opposed to the City of Manitowoc) and gave a school district number corresponding to Valders, a rural area outside of Manitowoc corresponding to the lake house, rather than the Manitowoc School District. Most significantly, on both their 1987 and 1988 states tax returns, the employes claimed the property tax credit made available under Wisconsin law to "homeowners" for "property taxes paid on home." The employes owned no property in the City of Manitowoc. This credit cannot be claimed for summer/weekend "cottage"; the statutory language providing for the property tax credit has, at all times material, provided that it is limited to property taxes paid on the taxpayers' "primary dwelling".

Based on the record of the employes' long distance telephone calls, the representations and declarations the employes made on their state income tax returns, the level of the employes' financial commitment to the lake house, the patent inadequacy of the room at the "Clipper City Motel" as a place of permanent residence, and the superiority of the lake house to 39th Street as a residence in terms of such factors as privacy and living space, it is inferred that from the time of the construction of the lake house in 1987 onward the employes spent a significant amount of time there on a regular basis and that they considered it to be their principal residence. It is further found that the arrangement whereby the employes sometimes stayed in rooms on the second floor of the old Shimek residence on 39th Street was undertaken primarily to achieve nominal compliance with the city's residency requirement, and that the arrangement whereby the employes rented a room at the "Clipper City Motel" was a sham similarly intended merely to achieve nominal compliance with the residency requirements. The employes did not reside within the city as required by the residency requirement.

The statutory concept of "voluntary termination" is not limited to the employe who says "I quit." "Voluntary termination" under the statute can encompass a situation in which the employer discharges the employe. Nottelson v. ILHR Dept., 94 Wis. 2d 106, 119 (1980). When an employe indicates an intention to leave his employment by work, manner of action, or conduct inconsistent with the continuation of the employe-employer relationship, it must be held that the employe intended and did leave his employment voluntarily. Fish v. White Equipment Sales and Service, Inc., 64 Wis. 2d 737, 745 (1974). Where employes who are subject to a residency requirement are aware of the requirement and are given the opportunity to comply with it, but do not genuinely attempt to do so and as a result have their employment terminated on the initiative of the employer, it is generally found that the employes have constructively quit their employment under the rule of Fish, supra. See, Swessel v. LIRC and City of Milwaukee, (Dane County Circuit Court, No. 161-462, November 6, 1978), Milwaukee County v. LIRC and Sherman, (Dane County Circuit Court, No. 78-CV-48, August 13, 1979), Larson v. City of Madison, (LIRC, Hearing No. 82-01633 AM, January 19, 1983), Humphrey v. City of Madison, (LIRC, Hearing No. 81-04054 AM, April 13, 1983).

The employes intentionally established a residence outside of the city, knowing of the residency requirement. Whether or not the employes originally may have mistakenly believed that spending some time at Shimek's son's house was adequate to constitute compliance with the residency requirement, they were disabused of that notion in the fall of 1988. The employes were given a further opportunity to comply with the requirement at this point, but they engaged in what was clearly a sham effort, renting a motel room while continuing to spend significant amounts of time at the lake house. Thereafter, they were given two further opportunities to avoid discharge, by entering into agreements to take action to evidence their intention to become residents of the city by agreeing to purchase a home in the city and to live in rental premises in the city until the purchase of the home could take place, but they did not take these opportunities.

Considering all of the circumstances, the Commission concludes that, with knowledge of the residency requirement and of the fact that noncompliance therewith was grounds for discharge, the employes were not making a bona fide effort to comply with the ordinance. The employes thus caused their own terminations, and must be found to have constructively quit their employment.

Residency requirement for municipal employes are constitutional and legally permissible. Eastman v. City of Madison, 117 Wis. 2d 106 (App. 1983). The residency requirement in this case was duly adopted as an ordinance of the City of Manitowoc. Under these circumstances, the Commission cannot conclude that the requirement was unreasonable. Therefore, the employes did not have good cause for their voluntary termination of employment brought about by their wilful refusal to comply with the requirement.

The Commission therefore finds that in week 23 of 1989, the employes terminated their employment with the employer, within the meaning of Wis. Stat. § 108.04(7)(a), and that the circumstances of their voluntary termination of employment were not within any of the exceptions to the disqualifying effect of the voluntary termination recognized by Wis. Stat. § 108.04(7)(a). The Commission further finds that employe Linn Anderson was paid benefits in the amount of $156 for week 23 of 1989, $182 per week for each of weeks 24 through 47 of 1989, and $208 for week 48 of 1989, yielding a total of $4,732 for which she was not eligible and to which she was not entitled, within the meaning of Wis. Stat. § 108.03(1), and pursuant to Wis. Stat. § 108.22(8)(a), she is required to repay such sum to the Unemployment Reserve Fund. The Commission further finds that employe Lawrence Shimek was paid benefits in the amount of $143 for week 23 of 1989, $200 per week for each of weeks 24 through 47 of 1989, and $257 for week 48 of 1989, yielding a total of $5,200, for which he was not eligible and to which he was not entitled, within the meaning of Wis. Stat. § 108.03(1), and pursuant to Wis. Stat. § 108.22(8)(a), he is required to repay such sum to the Unemployment Reserve Fund.

DECISION

The Appeal Tribunal decision is reversed. Accordingly, employe Linn Anderson is ineligible for benefits beginning in week 23 of 1989, and until seven weeks have elapsed since the end of the week of quitting and she had earned wages in covered employment performed after the week of quitting equaling at least 14 times her weekly benefit rate which would have been paid had the quitting not occurred. Employe Lawrence Shimek is ineligible for benefits beginning in week 23 of 1989, and until seven weeks have elapsed since the end of the week of quitting and he has earned wages in covered employment performed after the week of quitting equaling at least 14 times his weekly benefit rate which would have been paid had the quitting not occurred. For purposes of computing benefit entitlement: When the quitting has occurred before the employe has established a benefit year, the wages earned for work performed for this employer should be reduced by 50 percent when computing the base period wages. When the quitting has occurred after the employe has established a benefit year, the remaining benefit entitlement based on work with the employer shall be reduced by 50 percent and, if this quitting has also occurred during the base period for a subsequent benefit year, the wages paid for work performed for the employer shall be reduced by 50 percent when computing the base period wages for the subsequent benefit year. Employe Linn Anderson is required to repay the sum of $4,732 to the Unemployment Reserve Fund. Employe Lawrence Shimek is required to repay the sum of $5,200 to the Unemployment Reserve Fund. The Initial Benefit Computations, Department Form UCB-700, dated June 6, 1989, are set aside.

Dated and mailed November 7, 1990
110 - CD1002 VL 1007  VL 1080.05

/s/ Kevin C. Potter, Chairman

Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner


MEMORANDUM OPINION

The Commission rejects the contention that the employes were in fact in compliance with the residency requirement. A number of factors, described above in the Findings of Fact and Conclusions of Law, suggest that the employes' residence was the lake house.

To a great extent, the employes' claim that they were in compliance with (or believed they were in compliance with) the residency requirement relies on acceptance of their own declarations as to where they were at certain times and as to their intent. However, the Commission found reason to question the employes' credibility. Anderson and Shimek provided conflicting claims as to when they moved out of the "Clipper City Motel." This contradiction, relating as it does to the very material question of where the employes were actually residing, is considered highly significant by the commission. Another area in which the employes' credibility is suspect is the matter of the purported agreement to purchase Shimek's son's house (39th Street). The employes asserted that they entered into an agreement to buy the property and that they paid the son a "down payment" or "earnest money" of $500. The Commission finds this claim is incredible. The Commission considers it more likely that this payment was in fact a wedding present which only later was claimed to have been something that it was not.

The Commission has reversed the administrative law judge in part because of a disagreement of law. The administrative law judge relied on a definition of the term "residence" taken from Black's Law Dictionary, 4th Ed. (1986). The Commission looks to the somewhat different definition provided in Eastman v. City of Madison, 117 Wis. 2d 106 (App. 1983), a case concerning a municipal employe residency requirement. The court in that case, which quoted Black's Law Dictionary, 5th Ed. (1979) for the preposition that residence implies something more than mere physical presence, stated:

"Continuous personal presence and intention establish residency. (Citations omitted). Appellant's declarations of intent are not conclusive. Such declarations are only evidence of sate of mind, and `may be suspect because of their self-serving nature' (citations omitted). The self-serving declarations cannot be conclusive but must yield to the intent which the acts and conduct of the persona clearly indicate (Citations omitted.)" Eastman, supra , 117 Wis. 2d at 118.

The Commission also differed from the administrative law judge as to the matter of the employes' credibility. Specifically, for the reasons given above, the Commission found the employes not to be credible in their testimony as to where they spent the majority of their time and as to where they intended to reside. By contrast, the intent evidenced by the actual acts and conduct of the employes was that they resided at English Lake. Furthermore, the Commission did not accept the self- serving testimony of the employes, that they were trying to achieve compliance with the residency requirement. The intention evidenced by their acts and conduct was otherwise. They moved out of a genuine rental residence in the city, and established a principal residence outside of the city, with knowledge of the applicability of the residency requirement. They established a nominal "residence" at 39th Street, then establishing a sham residence tat the "Clipper City Motel" when the city advised them that the "residence" at 39th Street was not adequate. They returned to the claim of residence at 39th Street when the motel ploy failed to convince the city. Thereafter, as before, the employes continued to drag their heels and to resist the obvious step of either buying a residence, or renting a genuine residential apartment or flat in the city, such as they had resided in before buying the English Lake property. Apart from their discredited claim that they were already city residents, their only real excuse for not making efforts to comply with the residency requirement was that they could not afford to. This, however, simply serves to emphasize what is obvious in this case: they were already financially committed to a primary residence, and could not afford to have two of them. Finding that the employes had no genuine intention of complying with the residency requirement and were attempting to avoid such compliance, the Commission concluded that the employes voluntarily terminated their employment, without good cause attributable to the employing unit.

NOTE: The employes have objected to consideration of the award of Arbitrator Marshall Gratz issued on the employes' grievance concerning their discharges. The commission's consideration of this award has been limited, consistent with the comments made in the commission's order of July 19, 1990.

The employes have requested the Commission to "exercise its discretion and waive reimbursement" of any overpayments found. The Commission has no such discretion. Topp v. LIRC and University Court Apartments, 133 Wis. 2d 422, 428 (1986). While the department may have such discretion, its exercise is not reviewable by either an appeal tribunal or the commission. Id., at 429.

cc: ATTORNEY STEVEN R ALPERT

CITY ATTORNEY PATRICK L WILLIS
CITY OF MANITOWOC


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